MEETING BEFORE THE CALIFORNIA AIR RESOURCES BOARD BOARD HEARING ROOM 2020 L STREET SACRAMENTO, CALIFORNIA THURSDAY, JUNE 25, 1998 9:30 A.M. Vicki L. Medeiros, C.S.R. License No. 7871 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 ii MEMBERS PRESENT John D. Dunlap, III, Chairman Joseph C. Calhoun Mark DeSaulnier Dr. William Friedman Lynne T. Edgerton Jack C. Parnell Barbara Patrick Sally Rakow Barbara Riordan Ron Roberts Staff: Michael Kenny, Executive Director Tom Cackette, Chief Deputy Executive Officer Mike Scheible, Deputy Executive Officer Kathleen Walsh, General Counsel Jim Schoning, Ombudsman PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 iii I N D E X --o0o-- Page Proceedings 1 Call to Order 1 Pledge of Allegiance 1 Roll Call 1 Opening remarks by Chairman Dunlap 1 AGENDA ITEMS: 98-7-1 Public Meeting to Consider an Informational Report on the Children's Health Study Introductory remarks by Chairman Dunlap 2 Staff Presentation: Mike Kenny 3 Helene Margolis 4 98-7-2 Public Meeting to Consider an Informational Report on the Innovative Clean Air Technology (ICAT) Program Introductory remarks by Chairman Dunlap 28 Staff Presentation: Mike Kenny 29 Tony Andreoni 30 Contractor Presenters: Charlie Carlisle, CHA Corporation 34 Scott A. Drennan, COEN 42 Eddy W. Huang, Ph.D., AeroVironmental 52 Environmental Services PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 iv I N D E X (Continued) --o0o-- Page 98-7-3 Public Meeting to Consider Research Proposals Introductory remarks by Chairman Dunlap 61 Staff Presentation: Dr. John Holmes 62 98-7-4 Public Meeting on Proposed Addendum to the Air Resources Board's 1995 Criteria and Guidelines for the Use of Motor Vehicle Registration Fees Introductory remarks by Chairman Dunlap 65 Staff Presentation: Mike Kenny 66 Pam Burmich 67 Public Comment: Linda Urata 78 Oscar Barker 92 98-7-5 Public Meeting to Consider an Update on the New Federal Standards, Regional Haze, and Particulate Matter Forums Introductory remarks by Chairman Dunlap 94 Staff Presentation: Mike Kenny 94 Edie Chang 96 Announcement of Closed Session 116 Afternoon Session 117 98-6-1 Continuation of a Public Hearing to Consider the Appeals of the City of Los Angeles from Order Nos. 041697-05 and 070297-04 of the Great Basin Unified Air Pollution Control District PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 v I N D E X (Continued) --o0o-- Page Introductory remarks by Chairman Dunlap 120 Staff Presentation: Mike Kenny 121 Public Comment: S. David Freeman 123 Ellen Hardebeck 125 Brian J. Lamb 128 98-7-6 Public Meeting to Consider a Status Report on Air Pollution Control Enforcement in California Introductory remarks by Chairman Dunlap 144 Staff Presentation: Mike Kenny 146 Jim Morgester 146 98-7-7 Public Meeting to Consider a Report to the Legislature Regarding the Application of Penalties for Violations of Motor Vehicle Fuels Regulations Introductory remarks by Chairman Dunlap 176 Staff Presentation: Mike Kenny 177 Kirk Oliver 177 Open Session to Provide an Opportunity for Members of the Public to Address the Board on Subject Matters within the Jurisdiction of the Board 182 Adjournment 182 Certificate of Reporter 183 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 1 1 P R O C E E D I N G S 2 --o0o-- 3 CHAIRMAN DUNLAP: Will this, the June meeting of 4 the California Air Resources Board, please come to order. 5 Supervisor DeSaulnier, would you please lead us, 6 and the audience, in the Pledge of Allegiance. 7 (Thereupon the Pledge of Allegiance was recited.) 8 CHAIRMAN DUNLAP: Thank you, Mark. 9 Ms. Shelby, would you please call the roll. 10 MS. SHELBY: Calhoun. 11 BOARD MEMBER CALHOUN: Here. 12 MS. SHELBY: DeSaulnier. 13 BOARD MEMBER DeSAULNIER: Here. 14 MS. SHELBY: Edgerton. 15 BOARD MEMBER EDGERTON: Here. 16 MS. SHELBY: Friedman. 17 BOARD MEMBER FRIEDMAN: Here. 18 MS. SHELBY: Parnell. 19 Patrick. 20 BOARD MEMBER PATRICK: Here. 21 MS. SHELBY: Rakow. 22 BOARD MEMBER RAKOW: Here. 23 MS. SHELBY: Riordan. 24 BOARD MEMBER RIORDAN: Here. 25 MS. SHELBY: Roberts. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 2 1 BOARD MEMBER ROBERTS: Here. 2 MS. SHELBY: Silva. 3 Chairman Dunlap. 4 CHAIRMAN DUNLAP: Here. 5 Thank you. I believe Mr. Parnell is going to be 6 joining us a little bit late today, but he should be with us. 7 Good morning. Everybody seems quite chipper today, 8 which is always a good sign. 9 I would like to remind those of you in the audience 10 that would like to testify before the Board to please see the 11 Clerk of the Board, to our left, Ms. Shelby. 12 Some of you may note that Pat is not here. She has 13 an illness in her family that is going to keep her away 14 today. So, we have a fill-in team, who I think is most 15 capable. 16 Please provide 20 copies to them, if you have 17 written materials, then we will make sure that the Board and 18 the staff get those copies. 19 The first Item on the Agenda today is 98-7-1, a 20 Public Meeting to Consider an Informational Report on the 21 Children's Health Study. 22 This Item is a Status Report on the Board's 23 Children's Health Study being conducted by the University of 24 Southern California School of Medicine. 25 This project was initiated in 1991, to begin PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 3 1 addressing concerns regarding the health consequences of 2 long-term exposure of children to air pollution. 3 This landmark study is entering its seventh year of 4 field work. The USC and investigators are following the 5 respiratory health and lung development of school age 6 children living in 12 Southern California communities. 7 Over the past seven years, nearly 5,000 children, 8 with the support of their parents, teachers, schools and 9 school districts have participated in this effort. 10 The staff today will provide us with the report on 11 the project's progress, budget status and early results. 12 So at this point, I would like to ask you, 13 Mr. Kenny, to introduce the Item. 14 MR. KENNY: Thank you, Mr. Chairman, and Members of 15 the Board. 16 The Children's Health Study is the core project of 17 the long-Term Exposure Health Effects Research Program. 18 The goal of the Program is to study the chronic 19 effects of air pollution. Historically air pollution health 20 effects research has focused on acute effects resulting from 21 short-term exposures, that is, exposures that occur over a 22 period of hours or days. 23 As you indicated, Mr. Chairman, this project is 24 entering its seventh year and a lot of progress has been 25 made, including production of two major written reports for PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 4 1 the ARB, and presentation of earlier results at professional 2 meetings. 3 Staff is here today to update the Board on the 4 details of this progress. The project is scheduled to 5 continue for approximately three years after the current 6 contract concludes in October of 1999. 7 We anticipate a proposal for continued funding to 8 be submitted to the Board's Research Screening Committee in 9 December of this year, and if approved, the proposal will be 10 submitted to the Board early next year. 11 With that, I will introduce Helene Margolis, 12 Project Officer and Program Manager for the Long-Term 13 Exposure Health Effects Research Programs. 14 Helene. 15 MS. MARGOLIS: Thank you, Mr. Kenny. Please excuse 16 my voice, it sounds a little peculiar, but it's working. 17 I am here today to update you on the Children's 18 Health Study, which is previously noted as the core project 19 of the Long-Term Exposure Health Effects Research Program. 20 The Program was initiated to address the need for 21 more information on the effects of long-term exposures. 22 These effects may result from repeated acute 23 effects of the short-term, hours, days, high concentration 24 exposures, or they may result from subclinical changes due to 25 long-term, which is the months or years of low to moderate PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 5 1 level exposures, or a combination of both. 2 Most air pollution health effects research had 3 previously focused on acute effects of short-term exposures. 4 The University of Southern California, with 5 Dr. John Peters as the principal investigator, has been 6 contracted with to perform the study. 7 For members of the audience not familiar with the 8 project, I will briefly review the study objectives and 9 design, and then I will discuss the work completed, ongoing 10 activities, the budget status, and finally I will present 11 some early results from the study and future plans. 12 The project objectives, first of all, children were 13 selected to study because of their potential increased 14 vulnerability. They are growing, and especially in 15 California, they may spend long periods of the day outdoors. 16 Based on their potential to cause long-term 17 effects, ozone nitrogen dioxide particulate matter 10 microns 18 or less, and PM 2.5 microns or less, and ambient acids were 19 selected for study. 20 The specific acids include nitric hydrochloric and 21 the organic acids. The objectives of the study are to 22 determine whether long-term exposure to air pollution effects 23 children, causing retarded lung growth, reduced lung growth, 24 or increasing the occurrence of acute respiratory illness, to 25 determine whether the severity, duration and frequency of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 6 1 effects are greater among those most exposed and to determine 2 which pollutants and concentrations cause the effects. 3 The project is comprised of three phases. Phase I, 4 which was a planning phase, was completed in 1992. 5 Phase II, also complete, was a cross-sectional 6 study. That's a study in which one compares groups of 7 individuals at one point in time. 8 Phase II provided baseline data for the 9 Longitudinal Study, which was initiated in 1995. The 10 Longitudinal Study is one where one follows an individual, or 11 groups of individuals, over a period of time, and then you 12 have this prospective data to review and analyze. 13 The children will be followed until their high 14 school graduation in Phase III, which is the Longitudinal 15 Study. 16 It's the more analytically powerful phase of the 17 Study, because each child serves as their own control, and 18 then their rate of development is compared with other 19 children who have different air pollution exposures. 20 Over the course of the project, nearly 5,000 21 children will have been followed. For Phase II, 1,800 fourth 22 graders and 900 each of seventh and tenth graders were 23 enrolled in the Study. 24 Most of the seventh graders are getting ready to 25 graduate high school. In the first year of Phase III, an PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 7 1 additional 1,800 fourth graders were enrolled and continue to 2 be followed. 3 So, we have a combination of the fourth graders 4 that we enrolled originally, plus the additional fourth 5 graders. 6 The children have been recruited from across 1,200 7 communities, including Lompoc, Atascadero and Santa Maria in 8 the north, which serve as our control communities, Alpine and 9 San Diego County in the south, and in between in the South 10 Coast region, Long Beach, San Demas, Lancaster, Mira Loma, 11 Riverside, Lake Elsinor, Upland and Lake Arrowhead. 12 The communities were selected to ensure a range of 13 high and low exposures for each pollutant. 14 Children were recruited through schools. All 15 children in the classroom were asked to participate, and 16 after a lecture on lung function on health and an 17 introduction to the Study, students were asked to bring a 18 comprehensive questionnaire home to their parents to 19 complete. 20 The front page of the questionnaire was a consent 21 form for the parents to sign. In Phase II data for 22 approximately 3,700 children were collected, including 23 baseline medical demographic and residential data, that was 24 collected in 1992, and updates on that information was 25 collected again in fall of 1993 and 1994. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 8 1 Pulmonary function measurements were on all of the 2 children in spring of 1993 and again in 1994. The 3 investigators pilot-tested and implemented an Acute 4 Respiratory Illness Surveillance Program. 5 This proved to be more resource intensive than 6 anticipated, therefore the U.S. EPA Health Effects Research 7 Laboratory split funds of this task with ARB during Phase II 8 and the first year of Phase III. 9 Once parental consent was obtained, the field teams 10 returned to the schools to perform lung function tests, 11 obtain the children's height and weight and to have the 12 children complete activities questionnaires. 13 This photo shows why the project has succeeded. 14 The children are fascinated by the biology. 15 While waiting their turn to perform their lung 16 function test, the children often gather around to assist 17 their classmates with their tests, meanwhile learning from 18 the technician about what the graph on the screen says about 19 lung health. 20 This photo shows a young man performing his lung 21 function test while being coached by the technician. 22 These tests, they take a bit of work for the 23 children, so it is quite a commitment on their part year 24 after year to come and do these. 25 As important as the health assessments are to the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 9 1 success of this project, so is obtaining high quality, time 2 resolved data for the air pollutants being studied. 3 This starts with ambient measurements. To do this, 4 a 12 site ambient air quality monitoring network was 5 established. 6 This involved developing a new sampler to measure 7 PM 2.5 and the acids, establishing five new stations to 8 monitor the air pollutants and upgrading seven existing 9 stations, which all of this is no small feat. 10 During Phase II, oversight of the network was 11 transferred from USC subcontractor to ARB Research Division 12 staff, who continue to manage the network with cooperation 13 and assistance of local air quality management districts and 14 contractors. 15 In addition to the ambient measurements, the 16 project includes an enhanced exposure assessment component, 17 because we know that outdoor air pollution is not the only 18 source of exposure. 19 This is one of the first epidemiology studies to 20 take a comprehensive approach to exposure assessment. 21 Knowledge gained from this Study has contributed 22 significantly to the science of exposure assessment. 23 An effort has been made to refine exposure 24 estimates by measuring indoor and personal ozone exposures. 25 Among the major accomplishments in this area is the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 10 1 development of a timed exposure diffusive sampler, or TEDS, 2 for indoor ozone. 3 This enabled us to measure ozone indoor and 4 outdoors at most of the schools involved in the Study, that's 5 52 schools. 6 Ozone levels inside schools had not been measured 7 prior to this work. An important result of this effort has 8 been the validation of policies that bring the kids indoors 9 doors during smog alerts. 10 Ozone in the classrooms was never more than 40 11 percent of the outdoor levels. In addition, personal ozone 12 samplers developed at the Harvard School of Public Health 13 were field tested in California for this project, and then 14 personal ozone data was collected for a subset of children 15 under three different protocols. 16 Another major accomplishment was the completion of 17 the Residential Substudy sponsored by the ARB's Indoor 18 Program. 19 During this Study, ozone PM 10, PM 2.5 20 formaldehyde and air exchange rates were measured in 125 of 21 the children's homes. 22 This slide just shows the children at play during 23 the pilot-testing of the active personal ozone sampler, and 24 what we had done was we developed little backpacks and it had 25 the active sampler, and the little white badge that you see PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 11 1 hanging below the number that is backwards, is a passive 2 sampler, we compared the results and in this Study the 3 active sampler worked much better, so that was what we used 4 in the three different experiments where we measured the 5 children under different protocols. 6 In conjunction with the health testing and air 7 quality measurements, there is a complete Quality Assurance 8 Program. 9 In addition, a not inconsequential accomplishment, 10 has been the statisticians' efforts to analyze the data. 11 There are many complexities associated with 12 estimating the effects of a single pollutant in the context 13 of multi-pollutant exposures. 14 All of the Phase II activities and results are 15 summarized now in the Phase II final report, published by the 16 ARB a few months ago. 17 I will now briefly discuss some of the Phase II 18 results. This data was based on the 1993 and 1994 data, or 19 these results were based on 1993 and 1994 data, which were 20 used in the Phase II cross-section analyses, and from this 21 the investigators observed that one, lifetime ozone exposure 22 is associated with a statistically significant reduction in 23 pulmonary function in boys. 24 A similar, but non-significant effect occurred in 25 girls. This is consistent with the idea that boys may be at PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 12 1 greater risk of air pollution effects because they tend to 2 play outdoors more and often engaged in more intense 3 exercise, which could increase their potential dose. 4 Another observation was that the size of the ozone 5 effect on lung function tended to be larger in the older 6 children, suggesting that the longer one is exposed to air 7 pollution, the greater the effect. 8 Lifetime ozone exposure is associated with higher 9 rates of acute respiratory illnesses and with longer duration 10 of absences due to those illnesses. 11 Finally, PM 10 was found to be associated with a 12 slightly greater chance of having bronchitis based on 13 questionnaire data. 14 The Longitudinal Study, that is the part of the 15 project during which we followed the same children over time, 16 year after year, is progressing. 17 Phase II involves the same activities as Phase III 18 health assessments, including lung function testing and 19 absence monitoring, exposure assessments, including ambient 20 air quality measurements and exposure modeling, as well as 21 the quality assurance activities related to the health and 22 exposure assessments and data management. 23 All of these tasks are on schedule and progressing 24 very well. The analyses have fallen behind, but are now 25 catching up. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 13 1 I would also like to note that throughout the 2 project, and continuing in Phase III, we have had excellent 3 peer review provided by the Research Screening Committee of 4 ARB, Board Members, Dr. Friedman and Dr. Boston and the USC 5 External Advisory Group, which includes six more 6 distinguished scientists. 7 Phase III is divided into two budget periods. We 8 are still in the first budget period, which was originally 9 scheduled to conclude in November of this year. 10 However, due to delays and analyses and a rate of 11 expenditure less than budgeted, we are in the process of 12 granting a one year, no cost, time extension on the contract. 13 The second budget period will likely overlap the 14 current one by a few months in order to ensure a smooth 15 transition and no breaks in the field operations, which are 16 on a tight schedule. 17 This period will run three to four years. The air 18 quality monitoring network budget is approximately $274,000 19 per year, including contracts with the local air quality 20 districts and a contractor to perform field operations. 21 The ARB Research Division staff oversee the network 22 and compile quality assurance and provide the data to USC. 23 This has realized an annual savings to ARB of 24 approximately $500,000 per year. While discussing the 25 budget, I would also like to acknowledge the U.S. EPA's PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 14 1 Health Effects Research Laboratory and the South Coast Air 2 Quality Management District's contribution of funds to this 3 project, and the in-kind support from the ARB's Monitoring 4 and Laboratory Division and the local air quality management 5 districts also for their in-kind support. 6 I would like to present now some early results from 7 Phase III. These are unpublished, and they were reported at 8 this year's annual meeting of the American Thoracic Society. 9 These analyses use pulmonary function data from 10 five years, 1993 through 1997, and interestingly, when the 11 effect on lung function, all of the pollutants were evaluated 12 together, annual average NO 2 two stood out as significantly 13 reducing lung function as measured by forced expiratory 14 volume, abbreviated, REV 1, this can be used as a general 15 measure of lung health. 16 When they were evaluated individually, all NO 2, 17 PM 10 and PM 2.5, as well as nitric acid, also caused a 18 significant detriment in lung function, but when they were 19 put into the model together only NO 2 stood out. 20 This graph shows this effect in seventh grade 21 girls. Let me briefly explain what you see in this graph. 22 First of all, the zero can be interpreted as the 23 average growth rate across all of the communities after 24 taking into account all the information on individual 25 children, it has become what they call a standardized PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 15 1 measure. 2 Then each point represents how far a specific 3 community differs from the average growth rate. So, the 4 points above the horizontal zero line represent faster than 5 average growth. The points below the zero line represent 6 lower than average growth. 7 The key thing to observe is the pattern that the 8 dots reveal. When nitrogen dioxide is at the lowest levels, 9 lung growth is greatest and vice versa. 10 The little R in the box of -.71, that is a 11 statistical way of just saying how strong this relationship 12 is, and an R of .71 is considered fairly strong, and the 13 little P indicates the significance level, and that is of 14 highly significant value. 15 Not only was this effect seen in the seventh grade 16 girls, but it was seen across all the fourth graders, both 17 the boys and the girls. 18 Among the fourth graders, the difference between 19 communities that had the fastest or slowest lung growth among 20 their children was about 50 milliliters lung volume per year. 21 Well, when you add this up over ten years, the 22 investigators considered this as a potentially significant 23 effect in terms of long-term health, but it is not known why 24 in these analyses ozone was not significantly associated with 25 these effects, even though we had seen such an effect in the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 16 1 cross-sectional. 2 It's possible that NO 2 is acting as a surrogate 3 for pollution in general, and then as a surrogate it is 4 statistically absorbing the effects of ozone. 5 These results highlight the need for additional 6 research on the effects of oxides of nitrogen, such as the 7 proposal that you have before you today in the research 8 resolutions. 9 It is also not known whether the children 10 experiencing slower lung function eventually catch up and 11 reach their full lung function potential. 12 The additional data collected over the next few 13 years is expected to shed light on these and other questions. 14 As I indicated earlier, Phase III is divided into 15 two periods, the schedule for considering and implementing 16 the second one, referred to as Phase III B, is as follows. 17 Based on the results from Phase III A, a final 18 scope of work will be developed and reviewed by ARB staff and 19 outside peer reviewers. 20 The technical and cost proposals will then be 21 submitted to the Research Screening Committee for their 22 review in approximately November of this year, 1998, and 23 pending their approval, the proposal will be submitted to the 24 Board early in 1999. 25 This schedule will allow for the long lead-time PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 17 1 necessary to get a contract in place and thus ensure smooth 2 transition into the next phase of this important public 3 health research. 4 On that note, I will conclude by showing the next 5 slide, which I use as a reminder of why children are 6 especially at risk of air pollution effects and why our 7 commitment to this project is so very important. 8 Thank you for your attention, and I will be happy 9 to answer any questions you may have. 10 CHAIRMAN DUNLAP: Thank you. 11 Any there any questions that the Board has of 12 staff? 13 BOARD MEMBER EDGERTON: I do. 14 CHAIRMAN DUNLAP: Yes, Ms. Edgerton. 15 BOARD MEMBER EDGERTON: Helene, you continue to do 16 a wonderful job. Thank you, so much. 17 I was interrupted during the midst of the seventh 18 graders with the NO 2 chart, could you just review that, this 19 is the 1993 to 1997 annual average NO 2, significantly 20 reducing lung function, could you just do that again for me? 21 MS. MARGOLIS: I would be happy to. 22 BOARD MEMBER EDGERTON: It seemed to me very much 23 the heart of this. 24 MS. MARGOLIS: It is the heart of it, but I do 25 emphasize its preliminary results, or early results, and what PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 18 1 it basically, the way one would look at this is that 2 statistically we have standardized, what you have to do is 3 consider all the children's different factors, what their 4 personal exposures are, what their health status is, and then 5 within that you have to consider all the factors that are 6 related to the communities. 7 So, the investigators create this standardized 8 measure of lung function, and this is a fairly common 9 statistical approach, so you are eliminating some of the 10 things that could cause noise. 11 BOARD MEMBER EDGERTON: But the zero there for, 12 what I understood is in a community that wouldn't have any 13 air pollution, for example, how children's lungs would grow. 14 MS. MARGOLIS: No, actually the way to look at it 15 is that is the average across all of the communities, so it 16 says, if I take the highest exposure community and the lowest 17 exposure community, and the highest in this case it is 18 actually if I take the highest lung function community and I 19 take my lowest lung function community and I average across 20 all of the communities, that gives me my zero. 21 BOARD MEMBER EDGERTON: So, if I understand you 22 right, that is not -- so that's not even the best. 23 That is just the average which is normalized. 24 MS. MARGOLIS: What each point above or below that 25 line says, is the deviation of a given community from the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 19 1 average. 2 So, if it is above the average, in this case if 3 lung function is above the average it ends up higher and if 4 it's below the average, it goes below the zero line. 5 Well, the pattern here that those dots form, they 6 could have formed any pattern on this plot, but the pattern 7 that they form is that the highest lung function communities 8 tend to be where the lowest NO 2 was, and the lowest lung 9 function communities tend to be where the highest NO 2 was. 10 So, when they actually did this, and the 11 statistical measure they used is this correlation 12 co-efficient, the R, the little R, which says that there is 13 an inverse relationship, and the thing to note here is the 14 maximum number that R could equal is a one, so the a .71 is a 15 pretty high number for this measure, this statistical 16 measure. 17 What this is saying is that this is a pretty strong 18 relationship to see, and that the relationship is such that 19 the higher the NO 2 is, the lower the lung function. 20 BOARD MEMBER EDGERTON: So, may I ask, for example, 21 are all of the dots on this representing locales in 22 California? 23 MS. MARGOLIS: They are the 12 study communities 24 that we have used, and in anticipation of that question, I 25 did a little bit of looking at what our rankings were for the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 20 1 NO 2, and I don't know the exact, in terms of, for this 2 particular plot, because Dr. Peters, you know, had given it 3 to me, but based on our rankings of NO 2, those communities 4 with the lowest levels of NO 2 were Lake Elsinore, Lancaster, 5 Atascadero, Alpine, Santa Maria and Lompoc, which were the 6 very lowest and which are control communities, and Lake 7 Arrowhead. 8 Then, among the highest communities, not 9 unexpectedly, was San Demas, Uplands and Long Beach. 10 These are also the communities that tend to have 11 the other pollutants fairly high. The PM is particularly 12 high in the San Demas, Mira Loma, Uplands areas. 13 So, basically, it is not, I mean it is consistent, 14 you know, with the numbers that we have been seeing, but I 15 think that answers your question, I hope. 16 BOARD MEMBER EDGERTON: It does. I just wanted to 17 follow-up a little bit. 18 Let's look at the, for example, on the far right, 19 the last point, which is showing a minus 13. 20 MS. MARGOLIS: Okay. 21 BOARD MEMBER EDGERTON: If I understand correctly, 22 that's probably where San Demas, or Long Beach would be? 23 MS. MARGOLIS: Well, it could be. 24 Let's see. It would be more likely in the Uplands 25 area. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 21 1 BOARD MEMBER EDGERTON: Well, then there is the one 2 down there that's minus 25. 3 Maybe that's San Demas. 4 MS. MARGOLIS: Well, you know, I'll tell you, I 5 couldn't even begin to conjecture, because I wasn't at the 6 actual analysis when the statisticians were doing this, but 7 basically what I have given you here are the highest and 8 lowest ranking communities in terms of what we have seen, and 9 when I summarize the data for NO 2, and over the years those 10 are pretty much the same rankings, and, in fact, I did ask 11 Dr. Peters if he could tell me exactly which communities they 12 were, and he didn't have enough time to get back to me on 13 that. 14 CHAIRMAN DUNLAP: Lynn, if I might, I want to go 15 around to some of the other Board Members, and Lynn, if you 16 want to do a follow-up, you are welcome to do more detail. 17 By the way, I want to compliment you on your 18 overview. I know that you are trying to hit as many of these 19 points broadly to give us a feel, because it's obviously in 20 its earlier stages, the work is not complete, though I am 21 getting nervous hearing Uplands thrown around a lot, because 22 that's where I am from, and having grown up there I am very 23 interested. 24 Ms. Rakow, and then Dr. Friedman. 25 BOARD MEMBER RAKOW: How are the study areas PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 22 1 chosen? 2 MS. MARGOLIS: We compiled data, when we bring this 3 one year planning phase, we had compiled the data from all of 4 the California monitoring sites, all the historical sites, 5 and we developed a ranking for the four pollutants we were 6 most interested in, which were the ozone, PM, nitrogen 7 dioxide and then what acid data we had available. 8 Then based on that ranking, we pick a matrix of 9 exposures where each community had its own little 10 characteristics of high and low of each of those pollutants 11 with the idea of trying to find at least one community with 12 the high of one and low of everything, and then low 13 communities, that doesn't exist, but that was the goal, and 14 so there is a gradation. 15 So, that was the first basis, and then we ranked 16 those communities, and then we looked for communities that 17 had stable pollutions based on 1990 demographics. 18 The idea there is if you are trying to do a 10 year 19 study, you need to be able to follow the same children. 20 So, by finding communities that were more stable, 21 ensured a better rate of follow-up, and, in fact, we have 22 done extraordinarily well. We have had less than a 10 23 percent loss to follow-up, and often times, which really is 24 kind of challenging, is we can tract them to other one's of 25 our communities, and they stay in our Study, and so that has PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 23 1 been the basis of the decision. 2 BOARD MEMBER RAKOW: There would be air monitoring 3 situation before an area would be able to get into the Study. 4 MS. MARGOLIS: That was part of it. 5 It ended actually, though, because some of these 6 communities when we went in and asked the school boards 7 whether we could utilize their schools, they had, like we had 8 first chosen Santa Barbara, but they had so many studies 9 going on there through San Luis Obispo, they said they 10 couldn't burden their schools, so we had to move to a 11 neighboring community, and so in that case we ended up, 12 because there was not a monitoring station in the neighboring 13 community, but we had reason to believe based on other 14 monitoring sites that that would be non-polluted, or a low 15 pollution community, we would set up a site there, so 5 of 16 the 12 sites were brand new. 17 BOARD MEMBER RAKOW: There is an area in San 18 Francisco that is undertaking a study from external factors 19 that the children are more subject to asthma and bronchitis 20 and respiratory diseases, and there has been no actual 21 scientific study in this area to prove or disprove whether 22 these external factors had something to do with the very high 23 incidents, and they would be a great subject for this. 24 MS. MARGOLIS: I think throughout the State there 25 are a number of pollutions that are of concern that we just PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 24 1 don't have the resources to look at all of them. 2 I know that just reading the newspaper every day, I 3 see a community that I would like to go in and assess the 4 health. 5 CHAIRMAN DUNLAP: Thank you. Dr. Friedman. 6 BOARD MEMBER FRIEDMAN: This Study has the 7 potential to be an authentically landmark investigation. 8 The important part of the Study is the Study that 9 is starting now, which is the Longitudinal portion of the 10 Study. 11 The Phase II, of the ice pick view of the 12 population, has some provocative findings, but you cannot 13 hang your hat and create health or air policy based on that 14 portion of the Study. 15 The logistics to do this are extraordinary. It is 16 not unlike the arrangements for D-day. 17 You have very complex issues, complex questions, 18 shifting populations and growing children. 19 I really enjoyed participating as, not as a 20 participant so much, but as an observer, watching the group 21 and their advisors, their external advisory board, and it is 22 slow, and they are a little behind, but there are a lot of 23 reasons for that, but I think they have now been sufficiently 24 motivated to get back on a time track, and I really think 25 that this may indeed be a terribly important study of great PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 25 1 national, and probably international significance, once 2 finished. 3 MS. MARGOLIS: Thank you, Dr. Friedman. 4 CHAIRMAN DUNLAP: Any other questions? 5 Yeah, Lynn, I would like to keep it fairly general, 6 if you don't mind. 7 BOARD MEMBER EDGERTON: Yes, I wanted to ask Dr. 8 Friedman, in your view, what are the areas that will make the 9 most difference, what do you think the greatest contribution 10 of the report will be, because I have great respect for your 11 opinion? 12 BOARD MEMBER FRIEDMAN: It will be the only 13 prospective study about which the influence of components of 14 the air environment may even be able to be dissected with 15 respect to the influence on lung function, lung growth, rates 16 of illness, what Sally was just talking about a moment ago 17 may, in fact, come out of this study just by virtue of the 18 larger numbers of people involved, and so there may be some 19 statistical significance, and there is enough information 20 relative to the environments in these 12 communities that 21 some of the guesswork will be removed. 22 There are always going to be problems in studies of 23 this complexity, in terms of interpretation. You start a 24 study ten years ago and you think you know what to study, and 25 six years down the pipe someone makes a new discovery and you PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 26 1 couldn't have factored it in, I mean, some things may be 2 missed, or need to be studied further beyond the study. 3 But this is the first, to my knowledge. I don't 4 think that anyone has done this before, and until it is done 5 epidemiologically with hard numbers, not by reviewing past 6 studies, there will always be a whole host of nay sayers 7 about us trying to do our job of cleaning up the air. 8 So, I am very hopeful that the results are going to 9 be of great significance healthwise, politically, and so 10 forth. 11 BOARD MEMBER EDGERTON: Thank you, very much. 12 One of the things that is most controversial and 13 alarming about material that comes out on air pollution and 14 the effect on health is the likelihood of shortened life 15 spans, and I wonder whether -- and, of course, another thing 16 is that's related to aging, premature aging, or if you are 17 living in Los Angeles, you are really 10 years older than 18 your age because of the air. 19 Is that how you get to lung function? 20 CHAIRMAN DUNLAP: Ron is agreeing with you. He is 21 promoting San Diego with that thought. 22 You look a lot younger in San Diego. 23 BOARD MEMBER ROBERTS: I thought it was 12 years. 24 BOARD MEMBER EDGERTON: I just want to ask whether 25 this is related, whether there are implications for these PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 27 1 children's life spans, mortality or morbidity? 2 BOARD MEMBER FRIEDMAN: There's no way to know 3 that. 4 MS. MARGOLIS: On this Study we don't know, because 5 we are not following them through the end of their lives, 6 which probably means my life will be longer. 7 But essentially, there's other studies, if you take 8 the body of evidence, we know that as you get older, and once 9 you hit one number, once you hit your thirties there is a 10 natural decline in lung function with aging. 11 Whether this is noticeable to an individual depends 12 upon their lifestyle, etcetera, but if a child's lung growth 13 potential is not maximized, then you are entering your 14 thirties with less lung capacity. 15 So, theoretically, any of the natural aging that 16 occurs you are a little bit set-back, and how much you are 17 set-back, we don't know. 18 BOARD MEMBER EDGERTON: So, I guess the Chairman 19 should be scheduling more of our meetings in San Diego. 20 CHAIRMAN DUNLAP: That may be. 21 BOARD MEMBER EDGERTON: Or the Bay Area. 22 CHAIRMAN DUNLAP: Yes. Thank you, very much. 23 If there are no other questions of staff, we will 24 move on. 25 Are there any letters that need to be read? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 28 1 Does anybody have any comments? 2 DR. HOLMES: We have no written comments. 3 CHAIRMAN DUNLAP: All right. Very good. 4 Thank you, again, for this overview. This, not 5 only, as I think Dr. Friedman said well, not only is this 6 meaningful to the long-term and it's going to be, certainly, 7 a benchmark work, it is important for us to know about how it 8 is going, and that's why it was important for you to present 9 it to us. 10 There is a lot of money being expended on this. I 11 can remember, I think I was Chairman for a very short time 12 when this Item came for a second Phase funding, I was pretty 13 nervous about the big dollars associated with it, but I'm 14 glad to know that it's on track and that you guys are 15 watching the fiscal as well as the actual work product, so 16 thank you for that. 17 Mr. Kenny, anything else you want to add? 18 MR. KENNY: Nothing else. 19 CHAIRMAN DUNLAP: All right. Thank you, again. 20 We will move to the next Item. The next Item is 21 98-7-2, a Public Meeting to Consider an Informational Report 22 on the Innovative Clean Air Technology Program. 23 This is the fourth year for this effort, which 24 supports technologies that not only have high potential for 25 improving air quality in our State, but also offer great PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 29 1 promise for stimulating the State's economy through 2 significant commercialization opportunities. 3 Today we do not have any proposals that are being 4 recommended for the Board's consideration. Instead staff 5 will present an overview of the Program, and also three ICAT 6 contractors are here today to discuss their projects. 7 This, to give the Board some context, it has been 8 some while since we have talked of this, it is a relatively 9 small amount of money, it's about a million dollars a year, 10 and staff has gone through an exercise as it relates to 11 finding folks that would be likely to be able to make use of 12 this funding. 13 I have been very pleased with the work, and only 14 wished that we had more money to be able to put towards this 15 effort. 16 With that, Mr. Kenny, would you introduce this Item 17 for the Board? 18 MR. KENNY: Yes. 19 Thank you, Mr. Chairman, and Members of the Board. 20 As Mr. Chairman has indicated, we will be discussing the 21 status of the ICAT Program. 22 This Program provides seed money for projects to 23 move from the research and development phase to the 24 commercialization phase. 25 Let me point out that to be eligible for PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 30 1 consideration under this Program, proponents must commit 2 significant resources of their own, and may need to also show 3 resource commitments from outside sources. 4 An administrative change in March affected our ICAT 5 solicitations process when the Department of General Services 6 issued a notice to remove the statutory requirements for 7 participation goals of minority and women business 8 enterprises. 9 This action by the Department of General Services 10 resulted in our cancelling the ICAT solicitation for this 11 fiscal year. 12 Our May 1998 solicitation reflected the new 13 Administration requirements. In response to our May 14 solicitation, we received 42 preproposals. 15 Staff will request final proposals from the 16 applicants that passed the preproposals screening stage. 17 Later this year staff will recommend some of these 18 ICAT proposals to the Board for funding. 19 With that, I would like to turn the presentation 20 over to Tony Andreoni, ICAT Program Manager, from the 21 Research Division. 22 Tony. 23 MR. ANDREONI: Thank you, Mr. Kenny. Good morning, 24 Chairman Dunlap, and Members of the Board. 25 This presentation will provide an update of the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 31 1 ICAT Program. First, I will briefly discuss the Program, and 2 second I will discuss the status of the Program, and finally, 3 I will introduce three speakers who will discuss their 4 respective projects. 5 The ICAT Program provides funds to promote the 6 development of air pollution prevention and control 7 technologies. 8 As shown on the slide, projects must increase the 9 efficiency of existing air pollution prevention and control 10 technologies, increase their cost effectiveness, or develop 11 new cost effective alternatives. 12 These projects must also have the potential for 13 creating jobs here in California. 14 ICAT funding must be used for projects in either 15 the pilot prototype, or application demonstration stages. 16 Most technology development funding available in 17 U.S. is for basic research, or for commercialization after 18 full demonstration shown by steps one, two and six on this 19 slide. 20 Once through the first two stages, however, some 21 projects die for a lack of funding, while other's may 22 eventually be commercialized by foreign companies. 23 Projects in steps three, four and five, shown on 24 the slide, fall into what we refer to as the "valley of 25 death." PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 32 1 ICAT funds help California businesses bridge this 2 "valley of death." 3 ICAT provides funding for up to 50 percent of the 4 project's total cost. The applicant and any partners share 5 the remaining cost. 6 This year, CAT funding is limited to a maximum of 7 $350,000 per project. The ICAT Request for Proposals, or 8 RFP, provides specific rates, or limits on cost. 9 Also, the contractor must explicitly justify all 10 proposed costs. These stringent requirements help assure us 11 that companies will move toward technology commercialization, 12 thereby enabling them to recover their expenses and make a 13 profit. 14 ICAT proposals are not only evaluated by ARB staff, 15 an advisory committee consisting of business and technical 16 reviewers from both the private sector and State 17 Universities, provides an evaluation to the ARB staff. 18 In addition, the South Coast Air Quality Management 19 District and the California Energy Commission will have an 20 opportunity to review ICAT proposals. 21 Now I will discuss the status of the ICAT Program. 22 Four months ago, the Research Division reissued the ICAT RFP. 23 From this solicitation, we received 42 preproposals 24 to review, and we intend to present ICAT resolutions to you 25 later this year. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 33 1 For 1998, we increased outreach efforts by 2 attending public workshops held by other State agencies, and 3 by attending conferences and meetings statewide. 4 We also expanded our mailing list. Due to the 5 increase in use of the Internet, we expanded our ICAT webpage 6 to provide additional information. 7 Results from this expansion show an increase in the 8 number of visitors who logged on. In the entire year of 9 1997, the ICAT Website had close to 300 visitors. 10 So far this year, the ICAT Website has had more 11 than 700 visitors. 12 As mentioned earlier, we are coordinating with the 13 California Energy Commission and will continue to work 14 closely with the Transportation Energy Technologies 15 Advancement Program. 16 As with previous ICAT proposal solicitations, we 17 plan to provide a bidders workshop prior to the proposal due 18 date. 19 We are aware of the bidder's cost and time 20 associated with writing and submitting project proposals. 21 This is why we begin the solicitation process by 22 requesting brief preproposals. The workshop will help 23 applicants obtain useful information before submitting a full 24 proposal, such as matching fund requirements and 25 confidentiality provisions. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 34 1 Finally, I would like to mention that the ICAT 2 Program is currently funding 11 projects, and we will present 3 several new projects to you later this year. 4 These projects are both in the Mobile Source and 5 Stationary Source areas. Last year two ICAT contractors 6 provided you brief overviews of their projects. 7 PKM presented preliminary results on their 8 two-stroke electronic fuel-injection system for utility gas 9 engines. 10 Ultramet provided a review of their camera support 11 material, made from a silicon carbide foam. Today I have 12 scheduled three contractors to provide you brief overviews of 13 their projects. 14 They are here to represent CHA Corporation, COEN 15 Company and AeroViroment Environmental Services. They have 16 completed their respective projects and will begin marketing 17 their products. 18 First, Tony Carlisle, from CHA Corporation, will 19 discuss their development of the CHA process, a process 20 designed to reduce NOx emissions from small stationary diesel 21 engines. 22 CHA is just beginning the commercialization phase 23 after demonstrating their technology at McClellan Air Force 24 Base, in Sacramento. 25 Mr. Carlisle has a Masters Degree in Chemistry, and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 35 1 has been the Research and Development Manager for CHA since 2 1992. 3 MR. CARLISLE: Good morning. I want to share with 4 you the development work that we were successfully completed 5 under the ICAT Program. 6 Specifically, we were interested in cleaning the 7 exhaust gas from diesel engines. Also, I'm from Laramie, 8 Wyoming, so I wanted to share some Wyoming scenery with you. 9 This is just south of the Bridger-Teton Mountains in the 10 Bridger-Teton National Forest, but anyway, I thought you 11 would enjoy that. 12 The title of our project, I'm sorry it's so long, 13 is the Prototype Demonstration of CHA NOx Removal System for 14 Treatment of Stationary Diesel Engine Exhaust of Gas. 15 In 1996, when we proposed to ICAT to develop a 16 technology that we had, we had proven the concept on a very 17 small scale in the laboratories in Laramie, but we didn't 18 have the funding necessary to take the next step to build a 19 prototype device. 20 ICAT offered that possibility to us and they were 21 willing to share those cost, and we were successful in our 22 proposal in October of 1996. 23 The project lasted 18 months. We just submitted 24 the draft final report last month. 25 The total project cost was $425,000, as you see on PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 36 1 the slide, with some additional numbers. The ICAT portion 2 was about $212,676. 3 CHA paid $192,000 in cash in the development. 4 McClellan Air Force Base, Gerling Engineering, through 5 engineering support, that's in California, and the Sacramento 6 Municipal Utility District, in kind helped us with $13,000, 7 Gerling was about $21,000 and McClellan was $28,000. 8 So, they became our partners, our California based 9 partners to develop this process idea that have been proven 10 on a lab scale to a prototype size to be able to treat 11 exhaust gases from the diesel engine, specifically diesel 12 engines that are driving electrical generators. 13 The pollutants that come from diesel engines, NOx, 14 these are any oxides of nitrogen, I heard discussions this 15 morning, also organic compounds called VOCs, carbon monoxide 16 and the nice black cloud that comes out of the back of a bus, 17 soot. 18 Our process set out to remove all of these 19 pollutants as we scaled up. The objectives were to design a 20 prototype. 21 We were working with very small gas flows and a 22 small one inch glass tube that worked beautifully, but we 23 needed to take this to a scale to accommodate about a 35,000 24 watt electrical generator set powered by say a four cylinder 25 diesel engine. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 37 1 So, we designed and built the system and ran into 2 several operational problems. We rebuilt the system more 3 times than I can count and that is what we call develop, that 4 is when you scrap and start over. 5 Last March, we brought the device out to McClellan 6 Air Force Base, part of their sharing as a partner was to 7 provide the engine and a facility to set up our prototype 8 device and test it. 9 So, we got to go from freezing Wyoming in March to 10 nice Sacramento, it was great, to demonstrate this device. 11 So, ICAT provide a means for a small company like 12 CHA. CHA has eight engineers, and we have the boss's wife, 13 who pays the bills, but she doesn't have the engineering 14 degree, we will count her as nine, but we are indeed a small 15 company in a small town and it is difficult for us to reach 16 out to the world with these ideas. 17 Now, the process flow diagram that technical folks 18 can't resist in pouring these things on you, but let me 19 assure that it is quite simple. 20 The process is based on carbon absorbing the 21 pollutants. This is NOx and volatile organic compounds that 22 are produced by the combustion process of the diesel engine. 23 Carbon has been known for centuries to absorb 24 pollutants, but the problem is, what do you do with the 25 carbon after it has been exposed to these pollutants? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 38 1 Our idea is to transfer the carbon to a 2 regeneration device that uses microwave energy identical to 3 the microwave energy that you use to heat up food in your 4 kitchen in a microwave oven, expose the carbon to microwaves, 5 which destroys the pollutants that were absorbed and the 6 carbon is transferred back to the absorber and reused in a 7 cyclic fashion. 8 The soot is removed by a filter, a ceramic based 9 filter that is regenerated using microwave energy, because 10 carbon absorbs microwave energy very well, it becomes quite 11 hot and we use it to ignite the soot that is accumulated on 12 the ceramic filter after it becomes loaded with soot. 13 The McClellan facility that we visited last March 14 and set up in was their diesel engine repair shop. 15 It was a large building that was used to test jet 16 engines, so the walls were lined with this soft cellulose 17 material, it was quite sooty in there and it didn't hold up 18 well to our photography, but the best shots that we were able 19 to take in this dungeon-like environment were the one's 20 before you. 21 The system, there it is, this is the main system, 22 these two sections here, the test engine is sitting just 23 adjacent, and we simply set a temporary pipe into our device 24 from this diesel engine driven electrical generator, which 25 was loaded by connecting a large heater to the generator to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 39 1 produce NOx, and we passed the exhaust gas through the device 2 and monitored the NOx coming out to see if we actually 3 removing the pollutants that we designed to remove. 4 There is a PC that's running the system because 5 there are valves to be opened and closed, and vacuum transfer 6 devices to be operated during the process. 7 We were visited by several folks. Bob Guffie and I 8 came out and set up the system, and we had a great time, 9 setting it up there, and the McClellan folks just treated us 10 like special guests. 11 In spite of the kind of dungeon-like building that 12 they gave us to work in, it was very warm and friendly folks 13 over there. So they were an outstanding partner in providing 14 a place for us to set up and show what we could do with these 15 diesel exhaust gases. 16 We were visited by 36 or 37 people from various 17 organizations, and I was able to, we had to turn the engine 18 off because you couldn't hear a single word in that room 19 until we turned the engine off, and then I was able to 20 discuss what we were actually doing and what was taking 21 place, and then we started the engine and showed the analysis 22 of the gas going into our device and then leaving our device. 23 What we managed to accomplish during this project 24 is in the demonstration -- by the way, we did remove 100 25 percent of the NOx throughout the entire week that we ran the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 40 1 engine through the device, and we removed all the VOCs, and 2 we promised 90 percent, so I put 90 percent in the slide 3 trying to be modest, and we continuously removed 80 percent 4 of the soot, and we successfully demonstrated it at 5 McClellan. 6 Coming to California and using this device and 7 drawing the attention of several folks immediately generated 8 a second demonstration that we will start on next month at 9 McClellan for cleaning up the vapors coming from the soil 10 vapor extraction process that is going on at McClellan, the 11 identical system which we have not scrapped by any means, it 12 is still operating in our laboratories, the same technology 13 applies beautifully to remove the pollutants that are being 14 pulled out of the ground by air extraction, and in destroying 15 those pollutants using microwave energy, because now they are 16 using carbon, but the carbon has to be hauled away from the 17 site and that is quite expensive. 18 So, the hope is that this system will replace the 19 carbon beds being used and the carbon won't have to leave the 20 base and it can stay right there and it will have a much 21 longer life. 22 We anticipate the life of the carbon to be in the 23 range of five years, rather than one month. The only 24 limitation is that the carbon does slowly grind up and we 25 would lose some attrition losses in the process. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 41 1 So, we are now working with one of the contractors 2 at McClellan. We have entered a contract with them just last 3 week, and the demonstration takes place this fall, possibly 4 winter, we are hoping for winter so I can come to Sacramento 5 rather than spend my days in Laramie, and demonstrate the 6 technology, and they are talking, or they are saying that if 7 the process works they would like to immediately go to a full 8 scale commercial. 9 I get a little lump in my throat when I say that 10 because it is incredible how a small company can accomplish 11 this much in the course of two years and it's through the 12 ICAT help that we have been able to do this. 13 The future plans that I spoke of, the soil vapor 14 extraction partnership, and we did meet a company that works 15 in California, Filtration Media Group, and they want to 16 license the technology to market for us, and this would be a 17 nonexclusive licence, but they want to start finding more 18 companies that need to use this base technology for cleaning 19 up all kinds of gaseous effluence. 20 I don't want to miss an opportunity to thank you, 21 the ICAT Program, which is essential to us, and we are very 22 appreciative. 23 Also, our partners, the SMUD partners, McClellan 24 and Gerling Applied Engineering, very supportive and we 25 became good friends throughout the project and went the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 42 1 distance year and a half and they were there every time and 2 they helped all the way. 3 Of course, the ICAT folks who were a part of this, 4 we talked to them all the time, and they gave us guidance and 5 encouragement throughout the whole project. 6 I would like to stand here and thank you 7 personally. 8 MR. ANDREONI: Our second speaker is from Coen 9 Company, will provide you with an overview of their project. 10 Coen is using the ICAT funding to go develop an 11 ultra-low NOx gas fired burner to address a large market 12 sector of industrial burners in California. 13 Coen is beginning the demonstration phase of the 14 ICAT Project, a State operated heating and cooling plant 15 located in downtown Sacramento. 16 Dr. Drennan received his Ph.D. in Mechanical 17 Engineering and has been the Business Development Manager for 18 Coen since 1994. 19 MR. DRENNAN: Thank you, Tony. Good morning. 20 It is certainly a pleasure to be here. Coen 21 Company is a manufacturer of industrial burners and burner 22 equipment for boilers, furnaces, air heaters, duct burners 23 and things like that. 24 We have been associated with this ICAT Program now 25 for about three years, and I have found it a very beneficial PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 43 1 association, it's helped us greatly. 2 I am the principal investigator on the project. 3 There's about 50 other people at Coen Company that are 4 involved in the project, and also people at the other of our 5 partners that are given credit, as well. 6 The slide slows shows the project organization. 7 The total project funding right now is running about $2.75 8 million. 9 I have good news, that three days ago it was up by 10 about another $500,000 by the Gas Research Institute, SoCal 11 Gas and Coen Company added another host site. 12 The current break-down that we were at three days 13 ago is shown up there with the ARB ICAT funds at about 14 $195,000. 15 Subcontractors, our partners with us on the project 16 are Arcadis Geraghty and Miller, and UC Irvine Combustion 17 Laboratory, my Alma Mater. 18 By way of introduction, the bottomline is the 19 California ultra-low NOx market, while it does exist and it 20 is there and it is thriving, it is just not large enough to 21 justify the expense that we need to go through to develop 22 this technology, and that's where ICAT funding comes in. 23 The simple way to explain it is there are, while 24 the entire Southern California and other places in California 25 are ultra-low NOx markets, that revenue that we would PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 44 1 generate from burner sales that's available down there does 2 not justify the quantity of funding that I showed on this 3 project. It equals about two times our annual corporate 4 profit before taxes, and I might lose my job if I wanted to 5 spend all that to develop one product, and that is really 6 where ICAT funding comes in. 7 I was amazed at the presentation that I saw this 8 morning about the connection between NO 2 and health effects, 9 and lung effects, and I think that is really where this 10 project focuses on, is ultra-low NOx burner technology. 11 It provides significant cost and environmental 12 advantages, and as you can see, it also provides significant 13 potential health effect mitigation by reducing NOx. 14 We are currently, Coen is currently entering its 15 third year of ultra-low NOx burner development testing. 16 Why is the ICAT funding needed? 17 As I mentioned here before, Coen is just not large 18 enough to undertake this project without external assistance, 19 that is why we went to the Gas Research Institute and 20 Southern California Gas to help us, and that's where ICAT 21 falls in. 22 There is a key factor in our original program that 23 was not being looked at, a key commercialization issue, and 24 that was looking at the use of air preheat on boilers. 25 Anybody familiar with NOx formation recognizes that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 45 1 NOx formation goes up with temperature, if you have higher 2 air preheat, you have much more NOx, while air preheat does 3 add a lot of efficiency improvements. 4 So, specifically, the ICAT projects helped look at 5 the issue of air preheat, and it also has some additional 6 benefits in helping us secure a proper host site for field 7 demonstrations and technology, and I also mentioned later on 8 how it helps in commercialization, as well. 9 What are our objectives? 10 Well, we have to produce burners that are 11 commercially viable for industrial steam generation. 12 They have to work when you turn them on. They have 13 to stay on. When you turn them off, they have to stay off, 14 and in between they have to work well. 15 In addition to doing that, those things that I call 16 operational requirements, there are many emission 17 requirements. 18 Specifically, the GRI Program that we started is 19 looking at meeting five PPM NOx without air preheat, and the 20 ICAT Program was added to look at nine PPM NOx with 600 21 degrees farenheit air preheat. 22 While meeting those NOx targets, we still had to 23 meet CO and low hydrocarbon emissions, as well. 24 By way of background and our approach, we 25 experimentally achieved about two years ago a single digit PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 46 1 performance on these burners in our test facility in 2 Burlington. 3 The initial burner designs that we have are 4 susceptible to pulsation, rumble, blow-out or lift-off, 5 essentially they were unsafe and we refused to sell them at 6 that time. 7 So, we started working on two completely different 8 paths. We wanted to improve the burners performance, that is 9 to essentially improve the stability of the burner, and we 10 worked over the last two years to do that. 11 That stability, meaning the flame stays on when we 12 want it to stay on, and then turn-down, which is the low 13 fired high firing range of the burner. 14 In addition to trying to improve the burners 15 performance, we went into an advanced control system that we 16 have developed for active and dynamic control, or are 17 developing, that's required, and I will mention that later 18 on. 19 This is a little bit of a complicated slide, but it 20 tells an awful lot of things that are going on with our, it's 21 basically a snapshot of what is happening with this burner. 22 It's a little bit of a spin on a classic combustion 23 stability limit, for burner designer's, we live off of these 24 things. 25 Down here at the bottom, you have air to fuel PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 47 1 stoichiometric ratio, or increasing amount of excess air as 2 you move toward the right. 3 The vertical access is flux gas recirculation 4 quantity. One of the common techniques to reduce thermal NOx 5 formation is to suck some of the flux gas that goes up the 6 stack to bring it back in through the burner, it reduces the 7 oxygen level and lowers flame temperatures, thereby lowering 8 NOx. 9 The typical burner stability loop is limited by 10 what is called a lean-extension limit that is limited by this 11 line right here. 12 This vertical line indicates where the CO starts 13 getting too high. These numbers here in the field of 14 operation, or the actual burner stability, indicate what the 15 NOx numbers are at different levels of flux gas recirculation 16 and excess air. 17 Most people like to operate their boilers with 18 three percent excess air, or three percent O-2, or 15 percent 19 excess air, and that is kind of indicated by this box up 20 here. 21 That box illustrating the range of operation where 22 NOx is actually in compliance at less than five PPM. 23 The burner is stable and it will remain stable, but 24 it has to dance within that box, that entire operation of the 25 burner has to remain within that box to remain compliant. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 48 1 This red line up here indicates where stability 2 actually starts to come into play. We have done great 3 strides in improving stability of the burner, but as you can 4 tell, this box of required operation is actually very close 5 to the stability limit of the burner and that requires great 6 control sensitivity. 7 Now, let's talk about some of the fun things we 8 have coming up. We are about ready to go into our field 9 demonstration site. 10 We were lucky enough to secure the Sacramento 11 General Heating and Cooling Plant. It's about a mile away 12 from here. 13 I don't think it provides heating and cooling for 14 this building, but it does for the Governor and several, I 15 think it's 22, other State buildings. 16 Some details on it, it's a dual burner, air 17 preheated, about 450 degrees preheat, 60,000 pound an hour 18 boiler. 19 There are two of them. The original boilers, I 20 think, were part of the wood gasification back during the 21 Brown Administration. 22 GRI, Coen, SoCal Gas, DGS and ICAT funding, there 23 are a lot of partners on this project. I would have to say 24 that the ARB staff was critical in securing this site and 25 working with the customer, getting the customer to understand PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 49 1 what we were doing and helping to secure this site. 2 The ARB funding has been critical. One of the 3 other things that I will mention is that it really is helpful 4 to have an ICAT or ARB connection because when dealing with 5 industry they are a little afraid of the Air Quality Board, 6 or dealing with experimental technologies on low emissions, 7 and when you mention that you are actually doing a project 8 with the ARB, it actually gives an awful lot of sense of 9 comfort that they are not going to get in trouble doing an 10 experimental project, that's helped greatly. 11 Now, this retrofit, I am not going to mention how 12 bad this boiler is set up right now, but this retrofit is 13 actually going to save about $80,000 a year in fuel to the 14 State. 15 Remember, you have only invested $195,000, so we 16 should pay that back in about two and a half years, and just 17 from this one installation. 18 The start up right now is going to start up in late 19 September or early October. 20 What potential market do we see for this technology 21 after we demonstrate it? 22 Well, predominantly, it's new boilers. New boilers 23 are new sources, they have to go through NSPS, and right now 24 Southern California has just changed it to anything over 20 25 million BTUs an hour is less than 5 BTM. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 50 1 So, while the target we have is a little more 2 aggressive than the current regulation was when we started 3 the project, it actually is meeting the 5 PPM target now in 4 Southern California. 5 Retrofit boilers. We are seeing a number of 6 applications of retrofit boilers where they would like to 7 reduce NOx emissions to the lowest available, also as we call 8 it, to become future regulatory-ready. 9 Some of these boilers are grandfathered and only 10 have to do 30 PPM, but they are looking towards the future, 11 or NOx credits. 12 Utility boilers. That's the specific reason why we 13 looked at air preheat. 14 Most utility boilers utilize air preheat for the 15 higher efficiency, and this burner now can, without using 16 selective catalytic reduction or other post combustion 17 treatment systems, can meet NOx emissions. 18 Process heaters. We have not specifically looked 19 at process heaters in this Program, but that is certainly a 20 part of Coen Company's desire to commercialize this project. 21 Process heaters typically operate at higher excess 22 air levels and a little bit different operation system and a 23 different design. 24 Also, units that currently have SCR and SNCR that 25 are approaching catalyst replacement, catalyst replacement is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 51 1 typically on the order of $50,000 to $100,000, and whereas my 2 burner costs about $140,000, you can completely eliminate SCR 3 and SNCR. 4 By conclusion, the bottomline is careful attention 5 to burner performance and control methods that are required 6 for safe operation. 7 This is not a conventional burner. This is an 8 ultra-low NOx burner. 9 It is designed to act and look like a conventional 10 burner to the operator, but it's a very sophisticated piece 11 of equipment that requires very sophisticated attention to 12 the controls and to its application. 13 We believe that improved sensors and controls are 14 required for continuous reductions of NOx emissions and to 15 continually do that while also maintaining safe operation. 16 So, we are in preparation for our field 17 demonstration of the ultra-low NOx burner. We have also, as 18 I have mentioned, we have had additional funding and an 19 additional host site in Southern California of a package 20 boiler, 60,000 pounds at our package boiler at Henkel 21 Corporation in Los Angeles. 22 We believe that the ultra-low NOx burner is very 23 well suited for boilers, but it's not suited for every 24 combustion application. 25 I've been asked how low would I go in this burner PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 52 1 size, and right now we are looking at about 20 million is the 2 minimum size. 3 If you get down to lower and lower sizes you, tend 4 to have less and less controls complexity, and less and less 5 operator attention to the boiler. 6 I would liken a term to a hotel that has a fire to 7 boiler in the basement and has a guy that goes in and checks 8 it like clockwork every Friday morning. Well, that's not the 9 kind of application that this burner would really be suited 10 well for. 11 It's in a typical industrial boiler environment 12 where you have a full-time operator watching it and can pay 13 attention to it. 14 People are afraid of these burners and afraid of 15 this technology, and the last thing that I want to have 16 happen is to have an explosion, or as we call it in the 17 industry, a puff, and I recognize that, or a small pressure 18 exertion, if we have one of those incidents with this burner 19 it can kill the industry's desire to utilize this technology, 20 any kind of new technology. 21 We mentioned microwave ovens earlier today. It's a 22 very complicated device, but as far as you know, it works 23 very simply. 24 It turns on when you want. It turns off when you 25 want. It works the way you want it to, and we want this PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 53 1 technology to act that way as well, because any advanced 2 technology will not be accepted by the public unless it is 3 relatively simple to use. 4 That completes my discussion. Thank you. 5 CHAIRMAN DUNLAP: Thank you. 6 MR. ANDREONI: Today's third speaker, Eddie Huang, 7 from AeroVironment Environmental Services, will discuss their 8 successful commercialization of a metal coating with zero 9 volatile organic compounds and zero hazardous air pollutants. 10 They are poised to make a significant impact in the 11 U.S. and global paint and coating market. 12 Dr. Huang received his Ph.D. in Chemical 13 Engineering and has over 11 years of experience in the air 14 pollution field. 15 DR. HUANG: Good morning, Chairman, and Members of 16 the Board, and ladies and gentlemen. It is my pleasure to be 17 here. 18 This morning I would like to share with you another 19 clean air technology. It's no volatile organic compounds and 20 no hazardous air pollutant industrial maintenance metal 21 coatings. 22 Under the sponsorship of the California Air 23 Resources Board ICAT Program, AeroVironment Environmental 24 Services, Inc. and Adhesive Coatings Company came together to 25 develop and demonstrate a no VOC, no HAP coating PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 54 1 technologies. 2 We are happy to report that we have completed the 3 project on time and within budget. ICAT funding was used for 4 the following tasks, mainly for the coating reformulation to 5 achieve specifications. 6 We conducted thousands of laboratory testings, even 7 though the results were extremely promising, we conducted the 8 full-scaled field demonstration to validate the result, 9 because under the actual field environment, we cannot control 10 the temperature, humidity, and the turbulence can have an 11 impact on the coating operations. 12 ICAT funding was also used to conduct very detailed 13 cost analysis in the environmental impact studies. Cost 14 analysis is very critical for the manufacturers, because they 15 want to know that besides the cost per gallon, is there any 16 associated cost related to this new technology, how much will 17 this cost for them to convert over to this new technology. 18 Environmental impact analysis, the air quality 19 analysis also the impact to the water, to hazardous waste and 20 even to transportation requirements. 21 Finally, this ICAT funding produced successful 22 results to help us facilitate the commercialization. 23 Manufacturers typical concern when it comes to 24 coating operations are, first of all, the regulatory 25 compliance and permitting requirements. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 55 1 For example, South Coast Air Quality Management has 2 Rule 1107 for metal coatings. For air-dried metal coatings, 3 the current VOC limit is about 340 gram per liter, and a lot 4 of manufacturers when it comes to coating operations, they 5 want to select a coating which is in compliance. 6 Also, based on their VOC emissions for the entire 7 facility, it is sometimes necessary to install best available 8 control technology and other controls. 9 In California, EPA calls this the layer AER. And 10 also, manufacturers worry about the waterbase of no VOC 11 coating because it doesn't perform as well as the 12 conventional coating. 13 So, even though the no VOC coating has a lot of 14 benefit to the air quality, however, it has to perform as 15 well, or better to serve the purpose. 16 How about the cost, they worry about that, it would 17 cost much higher and they cannot afford, especially for small 18 coating operations. 19 Finally, some of the low VOC coatings, or waterbase 20 coatings, they used an ethylene glycol ether in their 21 formulation, some even have formaldehyde, those air toxins 22 can emit throughout the life of the coating. 23 For example, if you are using your bedroom 24 furniture or your office, you want to make sure that you do 25 not subject yourself to these kinds of air toxics. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 56 1 The status before the ICAT fundings. This 2 technology was a pure research and development result. 3 We cannot find any parties interested to form any 4 licensing agreement, and we did not have the production 5 capability, not to mention any sale. 6 In the course of the ICAT funding, we have 7 conducted a couple of successful full scale demonstrations, 8 one of them is Fleetwood Motorhomes in Riverside, California. 9 Fleetwood is one of the leading recreational 10 vehicles and motorhome manufacturers. We applied no VOC 11 metal coating to their chassis, and the results are very 12 promising. However, currently they are conducting further 13 evaluation for cost. 14 They have invested a tremendous amount of money in 15 the control equipment and the spraying booths at this point. 16 So, whenever when it comes to switch over to a new 17 technology, they have to look at the bottomline and to see 18 how many years they can break even. 19 We also conducted two very successful 20 demonstrations at National RV, Perris, California. This 21 company is very happy with the result and shifted their 22 chassis to Indiana after six months of harsh winter weather, 23 showed no signs of corrosion, or peel-off of the coating. 24 The status after ICAT funding, we are very happy to 25 report that because of the successful result of this coating, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 57 1 we won the prestigious DOE NICE cubed Award for 1998. 2 NICE cubed stands for National Industrial 3 Competitiveness, and it's through environmental and 4 achievement and economics, and there are only ten selected 5 this year, and we are one of them. 6 We signed a licensing agreement with Sierra 7 Performance Coating, they used to be H. Thompson, so right 8 now we have a full production capability, and we received the 9 first order from National RV. Currently they converted to no 10 VOC coating operations, and we are still working with 11 Fleetwood trying to look into the cost, and then into future 12 convergence. 13 When they look to the cost analysis, one thing that 14 you take into consideration is the productivities, 15 through-put, and once they switch to the no VOC technological 16 knowledge, coating technologies, they are no longer limited 17 to the current permitting. 18 For example, right now they may be subject to 20 19 chassis a day. Once they switch over they can double their 20 capacities. 21 Finally, I would like to report that Dupont 22 Automotive is very interested in these technologies. 23 Currently we are teaming with them to evaluate the 24 long-term durability of this coating in automotive 25 refinishing and OEM operations. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 58 1 Currently we are making arrangements to have this 2 coating tested and conduct a long-term weathering test in 3 their Florida testing center. 4 The direct benefit from the ICAT funding includes 5 the job creations in California for the first part of 1998, 6 most of them are professional, such as the production and 7 sales and marketing. 8 A typical facility can reduce 4.5 tons of VOC per 9 year, such as National RV. 10 Because this coating has no volatile organic 11 compound and has no hazardous air pollutants, so not only are 12 they complying with the current regulation, but they also do 13 not pollute, do not endanger the workers and that has a great 14 benefit in the work exposure. 15 The manufacturers, especially the small 16 manufacturers, can easily comply with their regulatory 17 limits, which is a big savings for them. 18 We also see a very wide applicability for different 19 market sectors for this coating, including automotive 20 refinishing, OEM, concrete, metal coating and also traffic 21 coatings. 22 Where do we go from here? 23 Currently, we are looking to form a strategic 24 alliance with one of the largest residential distributors. 25 We are looking at the nationwide market, and the idea is to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 59 1 design a new plant, and currently we are targeted one to two 2 million pounds of resin per month, and by the year 2000, we 3 are looking at about $43 million in sales. 4 Another very promising, most likely we will form 5 with a leading specialty chemical company, this is an 6 international company, and we are looking at the worldwide 7 market. 8 This company currently has $4 billion in sales, and 9 this coating knowledge can be used to produce not only the no 10 VOC resin, but also can produce the no VOC occurring agent, 11 and we can market that. 12 That concludes my presentation. Finally, I would 13 like to thank the Board for your effort to improve the air 14 quality, and also for your vision for the ICAT funding, so 15 that technologies like this one can walk through the "valley 16 of death" and be successful and benefit the public. 17 Thank you. 18 CHAIRMAN DUNLAP: Thank you. 19 Anything else staff, any concluding comments? 20 MR. ANDREONI: We believe that the ICAT Program is 21 showing significant accomplishments. 22 The Zero Volatile Organic Compound Coating Project 23 and the CHA process are our first two completed ICAT 24 projects, with several more on the way. 25 The successful commercialization of the zero VOC PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 60 1 coating proves that ICAT funding can play a significant role 2 in helping businesses bridge the gap between research and 3 commercialization. 4 ICAT is providing vital funding for new projects 5 and technologies that will reduce air pollution in California 6 and help our economy to grow. 7 We will present ICAT resolutions later this year 8 for your approval that we hope will continue the effort to 9 reduce air pollution and create jobs here in California. 10 This completes the ICAT presentation. I will be 11 happy to answer any questions that you may have. 12 CHAIRMAN DUNLAP: Very good. Thank you. 13 I appreciate the fact that you brought in some 14 folks that have been actually using the State's dollars, and 15 I was heartened to see that. 16 Any questions? 17 Mr. Parnell. 18 BOARD MEMBER PARNELL: If I may. I have worked in 19 the area for a number of years, and we compliment the staff 20 of the Air Board for using their vision, their ingenuity to 21 perpetuate this whole idea of working basic research into 22 commercialization, because while it is difficult to 23 understand and very difficult to communicate to other people, 24 we have transported our technology to other countries so much 25 of the time in years past, so you should be complemented. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 61 1 Thanks for your diligence and your efforts. 2 CHAIRMAN DUNLAP: I just had a statistic that may 3 have come from you all in a speech that I gave not long ago 4 about the impact of the environmental technology industry on 5 the global economy and in the U.S., and I think it was a $180 6 billion industry in the United States, while the lion's share 7 of it, well, proportionally the lion's share of it being 8 located in California. 9 BOARD MEMBER EDGERTON: Can we use any of these in 10 the new Cal EPA building? 11 MR. KENNY: I don't know the answer to that. 12 CHAIRMAN DUNLAP: Mr. Schieble is averting his gaze 13 from us, but he has the Administrative responsibility and his 14 team is helping with the Cal EPA building. 15 Mike, would you look into that and see if there are 16 any of these things? 17 MR. SCHEIBLE: We will. Hopefully we will have 18 more pollution prevention, so we don't need the control 19 technologies. 20 CHAIRMAN DUNLAP: Thank you. Let's move to the 21 third Item. 22 Again, thank you, Dr. Holmes, and your team for 23 putting that together for us. 24 The third Item today are the three research 25 proposals. We have had them given to us, and we have PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 62 1 resolutions before us on them. 2 I would like to have any discussion and then a 3 motion to approve if they are satisfactory for the Board, but 4 before I do that, Mr. Kenny, do you or Dr. Holmes want to say 5 anything, do you want to give us a couple lines on each one, 6 just to reacquaint us? 7 John. 8 DR. HOLMES: Thank you, Mr. Chairman, and Members 9 of the Board. I will give you a one minute summary. 10 As Ms. Margolis suggested in her presentation, 11 there is concern on the part of the folks who are doing our 12 health effects analysis for us about the oxides of nitrogen, 13 item one is to go back and take a second look on a lot of 14 work that's been done over the past 10 or 12 years on nitric 15 oxide as a health risk. 16 With the completion of this project, we will be 17 able to decide whether or not there needs to be a renewed 18 effort on the nitrous oxide research front. 19 One of the most important areas for exposure to 20 nitrous oxide and other oxides of nitrogen is indoors. 21 Combustion appliances indoors create a lot of nitrous of 22 oxides that are concentrated particularly in the kitchen. 23 So, item number two is a study to measure the 24 extent and seriousness of this exposure and to look at ways 25 that people can minimize, or even eliminate, that exposure PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 63 1 during cooking in residences. 2 Item three is another smaller epidemiological 3 study, the effects of air pollution on health, measure health 4 effects by looking at hospital and clinic records from Kaiser 5 Permenente. 6 These records are very complete. We also have a 7 very complete air quality data in the San Joaquin Valley. 8 We will put these two together and investigate what 9 the effects of exposure to pollution, particularly PM 10 pollution in the valley may be. 11 So, that is it. 12 CHAIRMAN DUNLAP: All right. Very good. 13 The dollar amounts, the first one, the $33K, next 14 is $299K, and the third is $264K, which represents, what, 15 John, help me with my math, about $600,000, is that about 16 right? 17 All right. Very good. 18 We have the resolutions before us. There are 19 three, 98-29, 98-30 and 98-31. 20 BOARD MEMBER PATRICK: I make a motion to approve. 21 CHAIRMAN DUNLAP: There is a motion by Supervisor 22 Patrick, and a second by Dr. Friedman. 23 Any discussion? 24 All right. We will proceed with a voice vote on 25 approving those three resolutions. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 64 1 All those in favor, say aye. 2 Any opposed? 3 Very good. Thank you. 4 I would -- obviously the Board, Dr. Holmes, is very 5 interested in these and other research proposals, and I 6 encourage you in the staff to make the Board Members who are 7 in the geographic areas in which this work is being done, for 8 example, Supervisor Patrick, we are talking about the Valley, 9 make sure she is aware of what's going on, and for major 10 milestones and the like, if you would. 11 Dr. Holmes, do you want to say anything while we 12 have Mr. Barham with us, about any academic achievements that 13 he has realized lately? 14 DR. HOLMES: We are very pleased that Bob Barham, 15 the Chief of the Research Division, has after several years 16 of work completed his dissertation for a Doctorate Degree, 17 and it was awarded within the last few weeks, and 18 congratulations are due to Bob. 19 CHAIRMAN DUNLAP: It's obvious we are not working 20 you hard enough, Bob. 21 BOARD MEMBER RIORDAN: What was the subject matter 22 of the dissertation? 23 MR. BARHAM: Well, actually it was a Degree in 24 Environmental Studies, and it was how organizations like you 25 make decisions. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 65 1 BOARD MEMBER RIORDAN: Are you serious? 2 BOARD MEMBER FRIEDMAN: No wonder he took so long. 3 CHAIRMAN DUNLAP: Is there anything offensive in 4 that dissertation? 5 Have you looked at it, Dr. Holmes?. 6 DR. HOLMES: It is free of any taint. 7 CHAIRMAN DUNLAP: Very good. All right. 8 Well, congratulations. Thank you, again. 9 You guys had a full Agenda for us today, and we 10 appreciate it. 11 Okay. The next Item on the Agenda is 98-7-4, a 12 public meeting on Proposed Addendum to the Air Resources 13 Board's 1995 Criteria and Guidelines for the Use of Motor 14 Vehicle Registration Fees. 15 Staff reported to the Board on this Program in 16 October of 1997. At that time, several of you expressed the 17 desire to see good cost effective projects given priority for 18 funding. 19 To this end, the Board directed staff to bring 20 forward examples of successful cost effective projects of 21 maximizing emissions reductions, and I understand that the 22 proposed addendum is the result of those efforts. 23 This Program, as you may know, is implemented by 24 local districts and involves some very important resources 25 that can be used to get real emissions reductions. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 66 1 Because of not even quirks in the State law but the 2 general open nature of the law, local districts have been 3 accused by some quarters of not having a focus, or not having 4 emphasized certain projects over others, and what we wanted 5 to do is to try to provide some guidance and direction, and 6 it's an impossible task, but Ms. Terry is going to tell us 7 how she accomplished it. 8 Mr. Kenny, do you want to introduce this Item? 9 MR. KENNY: Thank you. For the past six months, 10 staff has worked with recipient agencies through a technical 11 working group to follow up on the Board's direction. 12 The primary focus of this effort has been to 13 evaluate and define the technical factors that are key to 14 realizing cost effective emission reductions. 15 The proposed addendum that you will hear about 16 today provides a variety of project examples that demonstrate 17 good project design. 18 The addendum would make no changes to the Board's 19 adopted criteria of cost effectiveness and new technology 20 advancement, implementation of clean air plans and leveraging 21 of funds. 22 The addendum does, however, recognize that by 23 leveraging the motor vehicle funds with other revenues, the 24 cost effectiveness of the projects increases. 25 Pam Burmich, of the Transportation Strategies PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 67 1 Group, will make the staff presentation. 2 Pam. 3 MS. BURMICH: Thank you, Mr. Kenny. Good morning. 4 I'm pleased to present to the Board the proposed 5 addendum to the 1995 criteria and guidelines for the use of 6 motor vehicles registration fees. 7 I will begin my presentation with a brief 8 introduction, and then discuss the development of the 9 proposed addendum. 10 Last, I will describe related future activities. 11 Let's begin with the introduction. 12 You will recall that State law authorizes air 13 districts and other agencies to assess motor vehicles 14 registration fees specifically to fund emissions reductions 15 from motor vehicles and for air district activities necessary 16 to implement the California Clean Air Act. 17 In 1995, the Air Resources Board reported to the 18 Legislature on the use of these funds. 19 As part of that process, the Board adopted criteria 20 to help guide funding decisions by local recipient agencies 21 and ensure that the goals of the program are met. 22 At the time the Board adopted the 1995 criteria, 23 staff was directed to provide a staff report in two years. 24 In October 1997, we reported on the status of the 25 implementation of the Board's criteria. Before we discuss PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 68 1 our follow-up activities, let's review those four criteria. 2 In 1995, the Board concluded that several criteria 3 would be appropriate for use in evaluating and prioritizing 4 projects for funding. 5 These criteria are cost effectiveness, new 6 technologies advancement, leveraging funds and implementing 7 clean air plans. 8 The ARB criteria and guideline document discusses 9 these criteria and encourages recipient agencies to 10 incorporate the criteria into their programs. 11 After the Board's adoption of the criteria, the 12 report was provided to all recipient agencies, as well as to 13 the Legislature. 14 I should note that the proposed addendum would make 15 no changes to these fundamental criteria. Now let's discuss 16 about where we stand today. 17 The proposed addendum you are considering as a 18 result of the Board's discussion and direction to staff at 19 the 1997 meeting, in order to assess recipient agencies, we 20 were asked to develop further guidance on cost effective 21 projects, projects that have been demonstrated to be 22 successful. 23 As a mechanism to help ensure this type of 24 information, ARB staff would hold workshops to discuss good 25 project design. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 69 1 The Board also suggested that staff identify 2 potential incentive approaches that would encourage recipient 3 agencies to fund well-defined projects and cost-effective 4 projects. 5 In response to concerns expressed by small 6 districts, we were also asked to consider the special needs 7 of rural air districts. 8 Finally, the Board agreed with our recommendation 9 to convene a technical working group as part of our follow-up 10 activities. 11 Now, I will discuss the development of the proposed 12 addendum and the technical working group that we formed. 13 The Statewide Technical Working Group began its 14 work in November. The group included representatives from 15 all recipient agencies, air districts, Bay Area Congestion 16 Management agencies, the South Coast Mobile Source Review 17 Committee and South Coast cities and counties. 18 The working group provided a forum for staff to 19 hear the concerns and recommendations of recipient agencies. 20 The working group provided us with input through 21 several meetings, conference calls and small subgroup 22 meetings. 23 In addition to meeting with the statewide group, 24 staff held meetings focused on the specific concerns of the 25 Bay Area Congestion Management Districts, South Coast cities PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 70 1 and counties and rural air districts. 2 The meeting on rural issues helped us to develop 3 language in the proposed addendum that recognizes the need 4 for rural districts to establish project selection criteria 5 that reflect their local air quality and district program 6 needs. 7 It was also clear from the discussion with 8 Congestion Management agencies that air quality goals often 9 overlap with local needs to improve transit, reduce 10 congestion and increase safety. 11 Finally, in the meeting with South Coast cities and 12 counties, we found most were generally receptive to our 13 offers of additional technical assistance. 14 This slide summarizes the input we received from 15 recipient agencies during the development of the proposed 16 addendum. 17 One of the main concerns of our recipient agencies 18 was that the benefits of leveraging these funds be accounted 19 for in the calculation for cost effectiveness. 20 Leveraging improves the cost effectiveness of 21 projects, and staff agreed that integrating these two 22 criteria is appropriate. 23 The impact of this change is primarily on 24 transportation related projects. One example is the use of 25 funds to complete a critical link in a bike lane network. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 71 1 We also learned that project opportunities vary by 2 region, especially in smaller districts. 3 For this reason, it may be appropriate to apply 4 additional local criteria. We acknowledge this in the 5 original criteria and guidelines. 6 The proposed addendum elaborates on this point in 7 the discussion on accountability and states our view that all 8 criteria for project selection should be clearly specified by 9 local agencies as part of the public process. 10 I will briefly summarize what is new in the 11 proposed addendum. The proposed addendum acknowledges the 12 link between leveraging and cost effectiveness. 13 When co-funding covers a substantial portion of 14 total project cost, the cost effectiveness of the motor 15 vehicle funds spent is improved. 16 The proposed addendum encourages financial 17 incentives for complete conversions by local governments. 18 Incentive programs can help jump-start a strategy 19 to cleanup government owned motor vehicles, particularly when 20 introducing new technologies. 21 A possible incentive approach would be to fund more 22 than the differential cost between conventional and low 23 emission vehicles if there is a commitment to convert the 24 entire fleet. 25 As I mentioned earlier, the proposed addendum PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 72 1 recognizes that rural needs are different and that such 2 districts should establish project selection criteria 3 appropriate to their situation. 4 The proposed addendum provides for accountability 5 through public consideration of local decision making 6 criteria. 7 Specifically where projects are funded outside of 8 the range of cost effectiveness recommended by ARB, the 9 criteria applied to the project should be identified in a 10 public process. 11 Next, because California has an integrated State 12 and Federal planning process, the proposed addendum 13 acknowledges that the emission reduction benefits of funded 14 projects should be accounted for in clean air plans that are 15 designated and designed to meet both State and Federal 16 requirements. 17 Of course, this applies only to districts whose 18 clean air plans are also part of the California State 19 Implementation Plan, or SIP. 20 Finally, the proposed addendum provides examples of 21 projects designed to be under $20,000 a ton. This sample of 22 projects is intended to assist in the design and selection of 23 good projects. 24 We expect to add to these examples as recipient 25 agencies provide us with further examples in the future. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 73 1 The project examples in the proposed addendum 2 provide good design parameters. The examples show the key 3 factors that effect cost effectiveness and illustrate how 4 these projects achieve emission reductions for $20,000, or 5 less per ton. 6 The project examples include technology-based as 7 well as trip-reduction programs. All of the projects have 8 been successfully demonstrated by air districts or local 9 governments. 10 A good example of a cost effective project is the 11 purchase of a cleaner transit bus. The purchase of new, 12 low-emitting alternative fuel buses in place of typical 13 diesel fueled buses results in new buses that emit 14 substantially less pollution. 15 These projects yield multi-pollutant benefits, 16 including reductions in NOx, particulate matter and toxic air 17 contaminants. 18 Because Federal matching dollars are available for 19 transit bus purchases, these projects are also good examples 20 of leveraging co-funding. 21 Statewide, the purchase of low-emitting transit 22 buses is off to a good start. Over 680 buses were purchased 23 from 1992 through 1997. 24 Sacramento has been a leader in this effort with 65 25 percent of the regional transit fleet already converted. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 74 1 In addition, the South Coast Mobile Source Review 2 Committee has been aggressively funding transit buses for 3 several years. 4 The MSRC plans to fund 491 more cleaner buses from 5 1997 through 1999. These nearly 1,200 buses will be reducing 6 over 450 tons per year of NOx statewide, at $10,000 per ton. 7 The bus projects identified here represent 20 8 percent of the statewide in-use transit bus fleet by 1999. 9 Since the public release of the proposed addendum, 10 we have received two primary comments. The first is a 11 request by the Sacramento Air Quality Management District to 12 add two additional projects. 13 These are good examples and we propose to put them 14 in our addendum. The second comment relates to the SIP 15 benefits issue. 16 The Monterey District expressed concern that these 17 funds would be used for SIP purposes instead of California 18 Clean Air Act activities. This is not what we were 19 proposing. 20 As I mentioned earlier, since many clean air plans 21 in California are designed to meet both State and Federal 22 requirements, we simply want the U.S. EPA to recognize all 23 our emission reduction efforts. 24 The Ventura District also commented on this issue, 25 indicating that air districts, ARB and U.S. EPA, all have a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 75 1 role in improving the SIPs and that they have had minimal 2 success in securing U.S. EPA approval. 3 We certainly don't disagree, but we are willing to 4 support districts in their effort to get Federal support. 5 Now let's move on to our future planning 6 activities. The first area is technical development. 7 Staff will continue to work with CAPCOA to expand 8 the list of example projects. This effort will provide 9 recipient agencies with more information on projects that can 10 be funded for $20,000, or less. 11 Next, staff will refine analysis tools for 12 recipient agencies to use to evaluate the projects they are 13 considering for funding. 14 Analysis tools are an important part of 15 implementing cost effectiveness as a criteria for funding 16 decisions. 17 Last, staff will maintain a technical clearinghouse 18 of well-designed projects that can be shared with recipient 19 agencies statewide. 20 Good technical information is not of much use 21 unless it can be shared, which brings me to our next area of 22 future focus, information sharing. 23 Because 157 local governments in the South Coast 24 participate in this Program, information sharing is a 25 challenge. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 76 1 Currently, there is no ongoing mechanism to keep 2 these agencies abreast of the latest air quality technology 3 developments or to share the lessons being learned around the 4 State from successful and unsuccessful projects. 5 Staff proposes some ways to address this problem. 6 As the Board directed last October, staff will hold technical 7 forums in the South Coast. 8 The forums are scheduled for August 21, 22, 24 and 9 25, and will focus on how to design and implement successful 10 technology-based projects. 11 These forums will build on work begun by the South 12 Coast Air District's Leadership City Roundtables that have 13 been held over the last year. 14 We will also convene in an ongoing technical 15 working group of South Coast cities and counties and the air 16 districts. 17 The working group will be a forum for sharing 18 information and will assume responsibilities to host an 19 annual good projects conference. 20 We believe that the continued emphasis on technical 21 development combined with ongoing technical communication to 22 recipient agencies will result in more cost effective 23 projects, with greater emission reductions over time. 24 This concludes my presentation, except to urge the 25 Board to adopt the proposed addendum. Thank you for your PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 77 1 interest. 2 CHAIRMAN DUNLAP: Thank you, Ms. Burmich. I 3 appreciate that overview. 4 Do any of the Board Members have any questions? 5 Ms. Rakow. 6 BOARD MEMBER RAKOW: Has there been communication 7 with both Ventura and Monterey on their concern about the 8 SIP? 9 MS. BURMICH: Yes, we have talked to them. 10 BOARD MEMBER RAKOW: Thank you. 11 CHAIRMAN DUNLAP: Okay. Mr. Calhoun. 12 BOARD MEMBER CALHOUN: A lot of progress has been 13 made since the inception of this particular Program when 14 initially all kinds of projects were being approved, and I'm 15 happy to see these guidelines being developed. 16 I guess one question that I would ask is after the 17 NARD guidelines, after they have been adopted, is there some 18 method of procedure that we have in place to review and 19 follow-up on the projects, those that are approved by the 20 local districts? 21 MR. KENNY: I think the easiest way for us to do 22 that, Mr. Calhoun, will be through the annual report that we 23 provide to you. 24 What we can do at that point in time is show you 25 essentially how the guidelines are being complied with by the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 78 1 districts throughout the State. 2 MS. TERRY: We are tracking the projects on an 3 ongoing basis, and a large part of our effort is to work with 4 recipient agencies in a project selection process, so we try 5 to get input in before they make a decision, which we think 6 is a critical piece. 7 CHAIRMAN DUNLAP: Thank you. We have one witness. 8 Ms. Urata, from the Project Clean Air in the 9 Valley, Bakersfield area. Welcome. 10 MS. URATA: Good morning. Thank you. 11 I'm Linda Urata, and I'm the Executive Director of 12 Project Clean Air. We are a nonprofit, and most of our 13 things are done in the central valley and Kern County. 14 The mission, just to familiarize you with our 15 group, our mission as an agency is to enhance our communities 16 by improving air quality through collective action and 17 through education. So, we have as part of our action or our 18 efforts to improve air quality over the years, we have 19 received over three and a quarter million dollars over the 20 past four years of DMV funds, which I think as an agency is 21 probably the most significant of the -- the recipient 22 agencies that you are talking about, granted to people like 23 me. 24 I did want to bring some things to your attention 25 about the focus strictly on cost effectiveness as identified PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 79 1 dollars per ton. 2 We might take a broader, or long-term take on cost 3 effectiveness of programs. For instance, the focus of 4 funding, just the differential cost of CNG, or other 5 alternate fuel conversions, we are finding that there are 6 decreased funds available for CNG technician training, or 7 just in general, alternate fuel technician training. 8 You need to consider that the fleets that you want 9 to convert to CNG need to have a market afterwards. Most 10 government vehicles don't stay in use for the 13 years that 11 you would own your car. They continually turn over their 12 fleets. 13 So, in order to make fleet conversions saleable to 14 government agencies and achieve the 100 percent fleet 15 conversion that you might hope for, we think that you need to 16 consider having more technical training for technicians, not 17 just within these fleets, but also to the general, you know, 18 the other fleet dealers and people who offer services to the 19 public. That way you will have more buying by the public. 20 If they are going to buy one of these auctioned off 21 vehicles, they know that they can get it fixed. The 22 infrastructure, likewise, they know they will get it fueled. 23 So, we think that, for instance, on page 11, where 24 they make a suggestion about the 25 percent differential 25 cost, and then in some areas it might be increased, you might PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 80 1 want to include some language regarding -- one of the 2 suggestions from the Clean Cities Coalition, I attended a 3 meeting this week, was that projects show that five percent 4 of their budget go to training and maintenance. 5 Another aspect of that is, yeah, these cars are 6 great, but if they are not being maintained, and they are not 7 running efficiently, and they're not on the road -- so you 8 want to make sure that the cars are being used are out on the 9 road and actually in use. 10 So, that would be one of our considerations that we 11 would like you to adopt as part of your addendum. 12 CHAIRMAN DUNLAP: Well, if I could stop you. If 13 you would just focus right now on what you want us to add to 14 this report, we will keep our list here, and then we will 15 press our staff, and we'll figure out if that could be done. 16 So, how many do you have? 17 MS. URATA: Just one or two, which are many of our 18 more general recommendations, but I wanted to give you -- 19 CHAIRMAN DUNLAP: We are willing to listen to 20 whatever you want to say, but we are going to focus on 21 dealing with this today, so be as specific as you can about 22 what you want us to add or subtract from this thing. 23 MS. URATA: I also wanted to give support where I 24 think it's important. 25 For instance, on page 9, we appreciate the staff PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 81 1 recommendations of partnerships for public education 2 activities. 3 In the San Joaquin Valley, specifically, all of the 4 Pub Ed dollars disappeared from the Grant Program, and it was 5 all taken in-house, and as a result, we think that the cost 6 for Pub Ed Programs has become less effective. 7 I understand part of the -- I think that is where 8 some of the conflict in the guidelines comes in. Staff at 9 the local district will read that you want a comprehensive, 10 one-focused-message going out, but as a result they took all 11 their Program in-house, which made it more expensive to do. 12 It also makes it difficult for agencies like us to 13 get public service announcements out because the Valley Air 14 District is willing to pay for commercial time. 15 So, there's those kind of cost effective problems 16 that we are running into, but I do appreciate the 17 recommendation on that score, and maybe that could be focused 18 a little bit greater. 19 Our recommendation to staff is to really work on 20 those partnerships. For instance, if they were producing 21 high quality spots in a weaker place than this PSA throughout 22 the Valley as nonprofit, that's generally better received in 23 our local area. 24 CHAIRMAN DUNLAP: Have you communicated that to 25 them? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 82 1 MS. URATA: Yes. 2 We have also noticed that we have resulted in fewer 3 community partnerships and less effective programs when some 4 of the guidelines were set by the Air District. 5 For instance, the Vehicle Scrapping Program 6 originally was a part of the Competitive Grant Program and 7 Project Clean Air originally brought vehicle scrapping to 8 local air districts. We were the first Program that was ever 9 funded by a local air district. 10 It was part of that Competitive Grant Program as 11 far as leveraging funding. We had over 30 partners with an 12 over $100,000 buy-in. 13 In this last year, the Vehicle Scrapping Program 14 was taken in-house, which we really appreciated that they 15 committed a million dollars a year to this funding, but what 16 resulted was the Air District said, only our name can go on 17 this Program. 18 As a result, all of our community sponsors dropped 19 out. We had less than five with a buy-in of only $65,000. 20 So, cost-effectiveness wise it sounded great, but 21 it had a reverse impact as far as our Program was concerned. 22 We are concerned, likewise, on that score, that the 23 cookie cutter programs suggested, while they meet your 24 transportation control measures and their focused campaigns, 25 that they discourage creative or innovative solutions. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 83 1 That is pretty much just the way that our District 2 crafted its RFP. It is not the same district to district. 3 So keep that in mind, I am focused on my specific experience. 4 For instance, the Vehicle Scrapping Program would 5 not have come to the District had we not brought it to them 6 as one of the open programs. 7 Now it's not on their list of suggested -- it 8 wouldn't qualify the way that their RFP is constructed. 9 Also, the Heavy-Duty Diesel Program, when we first 10 brought it to the District staff, oh, about six years ago, 11 no, five years ago, they laughed at us and called it 12 truck-a-rama, but they put $6.1 million aside for Heavy-Duty 13 Diesel. 14 So, I think the District staff, again, through your 15 recommendations and guidelines, should be encouraged to 16 maintain, as you said, the funds assigned for creative and 17 development type programs. 18 There really does need to be room in their budgets 19 for those types of programs to come to them. I think that 20 cost effectiveness should also apply to the district 21 administration of these programs. 22 I don't see enough in your addendum or guidelines 23 regarding that. In our experience, we have had delays in 24 contracts which ended up in the leveraged funds going away. 25 We had a local refuse hauler who had leveraged PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 84 1 funds, and by the time they got their contract, that money 2 had gone away and they had to turn their money back into the 3 district and the refuse hauler was never purchased. 4 So, I think district administration of some of 5 these programs could be more cost effective and more timely 6 and that would lead to better programs. 7 In our specific instance, with the Vehicle 8 Scrapping Program, we were awarded a project in May but 9 didn't receive a contract until December. 10 By the time we implemented the contract in January 11 of 1997, the insurance laws had taken effect, the new Smog 12 Check II was on the books, people were really concerned, and 13 so it impacted the cost effectiveness of the Program. 14 And likewise by focusing only on cost effectiveness 15 in terms of dollars per car, or dollars per ton, it led to a 16 lower price pay per vehicle, which then turned the Vehicle 17 Scrapping Program into a bare bones, get tons of emissions 18 reduced, but then people weren't buying into it, they didn't 19 want to sell us their car for the lower price. 20 It changed the concept of it as an incentive 21 program to a last ditch effort to get rid of your car for 22 more than the 60 bucks that the dismantler would give you. 23 So, I think these things, when you're considering 24 cost effectiveness and the ability to implement a program, 25 need to be considered against the strict dollars per ton. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 85 1 On this last go around, for instance, the Bay Area 2 gave us a timeline of three months to complete a project, so 3 when we bid on the project we bid $700 a car figuring that 4 that would be a true incentive. 5 They awarded the contract to somebody for $500 a 6 car, who bid at $500 a car to pay, and then allowed them over 7 a year to complete the Program. 8 So, I think that that was a problem with their bid 9 process, but you need to be aware of the impacts on how these 10 things get implemented at the district level that affect 11 their cost effectiveness. 12 Again, I don't know exactly how you do that in 13 terms of specific recommendations to the districts, but I 14 think your forums and technical work groups might be the 15 right forum for you to carry that out. 16 I would like to just say, again, you need to 17 consider short-term solutions as well as the long-term impact 18 by considering your education elements to all of your 19 programs. 20 The Pub Ed Program should not necessarily be a 21 separate focused Pub Ed message campaign. Your Pub Ed 22 component should be included in every program that you do. 23 The Vehicle Scrapping Program, you should be 24 talking to everybody who turns in their car about vehicle 25 maintenance. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 86 1 CNG conversions, you should train the techs and 2 educate the people who are working and driving these 3 vehicles. 4 Bike path lanes, those projects should be promoted 5 to the commuters who would be using them, and I think that 6 you could put that as a recommendation in order to make these 7 programs more successful in the long-term as well in the 8 short-term cost effectiveness. 9 Thank you. 10 CHAIRMAN DUNLAP: Thank you. Lynn, Anne, etcetera, 11 the team back there, I will ask you to respond to some of 12 these things, but if I might try to characterize it, and 13 Supervisor Patrick, if you have anything to say or add or 14 subtract to what I am saying, please do. 15 It seems to me that what we are about and what this 16 Board's concern has been in the past is that we want to be 17 able to defend these dollars. 18 You know, there are folks in Sacramento that would 19 like to use these monies for other things. There are 20 industry groups that have had opinions they have expressed in 21 the Legislature and to the Governor about how they could use 22 the money better to get emissions reductions. 23 We would like very much the idea of having 24 discretionary dollars available at the local district level, 25 that is a good thing, as long it's spent wisely. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 87 1 In order for us to be able to defend what goes on 2 locally, we need to have some recommended criteria that 3 people will try to adhere to so that if they do these things, 4 we can defend it collectively. 5 I appreciate your comments, very focused, and I 6 know a bit about your program. I think I have visited down 7 there three or four years ago. 8 A lot of good work has been done in the Valley, but 9 a lot of your concerns are kind of project specific, and 10 since the Program is mature and works pretty well down there, 11 maybe it's not perfect, maybe there's some things that you 12 see because you are so into it and have done it for a while, 13 it could be done a little better or a little differently, it 14 would get matching dollars, or more emphasis on public 15 education and the like, so I don't quibble with that, I mean, 16 if that is the way that you see it, I give you that. 17 Those things are kind of local district specific 18 issues, and to the extent that we can shore up the things 19 that she is recommending that we consider here in our 20 guidance, I would like staff to respond to it, but 21 Supervisor, that is kind of my take on things. 22 BOARD MEMBER PATRICK: I would agree with you, 23 Mr. Chairman. 24 I think that we need to get together and talk about 25 how we can help resolve some of these issues at the Valley PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 88 1 District level. 2 Some of them that you talked about I am sure have 3 broad coverage throughout the State. There are others that 4 are much more specific that it would probably be helpful if 5 you and I sat down at another time and talked about these and 6 see what we can do. 7 Project Clean Air does a fabulous job and is very 8 unique in the State. They do a great job not only in Kern 9 County but throughout the Valley and even throughout the 10 State. 11 So, I think Linda's point is well taken in that we 12 need to be doing what we can to encourage groups through 13 working with industry and the public together, so that we are 14 all on the same team, and they do a great job, so maybe there 15 is some way that we can help accommodate that. 16 CHAIRMAN DUNLAP: There may be things that the 17 Supervisor doesn't know, you know, on occasion our staff 18 might take a little longer than we might think that they 19 should on an issue. 20 I'm certain that if you kept in close contact with 21 her and perhaps a couple of her colleagues about 22 administrative things, it would be done quicker, it would 23 result in better results, I know her well enough to know she 24 would be willing to push that for you locally. 25 MS. URATA: Well, I do really feel that as a body PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 89 1 your Board could send that message. 2 We are getting the message from the air districts 3 that we must get the most dollars per ton and be cost 4 competitive. I think that that's a fair message to send to 5 your administrative staff for them to also be more cost 6 effective. 7 I would say the most significant thing that I have 8 asked is for the inclusion of the CNG technical training to 9 be part of -- well, I'm sorry, not CNG. I'm very focused on 10 that one, but alternate fuel training. 11 Is that a possibility? 12 MR. KENNY: I think basically with regard to the 13 comment there, we would agree with it, I mean, we actually 14 thought it was implicit in the document, to the extent that 15 we referred to the infrastructure that is being promoted. 16 We can make a specific reference in the document, 17 if the Board so desires. 18 BOARD MEMBER RIORDAN: Yes, because infrastructure 19 to some means, you know, the pipes and the fueling station 20 and all of that, and education. 21 I think, Ms. Terry, when we were in the desert area 22 that we heard the discussion about training, the technical 23 people that are going to do the maintenance work, and that is 24 a key component. 25 MS. TERRY: That's right, and it actually ties in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 90 1 to the other aspect, which is incentive programs, which you 2 suggested at the last Board meeting, and we thought was a 3 very important aspect of the Program, so we certainly would 4 like you to add that in. 5 CHAIRMAN DUNLAP: Well, it's a consensus it seems 6 to me that the Board add that in. It needs to be said in a 7 field neutral kind of way, no CNG specific stuff. 8 BOARD MEMBER RAKOW: Alternative fuel. 9 CHAIRMAN DUNLAP: We have been through that many 10 times. 11 We will -- I will look for you to emphasize it. 12 Maybe there needs to be an introduction where we 13 talk about some of the philosophy, which I tried to capture, 14 about -- we need to show that we get good value for this 15 money and that there needs to be some consistent criteria 16 applied if at all possible to defend it, because people, like 17 I said, look at these dollars for other things. 18 I think we could encapsulate some of your 19 suggestions, and if my colleagues are in support of that, we 20 will have staff do their best to wordsmith it. 21 Barbara, if you wouldn't mind, if it's okay with 22 the Board, I will have you kind of be the reviewer and you 23 let me know if that does it for you. 24 BOARD MEMBER PATRICK: I will be happy to do that, 25 and I think, Linda, I appreciate you bringing forward the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 91 1 idea of working on technical, you know, having the 2 technicians and so forth, because it is not just as easy as 3 buying a zero emission or low emission vehicle, because you 4 have to be able to fuel it and you have to be able to repair 5 it, and at some point in time if you are going to pass it 6 along to someone else, they have to have access to that as 7 well. 8 So, I think your point is super well taken, and I 9 appreciate you bringing that before us. 10 CHAIRMAN DUNLAP: Does that work for you? 11 MS. URATA: That's wonderful. Thank you for your 12 time today. 13 CHAIRMAN DUNLAP: You have come a long way, and you 14 have been heard. All right. 15 Staff, you have a couple of written comments, Ms. 16 Rakow mentioned two, one was from Monterey and one from 17 Sacramento. 18 MS. TERRY: In the presentation we characterized 19 the primary comments. 20 There were, in addition, a couple of information 21 items updating some information in the technical pieces that 22 are basically editorial in nature. 23 CHAIRMAN DUNLAP: Okay. 24 Any other questions of staff? 25 Anybody else in the audience wish to speak on this PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 92 1 issue? 2 All right. Mr. Barker, from South Coast. 3 I know you are involved as a staff liaison in part 4 to this Program. Anything you want to say? 5 MR. BARKER: Mr. Chairman, and Members of the 6 Board, good morning. 7 My name is Oscar Barker, Director of Local 8 Government Affairs for the South Coast Air Quality Management 9 District. 10 I'm here today to discuss briefly with you the 11 progress made between our respective staffs in developing 12 language for the amendments to the 1995 Criteria Guidelines. 13 Several changes to the draft staff report were 14 recommended to your staff by local governments in the South 15 Coast. 16 We supported the recommended changes, and at this 17 point I want to thank your staff for their flexibility in 18 incorporating these recommendations into the report before 19 you. 20 Further we have received very positive feedback 21 from several cities and counties in the South Coast on the 22 revisions. 23 Additionally, the South Coast District is committed 24 to continue to work with you and local government staff to 25 execute the following tasks: PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 93 1 Number one, we want to participate in efforts of 2 the AB 2766 Fund Task Forces of CAPCOA and of the South Coast 3 Air Quality Management District to expand the list of cost 4 effective projects; 5 To continue to work with the Air Resources Board 6 staff to refine the current analytical tools needed to select 7 cost effective projects; 8 To establish a central depository to showcase 9 successful projects that local governments can model their 10 efforts; 11 To coordinate with your staff a series of 12 countywide forums for local governments within the South 13 Coast Air Basin; 14 To convene working groups consisting of technical 15 staff from the Air Quality Management District and all cities 16 and counties within the South Coast Air Basin; 17 To assist the Air Resources Board staff in 18 convening an annual conference featuring exemplary motor 19 vehicle reduction projects cities have developed using AB 20 2766 subvention funds; 21 Finally, to continue to provide outreach and 22 technical assistance to local governments in the South Coast 23 Air Basin. 24 In conclusion, we look forward to continued 25 cooperation in working with your staff and anticipate PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 94 1 significant cost effective air quality benefits from this 2 Program. 3 Thank you for your time. 4 CHAIRMAN DUNLAP: Thank you. I think many of those 5 points that you made, Mr. Barker, were included in staff's 6 recommendation about how you are going to proceed with the 7 exemplary projects conference and the workshops and the 8 dialogue. 9 Thank you. I appreciate that. 10 Okay. The Board has before us a Resolution, 98-32, 11 which contains the staff recommendations, plus I am going 12 add, if amended, if we make a motion, whoever the maker of 13 the motion would indicate that we add those changes that we 14 discussed a few minutes ago to be added as part of that 15 Resolution. 16 BOARD MEMBER RAKOW: So moved. 17 CHAIRMAN DUNLAP: Ms. Rakow makes the motion. 18 Is there a second? 19 BOARD MEMBER PATRICK: Second. 20 CHAIRMAN DUNLAP: Supervisor Patrick. 21 Any discussion? 22 All right. We will do a voice vote on Resolution 23 98-32, with those changes that we have previously discussed. 24 All those in favor, say aye. 25 Any opposed? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 95 1 Very good. Thank you. 2 Ms. Terry, thanks to you and your team for working 3 through this. I know this has been a long process, and I am 4 grateful for your sticking with it. 5 CHAIRMAN DUNLAP: Okay. We move then to 98-7-5. 6 Mr. Kenny, do you want to introduce the Federal 7 Standards Item? 8 I'm looking for my file, Mike. So, I'm looking to 9 you to help me out here. 10 MR. KENNY: Thank you, Mr. Chairman. 11 U.S. EPA has moved into the implementation phase of 12 the new Federal Standards, and the President has directed, 13 and U.S. EPA has committed to rolling out guidance on 14 implementing these standards by the end of this year. 15 There are a variety of issues to address, such as 16 attainment deadlines, progress requirements and air pollution 17 transport. 18 These issues will be familiar to most of you 19 because of the regular updates in the monthly Board Member 20 news briefs and your participation in the particulate matter 21 forum. 22 Meanwhile, the State of California is moving ahead. 23 Our Statewide Fine Particle Monitoring Network Plan is ready 24 to be submitted to U.S. EPA this July. 25 We have kicked off development of an ARB work plan PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 96 1 to specifically address the new PM 2.5 standard. 2 We completed our initial outreach efforts on PM 2.5 3 through our 10 public forums on particulate matter. 4 At the 10 Particle forums around the State during 5 the last three months, over 280 participants had the 6 opportunity to learn about fine particles. 7 They also provided comments on the future direction 8 that they thought this Board should take. While each region 9 presents some unique issues, there were clearly common themes 10 that we heard statewide. 11 I expect staff's presentation will give us a good 12 flavor for the discussion at each of those forums. 13 For my part, I was able to attend the forums in 14 Sacramento and the San Joaquin Valley. The Valley forums 15 in Fresno and Bakersfield were especially useful because of 16 the active participation of key stakeholders. 17 I want to acknowledge and express my thanks to the 18 Chair and to each of the Board Members who participated in 19 the forums, Ms. Patrick, Ms. Riordan, Supervisor DeSaulnier, 20 Ms. Rakow, Mr. Calhoun and Ms. Edgerton. 21 I know Jack also tried to attend the forum in 22 Colusa despite an injury. With that, I would like to 23 introduce Ms. Edie Chang, of the Office of Air Quality and 24 Transportation Planning, who will now make a presentation. 25 Edie. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 97 1 MS. CHANG: Chairman Dunlap, and honorable Board 2 Members, good morning. 3 My name is Edie Chang. Today I will be presenting 4 an update on the status of the new Federal Standards for 5 Ozone and Fine Particulate Matter. 6 I will also discuss the U.S. EPA's proposed 7 visibility regulations, which are expected to be finalized 8 this summer. 9 As you will recall, in November 1996, U.S. EPA 10 proposed a revised Ambient Air Quality Standard for Ozone, 11 and new standards for fine particulate matter, which we often 12 refer to as PM 2.5. 13 In July, 1997, the U.S. EPA finalized the new 14 standards, replacing the existing one hour ozone standard 15 with an eight hour standard. 16 At the same time, U.S. EPA also finalized new 24 17 hour and annual standards for PM 2.5. My presentation today 18 will look back at some of the important activities that have 19 taken place over the last year, discuss where we are now and 20 look forward to future activities. 21 The ARB submitted formal comments on the proposed 22 Federal Standards in March 1997. In those comments, the ARB 23 noted that California's own Ozone and Particulate Standards 24 were more health protective than the then current Federal 25 Standards, and that U.S. EPA's proposed standards would PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 98 1 bring the Federal Standards closer to California's. 2 In the comments we emphasized that for California 3 implementation issues are the key. U.S. EPA must implement 4 the new standards in a way that takes technical feasibility 5 and cost effectiveness into account as well as allowing more 6 time for areas with more difficult air pollution problems to 7 comply with the standards. 8 Following California's example, U.S. EPA should 9 develop policies that allow states to pursue air quality 10 progress in parallel with economic growth. 11 The ARB also testified before Congress reiterating 12 these themes. In developing their implementation policies, 13 the U.S. EPA asked an external Advisory Committee for 14 recommendations. 15 Chairman Dunlap participated on this Committee with 16 about 100 other people. We hoped this Committee would help 17 avert some of the snags associated with past U.S. EPA 18 interpretations of Clean Air Act requirements, and it did. 19 Many of the extreme ideas brought to the Committee 20 have quietly disappeared. In this forum, Chairman Dunlap 21 routinely advocated state flexibility and the need to 22 encourage the innovative approaches, which have been so 23 successful in California. 24 U.S. EPA should set performance standards without 25 prescribing how states meet them, and implementation policies PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 99 1 must recognize progress already achieved by state programs. 2 When U.S. EPA finalized the new Standards, 3 President Clinton directed Administrator Browner to ensure 4 that implementation policies, "maximize common sense, 5 flexibility and cost effectiveness." 6 We are closely following U.S. EPA actions for 7 consistency with the principles and the Presidential 8 Directive as they implement the new Standards. 9 Within the State, we worked with a group of local 10 air districts and California industry to identify concerns 11 and recommendations developed through our collective 12 experiences implementing clean air programs in California. 13 We found much common ground on implementation 14 issues and sent three joint letters to U.S. EPA with 15 consensus recommendations. 16 Shortly after U.S. EPA finalized the new Standards 17 for Ozone and PM 2.5, the Agency proposed new regulations 18 addressing the regional haze that impairs visibility in our 19 National Parks and Wilderness Areas. 20 As required by the Clean Air Act, these regulations 21 would call on states to develop State Implementation Plans, 22 or SIPS, showing reasonable progresses towards improving 23 visibility. 24 The proposed regulations are partly in response to 25 the recommendations of the Grand Canyon Visibility Transport PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 100 1 Commission, of which California was a Member. 2 However, the regulations will apply nationwide; 29 3 of the 156 areas covered by the regulations are in 4 California, including Yosemite, Joshua Tree, Lassen and 5 Redwoods. 6 These areas are shown on the map on the last page 7 of your hand-out. California must address visibility 8 impairment in our own 29 areas, as well as interstate 9 transport to the Grand Canyon and other nearby parks. 10 We recognize the importance of protecting 11 visibility in these pristine areas. Public support for 12 healthy air includes improving the visible impacts of air 13 pollution. 14 However, the U.S. EPA proposal is deeply flawed. 15 In our comments, we called for U.S. EPA to follow the Grand 16 Canyon Commission's recommendations, particularly with 17 respect to the definition of reasonable progress. 18 The Commission recognized that steady emission 19 reductions will improve visibility at the Grand Canyon. 20 This is consistent with California's long-standing 21 and successful approach, as well as with the Federal Clean 22 Air Act's requirements for achieving the health based 23 standards. 24 Instead, U.S. EPA chose to propose an entirely 25 different metric for visibility progress, and because fine PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 101 1 particles in the atmosphere are the main cause of visibility 2 impairment, we recommended that the timelines for 3 implementation of the PM 2.5 and visibility regulations be 4 aligned to allow coordination of the necessary technical 5 work. 6 ARB staff also testified before Congress on the 7 proposed regional haze regulations, echoing the same themes. 8 I will talk about the status of these issues in a 9 moment, but first a little background on visibility in the 10 west. 11 As a signatory to the Grand Canyon Commission's 12 recommendations, we are committed to their implementation. 13 In California, we have a well-developed structure 14 for public involvement, and our stakeholders are active 15 participants in the development of plans and regulations. 16 However, other western states, which have not had 17 to develop comprehensive SIPS before, are still deciding how 18 best to involve stakeholders in their plan development. 19 In an effort to pool resources and establish a 20 mechanism for public input to implement the Commission's 21 recommendations, some western states are pursuing voluntary 22 regional efforts through the Western Regional Air 23 Partnership, or the WRAP. 24 The focus of the WRAP is implementation of the 25 Commission's recommendations. California is not a member of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 102 1 the WRAP. 2 The Grand Canyon Commission's preliminary analysis 3 of long range transport showed that emissions in California 4 did have some impact on visibility in the Grand Canyon, but 5 the analysis could not quantify the relative contributions of 6 emissions close to the Grand Canyon and those transported 7 long distances. 8 However, California's role is clear. The best 9 thing we can do for the Grand Canyon, and our own residents, 10 is to continue implementing our programs to achieve steady 11 emission reductions. 12 To that end, we are not a formal member of the 13 WRAP, but we are monitoring the WRAP's activities and 14 participating in the WRAP's technical work. 15 Over the last year, as we have worked with other 16 western states on the most appropriate ways to implement the 17 Commission's recommendations, we found that many western 18 states share our fundamental concerns about the problems with 19 U.S. EPA's proposed Regional Haze Rule. 20 U.S. EPA staff has indicated that they have heard 21 the message from western states, that steady emission 22 reductions are the appropriate legal test for reasonable 23 progress. 24 We viewed the fact that U.S. EPA staff has 25 testified to this effect in front of a Congressional PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 103 1 Subcommittee as a positive step. 2 Congress has addressed our other major concern with 3 the visibility regulations timing. Recent Legislation align 4 the schedules for PM 2.5 and visibility plans. 5 From the beginning, the ARB has pressed U.S. EPA to 6 fully fund the deployment of the PM 2.5 monitors with the new 7 Federal dollars. 8 Chairman Dunlap was an effective advocate for this 9 position in many forums, carrying a message that was endorsed 10 by other states and local air districts. 11 Congress recognized this need and recently passed 12 Legislation requiring not only full funding of the monitoring 13 network with new Federal dollars but the restoration of 14 previously diverted funds to states and local air districts. 15 One of the ideas discussed in the Federal Committee 16 and considered by U.S. EPA was mandatory regional bodies, 17 which would be above states, and have the authority to 18 develop, adopt and implement multi-state clean air plans and 19 control strategies. 20 U.S. EPA considered spliting the country in two and 21 placing every state west of the Mississippi River in one 22 large regional entity. 23 California was out in front opposing this idea as a 24 threat to state sovereignty and a transgression of the 25 authority and responsibility of individual states. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 104 1 We were quite vocal and successful on this issue. 2 With regard to interstate transport and our regional 3 obligations, California and other western states have 4 advocated using the Grand Canyon Commission's approach for 5 implementing the regional haze regulations. 6 The emission reductions from our existing and 7 planned programs will fulfill our obligations to the 8 Commission. 9 Intrastate transport should be treated in the same 10 way as interstate transport, achieving a technical 11 understanding of the relative contributions, and then 12 assessing appropriate control responsibilities. 13 In the approved Ozone SIP, the responsibility for 14 control of pollution in the Southeast Desert was shared by 15 the South Desert and its upwind neighbor, the South Coast. 16 In cases of intrastate transport related to the new 17 standards, we expect to follow the same process. 18 Although U.S. EPA and Congress have addressed some 19 of the most critical issues. Others remain. We are 20 continuing to monitor U.S. EPA's emerging policies to ensure 21 California's ability to pursue effective air quality 22 programs. 23 Now that we have looked back over the last year and 24 the progress that we have made on resolving policy issues, 25 what technical work do we need in California? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 105 1 The 1994 SIP for Ozone, which addresses the one 2 hour ozone standard, will be the basis for our eight hour 3 ozone plan. 4 The 1997 Southern California Ozone Study will 5 provide valuable information to improve the technical basis 6 for the next plan revision. 7 Another important factor is motor vehicle data. 8 Because motor vehicle emissions contribute significantly to 9 all pollutants, we are continuing our efforts to accurately 10 predict motor vehicle emissions in the real world with 11 enhanced inventories and a new model. 12 As a Member of the Policy Committee overseeing the 13 project, Supervisor Patrick is very familiar with the 14 California Regional Particulate Study. 15 This study will provide information about 16 emissions, formation and transport of both PM 10 and PM 2.5 17 in the San Joaquin Valley and surrounding areas. 18 The information will be used to develop a PM model 19 for the Valley, and the understanding that we gain there will 20 be transferable to other areas. 21 The ARB and the districts are currently in the 22 process of expanding our PM monitoring network to include 23 approximately 100 new Federally approved PM 2.5 monitors. 24 We are finalizing a monitoring network design, 25 which is due to U.S. EPA on July first, and we have already PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 106 1 received our first shipment of new monitors. 2 Our Technical Program for PM 2.5 and Visibility 3 will incorporate all of these components, as well as 4 additional work needed to understand PM 2.5 statewide. 5 One of the most important aspects of our Technical 6 Program is public input. This is an opportunity for the ARB 7 to solicit input on the directions our technical work should 8 take over the next five to eight years and for the public and 9 interested stakeholders to help us frame the important 10 questions. 11 Through educational public forums, technical forums 12 focused on specific issues such as monitoring or modeling, 13 and a detailed technical work plan, we hope to ensure a high 14 degree of public involvement in our activities over the next 15 several years. 16 As you all know, in collaboration with local 17 districts, during the spring we conducted a series of 10 18 public forums throughout the State. 19 Each forum was opened by an Air Resources Board 20 Member and a local elected official, many of whom stayed for 21 the whole program. 22 In our presentation we focused on public health, 23 what we are already doing to reduce particle pollution and 24 what more we have planned for the future. 25 The Air Resources District staff presented a local PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 107 1 perspective, including air quality data and programs to 2 address particle pollution. 3 As you would expect, each forum reflected the local 4 area, and each group of participants was concerned about 5 slightly different issues. 6 However, we did hear consistent concerns throughout 7 the forums. The first was questions and concerns about the 8 health impacts of particle pollution. 9 The second was prescribed fire. Land managers, 10 like the U.S. Forest Service and the California Department of 11 Parks, are planning four to tenfold increases in the acres 12 burned to restore the natural ecology on public lands, called 13 prescribed burning. 14 The impact of these increases must be evaluated as 15 we develop PM 2.5 plans. I will talk more about our near 16 term activities to improve smoke management programs in a 17 moment. 18 Participants also told us that mobile source 19 controls of all kinds are important but showed particular 20 interest in diesel engine controls. 21 We are currently in the process of summarizing all 22 of the forums and will transmit a summary to you once it is 23 complete. 24 The input from the forums will be incorporated into 25 our Technical Work Plan. This graphic illustrates the steps PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 108 1 on the way to our ultimate goal of clean air. 2 The Technical Work Plan will cover each of these 3 steps, discussing what we already know and what we still need 4 to study. 5 The Work Plan will also lay out a schedule and 6 describe how we intend to get the information. A draft of 7 the Technical Work Plan will be available later this year. 8 With progress on a number of important policy 9 issues and technical work beginning, where does that leave 10 California now? 11 California's long-standing strategy of pursuing 12 steady emission reductions has yielded tremendous air quality 13 benefits. 14 We have led the nation in recognizing the need for 15 reductions in both organic gases and NOx to address our ozone 16 problems, and we are reaping the benefits of that foresight 17 now. 18 NOx control is critical not only for zone but also 19 to address PM. Organic gases also contribute to both ozone 20 and PM problems. 21 Because of these common precursors, our existing 22 ozone programs will reduce fine particles levels and improve 23 visibility. 24 California's continued emphasis on more effective 25 NOx control for motor vehicles and industrial sources sets PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 109 1 the stage for further progress on PM 2.5. 2 The South Coast and the San Joaquin Valley both 3 violate the existing PM 10 Standard, and will violate the new 4 PM 2.5 Standard. 5 Existing PM 10 plans in both areas already address 6 both coarse and fine particle pollution. However, even with 7 the projected declines in emissions, additional controls will 8 likely be needed to bring the South Coast and the San Joaquin 9 Valley into attainment for PM 2.5. 10 Other urban areas in California may also violate 11 the new Standard. Although the planning timelines for PM 2.5 12 are long, particle pollution is a public health concern now. 13 We can and should begin reducing pollution levels 14 now. An added benefit of early action is that with the help 15 of additional emission reductions many of our other urban 16 areas, which are close to the standard, may avoid Federal 17 planning requirements. 18 If we are successful, even with growth and 19 population, vehicle travel and the economy, most urban areas 20 in the State will still comply with the standard. 21 Many of the mobile source regulations on the 22 Board's agenda over the next year, including LEV II, pleasure 23 craft regulations and off-road equipment measures, can 24 significantly reduce emissions of PM precursors like NOx and 25 organic gases. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 110 1 However, those measures address new engines and 2 equipment, so the timing of the emission benefits depends on 3 fleet turnover. 4 In the SIP we recognize that incentives to speed 5 the introduction of cleaner engines are the most effective 6 way to achieve emission reductions in the near term. 7 In his budget, Governor Wilson allocated $50 8 million for these types of incentive programs. In the near 9 term we also expect U.S. EPA to meet its SIP obligations to 10 address Federal sources like aircraft and marine vessels, 11 which are outside of the ARB's authority. 12 National agreements to reduce NOx emissions from 13 diesel trucks and diesel off-road equipment also contain 14 requirements to evaluate the feasibility of further 15 reductions in direct PM emissions in the future. 16 And in light of planned four to tenfold increases 17 in prescribed burning, we must improve our smoke management 18 programs to ensure that burning is done in ways that minimize 19 the health impacts. 20 The choices land managers make about when, where 21 and how much to burn, must take public health into account. 22 The success of our smoke management programs will 23 affect our ability to comply with Federal PM 2.5 Standards 24 and the Regional Haze Regulations. 25 The PM 2.5 Standards do not ensure public health PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 111 1 protection against high short-term smoke levels. 2 For example, a downwind community which is smoked 3 out for a few hours may not violate the PM 2.5 Standard. 4 We need to strengthen California's existing smoke 5 management programs now to ensure that we are doing 6 everything possible to protect public health. 7 Moving now to future activities. This slide shows 8 the planning calendar for the new standards. 9 In 2003, we will revisit our existing Ozone SIP to 10 show how these strategies will move us toward attainment of 11 the eight hour standard. 12 In 2006, or 2007, after we have developed the 13 necessary technical understanding of PM 2.5, ARB and the 14 districts will need to adopt our formal plans to attain the 15 PM 2.5 Standard and show reasonable progress toward 16 visibility improvement for California's 29 Class I areas. 17 In early 2000, ARB will also consider an update to 18 the State element of the SIP for inclusion in the South 19 Coast's 2000 Air Quality Management Plan. 20 This will be necessary to reflect updated emission 21 inventories and our progress on control strategies. 22 For each of these plans we will use the available 23 information to evaluate impact of the strategies on ozone, 24 PM 2.5 and visibility so that the Board can assess the 25 broader impacts of the plan. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 112 1 So what's next for 1998? 2 As you know, the Board has a full regulatory 3 calendar this year considering many SIP measures. 4 Implementing the Ozone SIP will ensure steady 5 progress toward achieving the new Standards, as well as 6 progress on visibility in the west. 7 We also plan to issue our Draft Technical Work Plan 8 by the end of year. We will continue to monitor U.S. EPA 9 proposals, and where necessary, work to ensure that 10 California's more advanced air quality programs are not 11 hindered. 12 We have already received our first PM 2.5 monitors 13 and expect to ship them to districts and begin monitoring by 14 the end of the year so that we can identify which areas of 15 the State will violate the new PM 2.5 Standards. 16 Finally, we will keep the Board updated on these 17 activities through the monthly Board Member news briefs and 18 period updates. 19 With that, we will be happy to take any questions. 20 CHAIRMAN DUNLAP: Fine presentation, Ms. Chang. I 21 appreciate the compliments to me. 22 We are going to find a way to promote you in the 23 near future. 24 MS. TERRY: Well, John, I wanted to declare 25 victory, but they wouldn't let me. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 113 1 CHAIRMAN DUNLAP: I found my notes, and my 2 apologies, Mike, for putting you on the spot, but I must let 3 my Board colleagues know how vigilant our staff has been in 4 keeping track of what has been going on with these new 5 standards and with proposals. 6 I had the opportunity to serve on a number of 7 advisory committees and work groups in Washington and 8 regionally, and I have always been very well staffed. 9 We have had just incredible intelligence from our 10 team, and I am grateful for that. We have, also, I think, 11 tried to be the right kind of neighbor to the our colleagues 12 in other states in that we have done some heavy lifting on 13 some things involving, like, monitoring dollars and making 14 sure that they knew our views about these proposals, and we 15 have done that successfully. 16 We can always be more successful if people just 17 listened to our points of view, but we are being vigilant, 18 and I appreciate very much the staff work that has gone into 19 this. 20 Any questions? 21 Mr. Kenny, if there aren't any, do you want to add 22 or subtract anything, talk about any recent developments that 23 the Board ought to know? 24 MR. KENNY: No, not really. 25 I think basicall, the presentation that was given PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 114 1 actually really does sort of lay out where things are right 2 now. 3 I think maybe the key thing is that as we go 4 forward into the future there will still be a lot of work, 5 and there will still be a lot of public outreach and 6 consultation to ensure that, in fact, we are on track on 7 this. So, that is about it. 8 CHAIRMAN DUNLAP: We have always, historically our 9 Board has always participated in national forums. 10 Technically, I am looking to Tom Cackette. He serves on a 11 number of mobile source advisory committees that have proven 12 to be very relevant for Federal standards, and others on the 13 staff do that as well. 14 Lynn Terry recently went and testified before the 15 U.S. Senate on an item relative to this. 16 We have always tried to distinguish ourselves as 17 this Board's representatives, whether it's me, or it's the 18 staff that has done that, so Mr. Kenny is going to continue 19 to keep you advised in real time with the monthly updates, 20 and if any of you have any particular interest on any of 21 these items, let me know, and we will make sure that you are 22 kept as current as possible. 23 Okay. If there aren't any other comments, I will 24 thank the staff very much for your work on this, and we will 25 ask you to come back, maybe at the end of the year, Mike, to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 115 1 give us another update, formally. 2 Let's move to Closed Session. Let me find my file 3 here and make sure I don't lose this one. 4 We will now adjourn for Closed Session of the 5 Board, as indicated in the Public Notice for today's meeting. 6 The purpose of the Closed Session is to confer with 7 or receive advice from the Board's legal counsel regarding 8 litigation. 9 I'm not going to read the litigations at stake, 10 because it's in the Board Notice package, but we are going to 11 go to this Closed Session, and then we will come back, and we 12 will take the next Item up. 13 Is there a time limit or a timeframe? 14 We want to come back at 1:00? 15 We will go to Closed Session, have lunch, hear from 16 our Legal staff, and then we will come back about five 17 minutes after the hour. 18 The Closed Session is going to be on the fourth 19 floor, in the Jim Boyd Conference Room. 20 Take a break. Thank you. 21 (Thereupon the lunch recess was taken.) 22 23 24 25 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 116 1 A F T E R N O O N S E S S I O N 2 --o0o-- 3 CHAIRMAN DUNLAP: Okay. I would like to call the 4 meeting to order again. Some of my colleagues are straggling 5 back from lunch, but they will be here shortly. 6 Earlier today the Board met in Closed Session to 7 confer with or receive advice from our legal counsel 8 regarding litigation. 9 Kathleen Walsh, our General Counsel, gave the Board 10 an informational briefing regarding the litigation, as noted 11 in the Public Agenda, and no action was taken by the Board, 12 but I wanted to do that on the record so folks here would 13 know what we were up to. 14 Before we continue with our next Agenda Item, I 15 would like to take a moment to have a special presentation 16 made to an outstanding ARB staff member who most of us are 17 very familiar with, and that's Bill Valdez. 18 Bill, are you here? 19 BOARD MEMBER RIORDAN: Mr. Chairman, I looked, oh, 20 there he is, way in the back. 21 CHAIRMAN DUNLAP: Bill, you have always been 22 dependable. You have been everywhere we needed you to be, 23 and yet we couldn't find you just a moment ago. You gave me 24 a heart attack. 25 Bill has been providing staff support at our Board PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 117 1 meetings for the past 15 years, and we are very grateful for 2 his service and want to recognize his outstanding performance 3 in carrying out those duties over so many years. 4 He is a professional, has a great deal of humor, 5 perspective that, I think, gives us pause to look at the 6 humor in what we do. 7 He has certainly gone beyond the call of duty in 8 many respects. He has been an asset to our Board. 9 However, as we all do, we promote people like that. 10 I know those of you in the audience can relate to that, and 11 he has been promoted. 12 His current duties and responsibilities have become 13 more wide ranging and time consuming. Bill will only be able 14 to provide support for the out-of-town meetings for the Board 15 in the future, but we are grateful for that. 16 Therefore, in recognition of his service to our 17 Board, we would like to acknowledge Bill with a Resolution 18 signed by our Board Members. 19 I have asked Barbara Riordan to please read the 20 Resolution and present it to Bill. 21 BOARD MEMBER RIORDAN: You know, this is a real 22 pleasure to represent not only the Board today, Bill, as it's 23 so seated, but the many Boards that you have served over the 24 years, those 15 years. 25 So what I am going to do is perhaps a little bit PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 118 1 out of character, and that is to allow you, because he always 2 anticipated every need we ever had, to look at your 3 Resolution while I attempt to read it. 4 It was prepared, Bill, and you will note, obviously 5 by people that knew you well, because there are some 6 interesting things that are enumerated here. 7 It begins as Resolution 98-33, June 25, 1998, 8 whereas, Bill Valdez has provided staff support for the 9 meetings of the Air Resources Board for the past 15 years. 10 Whereas, Bill's service to the Board has been 11 outstanding, showing attention to detail above and beyond the 12 call of duty, and demonstrating an amazing breadth of talent, 13 skill and initiative, from coordinating support equipment for 14 Board meetings to chauffeuring Board Members to and from 15 meetings, to trouble-shooting problems with audio-visual 16 equipment, to assisting members of the public trying to 17 understand ARB procedures, and last, but not least, to 18 providing a good cup of coffee when needed, and I insert 19 here, especially when those meetings were running well past 20 6:00 and 7:00 p.m. in years past. 21 Whereas, Bill's special skills lie in his uncanny 22 ability to anticipate the needs of the Board Members and the 23 Board's staff so that many things got done before anyone knew 24 it might be needed. 25 Whereas, Bill has traveled all over California to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 119 1 coordinate out-of-town Board meetings in virtually every 2 corner of this State, meeting with the particular challenges 3 of each new location with the characteristic of plumb and 4 good nature. 5 Whereas, Bill introduced many a Board staffer to 6 unique California experiences, like lunch at the LA Public 7 Market, when choices featured included such delicacies as 8 chicken feet and beef lips. 9 Whereas, Bill's sense of decorum, which was 10 reflected in his professional appearance and ability to 11 communicate effectively with government officials at all 12 levels, industry representatives and the general public, 13 balanced by his well-developed sense of humor, which served 14 him well in carrying out the many and often stressful duties 15 involved with Board meetings. 16 Whereas, Bill has earned the respect and affection 17 of his co-workers, past and present, and while Bill will 18 continue to provide his unique brand of service to the Board 19 at out-of-town meetings, his presence at meetings in 20 Sacramento will be missed greatly. 21 Now, therefore be it resolved that the Board and 22 each of us congratulate Bill on his promotion and wish him 23 well in his duties with the Air Resources Board and extend 24 our thanks to him for 15 years of exemplary service to the 25 Board. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 120 1 I would like you to join me in giving him a hand. 2 CHAIRMAN DUNLAP: Please, Bill, tell us, how does 3 this Board compare with the others in the past? 4 MR. VALDEZ: You can't compare them. 5 I am kind of taken back by this. I'm truly 6 honored. 7 I would have been prepared for a speech, but you 8 can see, I'm just honored, and thank you all for everything. 9 Thank you. 10 CHAIRMAN DUNLAP: Thank you, Bill, very much. 11 Well, I have delayed dealing with this next item as 12 long as I can, but we will take this one up, 98-6-1, a 13 Continuation of a Public Hearing to Consider the Appeals of 14 the City of Los Angeles from Orders Numbers 041697-05 and 15 070297-04, of the Great Basin Unified Air Pollution Control 16 District. 17 The next Item on the Agenda is a continuation from 18 our May twenty-second hearing at which the Board heard the 19 appeals of the City of Los Angeles from two Orders issued by 20 the Great Basin Unified Air Pollution Control District. 21 The first Order requires the City to pay fees to 22 the District, and the second Order requires the City to 23 implement PM 10 Control Measures on the dry bed of Owens 24 Lake. 25 On May twenty-second, the Board heard and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 121 1 considered arguments from the District and the City, as well 2 as public comments. 3 Regarding the Fee Order, on the twenty-second of 4 May, the Board voted to deny the City's appeal on this Item. 5 At today's hearing the Board will consider the 6 adoption of the decision and findings document to finalize 7 the Board's decision to deny this appeal. 8 Regarding the Control Measure Order, on May 9 twenty-second the Board considered a motion to deny the 10 City's appeal of this order. 11 When that motion failed, we continued the Item 12 until today's meeting. We also strongly encouraged both 13 parties to use the additional time, the month, to try to 14 resolve their conflict. 15 I now ask Mr. Kenny to introduce the Item, after 16 which I want to go through some housekeeping here about -- we 17 have had a Board Member or two that were not here, and I want 18 to give them a moment to make a statement, or have our 19 counsel, Ms. Barnes, discuss that, but first I would like to 20 hear from Mr. Kenny. 21 Mike. 22 MR. KENNY: Thank you, Mr. Chair, Members of the 23 Board. There are really two Items before you today. 24 The first is the fee findings that need to be 25 determined by the Board. The second is to probably hear from PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 122 1 the parties with regard to the Board's suggestion last month 2 that they would like the two parties to lock themselves in a 3 room and to discuss the issue with the idea being that they 4 might be able to come to some kind of a resolution. 5 So, with that in mind, I did look at the witness 6 list and I noticed that Mr. Freeman and Dr. Hardebeck are 7 both present, and they can address the second issue. 8 So, it really is up to the pleasure of the Board 9 whether they would like to hear from the witnesses first with 10 regard to the substantive issue or address the findings 11 issues first. 12 CHAIRMAN DUNLAP: I think I would like to hear from 13 the witnesses, but I would like to give Ms. Barnes an 14 opportunity to help me assemble some context here. 15 MS. BARNES: Thank you, Mr. Chairman. I think, 16 before we get started, the record should reflect that 17 Mrs. Sally Rakow was not here during the May twenty-second 18 hearing of this matter. 19 I have since spoken with Mrs. Rakow, and she has, 20 in fact, reviewed the transcripts from the twenty-second 21 hearing and also reviewed the documentation that has been 22 submitted to the various Board Members, so she is prepared to 23 participate in the proceedings today. 24 CHAIRMAN DUNLAP: Very good. All right. 25 Then what I think I will do then is I will move to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 123 1 the two witnesses. I have them signed up in this order, this 2 is the way it was presented to me, Mr. David Freeman, from 3 the Los Angeles Department of Water and Power, if I can have 4 you come up, sir, to the podium here, after which we will 5 hear from Ms. Hardebeck, Ellen Hardebeck who represents the 6 Great Basin Unified Air Pollution Control District. 7 How is your health? 8 MR. FREEMAN: Would it be appropriate if we appear 9 together? 10 CHAIRMAN DUNLAP: That would be fine. 11 I was concerned, you were ill at the last meeting, 12 and we heard that you had a health challenge, are you doing 13 well today? 14 MR. FREEMAN: Yes, it turned out to be a false 15 alarm. I got the most thorough physical that I have ever had 16 in my life, and I was pronounced well and apparently just 17 needed to be checked up the night before your inquiry. 18 If I might speak a moment first, but we are 19 speaking together here today, because we spent a good chunk 20 of the last month together at your direction. 21 If I could reminisce for just a second, the last 22 time I appeared before this body was at a very historic 23 hearing in 1990, shortly after I was the new General Manager 24 of the Sacramento Municipal Utility District, where this body 25 adopted the zero emission standards that ushered in the age PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 124 1 of the electric car, and I feel very honored to be able to 2 appear before you again, because in terms of air quality, the 3 CARB Board is among the giants, and I have always been in 4 admiration of what you have done, and I say that 5 notwithstanding what the decision in this case might be. 6 CHAIRMAN DUNLAP: By the way, back in 1990, were 7 you on the right side of that issue? 8 MR. FREEMAN: Yes. 9 We ushered in the Electric Car Program in SMUD, and 10 we have one in LA, but we could talk about that all morning. 11 But we have taken very seriously the direction that 12 we settle this matter, and I could report that we have made 13 tremendous progress, and if you will grant the stipulation 14 that we jointly request of 30 more days, there is every 15 reason to expect us to come to you with a settlement within 16 that period, and I think it is important that you make it 17 clear to us that we don't have all summer, that we have to 18 get it done by your next meeting. 19 We both, at least as far as I am concerned, 20 negotiated in good faith and have made tremendous progress, 21 and perhaps I should let Ellen speak for a moment. 22 CHAIRMAN DUNLAP: All right. 23 Dr. Hardebeck, do you concur with that assessment? 24 DR. HARDEBECK: Yes. Absolutely. 25 It has been a pleasure to work with Dave over the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 125 1 last month, and we are also signatories to the stipulation 2 saying we would like this to be put over until your July 3 meeting. 4 I think we are close, and I think we need to have 5 the pressure kept on. 6 CHAIRMAN DUNLAP: All right. If I might just 7 direct my attention just to my Board Member colleagues just 8 for a moment, and perhaps to Ms. Barnes, we get used to our 9 staff, looking for them. 10 If we are hearing from both parties that they would 11 like the extra month to work this out, it seems to me, you 12 know, the vibes are good, and the fact that you are working 13 together in trying to come to a reasonable solution, which I 14 am grateful for that you are trying to do that, and I think 15 if you can do that it will -- could even be stronger than the 16 action that we take because you guys would come to the same 17 place together, so I'm inclined to agree to give them the 18 extra time. 19 DR. HARDEBECK: I think we have a written 20 stipulation that we gave to your staff with all of the 21 details. 22 CHAIRMAN DUNLAP: I will defer to you, Ms. Barnes, 23 about what we do formally with the stipulation, but if I 24 could get a sense of my colleagues, is that okay to give them 25 the extra month, we will do this, and I want to -- we have PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 126 1 consensus it seems, I want to tell you that we certainly 2 would like this resolved by next month. 3 DR. HARDEBECK: We do, too. 4 CHAIRMAN DUNLAP: We have a busy month next month. 5 We have got an Item that is going to get a lot of attention, 6 too, so I am not looking to have a six-day hearing or 7 anything, but we are looking maybe for you to send a courier 8 back to us and tell us how things are going a couple of weeks 9 before that date to give us some kind of progress report. 10 So, as it relates to this stipulated order, what 11 would that involve, Ms. Barnes? 12 MS. BARNES: Certainly the Board can and has within 13 its discretion to continue the matter for another 30 days to 14 your next regularly scheduled meeting, should you choose to 15 do so. 16 CHAIRMAN DUNLAP: Do we need to do that with a 17 vote? 18 MS. BARNES: I would suggest a motion, and you can 19 do that in a number of ways. 20 One way is there could be a motion to accept the 21 stipulation as it's written. There could be a motion to have 22 the Chair sign the stipulation in a modified format. 23 I understand there is maybe some issue with the 24 date of the next meeting, you could modify the stipulation 25 and sign it in that regard, or you may accept the stipulation PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 127 1 in whole or in part, because the stipulation does deal with 2 some other issues than just the 30 day extension on the 3 Control Measure appeal. 4 CHAIRMAN DUNLAP: Have you had a chance to look 5 at -- 6 Mr. Freeman, go ahead. 7 MR. FREEMAN: A person doesn't like to put his head 8 in the noose, but I think it would help us to come to 9 agreement this month if this Board told us that we needed to 10 get it done this month and the due date was 30 days from now. 11 I would be concerned about the thought that we have 12 all summer. I know you don't meet in August. 13 CHAIRMAN DUNLAP: I would agree with you, that 14 would be my sense. 15 MS. BARNES: If I may, also, another option the 16 Board could exercise would be to, on the Board's own motion, 17 based on the proposed stipulation and the testimony here 18 today, just on its own motion, continue the matter for 30 19 days and not even go through the process of signing the 20 stipulation. 21 MR. KENNY: Mr. Chair, if I might, I actually 22 suggest that the Board consider the latter comment by 23 Ms. Barnes with regard to how the continuance was to occur. 24 I think the Board should continue to put pressure 25 upon the parties to reach this agreement within a month, but PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 128 1 I think the Board can do that simply with an oral agreement 2 to continue this matter. 3 CHAIRMAN DUNLAP: And they want the pressure. 4 Counselor, don't complicate this, I think we are in 5 a good place here. 6 MR. LAMB: Mr. Chairman, I am Brian Lamb. I am the 7 District Counsel for the Great Basin Unified Air Pollution 8 Control District. 9 We have a stipulation that addresses about four 10 issues, and it was signed by me as District Counsel and it 11 was signed by -- 12 CHAIRMAN DUNLAP: You want us to sign the 13 stipulation, is that what you want? 14 MR. LAMB: I want you to sign the stipulation. 15 MS. WALSH: If I may make a suggestion, the 16 stipulation that was developed by the parties and signed by 17 Mr. Lamb, and attorneys on behalf of the City, is an 18 agreement between those two parties. 19 Staff has reviewed the stipulation, and if you will 20 look at the resolution that has been drafted and provided for 21 you as a proposed resolution for taking action on this matter 22 today, consistent with that stipulation between the parties, 23 it reflects the issues and matters that have been discussed 24 here today, including the continuation of the matter to the 25 July hearing. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 129 1 The remainder of the stipulation, I believe, 2 reflects agreements between the parties and can be 3 accommodated by this Board as need be, and there is no need 4 for this Board to sign on to that stipulation. 5 CHAIRMAN DUNLAP: Okay. Counselor, last point, and 6 then I want to have a discussion with my colleagues. 7 Go ahead. 8 MR. LAMB: We see the stipulation as a package, 9 and we agreed to it as a package deal, and we haven't seen 10 this resolution that has been proposed to you, so I am not in 11 a position to address that. 12 CHAIRMAN DUNLAP: We are not asking you to address 13 it, Counselor. 14 MR. LAMB: Okay. So unless there is a reason, I 15 would like an opportunity to address, I would like you to 16 take that stipulation as a package. 17 BOARD MEMBER EDGERTON: Can we see the stipulation? 18 CHAIRMAN DUNLAP: Hang on one second. Thank you. 19 Have a seat, and I will come right back to you. 20 Ms. Barnes, if I might, we need a copy of the stipulation. 21 MS. BARNES: It sounds like there are two different 22 documents, and you want to see a copy of the proposed 23 stipulation, an order submitted by the parties, and I 24 understand there is a resolution that has been prepared by 25 staff. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 130 1 CHAIRMAN DUNLAP: I want both of those things now, 2 if we can get copies for the Board. 3 MS. BARNES: The resolution is in your package. 4 CHAIRMAN DUNLAP: Okay. 5 Where is the stipulation? 6 Mike, do we have copies? 7 I will allow for some questions. Mrs. Riordan, and 8 then Dr. Friedman. 9 BOARD MEMBER RIORDAN: My question is really to our 10 counsel, Ms. Barnes. Obviously, there are some documents 11 that both must be a part of the ongoing discussions between 12 the two parties and then our staff. 13 It would seem to me, if we could possibly do it in 14 a more informal way of simply continuing this without a lot 15 of, we need to see this, we need to see that, but just a 16 general continuance, could we do that without jeopardizing 17 anyone's position? 18 MS. BARNES: You certainly could do that. Like we 19 stated, you have various options. 20 The Board does have within its discretion to merely 21 continue the matter for 30 days on its own motion, or you can 22 accept the stipulation provided by the parties in whole or in 23 part, or you can adopt the resolution prepared by staff in 24 whole or in part. 25 So, the answer to your question is yes. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 131 1 BOARD MEMBER FRIEDMAN: I'm convinced that this is 2 a no-brainer, and I would like to make a motion that we 3 continue this Item for 30 days, end of story, period. 4 BOARD MEMBER EDGERTON: I object. I insist on my 5 right to see the stipulation before voting. 6 BOARD MEMBER DeSAULNIER: I second the motion. 7 CHAIRMAN DUNLAP: We have a motion and a second. 8 Now what we are going to do is we are going to get 9 the stipulation. So what I would like everybody to do is, we 10 are going to have a quiet moment here while we get copies. 11 We are going to read the doggone thing, and then we 12 are going to deal with this motion. 13 BOARD MEMBER RIORDAN: Only thing on the motion, 30 14 days may not be an accurate number. 15 CHAIRMAN DUNLAP: You are looking to the July 30 16 date. 17 BOARD MEMBER FRIEDMAN: Yes. 18 CHAIRMAN DUNLAP: Second? 19 BOARD MEMBER DeSAULNIER: Yes. 20 BOARD MEMBER RAKOW: Is it for the District's 21 attorney to see the two sentences that continue this to July 22 30, maybe that would resolve his problem. 23 CHAIRMAN DUNLAP: Counselor, you have that. You 24 are reading it, right? 25 I know you referred to the stipulation. Are these PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 132 1 two sentences -- does that look good to you? 2 BOARD MEMBER RAKOW: The only thing on the motion, 3 Mr. Chairman, might be, and to the maker, 30 days may not be 4 an accurate number. The next Board meeting is July 5 thirtieth, so -- 6 CHAIRMAN DUNLAP: So, you are looking to July 7 thirtieth. 8 Is that okay with the second? 9 Very good. That's what Dr. Friedman means. 10 Yes, Mrs. Rakow. 11 BOARD MEMBER RAKOW: Would it be appropriate for 12 the District's attorney to see the two sentences that 13 continue this to July thirtieth and thirty-first, maybe that 14 would -- 15 CHAIRMAN DUNLAP: Counselor, I know you prefer the 16 stipulation. Are these two sentences -- does this look good 17 to you, yes or no, that is all that I am looking for? 18 MR. LAMB: Just to continue it, yes. 19 CHAIRMAN DUNLAP: What we are going to do is we are 20 going to wait to get the copies. We are going to take a 21 couple of minutes and look at it, then we are going to deal 22 with this motion. 23 It is my personal feeling that we should make this 24 as least complicated as possible, but Ms. Edgerton makes a 25 good point about reading this stipulation. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 133 1 BOARD MEMBER PARNELL: It seems that the resolution 2 that has been prepared simply does that, and in addition, 3 does some housekeeping with respect to some other issues that 4 we have had. 5 CHAIRMAN DUNLAP: Jack, I think I'm certainly 6 prepared to support Dr. Friedman's motion. I just want to be 7 responsible here and make sure we get a chance to look at 8 this before we take up the Item. 9 MS. WALSH: If I could just make another point of 10 clarification, so folks know what is happening here. 11 CHAIRMAN DUNLAP: It is regrettable if there is 12 anything that you said that would have a flurry of people 13 wanting to come up to respond to this, so choose your words 14 carefully. 15 MS. WALSH: It should not, but the proposed 16 resolution before you that was developed by staff includes 17 not only the language that continues the matter on the 18 Control Measures, but it also includes language that would be 19 adopting the findings on the Fee decision. 20 This is a matter that the Board voted on and 21 decided last month to deny the appeal. So, the resolution 22 itself, you should not vote on until we have moved through 23 the part of the hearing that deals with the proposed findings 24 on the fee measure, as well. 25 BOARD MEMBER FRIEDMAN: And my motion does not PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 134 1 address that. That's fine. 2 CHAIRMAN DUNLAP: We could still deal with the 3 matter that we have the motion before we deal with the fee 4 thing, or should we punt the whole thing for 30 days? 5 MS. BARNES: Technically you could do it either 6 way, but I think for clarification's sake, it would be 7 helpful to either have your motion include both the fee 8 issue, as well as the Control Measures issue, or I believe 9 that Ms. Walsh is correct in stating that the resolution 10 language does address both of those issues, and it also 11 addresses one of the points that was raised by the parties 12 involving the service of the findings regarding the fee 13 measure, that is assuming that the Board accepts those 14 findings today. 15 BOARD MEMBER FRIEDMAN: My motion is specific for 16 the Control Measure. If we want to talk about fees, we can 17 do that immediately after the vote. 18 CHAIRMAN DUNLAP: Okay. 19 MR. LAMB: Mr. Chairman, the stipulation addresses 20 several issues. You voted on the fee appeal, and as you 21 remember, Mr. Chairman, you said, let that go separate, this 22 is final. 23 This deals with money that expires on June 24 thirtieth. We need that decision to go final. 25 The stipulation between the parties provides that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 135 1 you will make a decision on adopting the fee decision today, 2 so that is final and we don't put that off. 3 MS. WALSH: The proposed resolution provides for 4 just that course of action. 5 MR. LAMB: The other thing that is in the 6 stipulation, Mr. Chairman, just to clarify, the City filed a 7 motion for reconsideration, which is a request for you to 8 vote again on the fee appeal. 9 They have agreed to stipulate to withdraw that 10 motion. So for the record to be clear, we have asked for 11 that stipulation to be approved. 12 That motion that is now pending before you is 13 formally withdrawn. The other thing that the stipulation 14 deals with is that it puts the hearing over to the July 15 hearing. 16 One thing that I must mention is under the Badgley 17 Keene Act, when you continue a hearing to a next date, you 18 have to set both the date and time for that hearing. 19 So, I ask you to set a time if you set it over to 20 the next hearing, so we can inform the public, anyone who has 21 questions about it. 22 CHAIRMAN DUNLAP: Thank you. The time will be 23 9:00 a.m., on July thirtieth. 24 BOARD MEMBER FRIEDMAN: It occurs to me that if my 25 colleagues want additional input into the fee issue, I PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 136 1 personally don't, then we can couple the fee issue with the 2 continuance. 3 CHAIRMAN DUNLAP: I think I would rather do the 4 continuance on the Control Measure. Leave it the way it is, 5 if you don't mind. 6 BOARD MEMBER FRIEDMAN: A continuance until July 7 thirtieth, at 9:00 a.m. in the morning for the Control 8 Measure. 9 CHAIRMAN DUNLAP: All right. We have the 10 stipulation. 11 I have looked at it. I'm inclined to call the vote 12 on the motion. 13 Supervisor Roberts seconded. 14 Any discussion that we need to have on the motion 15 that is currently before us? 16 BOARD MEMBER EDGERTON: It is important when you 17 suggest continuing it to the next Board meeting and it is 18 just the Control Measure, not the fees. 19 CHAIRMAN DUNLAP: Yes. We will come back to the 20 fee thing in a second. 21 We are going to proceed with a voice vote. 22 All those in favor, say aye. 23 Any opposed? 24 Very good. We have got the 30-day continuance to 25 the next Board meeting. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 137 1 The fee issue. 2 Who is prepared to present it to us who can give 3 me, you know, a straight-up quick briefing? 4 Counselor, you again? 5 Is it proper to have our staff do it? 6 Ms. Walsh, I will let you say something. 7 MS. WALSH: Staff has prepared a proposed decision 8 and findings in support of the Board's vote last month to 9 deny the appeal on the fees. 10 Those findings are based on the record and are in 11 support of the decision to deny the fee appeal. 12 The resolution that was presented to you, proposed 13 resolution that was presented to you earlier today does 14 include a provision that reflects the agreement and the 15 stipulation by the parties that the proposed fee decision 16 would not be served, formally served, on the City for 30 17 days, and the resolution reflects that. 18 If the Board moves ahead to approve the -- 19 CHAIRMAN DUNLAP: Kathleen, let me interrupt you, 20 I'm less interested in being anchored to the stipulation, and 21 less inclined to be anchored to the resolution as I am just 22 dealing with the issue. 23 I know you are trying to anchor it to some paper. 24 All I want to know from you, and I think my colleagues would 25 agree, is what decision needs to be made by this Board PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 138 1 relative to fees that we didn't already make, what is that? 2 MS. WALSH: You have before you a proposed decision 3 and findings. We are requesting that you adopt those 4 proposed findings and decision. 5 It reflects the action of the Board taken last 6 month. 7 CHAIRMAN DUNLAP: Okay. 8 Mr. Freeman. 9 MR. FREEMAN: I might say we are trying real hard 10 to show that we are in agreement, and we have withdrawn any 11 objection to the fees, and it seems a bit difficult. 12 I know it's unusual for us to agree, but we have 13 agreed, and we have withdrawn our objection to the fees, so 14 there is not a dispute here. 15 CHAIRMAN DUNLAP: The fee appeal, we have taken 16 action. 17 You have agreed to abide by that action, and so is 18 there any action, Counselor, that you think we need to take? 19 MR. FREEMAN: Anything you all do is fine. 20 CHAIRMAN DUNLAP: Thank you. 21 Counselor. 22 MR. LAMB: Mr. Chairman, just to clarify one 23 sentence, which is you are not being asked to vote again on 24 the fee appeal, the question is whether the proposed findings 25 and decision that the staff has prepared accurately reflect PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 139 1 the decision you have already made. 2 CHAIRMAN DUNLAP: Do you agree that it does? 3 MR. LAMB: I agree that it does. 4 CHAIRMAN DUNLAP: What I would do then is I will 5 entertain a motion to ratify the piece of paper, whatever it 6 is called, that indicates what the fee appeal was and our 7 action and decision. 8 MS. WALSH: Decision and findings. 9 CHAIRMAN DUNLAP: If I could have a motion on that? 10 A motion by Supervisor Patrick, and a second by 11 Mr. Parnell. 12 Mrs. Rakow. 13 BOARD MEMBER RAKOW: Does that motion mean we 14 accept the findings in total? 15 CHAIRMAN DUNLAP: As it relates to fees. 16 BOARD MEMBER RAKOW: On the bottom of page 11, it 17 states the Board expressly rejects any interpretation of the 18 staff report. 19 I think the findings are very objective, and they 20 are based on good rationale, and until we get to the last 21 sentence of that paragraph, top of page 12, where it says 22 then, to suggest the Board decide, deal with any control 23 measures. 24 CHAIRMAN DUNLAP: Sally, let me stop you, hold up 25 what you have, because there is a lot of paper here. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 140 1 BOARD MEMBER RAKOW: Findings, page 12. 2 CHAIRMAN DUNLAP: Do all the Board Members have 3 that? 4 BOARD MEMBER RAKOW: Attachment A. 5 MS. WALSH: This document should be in your packet 6 and made available to you. 7 BOARD MEMBER RAKOW: Maybe I'm seeing shadows where 8 they aren't there, but the last sentence of the top paragraph 9 reads, rather if the Board rejects that part of the Control 10 Measure Order, such rejection will be due to findings on the 11 measure scope, which relied on inadequate air quality 12 modeling analysis, and I do not find that to be a very 13 objective sentence in the findings. 14 CHAIRMAN DUNLAP: What would you like it to read? 15 BOARD MEMBER RAKOW: I would like to delete that 16 sentence because I think the sentence that goes in front of 17 it could stand alone. 18 CHAIRMAN DUNLAP: Sounds fine. 19 Anybody have an objection to that on the Board? 20 Could we have a motion, could that be incorporated 21 in it? 22 BOARD MEMBER PATRICK: I include that in my motion. 23 CHAIRMAN DUNLAP: To delete the sentence. 24 Mr. Parnell, do you agree with that? 25 BOARD MEMBER PARNELL: I agree. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 141 1 CHAIRMAN DUNLAP: Very good. 2 Lynn, do you have something to say on this motion? 3 BOARD MEMBER EDGERTON: I believe I have already 4 discussed this with Ms. Walsh and Mr. Kenny, but because I 5 was the sole no vote, I believe it was eight-one, on this 6 motion, I will not be -- 7 CHAIRMAN DUNLAP: Does that have anything to do 8 with the motion before us, or are you going over history? 9 Because if it's history, I don't care about it, but 10 if it is this motion, I want you to say whatever you need to 11 say. 12 BOARD MEMBER EDGERTON: It's this motion. 13 I will not be voting on the adoption of these 14 written findings, because they are not consistent with my 15 vote, and I will be submitting my written descent. 16 CHAIRMAN DUNLAP: Lynn, here's what I am going to 17 do. We are going to deal with this motion, and I will give 18 you a minute and you can say what you want to say, okay? 19 BOARD MEMBER EDGERTON: I have said all I'm going 20 to say. 21 CHAIRMAN DUNLAP: That's fine. Got you. 22 I just want to stick to this motion. We have a 23 motion and a second to adopt the findings relative to fees, 24 which everyone agrees with, with this one sentence amendment 25 that Mrs. Rakow found, which is a good thing, and then we can PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 142 1 be done with this thing for now. 2 Any other discussion? 3 We will proceed with a voice vote. 4 All those in favor of adopting the motion before 5 us, which includes accepting the findings with the one 6 sentence deletion, say aye. 7 Any opposed? 8 BOARD MEMBER EDGERTON: I abstain. Ms. Edgerton 9 abstains. 10 CHAIRMAN DUNLAP: So noted, Ms. Edgerton. 11 MR. LAMB: There is one additional thing. 12 CHAIRMAN DUNLAP: Okay. Well, talking past yes can 13 be bad. 14 MR. LAMB: I am agreeing with you. The next point, 15 and that is why Mr. Hoekenson is up here, is that the parties 16 stipulated, and I think you need to take a vote to direct 17 staff, the City is concerned that if this decision were 18 served today they would have to sue you within 30 days if 19 they disagreed with that decision. 20 They don't want to be suing you at the same time 21 you have an appeal pending. 22 CHAIRMAN DUNLAP: That would be a bad thing. 23 MR. LAMB: So, we have agreed to that, so the way 24 to stop that from happening is tell the staff not to serve 25 the decision until, say, July thirty-first, and that gives PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 143 1 them 30 days from the date of service to take their action. 2 CHAIRMAN DUNLAP: Stop. 3 Ms. Barnes, does his assertion hold water with you, 4 is this something that we ought to consider doing? 5 MS. BARNES: The statute says that the 30 days is 6 triggered by service of the written decision, so, yes, that 7 would be accurate. 8 CHAIRMAN DUNLAP: Okay. 9 Do we get into any kind of a problem by waiting 10 till the end of that 30 day period to do this? 11 MS. BARNES: I don't know of any problem. 12 CHAIRMAN DUNLAP: Does staff have any concern with 13 accommodating them in this? 14 MS. WALSH: No, we do not. 15 BOARD MEMBER RAKOW: I'll move it. 16 CHAIRMAN DUNLAP: I don't think we need to move it. 17 With the Board's concurrence, I am going to direct you not to 18 serve this until the timeframe that they just discussed. 19 Is that all right? 20 Very good. 21 Anything else? 22 MR. HOEKENSON: For the record, my name is Thomas 23 C. Hoekenson, Chief Assistant City Director of the City of 24 Los Angeles. 25 CHAIRMAN DUNLAP: Welcome. Thank you, very much. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 144 1 Now, is there anything that I have missed? 2 Ms. Barnes. 3 MS. BARNES: I don't believe it has been missed, 4 but I would just like the record to reflect the City has 5 withdrawn its motion for reconsideration of this Board's 6 decision regarding the Control Fee Measures. 7 BOARD MEMBER EDGERTON: Without prejudice, if I 8 understand that correctly, from the stipulation, you withdrew 9 without prejudice? 10 MR. HOEKENSON: Only as to the fee issue, not the 11 Control Measures. 12 CHAIRMAN DUNLAP: Prejudice or not prejudice, for 13 the rest of us nonlawyers, we don't know what the hell that 14 means. 15 Ms. Barnes, anything else that we need to take up 16 on this Item that you know of? 17 MS. BARNES: I don't believe so. 18 CHAIRMAN DUNLAP: Staff, anything else? 19 Mr. Assistant City Attorney of the City of LA, 20 anything else we need to deal with here? 21 Counsel from the Great Basin, anything else? 22 All right. Go get this deal done. 23 We will see you in 30 days. Thank you. 24 The next Item is 98-7-6, a Public Meeting to 25 consider a Status Report on Air Pollution Control Enforcement PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 145 1 in California. 2 The Item before us today is a nonregulatory item 3 for informational purposes only. I need staff to sit down, 4 and I need my Board Member colleagues to quiet, quiet. 5 This Item is a nonregulatory item for informational 6 purposes. As you know, one of our purposes here is to guide 7 air pollution regulation in our State, but without an 8 adequate deterrent program there is less compliance with air 9 pollution laws. 10 An effective program of air pollution control 11 enforcement is a major factor in the continuing improvement 12 of air quality throughout the Golden State. 13 Staff will present a description of how air 14 pollution control enforcement works in California, and staff 15 will also describe compliance assistance and training 16 programs applicable to those having compliance 17 responsibilities. 18 Mr. Kenny, in the interest of time, I would like 19 this Item a little bit quicker than we had previously 20 planned. 21 So, I am going let you floor manage this so we get 22 through this in about 10 to 12 minutes, okay? 23 MR. KENNY: That would be fine, and in that 24 context, I will defer all my comments, and simply turn it 25 over to Ms. Walsh to begin right now. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 146 1 MS. WALSH: I will give you a brief introduction to 2 this Item. 3 In a minute you are going to be hearing from Jim 4 Morgester, Chief of our Compliance Division, about the 5 excellent enforcement programs we have here at the Air 6 Resources Board. 7 In a real sense, enforcement gives life to the 8 regulations that this Board adopts. Enforcement is about 9 fairness. 10 It guarantees that people will obey the law and 11 when they don't, or those that do will not be unfairly 12 disadvantaged by those who don't. 13 But most importantly, enforcement, effective 14 enforcement protects public health. It guarantees that we 15 get the emission reductions necessary to clean the air. 16 If you look at a document like the SIP, there is an 17 assumption there that we will have high levels of compliance 18 to get the emission reductions that have been assumed and 19 committed to in the SIP. 20 At this point, I would like to turn it over to 21 Mr. Morgester to outline our enforcement programs. 22 MR. MORGESTER: Chairman Dunlap, Members of the 23 Board, and ladies and gentlemen, it is with great pleasure 24 that I have the privilege to appear before you today to talk 25 about the California Air Resources Board's Enforcement PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 147 1 Program, and also the enforcement program of the local air 2 pollution control districts. 3 As a little bit of an introduction, I had the 4 privilege of appearing with you about March of 1995, where we 5 talked about ARB's Compliance Assistance Program and their 6 Training Program. 7 Today I am going to try to give you, through the 8 eyes of a typical inspector, how we view enforcement and what 9 our goals and objectives are. 10 I would like to actually take you on some little 11 field trips to show you exactly how the enforcement takes 12 place and to give you a feel for what it is like to walk in 13 the shoes of an ARB inspector, or perhaps that of a local air 14 pollution control district. 15 To give you a little background about the 16 Compliance Division, as you know, there are about 953 staff 17 members within the Air Resources Board, and the Compliance 18 Division makes up about 7.6 percent of that total. 19 If you look at the first two bullets up there, 20 about 28 percent of my staff is devoted towards compliance 21 assistance and training, 22 percent towards fuel cargo tanks, 22 consumer products and fuels, that is where the primary direct 23 enforcement takes place along with the source testing group, 24 and then you see the 26 percent that's devoted for what we 25 call stationary source inspection and oversight. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 148 1 That's where the Compliance Division interfaces 2 with the local air pollution control districts, and we have a 3 certain amount of activity there working with our partners at 4 the local air pollution control districts in the stationary 5 source inspection field. 6 The last bullet that you see there is the 7 certification. It is important for you to realize that the 8 Compliance Division is responsible for the certification of 9 all Phase II and Phase I vapor recovery equipment throughout 10 the State of California, the certification of gasoline cargo 11 tanks and abrasive blasting. 12 The objectives of the Enforcement Program are 13 simple and straightforward. We consider us an extension of 14 your rulemaking capability. 15 It's our job to make sure that the emission 16 reductions that you envision, and the rules and regulations 17 that you have adopted after numerous public hearings and 18 public input are, in fact, met. 19 We also want to do this in a cost effective way, 20 and also we want to provide equity out there, so that no 21 matter where industry is located within the State of 22 California that, in fact, there will be a level playing field 23 and that no matter where you are, you are going to have to 24 deal fairly with the rules and regulations that are out 25 there. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 149 1 The scope of the challenge, and I produce this 2 slide because I think it really hits home and gives you an 3 idea of what we are really faced with, as you know, the Air 4 Resources Board is directly responsible for the compliance of 5 over 25 million motor vehicles. 6 14 billion gallons of gasoline fall within the 7 cleaner burning gasoline regulations, or the cleaner burning 8 diesel. 9 We have 4,000 cargo tanks which move gasoline from 10 the gasoline cargo tanks to the service station that are 11 subject to ARB certification. 12 There's 11,300 service stations out there that have 13 certified ARB equipment on it, as far as Phase II vapor 14 recovery. 15 In a consumer product field we have over 600 16 million separate items out there in the consumer products 17 subject to the regulation, and perhaps the most difficult 18 challenge of all of those is the 40,000 stationary sources 19 that have within them over 200,000 permitted units. That is 20 the primary responsibility of the local air pollution control 21 district. 22 This Enforcement Compliance Program is carried out 23 through the efforts of approximately 300 inspectors. 24 When I say 300 inspectors, I include those from our 25 partners at the U.S. Environmental Protection Agency, Region PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 150 1 9, our very close partners at the 35 local air pollution 2 control districts and the Air Resources Board. 3 We operate under certain governing principles. 4 These governing principles are not unique to the air 5 pollution field, they are governing principles that are 6 unique to any law enforcement agency. 7 First, it is absolutely critical that we enforce 8 the law fairly and firmly, and have consistent application of 9 the standards. 10 The industries within the State of California 11 should have some comfort that the standards are going to be 12 applied the same no matter where you are within California. 13 We do pursue penalties, but at the same time, we 14 take great steps to be sure that the penalties are 15 commiserate with the nature of the violation. 16 In other words, we look at the duration of the 17 emission violation, the amount of emission violation, the 18 ability to pay and other factors that are required for us to 19 look at by the Health and Safety Code. 20 Also, it is very important from my view point that 21 we use compliance education to enhance the compliance 22 capability. 23 Without an educated inspection staff, and without 24 an educated regulated community, we cannot achieve the goals 25 that we would like to achieve. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 151 1 We spend a lot of time assisting the air districts 2 and following these principles, and once again, the State of 3 California looks upon one of its primary roles is to level 4 the playing field, so that everybody within the State of 5 California is treated equally. 6 When I talk about enforcement you notice I 7 purposely don't use the word compliance, because I believe 8 enforcement includes compliance. 9 When I look at enforcement, I look at it as a three 10 legged stool. The first leg is training. The second leg is 11 compliance assistance, and once you have those two legs in 12 place, then you can talk about traditional enforcement, and 13 when I talk about traditional enforcement, I mean inspections 14 of sources, monitoring of those sources and penalty action 15 where it's appropriate. 16 CHAIRMAN DUNLAP: Jim, that looks like a bar stool. 17 That isn't what that is, is it, Jim? 18 MR. MORGESTER: No, sir, that is not a bar stool. 19 That is a stool from a recreational vehicle. I 20 would like to talk a little about the first leg of the 21 enforcement, why not, the enforcement bar stool. 22 The first leg is a leg that, I think, is absolutely 23 critical to the Program, and I would like you to get a little 24 feel for what the average inspector within the State of 25 California has to go through as far as training is concerned PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 152 1 to get the status within the State of California. 2 The very first thing that they have to do is take 3 the entry level course that we call the fundamentals of 4 enforcement. 5 This is a week long course that just kind of gives 6 them the basic overview of enforcement and how it is taken 7 out in the air quality issues. 8 They are also required to attend an enforcement 9 symposium each year. The average inspector has to have an 10 annual physical, what we call stalk and scram training, for 11 those of you that don't understand acronyms, that is a 12 self-contained breathing apparatus, because a lot of times 13 they are within hazardous work areas. 14 A scram type device is if you go to a refinery and 15 they have an H-2-S episode, you have this device that you 16 pull over your head, and they tell you that you five minutes 17 of oxygen to escape from the refinery. They get that kind of 18 training. 19 First aid, CPR, and also we call HAZWOPER training, 20 because many of your local air pollution control districts 21 and the Compliance Division is responsible for the emergency 22 responses for air quality episodes and air quality 23 emergencies, and we are directly tied in to the Office of 24 Emergency Services, and we probably average in the 25 neighborhood of five to ten significant emergencies a year PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 153 1 that we have to deal with. 2 Finally, on that list, because not all the people 3 that we deal with are necessarily law-abiding citizens, we do 4 have courses on advanced environmental crimes training 5 programs. 6 If that's not enough, the inspectors, after they 7 get though that basic course, they also have to take all the 8 courses that you see on the slide before you. 9 If you look down that list, you will see what we 10 are trying to do is to build their background so they are as 11 well-rounded as possible, everything from history of air 12 pollution to regulation and development, to visible emission 13 evaluation, to conduct of liability and environment law. 14 It's kind of interesting the way that this 15 developed. We originally developed these courses for the 16 inspectors at the local air pollution control district level 17 and the State of California. 18 However, to give you a feel for how popular it is, 19 since we developed these we have had 75,000 student days, and 20 in this last 12 months we have had 3,500 student days taking 21 these courses. 22 It is also very interesting, which I find very 23 interesting, is that about 50 to 60 percent of our classes 24 now are made up of industry. 25 We open these up to industry, and I'll tell you PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 154 1 that some of the best inspectors that I have are the people 2 that work in the major industries throughout California. 3 Once the inspectors get through their basic 4 program, they are not through yet. There is what we call a 5 200 series courses available, and what this does is hone 6 their skills in individual different types of industries that 7 they have to inspect, and those programs are more detailed so 8 they will know exactly what to look for. 9 When you look at that list for the 200 series 10 courses, that list encompasses those sources which are most 11 prone to requirements that require a lot of action, a lot of 12 looking at to make sure that they are continually operating 13 within compliance. 14 If that is not enough, we move into the 300 series 15 courses available, and they kind of react to ongoing 16 problems, and there are two courses up there that are very 17 unique, and I would like to call your attention to those, 18 that's the annual enforcement symposium cross media training, 19 and the multi-media task force workshop. 20 Those courses were put on and developed by the Air 21 Resources Board at the request of Cal EPA, where all of the 22 Cal EPA Board's departments and even local regulating 23 agencies come together once a year to share ideas and to 24 educate each other on what the other boards and departments 25 and medias are doing. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 155 1 The purpose is not to make the Water Board expert 2 on the Air Board stuff, or the Air Board expert on toxic 3 stuff, but to understand it enough, and to recognize when 4 they make an inspection, if they see a problem that they 5 believe should be looked into by the Department of Toxic 6 Substances Control, they can call those people, and they can 7 go out and take a look. 8 The multi-media task force workshop is very unique, 9 because throughout California there are environmental crimes, 10 task forces that are made up of all of the regulatory 11 agencies and all the police agencies, like the FBI, the local 12 district attorneys, and they meet periodically, and we 13 provide training on a multi-media basis to those local 14 organizations. 15 Once we get past the first leg of enforcement, we 16 get into the compliance assistance area. I will not spend 17 much time in this area, but basically the compliance 18 assistance area is made up of self-help manuals to help 19 industry and inspectors understand the rules and regulations. 20 The manuals come in three versions. Our technical 21 manual, which is a detailed document, it's a three-ring 22 binder, where industry can look in detail at what has to be 23 done to comply with the regulations, and there is also 24 self-inspection handbooks to be used to help the actual 25 workers, the blue collar workers at the industry sites comply PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 156 1 with the regulations. 2 There you see the list of the technical manuals 3 that are out there. As you can see, once again, that hits 4 the major industries that we regulate. 5 So far, we have distributed about 31,800 of those 6 manuals. The so-called funny books, self-inspection 7 handbooks, to date we have inspected, or put out in field, 8 620,000 of those. 9 That brings us to the third leg. The third leg is, 10 of course, the most important leg, and that is the inspection 11 monitoring and penalty action where appropriate. 12 What I would like to do is quickly take you through 13 what I call the regulated categories, tell you a little bit 14 about each category and how we conduct the inspections and 15 then the types of violations that we find. 16 The first one that you see on the list is motor 17 vehicle fuels. Of course, motor vehicle fuels is important 18 to the State of California and its air quality. 19 You can see, once again, when I look at the scope 20 of the challenge before us, over 14 billion gallons of 21 gasoline, 16 refineries, 84 bulk terminals, 11,000 service 22 stations. 23 With the resources that we have presently available 24 to us, we are able to look at about five percent of the fuel 25 that is produced within the State of California. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 157 1 The way that we carry this Program out, we simply, 2 it's pretty straightforward, obtain samples at the 3 refineries, terminals or service stations, analyze those 4 samples in our mobile laboratory, and, of course, the 5 bottomline of this whole Program is to be sure that the 6 consumer, when he puts the gasoline in his tank, has the 7 gasoline that satisfies the cleaner burning gasoline 8 requirements and we get the emission reductions that we want. 9 Bulk terminals, which is intermediate point between 10 the refinery and the consumer, are found all over. This is 11 one right down in downtown Los Angeles, and you can see one 12 of the staff members on top of the bulk terminal taking a 13 sample, a little closer look to exactly what it looks like 14 run the sampler down into the gasoline cargo tank and take 15 what they call a running sample, to get a representative 16 sample of what is in the tank. 17 One of the more unique things about our Motor 18 Vehicle Fuel Sampling Program is our mobile laboratory. 19 Prior to the time that we had this mobile 20 laboratory we would have to wait sometimes as much as two 21 weeks before we got the results back. 22 This shows you what the inside of the bus looks 23 like. Now the inspectors pick the samples up in the daytime, 24 we have the results the next morning, and we are able to go 25 directly to the refinery the next day and stop the flow of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 158 1 illegal gasoline. 2 Not only reduces their liability for the product, 3 but more importantly, it reduces excess emissions to the 4 atmosphere. 5 What kinds of motor vehicle fuel violations do we 6 find? 7 For the major refineries we mainly find inadvertent 8 errors. Somebody mistakenly, but not purposely, turned the 9 wrong valve and put a product in the mainstream that 10 shouldn't be there. 11 However, there are illegal blenders out there that 12 do purposeful violations, and those violations are mainly so 13 that they could go ahead and evade the taxes on the motor 14 vehicle fuel. 15 The taxes on diesel fuel is about 47 cents a 16 gallon. The tax on gasoline is about 43 cents a gallon. So, 17 you can see there is a large economic incentive to violate 18 these standards, and we believe that there is a significant 19 influence of organized crime in this area where they go ahead 20 and do what we call cocktailing, and they put products within 21 the motor vehicle fuel and blend those products with such 22 things as trans-mix and jet fuel, and even hazardous waste. 23 We have a number of criminal cases ongoing, both 24 through the U.S. Attorney's Office and local DA's in this 25 area. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 159 1 Moving to the mobile source enforcement area, you 2 are already very familiar with how many on-road vehicles, 3 heavy-duty vehicles and off-road engines that we have out 4 there. 5 I think our mobile source enforcement falls quite 6 nicely in the three areas that we call in-use compliance 7 testing and fuel inspection testing. 8 We are able to test approximately 10 new passenger 9 car engine families each year in the compliance testing area 10 and in-use compliance testing. As you may recall, we can 11 look at about 40 engine families per year, and for fuel 12 inspection and testing, we can look at about 490 dealers who 13 were inspected last year and about 3800 different vehicles. 14 You are very familiar with the mobile source 15 Heavy-Duty Vehicle Inspection Program. Of course, that has 16 just been started up again, as of June first. 17 It has worked in cooperation with the California 18 Highway Patrol, and, of course, they operate unannounced at 19 the CHP weigh stations, fleet facilities and roadside tests. 20 I know you are all very familiar with the Snap Idle 21 Test, but just to kind of refresh your memory, as of this 22 date, we have issued approximately 130 citations and about 33 23 notices of violation since June first of 1998. 24 Mobile source violations, if you kind of wrap those 25 all together for new and in-use vehicles, we find violations PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 160 1 of the emissions standards in defective emission components. 2 We find in some cases where there is defeat devices 3 actually put into the car that helps disable the air 4 pollution control equipment, tampering of the car's 5 noncertified vehicles. 6 The heavy-duty vehicles, pretty straightforward, 7 excessive smoke, tampering, off-road vehicles, noncertified 8 engines and emissions standards. 9 Consumer products is kind of an interesting 10 challenge, especially for the Compliance Division, because we 11 have 93 product categories out there, but we kind of 12 concentrate on the hairsprays, aerosols, windshield washer 13 fluids, air fresheners, insecticides, because that is about 14 75 percent of the emission inventory for that area, and we 15 are able to inspect about five to seven percent of the 16 material out there. 17 Like motor vehicles fuels, we kind of follow the 18 money. A lot of times the inspectors will go out and they 19 will start looking at the material where there are sales, 20 because sales usually mean discounted products that, in many 21 cases, are not complying products. 22 This is a statewide enforcement program where the 23 manufacturers, distributors and retailers are inspected. 24 Most of our violations are found through complaints 25 from competitors within the field. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 161 1 What kinds of violations do we find out there? 2 Of course, we find high VOCs, and you can see one 3 of the inspectors there actually look for the date code, 4 because date code tells us what the batch is and where it 5 comes from. 6 We also find what we call labeling requirements for 7 aerosol coatings that are, in fact, in violation. 8 The reason that they look at date codes, and this 9 shows you the bottom of some of the things that have been 10 removed, you see in the middle, there is a date code on there 11 and that date code tells us the date and batch that the 12 product was manufactured. 13 When that date code is there, we can trace it back. 14 You see the one's on both sides where the date code has been 15 defaced and taken off. 16 Many times when we find products like that, of 17 course, they see they exceed the VOC standard, but what's 18 also interesting is a lot of times these products are 19 high-jacked, they are never meant to be sold within the State 20 of California and a lot of times the products themselves are 21 counterfeit. 22 So, we have some interesting criminal cases in this 23 same area, also. 24 Cargo tank enforcement, the Gasoline Cargo Tank 25 Enforcement Program, we can look at about four percent of the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 162 1 cargo tanks per year, and the cargo tanks are really the 2 heart of the vapor recovery system in California. 3 The cargo tank like you see there, when it takes 4 the gasoline from the bulk terminal and takes it to the 5 service station, when they make a dump at the service 6 station, the vapors from the underground tank move back into 7 the cargo tank and are captured. 8 From there they are moved into the bulk terminal 9 when the tank is refilled again, and then those vapors are 10 turned back into gasoline. 11 If we do not maintain the integrity of those cargo 12 tanks, then we have lost all the emission controls from the 13 vapor recovery at the service stations. 14 The way we do this is that we have an Annual 15 Self-Certification Program where the cargo tank operators, 16 much as you see here, have to go ahead and pressure test 17 their cargo tank themselves, and they have to provide that 18 information to us, and we give them a decal, much like a 19 registration decal on your automobile, and that decal is good 20 for one year, and they have to certify themselves that the 21 cargo tank is leak tight. 22 However, in the field, a lot of cargo tanks are 23 operated and they check them, and what you see here is an 24 operator hooking up his line in the bulk terminal, to make 25 sure that the cargo tanks are, in fact, leak free by PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 163 1 pressurizing the tank with nitrogen and doing a pressure 2 check on it. 3 That pressure test inspection takes about 30 4 minutes, and we usually run less than five percent of the 5 cargo tanks that we look at in violation. 6 The next program I would like to quickly talk about 7 is what I call the Asbestos Demolition and Renovation. This 8 should not be confused with the program that deals with 9 serpentine rock and roads. 10 Any time you demolish or renovate a building, it 11 has to be inspected, and you have to remove the asbestos in a 12 very careful manner before the building is taken down. 13 There's about 15,000 of those that happen a year, 14 and about 35 are inspected. This is a primary job of the 15 local air pollution control districts. 16 This program is a little bit unique. If you look 17 at the counties in yellow there, those are the counties that 18 have not accepted responsibility for this Program, therefore, 19 the responsibility falls on the Air Resources Board. 20 The objective of that Program is that whenever you 21 have a demolition project, such as what you see here, all 22 that asbestos has to be removed from the facility before the 23 facility is brought down. 24 That would be better with sound. What the 25 inspectors do is check for notification of demolition and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 164 1 renovation. They sample the material for asbestos, check for 2 contractor certification and check for proper disposal. 3 I think this video here kind of depicts to you why 4 these 17 districts have decided not to take up the challenge 5 to do this. 6 To be certified for asbestos inspections you either 7 have to go to category A, like you see here, or you have to 8 go to category B, because it requires you to go within the 9 containment area. 10 When you go into the containment area to do your 11 inspection, you have to go into an envelope where it is 12 completely isolated, and you go through a decontamination 13 chamber, and you have to decide and make the determination 14 that the people inside are, in fact, removing the stuff wet 15 before disturbing it, wetting it after removing, disposing of 16 it in a container that's wet and put it wet in the landfill. 17 The asbestos violations that we find out there are 18 pretty straightforward. You see them on the list. 19 I will call your attention to the bottom down 20 there. That is the most important one, in my view, is use of 21 workers that are not certified or trained. 22 It is not uncommon to find demolition of asbestos 23 being carried out by undocumented people within the State of 24 California and homeless people that are hired to rip and tear 25 this material out. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 165 1 Of course, when we find that type of situation, we 2 take it very serious and take criminal action on it. 3 Let me spend a little time now on what I think is 4 the biggest challenge of all that you have seen so far, and 5 that is the 40,000 sources out there that the local air 6 pollution control districts have authority for. 7 Of course, they have to verify all the compliance 8 conditions that are out there, including source testing, and 9 I think it's important for you to realize that the local 10 district inspector doesn't have the luxury that I have to 11 concentrate on one area. 12 They have to concentrate on things as complicated 13 as a refinery that has multiplicity of sources in there that 14 they have to deal with, everything from FCC units to CO 15 boilers to degreasers. They also have to change gears almost 16 instantaneously and go ahead and do dry cleaning facility 17 inspections where they have to go in and interface with the 18 dry cleaning industry and look for leaks from 19 perchloroethylene, and they also have to, of course, move 20 into the gas station industry and make sure all the nozzles 21 and pumps go on there. 22 That just kind of gives you a little sense, a 23 little feel for the complexity of the local air pollution 24 control districts problem. 25 The types of violations that we find out there, of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 166 1 course, of the things that are still out there that we work 2 very hard on is excessive visible emission, because that gets 3 right at the PM 2.5 problem, odor nuisances always are a key 4 to toxic air contaminants, record keeping problems, operating 5 without a permit to operate, and the South Coast AQMD Program 6 has gotten more mature, we are also finding exceedences of 7 the Reclaimed Emission Allocation Program. 8 We spent a little time talking about source 9 testing. You can't talk about stationary source enforcement 10 without source testing, and it's important for you to realize 11 that there are about 20,000 stacks out there that can only be 12 regulated, or you can only make a determination of compliance 13 with a source test. 14 By a source test I mean that's where you actually 15 go in and take a sample out of the stack and remove that 16 sample and have it analyzed. 17 There are only six air pollution control districts 18 in the ARB that have source testing capability. That's the 19 Bay Area, the South Coast and San Diego. 20 They have full source testing capability. 21 Monterey, Shasta and North Coast have limited source test 22 capability. 23 We can only do about 500 source tests a year. If 24 we utilize all that capability strictly for enforcement 25 source testing, it would take us 40 years to look at all of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 167 1 those sources. 2 However, it is important to realize that many local 3 air pollution control districts require the industry 4 themselves to test themselves annually. However, you view 5 that as not an enforcement program but an inspection and 6 maintenance program, because I have never seen an independent 7 tester yet that has found his client in violation of the law. 8 The type of source testing violations exceed, of 9 course, their permit rule or limit and the continuous 10 emission monitors that are installed are not operational. 11 Let me spend just a second here to talk a little 12 bit about how the Compliance Division interfaces with the 13 Smog Check Program in support for BAR. 14 The Compliance Division interfaces with them only 15 on a criminal sense. Whenever there is evidence of a 16 criminal type activity, especially clean piping, we will 17 assist the Bureau of Automotive Repair in doing coverts, 18 video surveillance, we will assist in warrants service and 19 what you saw there were the clean piper's being arrested, and 20 here is where they're seizing the analyzer, and this shows 21 they are actually seizing the clean pipe car. 22 The way this typically works, as I'm sure you know 23 already, but let me touch on it a little bit, is that they 24 will have one car that passes the emissions standards, that 25 car stays in the bay or on dynometer all day, and they just PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 168 1 keep punching in new VIN numbers and keep certifying new 2 cars, one after the other. 3 This, of course, is a criminal act, and it's a 4 felony because of wire fraud, because all that material has 5 to go up to Sacramento by wire. 6 What I tried to do there is to try to give you a 7 window into the life of an inspector and try to leave with 8 you the sense that the job is daunting, it takes a lot of 9 training to be able to do it, but once we actually have 10 violations, then we look to the fine people in our Legal 11 Office and assist in the investigation, the case development 12 and handle these cases. 13 The type of legal action that is available out 14 there is notice of violation, notice to comply that is issued 15 by the Divisions, and you can see where it goes anywhere from 16 penalty letters all the way to litigation, and if it is a 17 criminal action, then it will be referred to the U.S. 18 Attorney or the local district attorneys. 19 One thing that I would like to point out at the 20 bottom there is the word, supplemental environmental 21 projects. 22 On those cases that we settled in-house, we always 23 look for some way to offset the find by some project that is 24 above and beyond what is required by law. 25 That would reduce emissions over the requirement of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 169 1 the law, or do some other good deed that they can put their 2 money to that use rather than simply turning it over to the 3 State of California. 4 I will spend just a real quick time here to talk 5 about the type of penalties, so you get a sense of what's out 6 there. 7 Field penalties run anywhere from $25,000 per day 8 to $300,000 per day administratively. The Legislature gave 9 us an interesting tool here. They included on the penalty, 10 in addition to the penalty, what I call plus economic gain. 11 We take away the economic gain for violating the 12 clean burning gasoline regulations by charging an additional 13 $9,001 per ton of pollutant, for diesel, $5,200. 14 One point that I would like to make here, you can 15 see down on the bottom, that the criminal statutes for 16 violating the fuel standards are simply a misdemeanor, 17 $1,000, six months in jail. That is not adequate to deal 18 with the true criminal people out there. 19 Those people we try to go civilly on, they don't 20 show up at court. We get default judgments that we can't 21 collect, so we usually go after them under criminal 22 conspiracy, or tax evasion, working with he Board of 23 Equalization, or the Federal Bureau of Investigation. 24 Mobile source penalties, $500 a vehicle applies to 25 manufacturers, $1,500 a vehicle applies to businesses and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 170 1 $1,000 a vehicle applies when a dealer sells a vehicle that 2 has already been cited with a previous violation. 3 Mobile source violations for the Smoky Vehicle 4 Program, I don't have to spend any time with you on this, 5 because you are more than familiar with that. 6 Stationary source violations are kind of 7 interesting because we have two prongs of attack here, both 8 the civil and the criminal. 9 It ranges everything from $1,000 a day strict 10 liability to $50,000 a day for willful and intentional. 11 There is exactly the same parallel type of 12 regulation, or penalties, that go on the criminal side, and 13 the only difference is that you have anywhere from six months 14 to one year in jail. 15 Okay. With that background, I would like to spend 16 some time with you with what I think is the most important 17 part of this presentation is that I want to give the message 18 that inspections are essential to emission reductions. 19 What you see here is some 1991 data that U.S. EPA 20 and ARB developed jointly, and if you look at the chart's far 21 right-hand side where it says 95, that is the percent 22 efficiency that we certify vapor recovery systems. 23 If the service stations are inspected twice a year, 24 the type of efficiency that we find out there in the field is 25 about 92 percent. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 171 1 If they are only looked at once a year, it's about 2 86 percent, and if they are looked at about every three years 3 or so, it drops down to 62 percent. 4 If you look at it a closer, this is some 1997 data 5 that we recently developed in cooperation with the Bay Area 6 Air Quality Management District, and we had a real 7 interesting window of opportunity here because we had two 8 types of service stations that had the same equipment. 9 We had a retail service station, and we found an 86 10 percent compliance rate there. They were inspected every 11 year and had assistance provided. 12 They also had another set of service stations that 13 we call non retail. Same equipment, except because of a 14 bunch of limitations they could only look at them every two 15 to three years. 16 We found a noncompliance rate of 52 percent. 17 Bottomline, infrequent inspections, low compliance. 18 To make sure that this was true, we also looked at 19 some data that was developed in 1993 in the South Coast Air 20 Quality Management District. 21 We had a previous audit -- we don't like to use the 22 word audit. We call it program review, where the previous 23 program review in the South Coast where the Vapor Recovery 24 Phase II service stations were in 93 percent compliance 25 across the board. We're very happy with that. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 172 1 Unfortunately, in 1995, because of budget 2 constraints within the District, the service station 3 inspectors were eliminated. They relied on self-reporting 4 and checklists on the hands of the service station operators 5 themselves, and we went out there and looked at it again in 6 1997, and the compliance rate has dropped to 63 percent. 7 We looked at a number of large sources, and we find 8 that large sources, because they have continuous in-stack 9 monitors and because they have environmental staff that works 10 there all the time, because they are looked at sometimes as 11 much as four times a year, are traditionally about 95 percent 12 of the time they are in compliance. 13 We looked a little closer at valves and flanges at 14 refineries, and we found that they get the same interest, and 15 valves and flanges are very hard to keep leak free. 16 We found in the Bay Area in 1997 that even with a 17 very small, 100 parts to a million threshold for a leaky 18 valve, that we have only a four percent noncompliance rate. 19 Is full compliance cost effective? 20 We tried to go ahead and take those noncompliance 21 rates and change those to tons of excess emissions. 22 In the South Coast AQMD, the 60 percent 23 noncompliance rate resulted in an excess emission of 1,825 24 tons per year, and that is a nondisputed, conservative 25 number. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 173 1 The inspectors require for annual inspections would 2 be 10. The cost of those inspectors as a function of pound 3 of pollutant that would be reduced is about 27 cents per 4 pound. 5 The slide that I showed you earlier in the Bay Area 6 Air Quality Management District, we did the same analysis, 7 the excess emissions from that facility was 42 tons per year 8 from those service stations, there is fewer stations, and the 9 cost effectiveness even with fewer stations, with one new 10 staff down there, would be $1.19 per pound. 11 If you look at the data that you recently adopted 12 for the heavy-duty, effectiveness of the Heavy-Duty Diesel 13 Enforcement Program, not the cost for the truckers to 14 implement the Program, but just the enforcement cost and the 15 emission reduction that we expect from that, we see that the 16 cost benefit gets down to twenty-three cents a pound. 17 How is that compared to the traditional rule 18 effect, or the cost effectiveness of the measures that you 19 adopt? 20 You can see on this list that it ranges anywhere 21 from $1.10 to over $4.00 a pound, depending on what you are 22 looking at. 23 It is clear, in my mind at least, that in many 24 cases, yes, full compliance is cost effective and is often 25 more cost effective to fully enforce the 16 rules rather than PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 174 1 develop additional control measures. 2 In conclusion, I strongly believe that training by 3 itself does not do the job. Compliance assistance by itself 4 does not do the job. Inspection and penalty action by itself 5 does not do the job. 6 You have to have all three to make enforcement cost 7 effective, and it's also important for you realize that only 8 about 10 percent of the State's air pollution resources are 9 devoted to enforcement. 10 Once again, I thank you for the privilege of being 11 able to address you, and I'll be happy to answer any 12 questions that you may have. 13 CHAIRMAN DUNLAP: Very good. 14 MR. MORGESTER: Those are all my staff. 15 CHAIRMAN DUNLAP: Nice presentation. Mrs. Riordan 16 and I were commenting about the high tech nature of that. 17 Very well done. It wasn't 12 minutes, Jim, but it 18 was a good presentation. 19 Any questions? 20 BOARD MEMBER FRIEDMAN: How many inspectors are 21 there? 22 MR. MORGESTER: The total statewide is about 300. 23 The Air Resources Board has in the neighborhood of 80. 24 Smoky Diesel Program has about 16. Not many. 25 CHAIRMAN DUNLAP: Yeah. One of the things Jim PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 175 1 didn't focus an awful lot of time on that they have done very 2 well is they have been used not only as a model but as 3 trainers for the rest of the country. 4 So, it is not uncommon for us at any given time to 5 have two or three people somewhere else in the country 6 training other states or other locals about the techniques we 7 use in enforcing our rules and about what the substance of 8 our rules are and the like, and equipment, too, and some of 9 the testing equipment have been developed by the staff here, 10 as is the case for our laboratory, too. 11 Ms. Rakow. 12 BOARD MEMBER RAKOW: It was a very fine 13 presentation. 14 This is really the meat and potatoes, I mean, we 15 can regulate and regulate and regulate, but unless there is 16 somebody there that makes sure the citizens are complying, 17 the regulations just sit on the shelf. 18 CHAIRMAN DUNLAP: I think that is the point about 19 the chart that you showed, Jim, about percentages, if you are 20 out there in a consistent presence. 21 One thing that I think the Board staff needs to be 22 commended for, and Mr. Kenny led some of this if not most of 23 it, was this idea of creative penalties, or creative 24 settlements where people can use dollars to do other things, 25 whether it be public education, or some other thing that does PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 176 1 a community good, which is what Jim mentioned, I think is 2 very important. 3 It isn't about just taking a hefty fine and putting 4 it over here with the State. It's making them invest in 5 education and in solving the problem long-term. 6 Okay. Mr. Kenny, I think I know you as you do 7 budget development, and Ms. Walsh, when you look at as we 8 build future year budgets, I know you have focused on getting 9 the right kind of additional resources for enforcement, I 10 want to encourage you to do that so that we can stay abreast 11 of what is going on, a lot of sources out there. 12 Good job. Enforcement staff, those that supported 13 Jim's presentation, I want to compliment you on that work. I 14 know he didn't do it alone, so thank you. 15 We don't have any witnesses on that Item, do we? 16 All right. We will move on. 17 The next Item is 98-7-7, a Public Meeting to 18 Consider a Report to the Legislature Regarding the 19 Application of Penalties for Violations of Motor Vehicle 20 Fuels Regulations. 21 In 1995 the Legislature passed SB 163, and the 22 Governor signed it into law. SB 163 revised the penalty 23 structure for violations of the Board's Clean Fuels 24 Regulations. 25 Our staff participated in the development of the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 177 1 new penalty structure, and SB 163 will sunset at the end of 2 this year unless it is extended by pending legislation. 3 To help it in its deliberations, the Legislature 4 directed the Board to prepare a report on our experience in 5 implementing SB 163. 6 That report is before us today for approval and 7 transmittal to the Legislature. 8 Mr. Kenny. 9 MR. KENNY: Thank you, Mr. Chairman, and Members of 10 the Board. 11 The purpose of this Item is to seek your approval 12 of the staff's report to the Legislature on our experience 13 implementing the new fuel penalty structure established by 14 SB 163. 15 Essentially, SB 163 provides a mechanism for 16 calculating civil penalties based on the violator's mental 17 state and the number of days of violation. 18 Prior law imposed a penalty based on the number of 19 vehicles that could have been fueled with the violating fuel. 20 Our experience indicates that there has not been an 21 appreciable change in our ability to collect civil penalties 22 under the new provisions of the law. 23 We conclude that the new penalty structure will not 24 change historic settlements of violations of motor vehicles 25 fuels and the compliance rate remains high. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 178 1 In fact, we believe that the new penalty structure 2 provides a rational basis for imposing appropriate penalties 3 that serve as an effective deterrent. 4 Kirk Oliver, of our Legal staff, has prepared a 5 brief presentation on this report. 6 CHAIRMAN DUNLAP: Key word, Kirk, is brief. 7 It didn't work well last time. 8 MR. OLIVER: Thank you, Executive Officer Kenny, 9 and Chairman Dunlap, and honorable Board Members. 10 I'm an attorney with your Legal staff here, and at 11 this point, I am going to have to interpose an objection, and 12 on the basis of that objection, Board Members, is that no one 13 should be forced to follow a presentation by Jim Morgester. 14 I do a considerable amount of speaking at the 15 training classes that the Compliance Division puts on, and 16 the one condition that I impose upon them is that I never go 17 on after Jim, because you lose the entire audience, and I can 18 only point behind me as proof of that. 19 You have before you a report that was prepared by 20 your staff regarding our experience in enforcing the new 21 penalty structure for violations of the Clean Fuel 22 Regulations that was mandated by the very law that changed 23 those regulations, that was SB 163, in 1995, and we 24 respectfully request that you approve that report so that we 25 transmit it to the Legislature. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 179 1 Mr. Kenny was right. The way that the law 2 prescribed these penalties to be imposed changed with 163. 3 The old days, the way that we calculated the 4 penalties was dividing the number of gallons of gasoline or 5 diesel fuel involved in the violation by 20 to determine a 6 one estimated vehicle fueling, and then we multiplied that by 7 $500. 8 If you had cases that involved a great deal of 9 gallons of fuel in violation, you got a very, very large 10 maximum penalty. 11 We never obtained penalties that came close to 12 those maximums in those cases, however. When the Legislature 13 looked at the penalty structure, and we looked at it, too, we 14 thought we could use a little guidance on the factors to be 15 used in calculating reasonable penalties, and we came up with 16 163 in cooperation with a number of groups that are regulated 17 in this industry. 18 We look at the violator's mental state now. We 19 look at the number of days in violation. 20 We look at the environmental impact of the 21 violation, what it had, and we have specific authority to 22 take per ton penalties for those types of impacts. 23 That report that you have before you evaluates how 24 that penalty regime is operated in practice, and we concluded 25 that the new law has not tied our hands or hampered our PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 180 1 ability to take reasonable penalties for these types of 2 violations, and similarly, when we looked back at the old 3 violations that we did take penalties for, we concluded that 4 the new law would not have changed those either. 5 So, we do conclude ultimately that the law did what 6 the Legislature intended it to and that it did not alter 7 historic levels of violations or penalties but gave more 8 guidance to us and to the regulated community about what 9 would be expected of them and what would happen to them if a 10 violation occurred in one of these cases. 11 It gave essentially fairness and predictability to 12 this process. 13 Now, the Legislature requested this report for a 14 very good reason. These penalties under 163 were due to 15 sunset at the beginning of 1999. 16 The Legislature has a bill under consideration, 17 that's Assembly Bill 1944, authored by Assemblyperson Rener, 18 that would extend that deadline. 19 The Legislature needs that report that you have 20 before you to be able to inform its deliberations on that 21 bill. 22 So, we would request respectfully that you approve 23 that report, and if you do, we will transmit it to the 24 Legislature. 25 CHAIRMAN DUNLAP: Okay. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 181 1 BOARD MEMBER FRIEDMAN: So moved. 2 CHAIRMAN DUNLAP: There's a motion by Dr. Friedman, 3 and a second by Mrs. Riordan to move the report. 4 Is there any discussion that we need to have? 5 One of the things that we need to make sure of, 6 just as a reminder to staff, I know people have been working 7 furiously on this, you know there is some leadtime that we 8 like to have, and it seems to me that we are a little bit 9 short on this one. 10 So, Kirk, I want to compliment you on a fine oral 11 presentation. We need to make sure, Mr. Kenny, that our 12 staff gives adequate leadtime so that we might tie the 13 appropriate ribbon upon it and send it up through our food 14 chain here in this Administration, so that's the only 15 drawback that I see. 16 MR. KENNY: Fully understood. 17 CHAIRMAN DUNLAP: Okay. Very good. 18 Any other discussion? 19 Okay. By the way, even though you followed 20 Mr. Morgester, we kind of liked your presentation, because it 21 was complete and brief. 22 We will do a voice vote on approving the SB 163 23 report and forwarding it to the Legislature, but before that, 24 up through our food chain and the Wilson Administration. 25 All those in favor, say aye. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 182 1 Any opposed? 2 Very good. The motion carries. 3 Thank you. Before we conclude, this is the Open 4 Comment Period. 5 This is a period in which we allow people to sign 6 up with our Clerk over here, Ms. Shelby, and address the 7 Board. 8 I want to remind you that you cannot address the 9 Board on any item that has been agendized, it needs to be 10 something that isn't, and we would ask you to limit your 11 comments to things that we have some measure of control or 12 authority to deal with. 13 Is there anyone here who wishes to comment? 14 Mr. Kenny, is there anything else that you want to 15 add to the Agenda today? 16 MR. KENNY: No. 17 CHAIRMAN DUNLAP: All right. With that, we will 18 now conclude or adjourn this the June meeting of the 19 California Air Resources Board. 20 (Thereupon the June meeting of the Air Resources 21 Board was adjourned at 2:48 p.m.) 22 --o0o-- 23 24 25 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 183 1 CERTIFICATE OF SHORTHAND REPORTER 2 3 I, VICKI L. MEDEIROS, a Certified Shorthand 4 Reporter of the State of California, do hereby certify: 5 That I am a disinterested person herein; that the 6 foregoing hearing was reported in shorthand by me, Vicki L. 7 Medeiros, a Certified Shorthand Reporter of the State of 8 California, and thereafter transcribed into typewriting. 9 I further certify that I am not of counsel or 10 attorney for any of the parties to said hearing nor in any 11 way interested in the outcome of said hearing. 12 IN WITNESS WHEREOF, I have hereunto set my hand 13 this fifth day of July, 1998. 14 15 16 VICKI L. MEDEIROS 17 Certified Shorthand Reporter License No. 7871 18 19 20 21 22 23 24 25 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345