1 2 CALIFORNIA ENVIRONMENTAL PROTECTION AGENCY 3 AIR RESOURCES BOARD 4 5 6 7 8 TRANSCRIPT OF PROCEEDINGS 9 10 CALIFORNIA EPA AIR RESOURCES BOARD PUBLIC MEETING 11 September 24, 1998 1115 Truxtun Avenue 12 Bakersfield, California 93301 13 9:30 a.m. 14 15 16 17 18 19 20 21 22 23 REPORTED BY: Kimberlee R. Miller, 24 CSR No. 10869 Our File No. 1-49410 25 1 APPEARANCES: 2 3 John D. Dunlap, III - Chairman 4 Joseph C. Calhoun, P.E. - Board Member 5 Lynne T. Edgerton - Board Member 6 Sally Rakow - Board Member 7 William F. Friedman - Board Member 8 Barbara Patrick - Board Member 9 Barbara Riordan - Board Member 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 CHAIRMAN DUNLAP: The meeting will come to 2 order. 3 We'll have Supervisor Patrick lead us in 4 the Pledge of Allegiance. 5 Please join us. 6 (Supervisor Patrick led the Pledge of 7 Allegiance.) 8 CHAIRMAN DUNLAP: Thank you, Supervisor 9 Patrick. 10 Ms. Hutchens, will you please call the 11 roll. 12 MS. HUTCHENS: Calhoun? 13 MR. CALHOUN: Here. 14 MS. HUTCHENS: DeSaulnier? 15 (No response.) 16 Edgerton? 17 MS. EDGERTON: Here. 18 MS. HUTCHENS: Friedman? 19 DR. FRIEDMAN: Here. 20 MS. HUTCHENS: Parnell? 21 (No response.) 22 Patrick? 23 SUPERVISOR PATRICK: Here. 24 MS. HUTCHENS: Rakow? 25 MRS. RAKOW: Here. 3 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 MS. HUTCHENS: Riordan? 2 MRS. RIORDAN: Here. 3 MS. HUTCHENS: Roberts? 4 (No response.) 5 MS. HUTCHENS: Silva? 6 (No response.) 7 Chairman Dunlap? 8 CHAIRMAN DUNLAP: Here. 9 Thank you. 10 First of all, I would like to thank 11 Supervisor Patrick for playing host to our meeting. 12 We're appreciative of the brief time we've had in Kern 13 County, and we've certainly noted the hospitality has 14 been very pleasant for us to travel here. 15 SUPERVISOR PATRICK: Thank you. It really 16 is an honor for us to host this meeting. We appreciate 17 very much that all you folks are willing to come to Kern 18 County. 19 CHAIRMAN DUNLAP: Thank you. 20 I would like to acknowledge the fact that 21 this board meeting is being broadcast on cable 22 television. It's my understanding that it's being shown 23 in a number of school classrooms in the county, and 24 we'll make note of that, and we'll make sure we're on 25 our best behavior and set good examples for the youth of 4 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 the county. 2 With that, I think we'll jump into the 3 agenda. I would like to remind those of you present who 4 would like to present testimony to the Board on any of 5 today's agenda items to please sign up with the clerk of 6 the Board to our left, Ms. Hutchens. If you have a 7 written statement, we ask you provide her 20 copies so 8 that the whole Board and our executive staff may have 9 copies. 10 The first item on the agenda today is 11 98-10-1 -- public hearing to consider amendments to the 12 gasoline control additive regulation. 13 This item on today's agenda is the 14 consideration of amendments to the California regulation 15 requiring deposit control additives in motor vehicle 16 gasoline. 17 In 1990, the Board adopted a regulation 18 requiring that California motor vehicle gasoline contain 19 effective levels of deposit control additives. At the 20 1990 hearing, staff showed when deposits form on port 21 fuel injectors and intake valves, vehicles experience a 22 significant degradation and combustion efficiency and 23 the loss of performance. The use of effective deposit 24 control additives was found to restore vehicle 25 performance and thereby reduce excess emissions. 5 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 To implement the regulatory requirements, 2 the Board staff manages our Gasoline Certification 3 Program to ensure that California gasoline has adequate 4 deposit control performance. Under this program, 5 gasoline formulations are certified when an applicant 6 demonstrates that their gasoline can reduce and prevent 7 the buildup of deposits on port fuel injectors and 8 intake valves. 9 Since establishing the gasoline 10 certification over six years ago, the Board staff has 11 approved over 370 applications for gasoline 12 certification. Based on recent evaluations of 13 application for certification, and in conjunction with 14 information obtained from meetings with industry, the 15 staff is now proposing several amendments to the deposit 16 control additive regulation to improve the program's 17 effectiveness. 18 So at this point, I would like to ask 19 Mr. Kenny to introduce the item and begin staff's 20 position. 21 Good morning, Mike. 22 MR. KENNY: I'll get here. 23 Good morning. 24 CHAIRMAN DUNLAP: You may have turned it 25 off. 6 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 MR. KENNY: It's off? I think I need 2 help. It's on? Okay. I think we're on now. 3 Good morning. Thank you, Chairman Dunlap, 4 and members of the Board. 5 Today we are proposing amendments to 6 update and improve the current deposit control additive 7 regulation. We're also proposing an amendment to 8 preserve NOx emission benefit which has resulted in the 9 use of improved gasoline deposit additives and the 10 introduction of California reformulated gasoline. 11 Other amendments are being proposed to add 12 clarity and specificity to the regulation. The proposed 13 amendments are intended to update the regulatory 14 requirements based on staff's evaluation of the 15 performance of today's additives. The amendments 16 account for improvements in gasoline additive technology 17 and reduce deposit forming tendency of California 18 reformulated gasoline. 19 The proposed amendments will also simplify 20 certification performance testing while strengthening 21 performance demonstration criteria. 22 Now at this time, I would like to 23 introduce Mr. Jim Aguila who will give the staff's 24 presentation. 25 Jim. 7 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 MR. AGUILA: Thank you. 2 Good morning, Mr. Chairman, and members of 3 the Board. As mentioned in the introduction, today we 4 are proposing several amendments to the gasoline 5 additive to update the program. 6 As you will see, the amendments will make 7 a regulation more effective, while simplifying the 8 certification process and reducing the cost of testing. 9 In addition, some information will be 10 presented to show that an unanticipated NOx benefit has 11 occurred due to improvements in gasoline and additive 12 technology. 13 The presentation will consist of some 14 general background information on the additive 15 regulation and a discussion of our proposed amendments 16 and the impacts. 17 In 1990, the Board adopted the gasoline 18 deposit control additive regulation to ensure that 19 commercial gasoline contained effective amounts of 20 additives to control both port fuel injector and intake 21 valve deposits. These fuel system deposits are known to 22 cause combustion inefficiencies and corresponding 23 adverse impacts on emissions. 24 Maintaining an acceptably low level of 25 fuel system deposits was proven to allow vehicles to 8 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 operate as designed and, thereby, avoid excess 2 emissions. 3 The regulation also established a Gasoline 4 Certification Program for the one-time approval of 5 commercial gasolines containing additives. 6 Under the program, gasoline marketers are 7 required to obtain certifications from the Air Resources 8 Board by demonstrating that their commercial gasoline 9 with additives complies with the performance standards 10 of the regulation. 11 Since implementing the gasoline additive 12 regulation in 1992, the staff has approved over 370 13 gasoline certifications. 14 To be certified, individuals must submit 15 an application demonstrating the effectiveness of the 16 additive using certification test gasoline. 17 This demonstration is made by conducting 18 vehicle tests using the applicant's test gasoline 19 containing the candidate additive. The test gasoline 20 must pass the performance standards for port fuel 21 injector and intake valve deposit keep-clean and also a 22 separate performance standard for port fuel injector 23 clean-up. 24 The vehicle tests are conducted in 25 accordance with the test methods prescribed in the 9 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 regulation. 2 Over the past year, the staff has been 3 evaluating several aspects of the gasoline deposit 4 control additive regulation to determine the need for 5 revisions. 6 Since combustion chamber deposits are not 7 addressed in the present regulation, we evaluated the 8 need to consider them at this time. In addition, staff 9 received information suggesting that potential benefits 10 might result from controlling combustion chamber 11 deposits. 12 In a separate evaluation, we found that 13 the current intake valve deposit standard may not 14 provide for the use of the most effective additives 15 within the commercial gasoline market. 16 In terms of port fuel injector deposit 17 control, today's additives have excellent performance, 18 thereby minimizing the need for separate keep-clean and 19 clean-up test requirements. 20 We also identified the need to update the 21 port fuel injector and intake valve deposit keep-clean 22 tests to reflect the newest version by the American 23 Society for Testing and Materials. 24 In developing the proposals, the staff 25 obtained available research from both public and private 10 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 sources. Along with the review of individual company 2 studies, staff reviewed studies published by the Society 3 of Automotive Engineers, among other information. 4 Staff also met with all major gasoline 5 additive manufactures and representatives from 6 automobile, oil, and motor vehicle testing companies. 7 Staff also conducted three public 8 workshops during this year. 9 Since the early 90's, significant amounts 10 of research have been conducted to gain a fundamental 11 understanding of combustion chamber deposits. Research 12 shows combustion chamber deposits are mainly caused by 13 unburned gasoline which contacts piston tops and 14 cylinder heads. 15 Commercial gasolines contribute to 16 combustion chamber deposits in two ways. First, the 17 heavy components of gasoline causes a certain level of 18 deposits. The gasoline's potential to create combustion 19 chamber deposits has been linked to the properties of 90 20 percent distillation temperature, aromatics, and 21 olefins. 22 Second, commercial gasolines also contains 23 additives for controlling port fuel injector and intake 24 valves deposits, but these additives also cause deposits 25 in the combustion chambers. Several studies indicate 11 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 both additive type and dose affect the amounts of 2 combustion chamber deposits that are formed. 3 Combustion chamber deposits have been 4 correlated to NOx emissions and octane requirement 5 increase, while providing a small fuel economy benefit. 6 Because of the reduced level of 90 percent 7 distillation temperature, aromatics, and olefins within 8 California reformulated gasoline and the use of modern 9 additives, today's gasoline has much less potential to 10 form combustion chamber deposits relative to the past. 11 As mentioned in the previous slide, 12 gasoline additives can cause combustion chamber 13 deposits. Studies found that the use of mineral oil 14 carrier fluids in additive packages along with high 15 additive dosage rates significantly increases the amount 16 of combustion chamber deposits. 17 However, in reviewing technical 18 information from our Gasoline Certification Program, 19 staff found that today's additive packages have been 20 significantly reformulated to use advanced synthetic 21 carrier fluids which are designed to minimize combustion 22 chamber deposit formation. 23 Modern additive packages also utilize more 24 effective detergent components resulting in dosage rates 25 at half the dose of older additive packages. Modern 12 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 additive packages with synthetic carrier fluids used at 2 lower dosage rates results in less combustion chamber 3 deposits. 4 Staff has compiled data from several 5 studies to characterize changes in combustion chamber 6 deposit forming potential due to changes in commercial 7 gasoline formulations. 8 This data suggests that California 9 reformulated gasoline with lower concentration of modern 10 additives produces about 25 percent less combustion 11 chamber deposit mass relative to pre-California 12 reformulated gasoline. 13 Several studies have found that when 14 combustion chamber deposits are removed from an engine, 15 NOx emissions are also lowered. 16 As a result of introducing California 17 cleaner burning gasoline in 1996 and modern additives, 18 levels of combustion chamber deposits in existing 19 vehicles were reduced by about 25 percent. This equates 20 to about a 5 percent unanticipated NOx decrease in the 21 1996 California motor vehicle fleet, or about 50 tons 22 per day of NOx reductions. 23 New vehicles which have operated only on 24 California reformulated gasoline will develop less 25 combustion chamber deposits and will experience less 13 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 adverse impact on NOx emissions. 2 We propose to cap the combustion chamber 3 deposit level to preserve the benefit that has occurred 4 due to the introduction of California reformulated 5 gasoline and improved additives. 6 Under this proposals, applicants would 7 have a choice of either meeting a maximum mass limit or 8 a percentage increase compared to a reference gasoline. 9 Staff established these standards based on 10 all available test data on California reformulated 11 gasoline, as well as information from other studies. 12 In terms of intake valve deposits, staff 13 has determined that the existing standard is not equally 14 protective of all vehicles in the California fleet. We 15 have reviewed information which indicates that some 16 in-use vehicles still exhibit elevated intake valve 17 deposit levels, despite the current standard. 18 Additionally, the referenced vehicle 19 intake valve deposit test procedure has a rather large 20 variability of about 30 percent and can potentially 21 allow marginally effective additives to pass. 22 To address these concerns, staff reviewed 23 the performance data of current additives to determine 24 if the intake valve deposit standard could be 25 strengthened. 14 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 We found that since introduction of 2 California reformulated gasoline in 1996, most additive 3 packages have demonstrated intake valve deposit 4 performance below 50 milligrams per valve. That's less 5 than half the current intake valve deposit standard. 6 We also found that gasoline marketers have 7 access to additives which can demonstrate performance 8 below 50 milligrams per valve. 9 By lowering the intake valve standard, we 10 would provide added assurance that only the more 11 effective additives will be used in commercial gasoline. 12 Therefore, staff proposes to lower the 13 intake valve -- the existing intake valve standard to 50 14 milligrams per day. 15 Presently, the regulation requires that 16 applicants conduct vehicle tests to show both port fuel 17 injector clean-up and keep-clean effectiveness. 18 Staff evaluated information which showed 19 that port fuel injector deposit clean-up tests may not 20 be necessary. 21 In evaluating the performance test results 22 from the certification program, staff found that modern 23 additive packages with effective intake valve deposit 24 control consistently demonstrated excellent port fuel 25 injector clean-up test performance. 15 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 Therefore, in conjunction with the 2 proposed lower intake valve deposit standard, staff 3 believes that the port fuel injector deposit keep-clean 4 test is no longer available. Clean-up test, excuse me. 5 Elimination of the port fuel injector test 6 would result in a significant cost savings to the 7 industry because this test represents about 25 percent 8 of the cost for gasoline certification testing, or about 9 $10,000. 10 Therefore, staff proposes to eliminate the 11 port fuel injector deposit clean-up test requirements 12 from the regulation in conjunction with lowering the 13 intake valve deposit standard. 14 Staff also evaluated other aspects of the 15 regulation to determine the need for changes. 16 One area to be addressed relates to the 17 requirements governing the certification test gasoline. 18 Currently, the regulation does not provide enough 19 guidance to ensure that the test gasoline will be 20 representative of the commercial gasoline to be marketed 21 under the certification. 22 Other changes are needed to update the 23 vehicle test methods and to disallow existing 24 gasoline certifications which use older, less effective 25 additive technology. As discussed earlier, older 16 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 additive technology will likely cause an increase in 2 vehicle combustion chamber deposit levels. 3 To address these issues, staff proposes to 4 require a specific 90 percent distillation temperature 5 requirement for certification test gasoline. Staff also 6 proposes to require that applicants submit the 7 information on the components used to produce the 8 certification test gasoline. 9 For test methods, we are proposing to 10 update the intake valve deposit and port fuel injector 11 deposit keep-clean test with the most recent versions 12 from the American Society for Testing and Materials. We 13 also propose to include a new Air Resources Board test 14 method for combustion chamber deposit measure. This is 15 based on existing methods used by the Southwest Research 16 Institute and EG&G Automotive Research. 17 Finally, staff proposes to invalidate 18 gasoline certifications which were approved prior to the 19 introduction of California reformulated gasoline, and to 20 provide a phase-in period to allow applicants to 21 transition to the new performance standards. 22 During the public comment period, we 23 received two comments, one of which was verbal, seeking 24 clarification of the proposed new amended language 25 regarding invalidating older gasoline certifications. 17 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 Staff agreed with the comments and now proposes to 2 modify our original proposal, which was contained in the 3 staff report, to include two minor administrative 4 clarifications. 5 These changes are indicated in the 6 modified proposed regulation order before you and are 7 shown in shaded text. 8 The impact of the proposed new combustion 9 chamber deposit standard will preserve the NOx benefit 10 which has resulted from improvements in gasoline and 11 additive technologies. 12 Also, lowering the intake valve deposit 13 standard to half the current standard will help ensure 14 the most effective additives be used in the gasoline 15 market. 16 From a cost perspective, today's proposals 17 will result in a significant savings for applicants 18 which certify new additive packages. Eliminating the 19 port fuel injector deposit clean-up test will save about 20 $10,000, while the addition of the new combustion 21 chamber deposit test will cost about $500, resulting in 22 a net savings of about $9500. 23 No other impacts were identified by staff. 24 We intend to continue our assessment of 25 the deposit control additive regulation, including the 18 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 combustion chamber deposit element. 2 We also plan to continue evaluating 3 potential alternative test means. 4 As part of our ongoing coordination with 5 the U.S. EPA, staff will closely follow their effort to 6 evaluate combustion chamber deposits. 7 Finally, staff plans to further refine the 8 NOx benefit from reduced combustion chamber deposit 9 formation. 10 In summary, we believe if adopted, the 11 amendments being proposed will substantially strengthen 12 the existing program to reflect today's advanced 13 gasoline and additive technology. 14 The proposals will also serve to preserve 15 the benefits provided by California reformulated 16 gasoline, while at the same time reducing the cost of 17 conducting certifications testing. 18 In conclusion, staff recommends that the 19 Board approve the amendments included in the modified 20 proposal. 21 CHAIRMAN DUNLAP: Thank you. 22 Mr. Schoning, would you please address the 23 process, prior to today, by which this item came before 24 us, and share any concerns or other comments you may 25 have with the Board at this juncture. 19 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 MR. SCHONING: Yes, I will, Mr. Chairman, 2 and members. The process was an extensive one, I can 3 assure you, and I shall. 4 The staff conducted three public workshops 5 prior to this item at issue as well as extensive 6 meetings individually with 14 individual companies, 7 industry associations with representatives from the fuel 8 additive industries including Ornight Additives Company, 9 the American Automotive Manufacturers' Association, the 10 Joint Auto Oil Coordinating Research Council, the 11 petroleum refining industry including Arco, Chevron 12 Products, Texaco Additives International, Exxon Research 13 Company and Mobile Technology Company, as well as 14 automotive testing facilities. 15 The staff also consulted with Southwest 16 Research Institute and EG&G Automotive Research, the two 17 principal contract testing facilities performing 18 combustion chamber deposit research. 19 The three public workshops were conducted 20 on the 24th of March through the 11th of June and 24th 21 of July of this year to which more than 600 stakeholders 22 were invited. These notices of these workshop were also 23 posted on the Air Resources Board website, and attendees 24 including the parties I've just mentioned as well as 25 members of the Association of International Automotive 20 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 Manufactures, the California Trucking Association, major 2 independent and -- major and independent oil refiners 3 including Costco, Altamar, and Kern Oil, and the fuel 4 additive industry including Lubrazal, Ethel Additives, 5 Octel America and BASF. 6 Other invitees included emission control 7 districts -- California Energy Commission, Bureau of 8 Automotive Repair to Natural Resources and Defense 9 Council, and the Sierra Club. 10 The proposed regulation file staff report, 11 which are before you together with the Board hearing 12 notes, were mailed to all of these above parties on the 13 7th of August, and likewise made available on the ARB 14 website. 15 In sum, it would appear to us, 16 Mr. Chairman, and members of the staff, if anything it 17 went above and beyond the requisites of full and 18 effective public stakeholder involvement. 19 CHAIRMAN DUNLAP: Thank you, Mr. Schoning. 20 Do any of the Board members have questions 21 at this juncture, because we have one witness. 22 Joe? 23 MR. CALHOUN: Yes, Mr. Chairman. 24 The focus of my question is on 25 enforcement. I realize we have a certification 21 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 procedure that is in effect. What's our follow-up? Do 2 we take fuel samples also? 3 UNIDENTIFIED SPEAKER: Board Member 4 Calhoun, the compliance division does in certain -- 5 THE REPORTER: I don't' know your name -- 6 MR. SIMEROTH: I'm sorry. 7 THE REPORTER: -- I'm sorry. 8 MR. SIMEROTH: That's quite all right. My 9 name is Dean Simeroth, I'm with the Stationary Resource 10 Division. 11 And compliance division does the follow-up 12 enforcement testing. They basically monitor the records 13 of the terminals to ensure the correct additives and 14 correct amounts of additives are injected into each tank 15 of gasoline at the terminal or any other distribution 16 point where a delivery tank is loaded and going to a 17 service station. 18 We require the applicants to identify the 19 test methods if we need to take samples and verify 20 presence of additives. 21 CHAIRMAN DUNLAP: Thank you. 22 Why don't we -- Mrs. Rakow. 23 MRS. RAKOW: Yes, for a brief 24 clarification. 25 The letter from Chevron addressed some 22 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 confusion about some of the chemical issues, and I 2 wondered if that had been satisfactorily answered. 3 MR. SIMEROTH: Yes. Again, Mr. Simeroth. 4 We have talked to Chevron at least three 5 times since receiving the letters, and they're 6 comfortable that we understand the additive technology. 7 MRS. RAKOW: Thank you. 8 CHAIRMAN DUNLAP: Any other questions? 9 We'll ask Steve Douglas from AAMA to come 10 forward. He is our sole witness. 11 MR. DOUGLAS: Good morning, Chairman 12 Dunlap, and members of the board. I'm Steve Douglas 13 with the American Automobile Manufacturers Association 14 and, obviously, gasoline controls are important to the 15 automobile industry. 16 I have submitted a statement, and I'll 17 just simply summarize that by saying we do support the 18 staff's proposals, fully support that. And further, 19 we're committed to working with them to develop new test 20 procedures or alternative test procedures as well as new 21 specifications where those may be appropriate. 22 Again, we appreciate the staff's work on 23 this, and we look forward to working with the staff and 24 the Board in the future. 25 CHAIRMAN DUNLAP: Thank you, Steve. 23 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 Any questions of the witness? 2 Yes. Dr. Friedman and Ms. Edgerton. 3 DR. FRIEDMAN: Mr. Douglas' statement 4 makes the point that there can be a disassociation 5 between the results or on the effects of cleaning up 6 intake valve deposit versus PFID, that an additive can 7 come along which can have a beneficial effect on one and 8 not the other, or maybe even deleterious to the other. 9 Is that a reasonable likelihood? What is the science 10 that is behind that, and are we doing something that may 11 in the future need to be turned around if such an 12 additive becomes available? 13 MR. SIMEROTH: Dr. Friedman, our proposal 14 will keep three performance standards. One for intake 15 valve deposits, one for port fuel injector keep-clean, 16 and the third one the new proposal for combustion 17 chamber deposits. 18 We intend to keep the port fuel injector 19 deposit keep-clean into the future. We agree with the 20 comment you can have an additive that can do a good job 21 on the intake valve deposit but not necessarily in port 22 fuel injector deposits. They're in different locations 23 of the engine, and the formation characteristics are 24 different because of the temperatures and the materials 25 that are exposed. So you need both. We're not 24 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 proposing to get rid of -- but we are proposing the 2 clean-up port fuel injector deposit be eliminated. 3 We found in reviewing the records that any 4 time an additive does a good job on the other two, it 5 does a good job on the clean-up. So that's superfluous 6 to the cost and additional moneys paid out. 7 DR. FRIEDMAN: Thank you. 8 CHAIRMAN DUNLAP: Ms. Edgerton. 9 MS. EDGERTON: Lynne Edgerton. 10 This is more of a comment about shared 11 success here. Sometimes the regulations which this 12 Board adopts, which are often cutting edge, do not 13 achieve the goals that we set for ourselves and then we 14 have to makeup shortfalls. This is a case where it's 15 important to celebrate that we have an unanticipated 5 16 percent reduction in NOx as a result of the introduction 17 of California reformulated gas. And I'm sure as 18 partners in cleaning up the air, the AAMA and the fuel 19 providers are as enthusiastic about it as we are, and 20 it's just as important to -- sometimes we're bigger 21 winners than we expect to be. I don't know if you have 22 any comment you would like to make on how nice that is. 23 MR. DOUGLAS: Thank you, Ms. Edgerton. 24 CHAIRMAN DUNLAP: Any questions of the 25 witness? 25 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 All right. Good deal. 2 Thank you, Steve. 3 That will conclude the public testimony. 4 I'm going to ask staff to take a moment 5 and summarize the written submissions we have on this 6 item. 7 MR. SIMEROTH: Mr. Chairman, we have two 8 additional letters. One from Texaco Additives 9 International Research & Development supporting the 10 staff's proposal; one from Chevron that we discussed 11 earlier commenting on some technical comments about the 12 report, which we've clarified, and also we're making a 13 suggestion for improvement for the administrative parts. 14 And staff is proposing a change to address their 15 concern. 16 CHAIRMAN DUNLAP: Okay. 17 Mr. Scheible, do you have anything you 18 want to add? 19 MR. SCHEIBLE: No, I don't. 20 CHAIRMAN DUNLAP: I am now closing the 21 record on this agenda. However, the record will be 22 reopened when the 15-day notice of public availability 23 is issued. Written or oral comments received after this 24 hearing date or before the 15-day notice will not be 25 accepted as part of the official record on this item. 26 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 When the record is reopened for 15-day comment period, 2 the public may submit written comments on the proposed 3 changes which will be considered and responded to in the 4 final statement of reasons for the regulation. 5 Ex parte communication. Do we have any ex 6 parte that we need to report? 7 (No response.) 8 Very good. 9 We have before us a resolution, resolution 10 98-46 which contains the staff recommendation. 11 The Chair would entertain a motion and 12 second to adopt the staff proposal. 13 DR. FRIEDMAN: So moved. 14 CHAIRMAN DUNLAP: Moved by Dr. Friedman; 15 seconded by Mr. Calhoun. 16 Any discussions we need to have further? 17 Very good. We'll proceed with a voice 18 vote. All those in favor of adopting resolution 98-46 19 please say aye. 20 (A chorus or ayes.) 21 Any opposed? 22 (No response.) 23 Very good. Motion carries. 24 Mr. Scheible, Mr. Simeroth, thank you very 25 much. I appreciate the hard work that went into this. 27 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 We'll proceed with the next item. 2 Before we do that, I have a few more 3 things to say about the broadcast today. It's also my 4 understanding that Centennial High School is here. Is 5 that true? 6 UNIDENTIFIED PERSON: Yes. 7 CHAIRMAN DUNLAP: Welcome. We're glad to 8 have you with us. 9 I would like to acknowledge Linda Urata 10 (phonetic) of Project Clean Air, and Mr. Kelly Blanton, 11 superintendent of schools in Kern County for their 12 assistance in notifying the 250 school sites and 142,000 13 students of the opportunity to access our Board meeting 14 today. Although we do not have an exact count, I'm 15 pretty certain there's not 142,000 watching us. But 16 we've been advised that about over half of the 17 government classes in high school government classes are 18 listening to us now and they're experiencing another 19 phase of the public process as we're being broadcast 20 live on KGOB. 21 (Applause.) 22 Thank you. We'll allow some time for 23 that. 24 (Applause.) 25 And I might add, too, for the students, 28 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 it's kind of fun for us, too, to have you tuning in and 2 watching as we go about doing your business, the state's 3 business in trying to protect public health. 4 All right. We'll go to the next item 5 98-10-2 -- public hearing to consider amendments to the 6 designation criteria and amendments to the area 7 designations for the state and air quality standards. 8 This item is for the Board's annual 9 consideration of the staff's recommendation for making 10 changes in the designation criteria and in the area 11 designations for the state ambient air quality 12 standards. These annual reviews are required by the 13 state Health and Safety Code. 14 The changes to the criteria are not 15 substantive and are mainly to simplify and make 16 clarification. 17 Again this year, the changes to the area 18 designations are largely good news. 19 And at this point, I would like to again 20 introduce Mr. Kenny to kick off this agenda item and 21 begin staff's presentation. 22 Mike. 23 MR. KENNY: Thank you, Mr. Chairman, and, 24 again, members of the board. 25 As you mentioned, the staff is proposing 29 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 amendments to both designation criteria and area 2 designations for the state and the air quality 3 standards. The California Clean Air Act requires for 4 establishing a periodic review of the criteria used for 5 designating areas. 6 The Board last amended the designation 7 criteria in November of 1995. This year the staff 8 reviewed the criteria as part of Governor Wilson's 9 executive order W144-97 which requires an evaluation of 10 all regulations to see if any can be eliminated or 11 simplified. 12 Based upon this review, the staff is 13 determined the criteria could be clarified and 14 simplified in several areas. Therefore, staff is 15 proposing a number of substantive changes to the 16 criteria. The proposed changes would not add any new 17 requirements to the criteria. 18 The California Clean Air requires the 19 Board to use these criteria to designate each area of 20 the state as attainment, nonattainment or unclassified 21 for the pollutants for which there were state standards. 22 The Board must review these area 23 designations each year and update them with new 24 information on the date when it's appropriate. 25 The Board initially designates areas of 30 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 the state -- excuse me, the Board initially designated 2 areas of the state in 1989 and has amended these 3 regulations every year since then. 4 The staff proposes today that the Board 5 update the designations based on our review of the air 6 quality data for 1995 through 1997. 7 The good news that Chairman Dunlap refers 8 to is the redesignation of two areas to attainment for 9 the carbon monoxide standards: Fresno and Lake Tahoe. 10 With this proposal, only two areas in the state remain 11 nonattainment: Los Angeles County and Calexico in 12 Imperial County. 13 Besides carbon monoxide there is a change 14 from nonattainment to nonattainment-transitional for 15 ozone required by operation of law. 16 At the time the hearing notice was sent 17 out, staff had identified six districts that qualified 18 for such a change. However, after a review of the data 19 for 1998 to date, five of these districts have had four 20 more exceedances and, therefore, no longer qualify for 21 nonattainment-transitional. Thus, the staff does not 22 propose designations for these areas be modified. 23 In addition to the changes for carbon 24 monoxide and ozone, there's also one change to 25 nonattainment for PM10. The staff will not propose a 31 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 change for sulfates that was originally presented in the 2 hearing notice, and we'll discuss our rational in the 3 staff presentation. 4 Ms. Debora Popejoy, Manager of the Air 5 Quality Analysis Section in the Technical Support 6 Division will now present the staff's proposal. 7 Debora. 8 MS. POPEJOY: Thank you, Mr. Kenny. 9 Good morning, Chairman Dunlap, and members 10 of the Board. 11 As Mr. Kenny mentioned, the staff's 12 proposal this year includes amendments to both the 13 designation criteria and the area designations. 14 First, I need to tell you today's proposal 15 is not the same as was proposed in the staff report, and 16 I'll explain why later. The staff is proposing a number 17 of minor changes to the designation criteria for the 18 purpose of simplifying the language, clarifying 19 terminologies, and updating current practices. The 20 staff is recommending changes in the area designations 21 for three pollutants -- for three pollutants and four 22 areas. 23 I think I'm one slide ahead. I'm sorry. 24 I think I lost my slides here. Okay. 25 The first is to confirm ozone 32 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 redesignations for one district that occurs by operation 2 of law; the second is to redesignate two areas for the 3 CO standard; and the third is to redesignate one county 4 for PM10 standard. 5 Today's presentation will be in four 6 parts: overview of the designation criteria, the 7 proposed changes to the criteria, the areas with 8 proposed changes in designations, and areas without 9 changes in designations. 10 So let me start first with a brief 11 overview of the provisions of the designation criteria. 12 The Health and Safety Code Section 39607(e) requires the 13 Air Resources Board to establish designation criteria 14 and also review the criteria periodically to ensure 15 their relevance. In addition, the Health and Safety 16 Code Section 39608 requires the Board use these 17 designation criteria to update the area designations 18 annually. 19 The criteria specify what type of data can 20 be used to make the designations. The Board must use 21 data for record, which are those air quality data that 22 meet specific siting and quality assurance requirements. 23 For the most part, these are data collected by the 24 Board, the local districts, and certain state and 25 federal agencies. When adequate air quality data are 33 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 not available, however, the Board may use relevant data 2 such as those for emissions, meteorology, topography, 3 and populations. 4 The criteria also will specify the size of 5 the areas to be designated. The size of the designated 6 area varies depending on the nature of the pollutant and 7 other factors. In general, an air basin is the area 8 used for designating the regional pollutants such as 9 ozone, nitrogen dioxide, suspended particulate matter, 10 sulfates, and visibility reducing particles. The 11 county is generally the area used for designating the 12 primary pollutants: carbon monoxide, sulfur dioxide, 13 lead, and hydrogen sulfide. But in 14 all cases -- 15 THE REPORTER: Excuse me, I'm going to 16 have ask you slow down just a little bit. You're going 17 a little fast. 18 MS. POPEJOY: Okay. 19 But in all cases, the Board may designate 20 a smaller area such as an urbanized area if the Board 21 finds that the smaller area has distinctly different air 22 quality, topography, and emissions. 23 CHAIRMAN DUNLAP: If I may interject to 24 give the court reporter some comfort. Much of this is 25 written and we'll promise to give it to you. We'll take 34 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 a little pressure off of you. 2 THE REPORTER: Thank you. 3 CHAIRMAN DUNLAP: Okay. Relax and let 4 them go ahead and we'll get that to you. 5 MS. POPEJOY: Another provision of the 6 criteria defined highly irregular or infrequent events. 7 Identifying an exceedance as affected by highly 8 irregular or infrequent event excludes the exceedance 9 from nonattainment designation decisions. The Board 10 determines area designations based on whether an area 11 has any violations in the latest three-year period. 12 Exceedances are those air quality 13 concentrations that are higher than the numerical value 14 of the standard. But an exceedance is not considered as 15 a violation if it is identified by the staff as affected 16 by highly or irregular of infrequent event. There are 17 three types of these events, and they are considered in 18 the order listed here in this slide. 19 First, an extreme concentration event is 20 determined using a statistical procedure which 21 calculates an expected peak day concentration, or EPDC, 22 for each pollutant for each monitoring site. The EPDC 23 is the concentration that is expected to recur on 24 average once per year. A measured exceedance that is 25 greater than the EPDC is not considered a violation 35 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 because it is expected to recur less frequently than 2 once per year. 3 Second, an exceptional event is a 4 specific, identifiable event that is beyond regulatory 5 control. Examples of exceptional events include forest 6 fires and chemical spills. An exceedance that is 7 affected by an exceptional even is not considered a 8 violation. 9 Lastly, an unusual concentration event may 10 be used to exclude an anomalous value. To have been 11 considered as effective by this event, the exceedance 12 must be determined to impact only the local area and 13 must not be expected to recur. This event can only be 14 identified for areas currently designated as attainment 15 or unclassified, and can be reevaluated the following 16 year when more data are available. 17 Now, let's take a look at the designation 18 categories. There are four categories. An area is 19 designated as attainment if there are no violations of 20 the relevant state standard in the area during the last 21 three years. Again, a violation is not an exceedance -- 22 again, a violation is an exceedance that is not affected 23 by a highly irregular or infrequent event. 24 An area is designated as nonattainment if 25 there is at least one violation in the area during the 36 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 last three years. 2 The nonattainment-transitional category 3 may be used to signal a possible improvement in air 4 quality for a nonattainment area. The requirements are 5 different for ozone than other pollutants. For ozone, 6 an area must have three of fewer exceedances at each 7 monitoring site in the last calendar year. This change 8 occurs by operation of law and does not require action 9 by the Board. However, the staff needs to evaluate the 10 data to ensure that the area indeed qualifies for 11 redesignation. 12 Also this category -- also for this 13 category the designated area is the air district rather 14 than air basin or county. For pollutants other than 15 ozone, an area must have two or fewer violations at each 16 site in the area within the last calendar year. The 17 change to nonattainment-transitional for pollutants 18 other than ozone does require the Board's approval. 19 Finally, an area is designated as 20 unclassified if there are insufficient data to designate 21 the area as either attainment or nonattainment. 22 Now that I have explained provisions of 23 the criteria, let me present the Board's proposal. 24 As Mr. Kenny mentioned, the staff 25 initiated the review of the criteria to comply with 37 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 Governor Wilson's Executive Order. This order requires 2 a sunset review of the regulations to determine if the 3 regulations or any section of the regulations can be 4 deleted. Based upon our review, we determined that no 5 part of either the designation criteria or the 6 designation regulation should be retired at this time. 7 However, in the process of our review, we decided some 8 minor changes in the criteria should improve the 9 regulations. These changes are listed in this and the 10 next two slides. 11 I should emphasize these changes merely 12 reflect the current practice in making designations. 13 They do not change the manner in which the designations 14 will be made. Some of these changes update the language 15 in the criteria to reflect current practices, make the 16 regulation internally consistent, and delete unnecessary 17 and obsolete language. One such change reflects that 18 the Board designates geographic areas other than just 19 air basins, such as counties and other urban areas. 20 Further, the staff proposes to replace the word "shall" 21 in all the instances with the word "will" in order to 22 provide a consistent terminology throughout the 23 criteria. 24 The next group of changes deal with the 25 nonattainment/transitional designations. One change 38 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 provides a separate section in the criteria for each 2 designation category including nonattainment- 3 transitional category so as to make the criteria easier 4 to use and interpret. 5 The next change in the criteria allows a 6 portion of a district to be designated as 7 nonattainment-transitional for ozone. This is needed 8 because some districts span more than one air basin. 9 One air basin portion of a district may qualify for this 10 transitional category before the other air basin 11 portion. This change in the criteria allows the 12 qualifying portion to be so designated without having to 13 wait until all portions of the district qualify. 14 Within the same section of the criteria, 15 another change provides a description of the current 16 practices where the staff also reviews the current 17 year's data in evaluating districts for the 18 nonattainment-transitional category for ozone. Because 19 designation for this category is based on only year's of 20 data, this designation is highly susceptible to 21 year-to-year changes in meteorology, and a district may 22 move back and forth between this category and the 23 nonattainment category. Thus, when the data for the 24 last calendar year signals the nonattainment- 25 transitional designation, the staff reviews the current 39 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 year's data. If there are more than three ozone 2 exceedances in the current year, the staff recommends 3 that the area remain designated as nonattainment. 4 Another group of changes clarifies the 5 term data for record to indicate the types of qualifying 6 data, and to specify more clearly the time schedules of 7 when data become data for record. 8 The next change to the designation 9 criteria revises the section on highly irregular and 10 infrequent events to show the order in which these three 11 types of events are evaluated by staff. The extreme 12 concentration event is evaluated first, the exceptional 13 then, and lastly the unusual concentration event. This 14 does not represent any change in the procedure, because 15 this is the order in which the staff has evaluated these 16 events in the past annual reviews. 17 The same section of the criteria 18 incorporates a referenced document that describes the 19 calculation procedure for determining extreme 20 concentration events. There have been minor 21 modifications to the statistical procedure and the 22 computer program listed in the document since the 23 document was originally incorporated. A proposed change 24 to this section substitutes a new document to be 25 incorporated by the reference that updates the 40 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 calculation procedures and the computer code. 2 Now let me present the staff's proposed 3 changes to the area designations themselves. 4 This slide gives an overview of the area 5 designations. The staff is confirming the change in 6 designation to nonattainment-transitional for ozone for 7 one district that occurs by operation of law. In 8 addition, the staff is proposing to redesignate two 9 areas to attainment for CO and one area to nonattainment 10 for particulate matter. 11 Redesignation from nonattainment to 12 nonattainment-transitional for ozone occurs by operation 13 of law. But the data must first be evaluated by the 14 staff to establish that a district qualifies for this 15 designation, and then the staff confirms this at the 16 Board hearing. 17 At the time of the publication of the 18 hearing notice and the staff report, the staff had 19 identified six districts that qualified for 20 nonattainment-transitional based on the data from 1997. 21 But since that time, the ozone data from 1998 show that 22 five of those six districts have recorded more than 23 three exceedances of the state standard thus far in 24 1998. 25 As I mentioned earlier, three or more 41 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 exceedances in the current year would disqualify a 2 district from the nonattainment-transitional 3 designation. 4 Therefore, the staff now confirms that 5 only one district qualifies to be redesignated as 6 nonattainment-transitional for ozone, which is the 7 Colusa County Air Pollution Control District in the 8 Sacramento Valley Air Basin. 9 There are six districts that would qualify 10 for nonattainment-transitional phase in 1997 data but do 11 not qualify in 1998. These include the Bay Area Air 12 Quality Management District, which already had three 13 exceedances in 1998 at the time the staff report was 14 published. The five districts whose 1998 exceedances 15 were learned of by the staff after the hearing notice 16 are: the Monterey Bay Unified Air Pollution Control 17 District, the San Luis Obispo County Air Pollution 18 Control District, the Yolo/Solano Air Quality Management 19 District, the Tehama County Air Pollution Control 20 District, and the Mountain Counties Air Basin portion of 21 Placer County Air Pollution Control District. 22 The Board and districts staff have 23 reviewed the exceedances and certify that the data meet 24 the requirements to be considered as data for record for 25 1998. And, therefore, the staff recommend that these 42 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 district remain designated as nonattainment for ozone. 2 The staff proposes to redesignate two 3 areas to attainment for carbon monoxide. There are 4 three state CO standards: a one-hour standard, which is 5 applicable to the entire state, and two eight-hour 6 standards: one for Lake Tahoe Air Basin and one for the 7 rest of the state. The Tahoe standard is more stringent 8 because of the affects of CO at high altitude. The 9 eight-hour standard is the controlling standard for 10 reaching CO attainment. 11 The staff proposes to redesignate Fresno 12 urbanized area from nonattainment to attainment. The 13 site with the highest eight-hour concentrations is the 14 Fisher Street site in Fresno. This site had only one 15 exceedance which occurred in November 1995 and qualifies 16 as an extreme concentration since it is greater than the 17 calculated EPDC. This site was missing data for the 18 month of november 1996, which is typically one of the 19 months with high annual concentration. 20 In order to have complete data to 21 calculate an EPDC, the staff substituted the data from 22 November 1995 for the November 1996 data. But first the 23 staff compared the data for '95 with '96 for all sites 24 in Fresno County and determined that the concentrations 25 in 1995 were higher than in 1996. 43 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 The staff concluded that this data 2 substitution for the Fisher Street site overestimated 3 the concentrations that would have been measured in 4 1996. Therefore, calculating an EPDC with this data 5 substitution ensures that the staff is not excluding an 6 exceedance that should be considered a violation of the 7 standard. Since there are no exceedances in Fresno 8 County, the staff recommends that entire Fresno County 9 be designated as attainment for the CO standard. 10 The staff also proposes to redesignate the 11 Lake Tahoe Air Basin portion of El Dorado County from 12 nonattainment-transitional to attainment for CO. There 13 was only one exceedance of the Tahoe CO standard, and 14 the staff has determined that this exceedance qualifies 15 as an extreme concentration event. Therefore, staff 16 recommends this portion of El Dorado Country be 17 redesignated as attainment for the CO standards. 18 The last redesignation is for suspended 19 particulate matter or PM10. The staff proposes to 20 redesignate Lassen County from unclassified to 21 nonattainment for PM10. Lassen County is designated as 22 unclassified due to a lack of historical PM10 data for 23 that county. 24 PM10 monitoring began in October of 1996 25 on a one in six day sampling schedule. Based on data 44 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 through the end of 1997, there have been three 2 exceedances of the 24-hour PM10 standard of 50 3 micrograms per cubic meter, and the measurements are: 4 84, 65, and 53 micrograms per cubic meter. 5 The staff evaluated the data and found 6 that none of the exceedances can be excluded as affected 7 by a highly irregular or infrequent event. Therefore, 8 the staff determined that Lassen County meets the 9 conditions for the nonattainment designation. As a 10 result, the entire Northeast Plateau Air Basin would now 11 be designated as nonattainment for PM10. 12 That concludes the staff's proposal for 13 the redesignations. Now I need to discuss the areas for 14 which staff does not recommend for redesignation. These 15 include four areas regarding two pollutants as listed on 16 this slide. 17 Inyo and Plumas county are designated as 18 unclassified for ozone. There was one exceedance of the 19 standard in 1996 for Inyo County and one in 1995 for 20 Plumas County. These exceedances qualify as unusual 21 concentrations and are, thus, excluded from 22 consideration as violation. The staff recommends that 23 Inyo and Plumas county remain unclassified until more 24 complete data are available and attainment can be 25 verified. 45 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 The north coast portion of Sonoma County 2 is designated as attainment for the ozone standard. 3 There were three exceedances at the Healdsburg site 4 during 1995 through 1997. The calculated EPDC excludes 5 all three exceedances as extreme concentrations. Thus, 6 the staff does not recommend redesignation to 7 nonattainment. 8 The fourth area is San Diego County and 9 the pollutant is sulfates. At the time when the staff 10 report and hearing notice were published, the staff had 11 proposed redesignation of San Diego County to 12 nonattainment for the state sulfates standard. However, 13 the staff now does not propose this redesignation, and I 14 will explain why with these next two slides. 15 A 24-hour sulfate concentration of 27 16 micrograms per cubic meter was recorded on May 16, 1997, 17 at the San Diego 12th Avenue monitoring site. This is 18 an exceedance because it is higher than the state 19 sulfates standard of 25 micrograms per cubic meter. 20 Although this is the only exceedance at 21 the site, there were four other relatively high sulfate 22 concentrations in the range of 20 to 24 micrograms per 23 cubic meter in the last three years. Based on a 24 calculated EPDC of 31 micrograms per cubic meter, the 25 staff concluded the exceedance was not an extreme 46 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 concentration. Furthermore, the exceedance occurred in 2 the sampling frequency of once every six days. In other 3 words, there might be additional exceedances if sulfate 4 were sampled more frequently. 5 For the above reasons, the staff had 6 originally identified a redesignation for San Diego 7 County from attainment to nonattainment for sulfates. 8 The staff analyzed the available air 9 quality, meteorological, and emission data, and believes 10 the logical source of the problem is possibly a power 11 plant in the Rosarito area of Mexico. This plant alone 12 emits more than five times the sulfur dioxide emissions 13 of all San Diego County. 14 The management of the power facility has 15 indicated that in or around the year 2000, two of the 16 six boilers at the plant will be converted to burning 17 natural gas, which has a considerably lower sulfur 18 content than the fuel oil currently being used. If this 19 occurs as planned, it will reduce the sulfur dioxide 20 emissions and possibly help lower the sulfate 21 concentrations in San Diego County. 22 After a further evaluation of the data, 23 the staff does not propose a redesignation of San Diego 24 County to nonattainment for sulfates. Additional review 25 of the data revealed that the data for 1995 at the 12th 47 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 Street site are not complete for a one in six day 2 sampling frequently, and, therefore, the calculated EPDC 3 is not valid for determining it's extreme 4 concentrations. 5 However, since this is the first 6 exceedance in 14 years, the staff recommends excluding 7 the exceedance of unusual concentration and maintaining 8 San Diego's attainment designation at this time. When 9 complete data are available, staff will reevaluate the 10 exclusion as an extreme concentration. 11 Since staff does not recommend change in 12 sulfate designation, the San Diego County Air Pollution 13 Control District has agreed to take some actions in 14 response to the sulfates exceedance. The district will 15 increase the sampling frequency for sulfates from one in 16 six days to once every third day in order to ascertain 17 whether or not there is an ambient sulfates problem in 18 the county. 19 In addition, the district will include a 20 notice to the public of the potential sulfate problem 21 through it's annual air quality report which will be 22 published in October. 23 That concludes my presentation. I'd be 24 glad to answer any questions. 25 CHAIRMAN DUNLAP: Thank you, Debora. 48 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 Any questions -- before we do that, I 2 think we'll hear from Mr. Schoning and then come back to 3 any questions. 4 Jim. 5 MR. SCHONING: Thank you, Mr. Chairman, 6 members. 7 In the initial development of the proposed 8 regulation, staff sought information from all 35 local 9 air districts in the state regarding these changes and 10 recommended designations. The item was "workshopped" on 11 the 26th of June of this summer in Sacramento. The 12 notice of this workshop was sent to more than 2500 13 stakeholders including air districts, businesses, 14 governmental, and environmental organizations. The 15 workshop notice and background materials were also 16 posted on the ARB website. 17 Two stakeholders attended the workshop: 18 one from California Transportation Department and the 19 other from the Monterey Bay Unified Air Pollution 20 Control District. 21 On August 7th, 1998, staff report 22 contained proposed regulation was sent to approximately 23 100 individuals including all air districts, Western 24 States Petroleum Association, the Bay Area League of 25 Industrial Associations, and California Council for 49 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 Environmental and Economic Balance. 2 Following release of staff's report in 3 August, staff revised the report for a number of 4 district designations, as I've just indicated to you, 5 based on data collected during the current 1998 calendar 6 year. Staff contacted the air pollution control 7 officers from the six affected districts in the area -- 8 Monterey Bay, Placer, Tehama, San Luis Obispo, and 9 Solano -- during the most recent couple of weeks, during 10 the period from September 4 through September 22, to 11 notify them of the changes and to hear their comments on 12 them. Additionally, staff spoke just this week with 13 California Council for Environmental and Economic 14 Balance and others to share the most recent changes and 15 to hear their views and concerns. 16 Changes for area designation from 17 nonattainment-transition to nonattainment will have no 18 regulatory impacts on the state, and will add clarity 19 and consistency in planning and decision-making 20 processes. 21 If the Board does approve the report in 22 view of the recent changes made to it, there will be a 23 legally required 15-day extension for public 24 notification and comment, and it would be our suggestion 25 that the 2500 person mailing list referred to above be 50 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 used for the purpose of that notification. 2 CHAIRMAN DUNLAP: Thank you, Jim. 3 Any Board members have questions? 4 Yes. Dr. Friedman. 5 DR. FRIEDMAN: One minor question. What 6 is the duration of time -- I'm speaking about the San 7 Diego sulfate issue -- with the invigorated testing? 8 How long will it take before we know if we need the 9 already obtained new level? 10 MS. POPEJOY: Well, we see the high 11 concentrations usually occur in winter and spring 12 because of the meteorology. You see high sulfate 13 concentrations under fog conditions, and that's the time 14 of the year that San Diego gets their fog. 15 The increased monitoring will occur 16 starting October 1st. So 1998 data will not give us any 17 additional clues to the problems of sulfate. So we'll 18 have to wait until winter and spring of 1999 to see how 19 that frequency might affect the concentrations that we 20 see. 21 DR. FRIEDMAN: So you don't see any 22 alterations for at least a year? 23 MS. POPEJOY: Probably not. 24 CHAIRMAN DUNLAP: Supervisor Patrick. 25 SUPERVISOR PATRICK: I have a question, 51 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 and I'm not exactly sure you can answer it. But it has 2 to do with the meteorologists' analysis of the weather 3 this year. 4 I'm sure in these particular districts 5 they thought they were doing fine, and now they have 6 over three exceedances. Is this considered to be an 7 anomaly by the meteorologists? 8 MS. POPEJOY: Actually, last year was an 9 anomaly. We have -- actually, we have two years that 10 are a little on the extreme of normal. Last year was an 11 El Nino and fairly cool year. When you have cooler 12 weather, you don't have nearly the build up of the ozone 13 as you see. 14 For May and June we had -- El Nino 15 continued into May and June, so we had a fairly cool May 16 and June. July came and it got pretty hot. So this 17 last summer it's been a little hotter than normal, but 18 last summer was much cooler than normal. 19 So we have two extremes that are now 20 balancing each other out. And that's one of the reasons 21 we make our designations based on three years of data is 22 to sort of balance the meteorology a little bit. If we 23 were making designations based only one year at a time, 24 we would have areas flopping from nonattainment to 25 attainment and vice versa quite often. And that is not 52 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 helpful in planning, making planning decisions. You 2 can't turn on and turn off control strategies on a 3 yearly basis. 4 So we have two years that are sort of the 5 extreme of the norm, but follow back to back of each 6 other. 7 SUPERVISOR PATRICK: But in 1995 and 1996 8 they were in attainment? 9 MS. POPEJOY: No. No. No. These 10 nonattainment-transitional areas? No, they are not in 11 attainment in 1995 and '96. 12 SUPERVISOR PATRICK: So it's just the last 13 two years that -- 14 MS. POPEJOY: And 1997 they had three or 15 fewer exceedance, and then 1998 they had more than 16 three. 17 SUPERVISOR PATRICK: I understood you to 18 say you were looking at '95 through '97. 19 MS. POPEJOY: Right. The 20 nonattainment-transitional is based on one year's worth 21 of data. That's just 1997. 22 SUPERVISOR PATRICK: I see. 23 MS. POPEJOY: That was legislation that 24 was adopted I think in 1992. 25 SUPERVISOR PATRICK: So they were exceed 53 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 in '95 and '96. The anomaly year was really in 1997? 2 MS. POPEJOY: Right. 3 SUPERVISOR PATRICK: When it was cooler 4 and now are back into this phase again. 5 MS. POPEJOY: Right. Right. So they 6 remain as nonattainment as they have been since 1989. 7 SUPERVISOR PATRICK: Thank you. 8 CHAIRMAN DUNLAP: Okay. We have no 9 witnesses that have signed up, but I'll ask staff to 10 summarize any written comments they received. 11 MS. POPEJOY: We only received one and 12 that was, of course, from San Diego. They sent a letter 13 asking us to again review the data and can we exclude it 14 as either an exceptional event or an unusual 15 concentration event. So we reevaluated and came up with 16 these conclusions and have already stated. 17 CHAIRMAN DUNLAP: And you've reflected 18 those conclusions in a positive way based upon their 19 letter, correct? 20 MS. POPEJOY: Correct. 21 CHAIRMAN DUNLAP: Great. 22 I'll now -- Mr. Kenny, do you have 23 anything else you want to add? 24 MR. KENNY: No, I don't. 25 CHAIRMAN DUNLAP: I'll now close the 54 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 record on this agenda items. However, the record will 2 be reopened when the 15-day notice of public 3 availability is issued. Written or oral comments 4 received after this hearing date but before the 15-day 5 notice is issued will not be accepted as part of the 6 official record on this item. When the record is 7 reopened for a 15-day comment period, the public may 8 submit written comments on the proposed changes which 9 will be considered and responded to in the final 10 statement of reasons for the regulation. 11 Ex parte communication. Any to report? 12 (No response.) 13 We have before us resolution dash 90 -- 14 excuse me, 98-47 which contains the staff 15 recommendations. 16 The Chair would entertain a motion. 17 MRS. RIORDAN: I would so moved. 18 DR. FRIEDMAN: Seconded. 19 CHAIRMAN DUNLAP: Moved by Mrs. Riordan; 20 seconded by Dr. Friedman. 21 Anything we need to discuss on resolution 22 98-47? 23 All right. We'll proceed with voice vote. 24 All those in favor say aye. 25 (Chorus of ayes.) 55 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 Any opposed? 2 (No response.) 3 Very good. 4 Thank you, staff. Appreciate your wading 5 through that for us. 6 What I would like to do, I'm going to 7 take -- I know there's some folks who have signed up to 8 testify on Item 3. I'm going to move that be the last 9 one. We're going to make quick work, I hope, of Item 10 No. 4. 11 So I'm going to ask Lynn Terry to come 12 forward. 13 In the meantime, for our high school 14 student visitors, I've asked Barbara Riordan to take a 15 moment and explain to you a bit of background on the 16 Board so you have a context of who we are and what we're 17 about. So I'll turn the time over to her. 18 I should mention, though, that on this 19 Board, sitting up here today, I believe we have at least 20 four current or former educators and a couple -- 21 Supervisor Patrick is well-known for having taught 22 elementary school level, and I believe Barbara Riordan 23 has as well. Both Sally Rakow and Bill Friedman have 24 taught or lectured young people, too. So we've got a 25 lot of people interested in your welfare and knowing 56 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 about us. So I'll have Barbara say a few words about 2 that. 3 MRS. RIORDAN: I'm going to borrow your 4 microphone, Mr. Chairman. Thank you. 5 I thought it might be helpful not only for 6 the students who are here but for those who may be 7 watching us to know a little bit more about this Board 8 and what we do. 9 We consist of 11 members, and while we're 10 not all here today due to illness and a prior 11 commitment, there are a variety of people here who are 12 chosen by the governor of the State of California to 13 serve on this Board. We serve at his pleasure, but we 14 are confirmed by the State Senate. So we must go 15 through a confirmation process. 16 We do meet certain qualifications that are 17 set out in law, and five members are chosen from boards 18 of local air quality management districts. 19 And for those of you who are from this 20 area, Supervisor Patrick is your representative because 21 she serves on the air district board from this area, and 22 she was chosen by the Governor to represent this area. 23 So she's essentially your special representative. 24 Then there are some people who are called 25 out in law very specific to be members of this Board. 57 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 They must have specific expertise. One is in automotive 2 engineering or closely related field, that's Mr. 3 Calhoun; one must have expertise in science or 4 agricultural law, and the person that represents that 5 area is Ms. Edgerton in law. Our agricultural member is 6 missing, unfortunately, today. One must be a physician 7 or surgeon or health effects expert, and you can guess 8 to my right here Dr. Friedman is that individual. And 9 then one person -- one of the three remaining members 10 must have some expertise in air pollution control and 11 meet some of the qualifications that are set out and 12 mentioned above. And the other two members are public 13 members, Mrs. Rakow is one of those public members. And 14 then our Chairman, and I'm not sure if you're a public 15 member or not, but he's the most hard working. 16 All of us are part-time with the exception 17 of the Chairman. He is full time, and he has the 18 responsibility of seeing that everything moves forward. 19 We meet in a variety of locations; 20 primarily in Sacramento. We are at this time, of 21 course, fortunate enough to be in Bakersfield. 22 We have two main areas of offices in 23 Sacramento and in El Monte, in the southern part of 24 California, where we do a lot of testing. So that's a 25 very interesting office. 58 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 What we are about is really quite simple. 2 We set and enforce emission standards for motor 3 vehicles, fuels, and consumer products, because they go 4 all over the state, and so they need to have state 5 standards. 6 We set health phase air quality standards. 7 We also conduct research. We have a very large research 8 program that we monitor. And we monitor air quality, 9 and we just had a discussion about that a moment ago. 10 We also talk about toxic air contaminants. 11 We also do some outreach that I think is 12 very important in the field of education and helping 13 businesses to comply with these air quality standards. 14 I think that the most important thing for 15 you to know is that these 11 members don't do it by 16 themselves. There are over a thousand employees in the 17 State Air Resources Department, and these are the people 18 who really do the work. We simply are a review Board, 19 and Mr. Dunlap is responsible for that, seeing that 20 things get done, along with Mr. Kenny. 21 We have a budget, a very substantial 22 budget of -- what is it now? 23 CHAIRMAN DUNLAP: 147. 24 MRS. RIORDAN: 147, $147 million each year 25 to carry out these programs. It's a sizable program. 59 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 The basic mission of this Board is to 2 provide healthy air for all of us here in the State of 3 California, which is most important, because if we don't 4 have healthy air, we don't have much in the way of 5 opportunities for this very golden state. 6 And I think that will conclude my remarks, 7 Mr. Chairman. 8 CHAIRMAN DUNLAP: Thank you. Excellent. 9 Thank you. 10 Did that help a little bit give you some 11 context? Okay. Good. 12 By the way, I might add it's a great 13 career to go into. So if you like environmental 14 protection and want to learn more about it, I'm certain 15 you can write to us and we'll send you information and 16 tell you -- and give you some suggestions on fields of 17 study, if you would like, for when you go to college. 18 We need good people helping us with this, so take a look 19 at environmental protection for a career. 20 We'll move into the next item, which will 21 be our fourth item. 98-10-4 -- public meeting to 22 consider a resolution supporting use of federal air 23 quality related transportation funds to purchase 24 cleaner, alternative fueled school and transit buses. 25 This item is to consider a resolution 60 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 regarding the use of federal transportation dollars to 2 purchase these clean school and public transit buses. 3 Recent passage by Congress of the Transportation Equity 4 Act for the 21st Century, or TEA-21, provides new and 5 unprecedented opportunities to replace diesel-powered 6 buses with alternative-fueled buses, thereby decreasing 7 exposure to diesel particulate emission as we also meet 8 our SIP commitments for NOx reductions. 9 The Board last considered federal 10 transportation expenditures in 1995 when we passed a 11 resolution endorsing the use of congestion mitigation 12 and air quality improvement funds as incentives to 13 accelerate the introduction of low NOx engines for heavy 14 duty vehicles in the Sacramento region. 15 During Mrs. Rakow's tenure as a member of 16 the California Energy Commission, that agency 17 administered a program that replaced over 800 diesel 18 school buses, and she reminded that of us last night at 19 dinner. And today staff will present a proposed 20 resolution that would build on these previous efforts. 21 So with that, Mr. Kenny, would you 22 introduce the item and begin staff's presentation. 23 MR. KENNY: Thank you, Mr. Chairman, and 24 members of the board. 25 Today's staff will explain why, following 61 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 passage of the largest service transportation funding 2 bill in nation's our history, replacement of a large 3 number of diesel school and transit buses with clean 4 alternative fuel buses is within our grasp. Using 5 TEA-21 funds for this purpose will address the twin 6 goals in reducing diesel particulate exposure and 7 significantly reduce the NOx emissions from heavy-duty 8 vehicles as called for in California. 9 During the resolution before you, this 10 Board can sound a call to action so we can engage the 11 transportation community and other effected parties in 12 discussions to implement the clean-up of California's 13 bus fleets. 14 Lynn Terry, deputy executive officer, will 15 make a brief presentation. 16 Lynn. 17 MS. TERRY: Thank you. 18 Good morning. I'm pleased to present to 19 be the Board -- I'm pleased to present to the Board a 20 proposed resolution that would urge local decision 21 makers to quickly move forward with the clean-up of 22 California school and public transit bus fleets. 23 The most important reason for the Board to 24 consider this action is the public health benefit. 25 Secondarily, timing is important in order to taken 62 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 advantage of the federal funds now available to 2 California under the Transportation Equity for the 21st 3 Century, known as TEA-21. 4 I will first address the reasons why clean 5 up of California school and transit buses is so 6 important and why this is an opportune time to take 7 action. Next will be proposals for replacing 8 diesel-powered school and transit buses with cleaner, 9 alternative-fuel buses based on identifying primary 10 sources. I will conclude with actions needed at the 11 local level and staff's recommended next steps. 12 Why is it a priority to clean up 13 California's school and public transit buses? The 14 simple answer is public health. This strategy is a 15 priority in terms of meeting air quality standards for 16 ozone and particulate matter. The benefit of also 17 reducing exposure to a toxic air contaminant adds to 18 it's value as clean air strategy. 19 Replacing these buses with cleaner, 20 alternative-fuel buses is a cost-effective means of 21 reducing ozone and fine particulate, while it also 22 reduces public exposure to particulate emissions from 23 diesel-fueled engines, which have been identified as a 24 toxic air contaminant. 25 The new funding opportunities are the 63 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 result of the enactment of TEA-21 in June of this year. 2 Thanks in part to bipartisan support of California's 3 congressional delegation, TEA-21 contains a major 4 increase in transportation related funds designated for 5 air quality improvement. 6 For California, there is a 100 percent 7 increase in clean air related funds available under the 8 Congestion Mitigation and Air Quality Improvement 9 Program, commonly known as CMAQ. In addition, there's a 10 50 percent increase in funds available for bus purchases 11 under the transit forming of grants program. 12 TEA-21 also contains a new special grants 13 program for clean fuel bus purchases known as the Clean 14 Fuels Formula Grant Program. 15 It is important to note that although 16 TEA-21 is a six-year bill with annual allocations made 17 to the states through 2003, local transportation 18 decision makers are programming some or all of these 19 funds now. Thus, timely action is needed to alert those 20 making the funding decisions to the public health and 21 importance of funding purchase of cleaner buses 22 Let's look at school buses first. 23 Purchase of cleaner school buses can be funded with 24 federal Congestion Mitigation and Air Quality 25 improvement funds, or CMAQ. California's annual 64 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 allocation under the CMAQ program is expected to average 2 about $300 million per year through 2003. Federal funds 3 must be matched with state or local funds. For CMAQ, 4 this state local match is about 12 percent. The most 5 promising source of funds for this match is the motor 6 vehicle registration fees. Because unlike transit 7 buses, there's little available state funding for school 8 bus purchases. 9 Air districts and local governments spend 10 about $40 million dollars per year of these funds 11 projects that reduce mobile source related emissions. 12 We recommend that school buses be a priority use of 13 these funds, especially for the state and local match. 14 About 70 percent of the state's school bus 15 fleet is diesel. Of the statewide diesel fleet, about 16 15 percent are pre-1977 large diesel buses. Such buses 17 have been the target of previous school bus replacement 18 efforts, on part because of their age and safety 19 concerns. Compared to compressed natural gas buses, 20 these pre-1977 buses emit three times more NOx and four 21 times more particulate matter. 22 Because money for school bus purchases and 23 replacement is limited compared to transit buses, school 24 buses tend on average to be older and dirtier than 25 transit buses. 65 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 Federal transportation dollars have not 2 been used for school bus replacement in the past despite 3 their eligibility under CMAQ. We hope to change this 4 situation. Some school districts and private school bus 5 contractors have developed infrastructures for natural 6 gas or other alternative fuels. Alternative fuel 7 infrastructure can be shared with transit fleet 8 operators. Wherever possible, we need to encourage 9 pursuit of opportunities for shared infrastructure. 10 Our goal for cleaner school buses is to 11 replace 2200 pre-1977 large diesel buses by 2003, which 12 is the final year of TEA-21. 13 Staff estimates the cost of replacing 14 these buses with CNG buses along with allowances for 15 inflation and in infrastructure to be about $68 million 16 per year over a five-year period. 17 We suggest allocation of about $60 million 18 annually in CMAQ funds for this purpose. This 19 represents about 20 percent of the available CMAQ funds 20 under TEA-21. 21 About $8 million would be needed in state 22 or local funds to match the CMAQ dollars. Motor vehicle 23 registration fee project funds are the most apparent 24 source for the matching of CMAQ dollars for school bus 25 purchases. 66 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 How does our goal compare to current 2 school bus purchases? Currently, no federal funds are 3 being used to fund school bus purchases. With the 4 doubling of CMAQ funds, we think this can and should 5 change. 6 In fiscal year "1977," about $8 million in 7 local motor vehicle fees was used for clean bus fuel 8 purchases. These local funds could go much further if 9 they were leveraged with the 88 percent matched in CMAQ 10 dollars. 11 Now let's discuss transit buses. As you 12 can see there are a number of federal TEA-21 funding 13 sources for replacement of transit buses in addition to 14 the $300 million CMAQ program. The largest is the 15 Transit Formula Grants Program. The average guaranteed 16 allocation to California under TEA-21 for this program 17 is $600 million per year. 18 In addition, the California share of the 19 surface transportation funds is expected to average 20 about $320 dollars per year. 21 The new Clean Fuels Formula Grant Program 22 and the Transit Capital Investment Funds are expected to 23 contribute $20 million or more per year. 24 There are also more potential sources of 25 state and local match for transit bus purchases then for 67 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 school bus purchases. 2 The recent legislation creating a state 3 trust fund for reducing NOx emissions from heavy-duty 4 vehicles, local transportation sales tax funds and motor 5 vehicle registration fees, are among the funds that 6 could be used to help purchase cleaner buses. 7 Staff recommends that all new bus 8 purchases be cleaner alternative-fuel vehicles. In 9 addition, it should be California's objective to replace 10 it's 5,000 diesel fueled transit buses by 2010. This 11 objective can be met if transportation agencies adopt or 12 remain committed to clean fuels polices, and if they 13 continue to abdicate about 25 percent of the federal 14 transit administration, or FTA funds, and about 10 15 percent of CMAQ funds to transit bus purchases. This 16 would total about $180 million annually in TEA-21 funds, 17 and an equal amount in funding from subsequent federal 18 transportation authorizations. 19 These federal funds would need to be 20 matched with about $40 millions per year in state and 21 local funds. The TEA-21 increases should provide 22 sufficient funds for both cleaner vehicle replacements 23 and fleet expansion needs. 24 Funding transit. Transit funding is a 25 complex matter, and there will be issues to be resolved 68 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 as we move forward with this proposal. Diesel buses 2 remain roughly 25 percent lower in costs than CNG buses, 3 though this differential may decrease as CNG becomes 4 more common. 5 Under the terms of a legal consent to 6 agree, the Los Angeles Metropolitan Transportation 7 Authority requires expansion of bus service to reduce 8 bus overcrowding. MTA is considering purchase of diesel 9 buses because more can be purchased for available funds. 10 However, we believe it will be shortsighted not to 11 consider all the public health aspects of such a 12 decision. We would like to see MTA work with the 13 plaintiffs in this case to see if a solution to this 14 dilemma can be found. 15 Two transit agencies in San Diego County 16 recently allocated funds to purchase two-thirds diesel 17 and one-third CNG buses with TEA-21 funds. We think 18 it's important to convince these transit agencies to 19 reconsider this allocation. 20 Finally is the question of emission 21 reduction credits. The emission reductions for cleaner 22 bus purchases funded with public dollars should be used 23 only for clean air and not sold for credit. This is not 24 really an issue in our view, but more of a need to get 25 the word out to transit agencies. 69 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 On the plus side, Golden Empire Transit 2 District here in Bakersfield runs 18 CNG buses and plans 3 to replace all of it's diesel buses eventually with CNG. 4 The Sacramento Regional Transit District 5 has been a pioneer in turning a diesel fleet over to 6 CNG, and hope to have that 100 percent complete within 7 five years. 8 Sacramento Regional Transit has found CNG 9 buses to be excellent performers with relatively little 10 engine wear compared to diesel buses. For this reason, 11 they plan on rehabilitating CNG buses rather than 12 replacing them after 12 years, extending their lives at 13 a fraction of the original cost. 14 The Orange County Council Governments is 15 another agency that recently adopted a county-wide plan 16 emphasizing purchase of cleaner fueled vehicles of all 17 types. 18 Air districts have been a steady source of 19 funds for meeting the cost of cleaner school and transit 20 buses. The Bay Area has been active in funding school 21 bus purchases, and the South Coast Mobile Source Review 22 Committee has funded both. Clearly, though, we can do 23 much more if we are using our more limited state and 24 local funds to match federal TEA-21 dollars. 25 Now let's discuss what specific actions 70 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 are needed to accomplish the goals we have outlined. 2 We believe that in order to focus local 3 transportation agencies on the importance of funding 4 school and transit buses, agencies will need to create 5 local cleaner fleet plans with milestones and identify 6 funding. We believe transportation agencies will need 7 to commit to long-term funding in order to achieve a 8 significant conversion of the state school bus fleet by 9 2003, and full conversion for transit by 2010. 10 Because some agencies have already made 11 commitments for these funds, it is important to take 12 immediate action to commit TEA-21 funds now before the 13 opportunities we've identified pass us by. 14 Lastly, agencies will need to work 15 together. Many different agencies have roles to play. 16 Let's bring together the actions each need to take. 17 First of all, air districts will need to 18 assume a leadership roll to and coordinate local 19 efforts. Although air districts do not allocate federal 20 transportation dollars, they do play an important 21 consultation role, especially with respect to clean air 22 related and transportation funding. 23 As part of the air districts' efforts to 24 communicate the importance of cleaner buses and meeting 25 clean air goals, they will need meetings of all parties 71 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 to develop clean bus fleet plans. 2 As I mentioned before, air districts do 3 allocate motor vehicle registration fees, and these 4 funds are frequently used as local managing for cleaner 5 bus purchases. The district may need to give a higher 6 priority to using motor vehicles fees for this purpose. 7 The California Transportation Commission, 8 or CTC, and the California Department of Transportation, 9 Cal Trans, both play an important oversight with respect 10 to federal and state transportation dollars eligible for 11 cleaner bus purchases. 12 Our agencies have been working together to 13 provide guidance to local agencies on the use and 14 evaluation of clean air related transportation funds. 15 In coming around, we are asking our sister 16 agencies to take a stronger position, support the cost 17 effective use of funds to reduce air pollution. These 18 agencies will need to include provisions supporting our 19 cleaner bus proposals in future guidelines. 20 And last, agencies will need to urge all 21 new bus purchases to be cleaner, alternative-fueled 22 vehicles. 23 Transportation planning agencies are the 24 ones who typically allocate funds at the local level. 25 We ask these agencies be informed about the highest use 72 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 of clean air transportation dollars, so that they are 2 willing and committed to allocate 20 percent of CMAQ 3 funds for cleaner school buses, even though they haven't 4 used the funding this way in the past. 5 They will also need to allocate all 6 transit bus funds for cleaner, alternative-fueled 7 vehicles rather than diesel. 8 And last, they need to support funding for 9 training and infrastructure to ensure the success of 10 fleet conversion to alternative fuels. 11 Transit districts bear the responsibility 12 for purchasing the transit fleet. It's critical that 13 they replace diesel buses with cleaner, alternative-fuel 14 buses, and that they specify only cleaner, alternative 15 fueled buses when they expand their fleet. 16 The availability of fueling stations for 17 alternative-fueled buses is an important issue as 18 training when economies of scale come into play, making 19 it more cost effective to provide fuel for a large 20 number of buses rather than a small fleet. To this end, 21 we encourage transit district to coordinate fueling 22 infrastructure with bus fleet. 23 Training has been identified as an 24 important factor for the success of fleet conversions. 25 To this end, we suggest that transit districts work with 73 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 community colleges to develop mechanics training 2 courses. 3 California's 1998 through '99 school 4 district budgets include very little funding for bus 5 replacements. Our proposals offers new hope for school 6 distributions. We are asking school districts to 7 prioritize bus replacements and maximize the reductions 8 in student exposures to diesel particulate emissions. 9 Because bus manufactures typically give cost breaks for 10 volume orders, school districts will need to work 11 together to bring down the cost of bus replacements. 12 Budget restraints have forced many school 13 districts to contract with private fleet managers in 14 order to continue school bus programs. When these 15 contracts come up for renewals, school districts should 16 specify that alternative-fuel vehicles will be provided. 17 Community colleges can develop alternative 18 fuels training program for mechanics. This should be 19 coordinated with transit and school districts. 20 Utilizing information from ARB inner districts could 21 enhance the quality of the training program. 22 I might add that the local community 23 college here, Bakersfield College, is an example of the 24 comprehensive mechanics training program for alternative 25 fueled vehicles. 74 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 In closing, we recommend that the Board 2 adopt the proposed resolution. We ask that the Board 3 direct staff to distribute the resolution to affected 4 agencies, to work with state and local agencies to 5 encourage this implementation. 6 I realize that was a lot of information 7 and a lots of numbers, but we think it was time well 8 spent in terms of opportunities presented by this new 9 federal funding. 10 Thank you very much. 11 CHAIRMAN DUNLAP: Thank you. 12 Any questions of Ms. Terry? 13 SUPERVISOR PATRICK: I want to find out 14 how the funding works. In other words, do we -- or 15 would they receive the money that's the difference 16 between buying a diesel bus and buying an alternative 17 fuel bus? Or do they get a brand new bus for this 18 funding? How does that work? 19 MS. TERRY: There are multiple pots of 20 money. Primarily what we're talking about in terms of 21 the federal dollars is that this is for purchase of the 22 bus's full cost, and there's a state-matched element. 23 So when we look at the state-match 24 element, that is where we -- to maximize our dollars at 25 the state level, we have typically provided that 75 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 incremental cost between diesel and alternative-fuel 2 bus. 3 But in our view, because this federal 4 funding is available, that incremental cost issue really 5 isn't so much the issue anymore, because the dollars are 6 available to purchase the buses. And transit agencies 7 have that responsibility to do so. 8 So we are saying there is money available 9 when they make that decision to fund a bus, that they 10 make the choice for a cleaner bus because of funding is 11 available. 12 SUPERVISOR PATRICK: And the 13 infrastructure would be something that would be paid for 14 out of these dollars as well? 15 MS. TERRY: That's right. 16 CHAIRMAN DUNLAP: Mrs. Rakow. 17 MRS. RAKOW: I think I may have missed 18 this. Was there any specific requirement that a certain 19 number of dollars go to alternative-fueled buses in the 20 new TEA increased funds? 21 MS. TERRY: There is a small amount of 22 money in the New Clean Fuels Program, but it's a new 23 grants program, and it remains to be seen how it 24 develops. Because it is a relatively small portion of 25 the TEA-21 funds though, we think it's important that we 76 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 send a message that the much broader pots of money be 2 used appropriately for cleaner fueled buses. 3 So there is -- the important thing I think 4 with the clean fuels grant program is the recognition 5 that this is from a policy standpoint where we want to 6 go. But we need to have more of the funds available 7 then just that special grants program. 8 MRS. RAKOW: One of the, I think, one of 9 the incentives for really very great competition between 10 school districts to get the "CATS" money dollars that 11 the state had for alternative fuel with buses, school 12 buses, is the fact they are so expensive, as you 13 pointed, and there was limited funding; but the money 14 had to go into the alternative fuel type of bus. And I 15 think it's good bribe. 16 CHAIRMAN DUNLAP: Ms. Edgerton. 17 MS. EDGERTON: I think it's an excellent 18 program. 19 First, what steps is the staff of the Air 20 Resources Board going to take to follow through on this 21 initiative? For example, are there specific staff 22 members who are going to be assigned to be 23 systematically contacting and working with the various 24 school purchasing entities? 25 And secondly, I did hear you mention CNG 77 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 natural gas powered buses exclusively, although there 2 was a mention on there or other alternative fueled -- 3 alternate-fueled buses. Of course, there are two kinds 4 of buses that are zero emission vehicles: the battery 5 powered electric buses and also fueled cell 6 hydrogen-powered buses of which I happened to see three 7 when I was in Vancouver last week, and I know there are 8 some operating in Chicago and elsewhere. 9 So my question is whether and to what 10 extent the zero emission bus, school buses or transit 11 buses are considered in this, and what efforts, as you 12 go to implement this initiative, will you be able to 13 take to encourage some of those since they clean up the 14 air a lot faster. 15 MR. KENNY: I think in response to your 16 question is that we will have staff immediately 17 dedicated to working with both the school districts and 18 transit districts to try and get the word out that in 19 fact funds are available and they ought to be taking 20 advantage of them. 21 More specifically, this Monday, the 22 Metropolitan Authority in Los Angeles is going to have a 23 hearing in which they are going to look at reallocating 24 their funds toward a greater diesel fleet. And so you 25 would see the staff of this Board, if this Board adopts 78 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 this resolution, appear before the MTA Board on Monday 2 arguing to the MTA Board that that's the wrong 3 direction, and the fact the direction they should be 4 going is not to greater use of diesel flees but for 5 lesser use of diesel and to greater use of the 6 alternative-fueled fleets. 7 As far as the zero emission buses, the 8 fuel cells in the electric buses, we are continuing to 9 work in that area. But at the same time, with regard to 10 the transit fleets, we have a great opportunity right 11 now with regard to the alternative-fuel fleets because 12 the NOx emissions are substantially lower with regard to 13 the alternative fuels than with they are with the 14 diesel-fueled buses. 15 And the costs associated with that benefit 16 are not that daunting at the moment. The costs are 17 associated with the fuel-celled buses and electric 18 vehicles are still somewhat daunting. So we need to 19 continue to make progress in that area. But I think 20 you're going to see us working on that as well. 21 CHAIRMAN DUNLAP: Very good. 22 We'll talk about that MTA thing later, 23 Mike. That's a good idea that you have. 24 MR. KENNY: All right. 25 MR. CHAIRMAN: We have two witnesses. So 79 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 what I would like to do, with the Board's indulgence, is 2 ask them to come forward. 3 We have Kenneth McCoy from the Antelope 4 Valley School Transportation, and Snyder, who is with 5 the Kern County Superintendent of Schools as 6 transportation/operations manager. 7 Good morning. 8 MR. MCCOY: Good morning, Chairman, and 9 members of the Board. 10 My name is Ken McCoy, and I represent the 11 Antelope Valley School & Transportation Agency, and I 12 also sit as a member on the new Antelope Valley Air 13 Pollution Control District. 14 Our agency has had the opportunity to 15 operate alternate-fuel buses including electric, 16 methanol, and CNG. So we can tell you what works and 17 doesn't work. We're not ready to give up on electric, 18 but I think it's going to take fuel cells before we get 19 there. 20 What about methanol? Methanol operates on 21 a cost per mile including maintenance and fuel for 66 22 cents. I can operate the CNG bus for 26 cents. In 23 fact, I can operate the CNG including infrastructure and 24 purchase price for less than I can operate a diesel bus. 25 Understand that we will buy these buses if we get help. 80 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 Our problem is that when we go to look for new buses, we 2 compete with the classroom and we lose every time. 3 That's the reason that many of our buses in this state 4 are 25, 30 years old. Those engines were not designed 5 to run clean, and I can tell you they don't. 6 In my own valley, ten years ago -- well, 7 in '90, I could walk out my front door and I could tell 8 where I go to work because all those 150 buses were 9 cranking up at six o'clock in the morning. I no longer 10 can do that. That air is clean. 11 We're not experts in emission results, but 12 my eyes tell me and the kids tell me and staff tells me 13 we're operating clean. So we want to rise in support of 14 this resolution. 15 We're concerned that how the funding will 16 eventually get to school districts because if it goes to 17 transit agencies -- and we're not against transit 18 agencies, in fact we think we ought to combine our 19 operations and resources in many cases -- we're not sure 20 that money is going to get to us. I can assure, as well 21 as some others here who are utilizing alternate school 22 buses, alternate-fuel school buses, that we will buy 23 buses with this money. 24 Now sense the first phase of the CEC 25 commission program, those CNG buses were not very cost 81 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 effective. We have been able, through technology over 2 the last six years, to lower that operating cost by 40 3 cents a mile. That's significant, and that tells you 4 the grant programs can be successful. 5 Our problem at this point is many of the 6 22,000 school buses in California are smaller buses that 7 transport our special ed and fragile kids. We do not at 8 this time have a chassis and a school bus body we can 9 use in this area. We need to fund some research, maybe 10 a Freightliner, maybe another major corporation, who can 11 put a CNG engine in those buses and make them available 12 to us. We'll get them. We'll buy them. We'll use 13 them. 14 I'll be happy to answer any questions. 15 CHAIRMAN DUNLAP: You've done this before, 16 testified before. You hit the points certainly that I 17 was going to query you on. 18 Do we have any questions of Mr. McCoy? 19 Go ahead. 20 MRS. RIORDAN: I don't know whether it's a 21 question for you or perhaps our staff. Your last 22 point -- and I think this is very true because I see 23 those smaller buses used for students with special needs 24 in the area where I live. It's a significant number 25 because we have a school district that happens to take 82 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 in a lot of students from other school districts. 2 What could we do? Is there something, 3 Mr. Kenny, we might do to help them with that? Because 4 if it is, as the witness has said, that we have a little 5 gap there and need some help in terms of development, 6 maybe we could be helpful. Because I see those buses 7 continually. They run even more than sometimes the 8 other buses because they're operating and taking those 9 children home at unusual hours sometimes, and they go 10 great distances, some of those buses, to pick up those 11 children with special needs. 12 MR. KENNY: I think that's a place we're 13 going to have to put a little more time into. What we 14 were looking at more than anything were the larger 15 transit buses and larger school buses. But we'll go 16 back and talk with technical staff and see what we can 17 do to -- 18 MR. MCCOY: I can tell you Freightliner 19 has told me if we can come up with some numbers, they'll 20 build us a bus. So it's a matter of them -- our 21 supporting a market that they think they can fill. 22 That's what it's all about. 23 Thank you. 24 CHAIRMAN DUNLAP: Thank you. I appreciate 25 the perspectives you shared with us. 83 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 Doug Snyder. 2 MR. SNYDER: Thank you, Mr. Chairman, 3 members of the Board. 4 I'm here representing Kern County 5 Superintendent of Schools as well as I'm currently 6 president of the California Association of School 7 Transportation Officials. 8 I would like to comment just a little bit 9 about that last point. 10 Our operation with the superintendent of 11 schools, we do transport special needs children all over 12 the county of Kern. In fact, our buses go approximately 13 8,000 miles everyday. To emphasize and reiterate what 14 you were saying, we do travel a lot of distances, and 15 they are the smaller chassis buses, and there is no 16 currently available alternate-fuel engine for those type 17 of buses. And that is something that is desperately 18 needed throughout the state. 19 Just for record, I want to talk a little 20 about the number of school buses in California. 21 Currently there are 22,878 school buses in California. 22 They travel over 360 million miles everyday. 23 The important part about the conversion to 24 CNG is the infrastructure available to everybody, and it 25 is not available to everybody. So I would encourage the 84 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 Board to put some sort of incentive like Mrs. Rakow said 2 to the districts that are getting these buses and to the 3 transit districts that they must work together to 4 develop that infrastructure in the cities and counties 5 where these buses are going to go. 6 Because without the infrastructure -- in 7 California there is out of the thousand school districts 8 that provide transportation, about 850 of those school 9 districts have less than 25 school buses. So they are 10 not necessarily in the metropolitan areas where the 11 infrastructure exists. So we need to develop that 12 clearly to make this program effective. 13 Besides that, I would like to thank the 14 Board and encourage more funding for school buses 15 throughout the state. Because even the 2200 that is 16 proposed for this grant through the TEA-21 money, that's 17 only 10 percent of the school buses in California. And 18 with the projected growth in students for the next ten 19 years of about 10 percent here in California, we're 20 barely going to be able to absorb that with these new 21 school buses coming in. 22 So with that, I thank you very much. 23 CHAIRMAN DUNLAP: Thank you. 24 Could I ask a process question? Would 25 either you or Mr. McCoy been able to testify before us 85 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 today if our meet was in Sacramento? 2 MR. SNYDER: Yes, I would have. 3 CHAIRMAN DUNLAP: You would have come up? 4 MR. MCCOY: We would have. It was just 5 off the internet that I happened to notice it was an 6 item. 7 MR. SNYDER: Just for clarification, I 8 would be happy to be a go-between for the school 9 transportation industry as our organization represents a 10 lot of the school transportation industry in the State 11 of California. 12 CHAIRMAN DUNLAP: Great. We'll ask 13 Ms. Terry's team to follow-up on that. 14 MR. SNYDER: Thank you. 15 CHAIRMAN DUNLAP: Mrs. Rakow, did you want 16 to ask a question? 17 MRS. RAKOW: Yes, one quick question. In 18 your statement about working the infrastructure and with 19 the transit districts, do you work with utility 20 districts also? 21 MR. SNYDER: We have tried. We actually 22 applied -- our operation applied for phase 4 of the 23 Energy Commission, the AB 35 "CATS" money, and it was -- 24 we tried with the utility companies to get a fueling 25 station in conjunction with them. They did offer us 86 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 their facility, if we wanted to travel over there and 2 buy it from them. So we're in the process of working 3 that out now. 4 MRS. RAKOW: The area I'm in in Northern 5 California PG&E uses quite a few CNG work vehicles, and 6 I know in small counties -- 7 MR. SNYDER: They do in Bakersfield also. 8 But the problems that exist in Bakersfield are not the 9 same that exist say in all of Humboldt County or Sonoma 10 County and smaller areas, the more rural counties. 11 MRS. RAKOW: Thank you. 12 MR. SNYDER: Thank you. 13 CHAIRMAN DUNLAP: Okay. All right. I 14 think that concludes our witness list. 15 Ms. Hutchens, was there anyone else who 16 wished to testify? 17 MS. HUTCHENS: No. 18 CHAIRMAN DUNLAP: Okay. Very good. 19 Lynn, could you summarize any written 20 comments you received on this item. 21 MS. TERRY: The one that is not present 22 here from Tim Carmichael, Coalition for Clean Air, 23 reiterated the need for this program's subcommitments as 24 well as reduce toxic exposure. 25 CHAIRMAN DUNLAP: Is that the only one? 87 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 MS. TERRY: Yes. 2 CHAIRMAN DUNLAP: Mr. Kenny, you're 3 looking awful comfortable sitting there. Is there 4 anything you want to add? 5 MR. KENNY: We have to replace the chairs 6 in Sacramento with the ones we have down here. 7 (Laughter.) 8 CHAIRMAN DUNLAP: Supervisor Patrick, see 9 if we can put a couple in our briefcase. 10 We have before us a resolution. It is 11 98-49, and we've had it for a bit. 12 The Chair would entertain a motion to 13 approve the staff resolution 98-49. 14 MRS. RAKOW: I so move. 15 MS. EDGERTON: I second. 16 CHAIRMAN DUNLAP: The motion was made by 17 Mrs. Rakow and seconded by Ms. Edgerton. 18 Is there any discussion that we need to 19 have? 20 (No response.) 21 All right. Then we'll proceed with the 22 voice vote. All those in favor of adopting resolution 23 98-49 please say aye. 24 (Chorus of ayes.) 25 Any opposed? 88 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 (No response.) 2 Very good. 3 Because Ms. Miller, our court reporter, 4 has asked for a few minutes break, why don't we stop for 5 about five minutes. Is that okay? And we'll ask the 6 witnesses to cue up. We've got some chairs for you up 7 here. 8 Mike, if you'll adjust the staff, we'll 9 get going on this. 10 (Recess.) 11 CHAIRMAN DUNLAP: The next item on the 12 agenda today is 98-10-3 -- public hearing to consider 13 amendments to procedures for adjudicatory hearings and 14 administrative hearings for citations issued under the 15 Heavy-Duty Vehicle Roadside Smoke and Tampering 16 Inspection Program, Roadside Inspection Program, and 17 adoption of procedures for administrative hearings for 18 review of complaints and petitions for review of 19 executive officer decisions. 20 This item is the consideration of 21 regulations that would revise the Air Resource Board's 22 administrative hearings and procedures to provide for 23 three distinct types of hearings and continue to ensure 24 due process in ARB programs. The regulations with the 25 proposed amendments would maintain the existing 89 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 relatively informal hearing process for the appeal of 2 citations issued under the Heavy-Duty Smoke and 3 Tampering Inspection Program. 4 As you recall, last December this Board 5 approved regulations that reactivated the roadside 6 inspection effort. Earlier this summer these procedures 7 were governed: hearings conducted regarding appeals of 8 citations issued under that program. 9 It is proposed that these procedures be 10 amended to also apply to hearings on citations issued 11 for less serious and less complex violations of ARB's 12 motor vehicle fuels requirement. 13 A second more formal hearing procedure is 14 also proposed for considering appeals of complaints 15 issued by ARB for more serious or complex fuel related 16 violations. Adoption of these procedures would fulfill 17 the requirements of SB 163 adopted in 1995, and allow 18 the assessment of administrative civil penalties to 19 enforce the Board's fuel standards and requirements. 20 Finally, it is proposed that a third 21 procedure be adopted that would provide a relatively 22 formal petition process for review of a wide variety of 23 executive officer decisions. 24 At this point, I would like to ask 25 Mr. Kenny to introduce the item and the staff's 90 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 presentation. 2 Mike. 3 MR. KENNY: Thank you, Mr. Chairman, and 4 members of the Board. 5 ARB first adopted administrative hearing 6 procedures for review of certain executive officer 7 decisions in 1989. The executive officer decisions 8 subject to appeal under these regulations include, for 9 example, a motor vehicle recall order or an order to 10 revoke the license of a vehicle emissions test 11 laboratory. 12 Recent experience in the application of 13 these regulations has given some insight into possible 14 improvements, and we have proposed amendment to the 15 existing procedures to this end. 16 The procedures for hearings on appeal of 17 citations issued under a Roadside Inspection Program are 18 adopted in 1991. During the initial implementation of 19 the Roadside Inspection Program from 1991 through 1993, 20 the administrative hearing office conducted hundreds of 21 hearings under the existing procedures. The procedures 22 for these hearings were intended to provide a level of 23 formality that ensured the fairness of the proceeding, 24 but would allow owners of heavy-duty vehicles cited 25 under the program to represent themselves effectively. 91 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 With three years of experience, we can 2 report that these purposes were successfully 3 accomplished. In fact, most truck or bus owners cited 4 under the program who requested a hearing represented 5 themselves at the hearings, and not one of the hearing 6 officer's decisions that was appealed to the courts has 7 been overturned. We do propose some changes to reflect 8 what we have learned during those three years. 9 Additionally in 1995, the legislature 10 vested authority in the ARB to assess administrative 11 penalties for fuel related violations after establishing 12 hearing procedures for the review of such assessments. 13 In carrying out the directives to 14 establish hearing procedures, staff is proposing the 15 creation of two categories with administrative penalty 16 assessments based on the seriousness and complexity of 17 the violations. 18 Staff is recommending that the existing 19 hearing procedure for review of roadside inspection 20 citations be broadened to incorporate fuel related 21 citations. 22 Staff is further proposing the adoption of 23 more comprehensive hearing procedures for the review of 24 complaints regarding more serious or complex violations 25 in the ARB's fuel regulations. 92 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 In recent years, ARB staff has been 2 involved in preparing for hearings under the existing 3 adjudicatory hearing procedures for review of petitions 4 requesting review of executive officer decisions. 5 We have learned much from the experience, 6 and staff is proposing adoption of hearing procedures 7 that will more clearly and specifically delineate the 8 rights and responsibilities of the parties that appear 9 at hearings, as well as the obligations and 10 responsibilities of the hearing office and the decision 11 makers that conduct hearings and draft proposed 12 decisions and orders. 13 As a whole, the proposed regulations are 14 intended to provide due process protections for the 15 parties that appear at hearings by assuring full and 16 fair notice and the opportunity for hearing on matters 17 covered by the procedures at a level of formality and 18 complexity commensurate with the interests at stake. 19 I will now turn the presentation over to 20 Mr. Mike Terris of the administrative hearing office to 21 provide us with more details. 22 Mike. 23 MR. TERRIS: Thank you, Mr. Kenny. 24 Good morning, Mr. Chairman, members of the 25 Board. 93 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 The objectives of all ARB procedures has 2 been two-fold: to provide full and fair hearings to all 3 parties, and assure expeditious resolution of issues. 4 In the late 1980s early 1990s, the Air 5 Resources Board adopted procedures for two distinct 6 types of administrative hearings. In 1989, the Board 7 adopted adjudicatory hearing procedures for the review 8 of certainly executive officer decisions including 9 decisions to recall motor vehicles and revoke or suspend 10 licenses of motor vehicle testing laboratories. 11 In 1991, the ARB adopted administrative 12 hearing procedures for vehicle citations issued under 13 the Heavy-Duty Vehicle Roadside Inspection Program. 14 Prior to this, the ARB historically enforced violations 15 of the Health and Safety Code in its rules and state 16 court system. Over the years, however, California civil 17 court dockets have become more and more crowded and 18 enforcement through the courts have become both 19 increasingly expensive in terms of both time and 20 resources. 21 With the creation of the Heavy-Duty 22 Roadside Inspection Program, the legislature for the 23 first time invited the ARB with authority to assess 24 monetary administrative penalties and establish its own 25 administrative hearing procedures for review of such 94 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 assessment. 2 In 1995, the legislature broadened the 3 ARB's authority to assess administrative penalties and 4 conduct administrative hearings for fuel-related 5 violations. Under SB 163, the ARB may assess 6 administrative penalties up to a maximum of $25,000 per 7 day for each violation, to a maximum total penalty of 8 $300,000. 9 To implement the directives of SB 163, the 10 staff recommends that fuel-related violations be 11 classified according to the complexity and 12 seriousness of the violation. ARB enforcement staff 13 would have instructions to classify violations on a case 14 by case basis. Class 1 violations would be those 15 violations which by their very nature are penalty 16 discernable, less serious and less complex. 17 An example might be a relatively slight 18 first-time exceedance of fuel specification standards by 19 a retail service station. Class 1 violations would be 20 subject to issuance of citations which carry maximum 21 penalties of $5,000 or less per day a violation, up to a 22 maximum total penalty, not to exceed $15,000. 23 For Non-Class 4 fuel-related violations, 24 ARB would have discretion to issue administrative or 25 civil complaints. These violations would typically be 95 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 more serious and potentially harmful to the environment: 2 violations that can be readily repeat, remedied, or 3 violations that are committed by repeat offenders or by 4 uncooperative sources. 5 If administrative penalties are issued, it 6 would be subject to maximum penalties up to $25,000 per 7 day per violation, with total maximum penalties not to 8 exceed $300,000. 9 If the ARB desired to seek penalties in 10 excess of these amounts, it would have to file a civil 11 complaint through the state court system. 12 To implement the directives of SB 163, 13 staff proposes that the existing hearing procedures for 14 review of citations issued under the Heavy-Duty Roadside 15 Inspection Program be amended to also include review of 16 fuel-related Class 1 violations. 17 Staff further proposes the adoption of a 18 more formal hearing procedures for review of 19 administrative complaints issued under SB 163. Because 20 of the greater interest in this complaint proceedings, 21 staff proposes that these proceedings be more 22 comprehensive in the citation hearings, especially in 23 the area of prehearing procedures. For example, 24 prehearing conferences and broader potential discovery 25 would be allowed. 96 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 Additionally, the staff proposes that the 2 procedures incorporated be recent amendments to the 3 state APA to better serve due process protections. 4 Finally, consistent with the above, the 5 procedures would be amended where necessary to provide 6 additional clarity as to the rights and responsibilities 7 of the parties. 8 Beyond proposing hearing procedures to 9 address the new authority granted under SB 163, staff is 10 proposing the Board adopt new hearing procedures for 11 petitions requesting executive officer decisions. These 12 petitions are presently considered under the existing 13 procedures for adjudicatory hearings. Staff is 14 proposing the new procedures because of recent -- 15 because of its recent experience in administering the 16 existing adjudicatory regulations has made it clear that 17 more details and more express hearing procedures would 18 improve the hearing process for all parties. 19 With certain obvious differences, the 20 proposed procedures for the review of petitions would be 21 similar to that being proposed for the review of 22 complaints, since both types of hearings involve matters 23 of similar complexity and significant stakeholder 24 interests. 25 As with the hearing procedures for 97 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 complaints, the proposed procedures would afford the 2 parties with appropriate due process and be cost 3 effective. 4 As mentioned, it is proposed that the 5 scope of the citation hearing procedures be broadened to 6 include fuel-related citations. 7 In addition, it is proposed that the 8 procedures be amended to allow persons cited under the 9 Roadside Inspection Program to have 45 days to request a 10 hearing. This would conform the regulations to 11 previously adopted amendments to the authorizing staff. 12 It is also proposed the procedures be 13 amended to provide for voluntary settlement conferences 14 to help the parties settle cases short of litigation. 15 Although staff, in the 45-day notice, 16 propose that the discovery provisions regarding access 17 to documents be amended for the citation program, staff 18 recommends that the existing procedures be retained, 19 finding that they better assure that all parties have 20 access to necessary evidence. 21 Finally, the proposed amendments provide 22 for summary determination of issues when no material 23 facts at hearing are in dispute. This would allow the 24 hearing officer to expeditiously resolve case without 25 sacrificing fairness. 98 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 The staff believes having hearings 2 initially held before the hearing officer would provide 3 the most efficient and effective process. Hearing 4 officers employed by the ARB's administrative hearings 5 office would be experienced attorneys with specific 6 expertise in air quality law and the administrative 7 hearing process. 8 The regulations would require that the 9 hearing offers be independent, impartial, and fair. To 10 this end, the hearing officers would not be allowed to 11 have served as an investigator, prosecutor, or advocate 12 in the proceeding or it's pre-adjudicative stages. 13 The regulations would specifically 14 prohibit ex parte contacts, including contacts with 15 other employees of the agency who have been involved in 16 the instant case or factually related case as either 17 investigators or prosecutors. 18 Under the proposed procedures, all cases 19 would be initially directed to the ARB's administrative 20 hearing office for assignment to a hearing officer. The 21 administrative hearing office is an independent office 22 of the ARB that does not report to or operate under the 23 supervision of the Executive Office, the Office of Legal 24 Affairs, or division programs. 25 The present staffing of the administrative 99 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 hearing office is based upon an estimate of the number 2 of appeals expected to be filed under the deactivated 3 Roadside Inspection Program and subject to SB 163. 4 Because the filings of petitions for 5 review of executive officer decisions has been 6 infrequent during the past several year, such cases have 7 been not considered steady for present staffing levels. 8 For this reason and because petitions for review of 9 motor vehicle related matters generally require either 10 expedited review or lengthy hearings, it is not true 11 that the administrative hearing office would not have 12 sufficient staffing to hear these matters during the 13 next several years. 14 Accordingly, it is proposed during that -- 15 during the two-year period immediately after the 16 effective date of these amendments, ARB hearing office 17 refer all petitions for review involving motor vehicles 18 matters to the state Office of Administrative Hearings. 19 During this time, the ARB hearing office would monitor 20 case loads to determine proper staffing levels and how 21 best to handle these cases. 22 Hearing officers would have broad 23 authority to take all actions necessary for the full and 24 fair adjudication of the issues presented for hearing. 25 In both hearings to review the merits of complaints and 100 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 petitions for review of executive officer decisions, the 2 hearing officer would conduct all prehearing 3 conferences, administer oaths, issue subpoenas, make all 4 rulings and orders regarding motions and introduction of 5 evidence, call and examine witnesses, and make all 6 necessary findings of fact based upon the evidence that 7 has been introduced. 8 At the conclusion of the complaint 9 hearing, the hearing officer would issue the decision or 10 order ruling on merits of the allegations raised in the 11 complaint. 12 In a petition for review hearing, the 13 hearing officer would issue a proposed decision or order 14 on the merits, which the Board itself would review and 15 ultimately decide. 16 The proposed procedures require 17 disqualification of any hearing officer who cannot 18 provide a fair and impartial hearing. These procedures 19 are consistent with the state APA and other 20 administrative procedure acts. 21 The proposed procedures do not provide for 22 peremptory challenges to disqualify a hearing officer. 23 This is necessary because of the limited number of 24 hearing officers available and the need to avoid 25 judicial shopping. 101 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 As in the administrative hearing 2 procedures for review of citations, the staff has 3 proposed a similar provision prohibiting ex parte 4 communications, believing it is important to clearly 5 spell out the prohibitions and obligations and 6 responsibilities of the parties and those that review 7 decisions regarding off-the-record communications during 8 the course of the proceeding. 9 The proposed section would allow the 10 hearing officer to engage in very limited communication 11 with employees of the ARB who are not in any way 12 involved with the investigation or prosecution of the 13 immediate case or factually related case. 14 The regulations provide for comprehensive 15 prehearing procedures including prehearing and 16 settlement conferences, discovery, and subpoena 17 authority. Prehearing conferences will be conducted 18 where necessary to help the parties simplify and narrow 19 issues: stipulate to facts in issue, and arrange times 20 and places for exchange of discovery. 21 Settlement conferences will be held to 22 encourage and assist the parties in settling matters 23 short of litigation. Similar to the proposed amendments 24 to the citation procedures, the complaint and petition 25 procedures provides for summary determination of issues 102 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 when no disputed facts are in issue. 2 Under the proposed procedures, discovery 3 would primarily be limited to access to the names and 4 addressees of witnesses to the events at issue and 5 writing statements or things that are relevant to the 6 issues at hearing. 7 Although staff in general believes that 8 additional discovery should be restricted because 9 administrative hearings should be simple, quick, and 10 inexpensive, it may be necessary at times for the 11 parties to conduct additional discovery including 12 depositions to properly prepare for and ensure full and 13 fair hearings. Accordingly, the proposed procedures 14 will allow the hearing officer to order additional 15 discovery for a good cause. 16 Under the present proposal, the hearing 17 officer would have discretion to issue protective orders 18 to protect the confidentiality of documents identified 19 as trade secrets or otherwise confidential. In 20 fashioning a protective order, the hearing officer would 21 balance its needs for confidentiality of the party or 22 persons citing that the information is confidential, 23 against the needs of the parties seeking information to 24 prepare its case. 25 Authority to grant protective orders is 103 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 necessary to ensure that the two conflicting interests 2 are properly protected and that a full and fair hearing 3 is provided to all parties. 4 The hearing officer would also have 5 authority to hear all motions regarding discovery and 6 subpoena, including motions to compel and quash. These 7 are also parallel recent amendments to the state APA. 8 As stated, all hearings would be held 9 before neutral hearing officers who have no involvement 10 in the investigation or prosecution of the case. At the 11 hearing on the merits, parties have the opportunity to 12 call and examine witnesses, cross-examine witnesses, 13 introduce relevant evidence, and present full legal 14 argument. 15 All hearings would be conducted in 16 English, but parties would have the right to an 17 interpreter. 18 While the order or decision of the hearing 19 officer in the complaint proceeding would generally 20 become the final order or decision of the agency, the 21 executive officer would be authorized to be considered a 22 hearing officer or order a decision on his or her own 23 motion or at the request of the parties. 24 Similarly, in a petition for review, any 25 party may request that the Board reconsider it's 104 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 decision. 2 Finally, under Section 1094.5(b) of the 3 Code of Civil Procedure, "Respondent in a complaint 4 proceeding or a petitioner in a petition for review 5 hearing may petition the Court as to whether the ARB has 6 proceeded without or in excess of its jurisdiction or 7 conducted an unfair trial by committing prejudicial 8 abuse of discretion." 9 This concludes my presentation. I'm 10 available for any comments or questions that you may 11 have. 12 CHAIRMAN DUNLAP: Thank you, Michael. 13 Mr. Locket (phonetic), could I have you go 14 into your ombudsman's report now? Would you do that? 15 MR. SCHONING: Yes, Mr. Chairman. 16 Is this on? 17 CHAIRMAN DUNLAP: Ask Mr. Kenny, he went 18 through the same thing two hours ago. 19 MR. SCHONING: Mr. Chairman, members of 20 the Board. 21 In developing a proposed role making, the 22 staff engaged in public outreach by conducting both a 23 public workshop and shaping a meeting for various 24 interested stakeholders to increase public 25 participation. 105 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 Attendees at the April 6 workshop in 2 Sacramento included representatives from the motor 3 vehicle and petroleum industries. Public comments were 4 received at the workshop and additional public comments 5 were received for 15 days after the workshop. 6 CHAIRMAN DUNLAP: Bill, I think you can 7 back up. You look very uncomfortable. 8 You still look uncomfortable, but go 9 ahead. 10 MR. SCHONING: After several meetings and 11 phone conversations with specific stakeholders, in 12 response to the comments received from stakeholders, 13 staff made significant changes to the proposal prior to 14 the mailing of the notice of proposal before you today. 15 ARB staff has continued to meet with 16 stakeholders, mainly General Motors. As you will see, 17 most issues have been resolved via stakeholders and 18 staff interactions. Nevertheless, there still may be 19 some provisions and matters at issue needing Board 20 determination. 21 CHAIRMAN DUNLAP: Thank you, Bill. 22 We have five witnesses, and what I would 23 prefer to do, if it's okay with my board and colleagues, 24 is we'll hear from witnesses and come back. Is that 25 okay? 106 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 MR. CALHOUN: I have one question. 2 CHAIRMAN DUNLAP: Sure. Go ahead, Joe. 3 MR. CALHOUN: We have an administrative 4 procedure at present that has been utilized -- how many 5 years? 6 MR. KENNY: Since 1989. 7 MR. CALHOUN: 1989. Have we had problems 8 with the use of the existing procedure? And if so, can 9 you identify what the problem would be. 10 MR. KENNY: We really haven't used the 11 existing procedures all that extensively. What has 12 happened is that with regard for petitions for review, 13 we have really never gone through the process through 14 it's completion. There are at least a couple of pending 15 items that are in the process right now of going through 16 that. 17 With regard to the heavy-duty roadside 18 inspections efforts, we began those reviews in 1991, and 19 we have learned some things through the process of going 20 through the reviews of the roadside inspections. And 21 there are things that can be done where it will make it 22 simpler and clearer to the parties as to what is 23 expected of all the parties. 24 In addition to that, since 1991, when we 25 initially received the initial authorization from the 107 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 legislature to have ALJs at the Air Resources Board, 2 there has been subsequent legislation which has also 3 provided the authorization for additional ALJs 4 at the Air Resources Board. 5 So the combination of the existing 6 procedures, some of the things we've learned with regard 7 to roadside, and then the legislative authorization of 8 greater use of ALJs at ARB is why we're bringing these 9 things to the Board today. 10 MR. CALHOUN: I want to focus on the 11 recall portion of it. And if you've had problems with 12 that and -- 13 MR. KENNY: We haven't had problems, 14 Mr. Calhoun, because we really haven't had a recall 15 order go out until just the last year or so. So we 16 haven't gone through the entire process. 17 One of the things we're trying to do with 18 the procedures that we're proposing today is take 19 advantage of the fact that we now do have ALJs at the 20 Air Resources Board. In 1989 when the original petition 21 for review regulations were put on the books, the Air 22 Resources Board did not have ALJ authority. So since we 23 do now have the authority, and the ALJs basically have 24 the ability to handle those kinds of situations. It 25 makes sense both from a cost-effective standpoint and 108 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 from a level of expertise standpoint to bring the ALJs 2 into that process. 3 MS. EDGERTON: I have a question. 4 CHAIRMAN DUNLAP: You guys are going to do 5 this to me. You're going to ask a bunch of questions. 6 Go ahead. 7 MS. EDGERTON: Lynne Edgerton. 8 With respect to the current individuals 9 who are ALJ members of the Air Board staff, what have 10 they been doing? Since we have them and they haven't 11 been doing anything. 12 MR. KENNY: What we did is we basically 13 had -- the original person who was designated as an ALJ 14 was Kathleen Walsh, and she served as an ALJ from about 15 1991 to about 1995. During the first three years, she 16 was doing the roadside inspection citation reviews, and 17 she also is the person who was involved in putting the 18 original office together and setting it up. 19 When we suspended the roadside inspections 20 efforts, what we then did is we transferred Kathleen 21 Walsh back to the Office of Legal Affairs, and she 22 essentially functioned as a SIP attorney. So she was 23 the one people who was crucially involved in the 24 adoption -- excuse me, promulgation and adoption of the 25 1994 SIP. 109 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 In the last year, we have taken advantage 2 of the authority that was provided to us by the 3 legislature in anticipation of the Roadside Program 4 being reactivated and the Fuels Program in which the 5 legislature provided us with the authority to issue 6 administrative penalties for fuels violations, we 7 appointed two new administrative law judges: Mike Terris 8 and Jim Ridon (phonetic). And what they have been 9 doing, at least since that point in time, is Mike Terris 10 has been working on putting together these procedural 11 efforts. Jim Ridon has been working with Mike on this, 12 but he is also been doing some other inventory work in 13 the interim. 14 MS. EDGERTON: So if I understand 15 correctly, the two -- certainly Jim Ridon has been 16 operating as an attorney within the Office of Legal 17 Counsel of the Air Board, and Mike Terris has not been 18 doing that, he's been solely working on developing the 19 program? 20 MR. KENNY: I'm going to let Mike Terris 21 answer that. I couldn't answer the "solely." 22 MR. TERRIS: For the better part of the 23 past year I've been working on these procedures. I also 24 was being phased out of the legal office. And since -- 25 I think it was the end of middle of April, I have not 110 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 been involved in any legal work, exclusively working for 2 the office of administrative hearings. 3 MS. EDGERTON: How long have you been with 4 the Office of Legal Affairs with the Air Pollution 5 Board? 6 MR. TERRIS: Since 1989. 7 MS. EDGERTON: And Jim, how long has he 8 been there? 9 MR. KENNY: Jim Ridon was hired in 1995, 10 about 1995. 11 MS. EDGERTON: Thank you. 12 That's all I have to ask. 13 CHAIRMAN DUNLAP: Okay. What I would like 14 to do, if there's no other burning questions of the 15 Board, is let's do the witnesses. We have five 16 witnesses. I'll announce the order and come forward. 17 Kingsley Macomber, AAMA and Sierra 18 Research, also years ago worked with us. Professor 19 Greogry Ogden, AAMA. Professor John Dwyer, also AAMA; 20 Bill Grier and Tim McCann. 21 So Kingsley, if you would like, you can 22 serve as a floor manager and take control of your panel, 23 if your will, and call them up as you see fit. 24 MR. MACOMBER: Thank you, Mr. Chairman, 25 members of the Board. Good morning. I guess it's still 111 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 good morning. My name is Kingsley Macomber. I'm legal 2 counsel with the Sierra Research, which is an air 3 pollution consulting and research firm in Sacramento. 4 I'm here today to represent the AAMA, 5 American Automobile Manufacturers' Association, and what 6 we would like to do in the interest of moving things 7 along quickly and keeping things coordinated, we would 8 sort of like to take a panel approach. What I would 9 like to do initially is to introduce the panelist so you 10 have little better idea of who they are and what their 11 background is, and then we can get to a few 12 introductions to get you directly into the testimony. 13 First member of our on panelist is Gregory 14 L. Ogden, he is Professor of Law at Pepperdine 15 University School of Law. He is a professor who works 16 specifically in the areas of administrative law, civil 17 procedure, and professional responsibility. He's the 18 author of a leading treatise on California 19 Administrative Law that is used actively not only by 20 students but by practitioners. He's served as a 21 consultant to the Law Review Commission here in 22 California on administrative law, and he's also been a 23 consultant at the federal level to the Administrative 24 Conference of the United States. 25 Also with us today is professor John P. 112 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 Dwyer. He's the John H. Boalt Professor of Law at UC 2 Berkeley, Boalt Hall. He teaches specifically in the 3 environmental and administrative law areas. He's the 4 author of annotated edition of California environmental 5 laws and also has served as a consultant to the Law 6 Revision Commission in the environmental area. 7 Also here today to answer any questions or 8 provide additional comments we have from General Motors 9 Tim McCann from their legal staff, and also from the 10 Ford legal staff we have Bill Grier an attorney with 11 Ford. 12 Also with us today, in case there are any 13 additional questions, we have Steve Douglas from AAMA 14 sitting behind me, and then also Stuart Greg and Rob 15 Gassaway from the law firm of Kirkland & Ellis that does 16 work for AAMA. 17 As for myself, I just wanted to point out, 18 as you've already done, sir, that I did serve as legal 19 counsel and general to the Air Resources Board during 20 the 1970s era for almost eight years, and I did 21 participate in the one adjudicatory hearing that the 22 Board conducted back in 1974. It involved a 23 decertification of a retrofit device, and that was a 24 hearing that went to a full -- through the full 25 litigation process and to a final decision by the Board. 113 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 I would also like to point out we have 2 provided a rather thick, complete statement on behalf of 3 AAMA. It is the large blue-covered volume, which should 4 be in front of you. I'm certainly not going to ask you 5 to read through all of that today, although we may refer 6 to it specifically later on this morning. 7 And before we get into the issues, I would 8 also like to say that we very much appreciate the great 9 level of effort that the staff gave to solving as many 10 of the very technical legal issues that first came up 11 during the workshop, and I think it was May or April of 12 this year. I would say that we probably solved dozens 13 of issues to get working together with the staff and 14 particularly with Mike Terris. I want to say thank you, 15 Mike. However, we still have two issues of very high 16 importance to AAMA and the industry. 17 At this point, I would like to have a 18 couple of slides put up to get you oriented; and then 19 after that, take a few minutes with that, then we'll 20 move into the testimony. 21 First, I want to make it clear that of the 22 three types of procedures that you're here to make a 23 decision on today, the citation cases and the complaint 24 cases, those are not of concern to us. Our concerns are 25 limited specifically to the petitions for review of 114 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 executive officer decisions, and in particular we have 2 concerns about those because those are the kinds of 3 procedures that would be used in vehicle recall cases or 4 in cases involving the revocation, suspension, or denial 5 of certification of vehicles. 6 Moving onto the two issues that we're 7 going to be talking about. The first one, and there's a 8 slide behind you and you should have hard copy on this 9 in front of you because it's hard to see the slide -- 10 thank you, Mr. Chairman. 11 I want to point out, following up on 12 Mr. Calhoun's observations a few minutes ago, that the 13 current rules -- those that were adopted in 1989 -- do 14 provide for hearing officers to be obtained from the 15 Office of Administrative Hearings, which is an 16 independent agency that specializes in providing that 17 kind of service to all California regulatory agencies, 18 if the Board decides not to hear the matter itself. In 19 fact, we're in that process right now in one particular 20 case where a recall issue has been to an OAH hearing. 21 Our basic position, and we will be going 22 into this more in detail with the other witnesses, is 23 that first there really has been no adequate rationale 24 presented for changing course. We think that the best 25 course would be for the Board to continue to rely upon 115 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 OAH professional hearing officers just for the long run 2 and not to limit it just to the two years, as you've 3 heard in the staff presentation. 4 Basically, there are two reasons why we 5 think this is advisable. First, the OAH hearing 6 officers have special expertise in conducting long, 7 complex evidentiary hearings. We recognize the staff 8 ALJs will have some valuable expertise in the area of 9 air pollution law, but we think it's more important to 10 have the kind of expertise you're going to get with OAH. 11 What you really want here is someone who can manage a 12 long, complex trial like procedure. We think that's the 13 most important attribute you should be focusing on. 14 In my experience, what happens in one of 15 these hearings is you quickly get passed the law issues. 16 Those are identified by the parties through briefs and 17 oral presentations to the hearing officer initially, and 18 then you get into witnesses, objections, evidence, and 19 things like that, and that's where you need the OAH type 20 of experience. 21 We also think this approach would improve 22 or assure the impartiality of the decision-making 23 process in a superior fashion. 24 I also want to point out that in Exhibit G 25 to the big packet of material that you have up there, we 116 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 have proposed some alternative language on this subject 2 of hearing officers. And we have suggested to address 3 the cost or cost-effectiveness issue that was first 4 mentioned by Mr. Terris, that the manufacturer can -- if 5 they want to have an OAH hearing officer, must first 6 agree to share or split the costs of retaining the 7 services of that office. So I think if there was 8 initially any question as to cost, that issue has now 9 been removed because we're going to share the costs with 10 the agency there. 11 CHAIRMAN DUNLAP: On that point, is that a 12 recent change, Mike, or is that -- I'm talking about the 13 two-year window. 14 MR. KENNY: We actually proposed the 15 two-year window I would say maybe a month and a half 16 ago. I'm not sure that's exactly right, but it's been 17 awhile. And the idea there was the fact -- because we 18 were making a transition to having the ALJs that are at 19 the Air Resources Board handle these matters. We didn't 20 know exactly what the workload would be like associated 21 with this, so we wanted to essentially provide some 22 flexibility in terms of a response. So what we did here 23 really was -- although we think that the ALJs would have 24 a very good likelihood of handling this, trying to be 25 flexible, trying to reasonable, and actually trying to 117 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 work out some kind of resolution on this. We proposed 2 that as a way of trying to address the issue. 3 CHAIRMAN DUNLAP: Is that included in your 4 proposed law? 5 MR. KENNY: Yes. 6 CHAIRMAN DUNLAP: The sharing of costs? 7 MR. KENNY: The sharing of costs actually 8 was something that was proposed by Kingsley and others 9 from the industry this morning to me. The sharing of 10 the costs actually addressees part of the issue. 11 Part of the reason we were having ALJs 12 in-house is that the Office of Administrative Hearings 13 is not cheap. And if we're talking about long-term 14 cases, they charge $105 per hour. So we aren't talking 15 about insignificant costs. Sharing that, obviously, 16 reduces that expensive cost by half. There is still a 17 cost issue we're talking about, and we have the 18 expertise in-house, and we have the ALJs who are 19 properly trained. We may -- 20 CHAIRMAN DUNLAP: Sorry, we're not there 21 yet. This was asking about the money. 22 MR. KENNY. I know. I jumped ahead. 23 CHAIRMAN DUNLAP: I know, you were taking 24 the opportunity of my good nature. 25 MR. MACOMBER: You will see specific 118 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 language addressing this cost amendment that we have 2 proposed in Exhibit G of our main packet. 3 The second issue of concern to AAMA is the 4 ex parte issue as it affects the Board itself. We have 5 resolved, to our satisfaction in working with staff, the 6 ex parte issue as it relates to contacts with staff. 7 In Appendix H to our material, we have 8 provided revisions that we would like you to consider 9 that would essentially change what we think -- bring 10 about a major improvement in the treatment of this 11 issue. What we're proposing is that the Board members 12 may have off-the-record ex parte contacts with hearing 13 officer, members of the hearing office, members of the 14 OAH, if they happen to be brought in, the Board at 15 consideration stage or outside counsel. However, we are 16 recommending that before any member of the staff is 17 contacted by the Board member -- and I want to clarify 18 what we're talking about is the point in the procedure 19 where the Board has already received a recommended 20 decision from the hearing officer and is in the process 21 of thinking about that and getting ready for it's public 22 hearing to make a final decision. 23 So what we're proposing here is that if 24 you want to talk to your staff, that you give the other 25 party in the case 24 hour advance notice and an 119 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 opportunity to participate in that discussion. And then 2 if they don't take advantage of that opportunity, the 3 Board members may proceed with that communication with 4 no restriction, once that notice has been given up 5 front. That is our proposal and it's in Appendix H. 6 CHAIRMAN DUNLAP: Mr. Kenny, I don't 7 want -- you know, can you give a reaction to that? 8 MR. KENNY: Actually, that was proposed to 9 us this morning. We don't have a problem with that. We 10 think that's acceptable. 11 One thing I wanted to clarify, I made a 12 mistake a few moments ago with regard to the cost of the 13 Office of Administrative Hearings. I cited them at $105 14 per hour. That's incorrect. They've gone up. They're 15 now $125 per hour. So just to keep the record straight. 16 CHAIRMAN DUNLAP: Still going to go half? 17 MR. MACOMBER: Absolutely. And I would 18 also suggest that if your own office tried to conduct 19 hearings, formal hearings like this, it would cost you 20 about the same. Both are the same salary structure, you 21 have the same rental rates, equipment requirements, 22 back-up and secretarial support, things like that. 23 That's our view on the matter. 24 CHAIRMAN DUNLAP: And I saw a letter -- 25 MR. MACOMBER: We did have different cost 120 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 numbers in the material we presented earlier. 2 CHAIRMAN DUNLAP: One thing that I would 3 ask you to do, Kingsley, is as you go through your 4 arguments that -- where we have common ground, don't go 5 over those things. I would like to focus on the things 6 that is the nut of the issue, and the other things, 7 let's not worry too much about. So I'm looking to you 8 kind of fill that role. 9 MR. MACOMBER: I'm prepared to do that. 10 I just wanted to clarify thing with Mike 11 Kenny. 12 You said you are prepared to adopt our 13 proposal on the ex parte contacts issue. Are you 14 referring specifically to the language that we presented 15 to you earlier today? 16 MR. KENNY. Yes. 17 MR. MACOMBER: Thank you very much. 18 With that, I think it might be my decision 19 not to bring Professor Dwyer up here to talk about the 20 ex parte issue. I think that has been resolved 21 satisfactorily. 22 And I would like to call upon Professor 23 Ogden to talk about the question of the use of the OAH 24 hearing officers. 25 Mr. Ogden. 121 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 MR. OGDEN: Good morning. 2 CHAIRMAN DUNLAP: Mike, this letter that 3 came from UCLA, will you make sure they get a copy? 4 MR. KENNY: Yes 5 CHAIRMAN DUNLAP: Go ahead, sir. 6 MR. OGDEN: I'm Professor Greg Ogden, and 7 I made more extensive comments in your written 8 materials. 9 The Office of Administrative Hearing ALJs 10 are by and large experienced judges who are used to 11 hearing complex cases, and who have experience in 12 dealing with technical and scientific issues, 13 particularly in hearings before the -- cases before the 14 Medical Board of California. 15 Importantly, for our purposes, the OAH 16 ALJs have institutional independence from the Air 17 Resources Board and, thus, they will have greater 18 acceptability to regulate an industry in petition cases, 19 and they will be able to much more easily satisfy 20 separation of functions concerns because they are 21 institutionally independent. This acceptability factor 22 is particularly crucial when we consider the possibility 23 of settlement of these cases. 24 As you know, the petition cases can be 25 very, very expensive in terms of the financial and 122 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 complexity of the cases. The AAMA clients and their 2 attorneys would be more likely to accept an assessment 3 of the strengths and weaknesses of their case and 4 recommended settlement from an OAH ALJ, who they view is 5 not only actually neutral, but also has the appearance 6 of the neutrality and is completely separate 7 institutionally from ARB. 8 And if we're concerned about costs, if one 9 of these cases went to into protracted litigation, it 10 can be very, very expensive for all sides involved as 11 well as making it more difficult for the Board to carry 12 out it's enforcement goals and for the industry to work 13 out compliance with required laws. So settlement cost 14 related issues and settling these cases is a significant 15 factor in favor of using of OAH ALJs. 16 Another factor is a question of expertise, 17 which we've heard from some today. I would like to 18 break that down into three different issues. One 19 expertise issue is a question of technical expertise. 20 In most complex civil cases or 21 administrative hearings where there are technical 22 issues, you'll have expert witnesses on both sides who 23 will present testimony and could be examined and 24 cross-examined on those issues. And I would anticipated 25 that that would be done here as well, that we bring in 123 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 engineers or statisticians, so that the experts who 2 testify will provide technical expertise. 3 The second area of expertise is expertise 4 in managing complex cases and working the new 5 Administrative Procedure Act. The OAH ALJs have been 6 under this act for a little more than a year, and by the 7 time they start hearing these cases, they'll have 8 several years experience with the new APA; and not just 9 the bill of rights provision, but also the elaborate 10 hearing procedures used in licensing cases. 11 As I was preparing for this, I reviewed 12 the regulations in many cases the procedures on 13 settlement and discovery and thing of that sort did 14 follow the new APA provisions as well. So the expertise 15 in administrative procedure law and hearing complex 16 cases is one where the OAH ALJs have a real track 17 record. 18 The third area would be in air quality 19 law. This is the area where the in-house ALJs certainly 20 have experience in working with air quality and other 21 substantive law. That expertise is particularly 22 important in citation complaint cases where you have 23 many of the regulated parties either unrepresented or 24 not being able to hire counsel experienced in 25 administrative law issues. Similarly, in those cases, 124 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 they're probably less likely to have settlement, and the 2 hearings and records in those cases are much shorter and 3 straightforward. 4 In the petition to recall cases because of 5 the stakes involved, you're going to have experienced 6 lawyers on both sides of the cases who are familiar with 7 the substantive law issues that are presented. And in 8 our adversary system, that's one of the primary roles of 9 the lawyers is to present in adversary fashion their 10 view of the relevant law to assist the triers of fact in 11 resolving dispute. 12 In this case, though, it would be 13 particularly helpful when making the record so that when 14 the Board eventually gets these cases and makes a final 15 decision, they'll have a full and adequate record and 16 any court that would provide judicial review would also 17 have a full and adequate record. 18 So in terms of expertise in petition to 19 recall cases, I really see these cases being different 20 from the citation and complaint cases for the reasons 21 that I've suggested. 22 One other issue here has to do with the 23 whole question of in-house ALJs versus OAH ALJs. In the 24 Law Revision Commission Report that supported the new 25 acts said over 90 percent of ALJs in California are 125 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 in-house. I wanted to talk about that a little bit. 2 In many of the cases that in-house ALJs 3 sit, the stakes, while important to the individuals 4 involved, are fairly low: hearings are short, records 5 are small. I'm thinking of Welfare Hearings, 6 Unemployment, Workers' Comp Hearings. And in some of 7 those cases, the agency in which the ALJs work does not 8 have any advocacy function at all. That would be true 9 of the WCAB, the State Welfare Department. So for two 10 reasons, the cases are small and manageable and there's 11 no advocacy function. The agency in-house ALJs in those 12 types of proceedings don't raise the kinds of concerns 13 we're talking here in this type of case. 14 Then, finally, I would like to just talk 15 briefly about the APA. As you may know, the new APA is 16 far more complex than the old APA. The old APA had 17 adjudication provisions that applied to licensing 18 agencies, primarily, and other agencies were on subject 19 to the APA. 20 Under the new Act, all but about seven or 21 eight agencies are subject to the Administrative 22 Adjudication Bill of Rights. One of the provisions in 23 that is a requirement of separation of functions. 24 The separation of functions requirement is 25 an internal requirement that an adjudicative personnel 126 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 in adjudicative functions not also have investigative or 2 prosecutorial responsibilities. And that's an important 3 due process safeguard in the new act. 4 The act has only been in place a little 5 over a year, and we have no, as of yet, no major court 6 cases litigating just how these bill of rights 7 provisions are going to be implemented in testing 8 particular institutional structures to see if they will 9 pass muster under the APA. 10 I note in the regulations there isn't in 11 the regulations themselves a description of the 12 institutional structure by which the in-house ALJs would 13 be kept separate from the investigative or prosecutorial 14 staff. And I think if a test case does come down the 15 road, they may very well be, that issue could be opened 16 or contested or litigated not only at the hearing level 17 but at the Board and court level. 18 And I would just recommend that because 19 the OAH structure is in place -- the OAH has been used 20 for over 50 years; California was an innovator in using 21 central panel judges; other states have adopted our 22 innovations. And that structure is likely to pass 23 muster under the Administrative Adjudication Bill of 24 Rights, and it's not as clear that in-house agency 25 structures will as well. 127 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 Given the stakes in these cases, having 2 that be a possible question or possible reason by which 3 a court might overturn an agency decision, it's my 4 feeling that the safer and more conservative course of 5 action here would be to retain the OAH structure in 6 petition cases, treating citation and complaint cases 7 differently where the ALJs -- in-house ALJs expertise 8 would be very, very useful and very, very helpful. 9 CHAIRMAN DUNLAP: Any questions? 10 Dr. Friedman. 11 DR. FRIEDMAN: One or two comments. 12 With respect to certain aspects of this, 13 in my own field when an issue is complex, requires wise, 14 thoughtful judgment, you go to a specialist not a 15 generalist. I can't imagine that that is going to be 16 very different with some of the kinds of cases that we 17 will be required to adjudicate. 18 Secondly, in my own experience with the 19 OAH, as a member of the Medical Board, I think if you 20 poll all the members of the Medical Board, they will 21 tell you the that the system is immensely constipated. 22 This is not an exaggeration. The length of time, the 23 pace of getting a product is -- it's incredibly slow. 24 And as a result, incredibly expensive. And I really 25 have reservations about both of those aspects. 128 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 MR. OGDEN: Would you like me to comment? 2 DR. FRIEDMAN: Please. Absolutely. 3 MR. OGDEN: I would be glad to comment. 4 In terms of specialized expertise, I think 5 that's most appropriately applied in this setting by 6 having in-house ALJs do the citation in complaint cases 7 where their air quality expertise and hearing expertise 8 would allow efficient and expeditious resolution. 9 CHAIRMAN DUNLAP: We all agree with that. 10 We've done that. 11 MR. OGDEN: As to the Medical Board of 12 California, my sense about why those people have 13 problems or the system is constipated may be due to a 14 number of factors. 15 First of all, there's independent judgment 16 review of the fact finding of the Medical Board. 17 Secondly, the stakes for the physicians involved are so 18 serious that they're going to contest and litigate those 19 cases to avoid having their licenses revoked. And 20 third, there has been problems with certain professional 21 licensing areas -- lawyers as well as doctors -- that 22 transcends, I think, the hearing process that is used. 23 DR. FRIEDMAN: We ought to be able to fix 24 all issues in each of those two domains and we haven't 25 done that. 129 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 MR. OGDEN: In petition cases you're going 2 to see the same level of complexity because of the size 3 of the case, the size of the record. 4 CHAIRMAN DUNLAP: All right. Thank you. 5 MS. EDGERTON: I have a question. 6 CHAIRMAN DUNLAP: Okay. 7 MS. EDGERTON: Following up on 8 Dr. Friedman's question. The sense of his question, if 9 I understood it correctly, the thing that made me want 10 to know is given that there's a constipation of the 11 Office of Administrative Hearings in some instances, why 12 wouldn't it be better to have this issue -- these issues 13 in the ARB in-house ALJ hands? 14 MR. OGDEN: Well, in terms of expertise, 15 you can provide the expertise in other ways. 16 In terms of cost-effectiveness, the 17 industry will just not feel as good about in-house ALJs 18 in the settlement process because they will feel that 19 there's some sort of institutional perspective there. 20 And you can't get rid of that no matter how you deal 21 with the internal separation functions. This is not a 22 reflection of the individuals involved, it's an 23 institutional structure problem. 24 I don't think that the problems of the 25 Medical Board of California are specifically a result of 130 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 the OAH hearing process. I think they are -- they 2 result in larger issues having to do with enforcement of 3 license revocation laws and the ability of physicians 4 and lawyers to hire attorneys to represent them to go 5 into court and to overturn the fact finding, which is a 6 function of our fundamental invested right of law in 7 California that you can go into Superior Court and have 8 the judge reweigh facts in the case and overturn the 9 action of the agency. I think that is as much a reason 10 for many of these problems than is the use of OAH ALJs. 11 MRS. RAKOW: John. 12 CHAIRMAN DUNLAP: Mrs. Rakow. 13 MRS. RAKOW: Regarding that perception, 14 which I think is very important, I served on the Energy 15 Commission, during my term, and I was involved in five 16 power plant citing cases as one of the two assigned 17 commissioners. There were a group of the staff were 18 assigned to the power plant citing, and the assigned 19 committee nor their advisors, they were not allowed to 20 talk to those staff members, even with ex parte 21 communication announcements, preannouncement. We 22 simply -- it was a hands off. I don't know, or at least 23 it didn't come to my attention, whether any of the 24 parties who wanted to build power plants felt that this 25 was ever abused. I mean the assigned staff were 131 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 completely independent, and they didn't even come to our 2 meetings. They read the report when we put it out. 3 So I just wanted to -- I mean in that 4 instance I think there was quite a division in the 5 powers of responsibility, the area of responsibility. 6 MR. OGDEN: And I think that's why the APA 7 settled on the internal separation of functions. That's 8 what's required. Although, the APA permits agencies to 9 put in provisions that are more protective of the 10 regulated industry. And I believe this would be more 11 protective regulated industry to continue to use the OAH 12 ALJs in these very serious cases for the indefinite 13 future. 14 MS. EDGERTON: Chairman? 15 CHAIRMAN DUNLAP: Yes, Ms. Edgerton. 16 MS. EDGERTON: Professor Ogden, you 17 served -- am I correct you that you served on the 18 California Law Revision Commission? 19 MR. OGDEN: I have consulted on the rule 20 making studies of the California Law Revision 21 Commission, which is in progress at this time. I 22 participated in an informal basis in the administrative 23 adjudication and judicial review part of this by reading 24 drafts and writing letters, and I've written the 25 California Administrative Law treatise that addressees 132 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 the issues dealing with the APA. 2 MS. EDGERTON: Mr. Dwyer, did you serve on 3 that Commission? 4 MR. DWYER: I'm a consultant to the 5 California Law Revision Commission on the codification 6 of environmental law. This is not that process. 7 MS. EDGERTON: My question is about that 8 particular process, and I ask my colleagues to bear with 9 me in the scholarship issues of the Law Revision 10 Commission. 11 It was my understanding that -- well, it 12 is my understanding that the states in the United States 13 are moving more in the direction of having central 14 panels such as the OAH, generally. The ten states -- 15 now there are 25 -- that more of the states are pursuing 16 the idea of farming out, if you will, or assigning their 17 administrative hearings to central panels in those 18 states. 19 By the same token, it was my 20 understanding, too, that the California Law Revision 21 Commission in addressing this concluded that the 22 cause -- about 95 percent of the individualized 23 administrative hearings are in-house in agencies, and 24 those were working pretty well, that the state would not 25 formally go to a measure where everything was assigned 133 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 to a central panel. 2 The place where -- which is a gray area 3 for me is how specific the choice was. It seems to 4 me -- I'm sort of two minds. It seems to me that -- as 5 I understand it, and I'm not a scholar in this, as I 6 understand it -- the California statute decided that -- 7 essentially said it would be all right for things to 8 go -- for cases to go to the administrative -- the 9 Office of Administrative Hearings or go out. But it's 10 also okay to have administrative law judges. But I 11 didn't -- I don't have an impression as to what, if any, 12 preference the Commission may have had or higher comfort 13 level except to the extent there seem to be -- I have 14 the impression there's somewhat more preference for 15 bigger, more important cases out of the agencies. 16 I guess I've touched on three points, and 17 I don't know if I've asked the question well enough. I 18 guess I would like for some discussion about where we 19 are in terms of the trends, in terms of most efficient 20 resolution of administrative matters. 21 MR. OGDEN: Well, I would like to respond 22 to that, if I could. 23 The Law Revision Commission operates on 24 the basis of enforcements ideas: persuasiveness. It 25 doesn't have much in the way of political clout. So it 134 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 has too to some degree operate by consensus. Now, 2 obviously, it also uses consultants and expertise. 3 In the discussion in the Commission Report 4 on this issue, they said many agencies were small 5 enough -- or in some agencies, and the other ones were a 6 little larger bit larger, like the Department of Motor 7 Vehicles where it would be financially impossible for 8 them to participate in the central panel system. 9 Instead of going with pure central panel 10 system, they went with the existing system coupled with 11 the internal separation requirement, which is now 12 clearly set forth as of July 1, 1997 APA, and will 13 probably require a lot of agencies to change the 14 structure of their in-house hearing people. So I would 15 say that the Law Revision Commission did not feel like 16 that they could recommend wholesale change. 17 It is also true, though, that the central 18 panel system is an idea that's catching on, and we've 19 had a long and very successful track record using OAH 20 hearing judges. 21 I guess the picture I would like to draw 22 is most of the in-house agency cases are more likely and 23 other agencies are more like the citation or complaint 24 cases where using in-house ALJs coupled with adequate 25 internal separation function is an appropriate 135 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 compromise. But in a higher stakes cases, that's where 2 the need for institutional separation and the appearance 3 of neutrality is even more important because the stakes 4 are so high. 5 I don't know if that answers your question 6 or not. 7 MS. EDGERTON: Thank you. That was very 8 helpful. 9 MR. TERRIS: I would like to -- 10 CHAIRMAN DUNLAP: Michael, I'd be happy to 11 let you respond, but I've got three witnesses I want to 12 move through. I want to hear their arguments and I want 13 to have a chance to talk amongst the Board. 14 We're talking around the key point, and 15 that is ultimately the decision is going to be ours. 16 And we're talking about a process before it gets to us. 17 So that's why I want to focus on those things. 18 One of the things, too, I want to remind 19 the audience we're going to do -- and I do and my 20 colleagues support that -- is that we hold staff 21 accountable to the highest level of personal ethics. 22 And we're kind of talking around some of that. 23 Where I have some concern about your 24 assertion is that somehow we can't be impartial; that 25 this appearance issue is so problematic to you that this 136 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 warrants this kind of horsepower coming here and making 2 these points. So that troubles me. It's impossible for 3 you to say we would like trust, respect, work well with 4 this staff, but in this point we think they're not to be 5 trusted. So there's a fundamental issue here and I 6 tried -- Steve, don't shake your head -- I tried very 7 clearly to let you know that if you guys feel this way, 8 this isn't the issue to come to us and tell us you have 9 no faith in our ability to objective. You're getting my 10 attention on that issue. So I'm going to appreciate an 11 explanation of that, perhaps bring you up as a last 12 witness to talk about the status of the relationship 13 between us and the trust and the level in the industry. 14 Because this is becoming problematic for me as I listen 15 to this. 16 So what I would like to do, Michael, is 17 let you say what you want to say, and I want to bring up 18 the remaining three witnesses and talk about the 19 substance. 20 MR. TERRIS: I just want to basically 21 address that point. The fact is that the Law Revision 22 Commission Report seems to indicate to me that they felt 23 that there was adequate safeguards with the protections 24 that came with the adjudicatory bill of rights that 25 independent agencies could fairly and impartially -- 137 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 basically the agencies themselves through their in-house 2 and ALJs could handle these matters fairly and 3 impartially. Further, they made no mention of major 4 cases. I think that's a distinguishing point. 5 MR. OGDEN: My only question is that the 6 regulations don't set forth the institutional structure 7 that you're proposing. So my question is: Are they 8 going to be legally binding? If this was litigated, how 9 would you establish that you've maintained a firewall 10 that you're talking about? 11 MR. KENNY: If I might answer that 12 question? 13 This issue was originally raised to us 14 some time ago with regard to the institutional structure 15 of the Air Resources Board and where the ALJs fit within 16 that structure. 17 In response to this specific industry 18 request, we did modify the structure of the Air 19 Resources Board. Where previously the ALJs actually 20 reported through the legal office and then to the 21 executive officer, we have now modified the 22 institutional structure such that they do not report to 23 the legal office and they do not report to the executive 24 officer. They are an independent office at the Air 25 Resources Board that does not have, essentially, a 138 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 supervisor in the sense of me supervising them or any 2 division chief supervising them. 3 The only connection that they have with 4 the Air Resources Board is they have a connection, 5 essentially, with the administrative services division 6 to ensure, in fact, that their administrative needs are 7 covered. We've taken away the supervisory role that 8 previously existed, and we did that at the specific 9 request of the industry. So I'm a little bit surprised 10 to hear we're not responding to the institutional 11 appearances issue when the only reason we did that was a 12 response to the request. 13 CHAIRMAN DUNLAP: Okay. 14 MR. MACOMBER: If I could address that 15 point? 16 CHAIRMAN DUNLAP: Yes. 17 MR. MACOMBER: We didn't raise that issue 18 very recently with the staff, and our concern is that, 19 yes, they have the policies, but we haven't seen them in 20 writing anywhere. Our concern is this could change next 21 week or next year, year or two or three years from now. 22 We need some kind of written institutional commitment. 23 CHAIRMAN DUNLAP: That's something we can 24 give you. 25 MR. MACOMBER: Beg your pardon? 139 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 CHAIRMAN DUNLAP: We can give you that. 2 We can make that so. 3 Mr. Kenny, make that so. 4 MR. KENNY: Absolutely. 5 CHAIRMAN DUNLAP: Very good. Get to the 6 procedures. 7 Next witness. 8 MR. MACOMBER: We would like to call upon 9 Professor Dwyer at this point to provide some additional 10 commentary on this issue. 11 And in that regard, I want to point out we 12 were just given a copy of a letter addressing the OAH 13 issue addressed to Mr. Kenny dated September 23, 1998, 14 from Professor Michael Azanoff (phonetic), Professor of 15 Law at UCLA School of Law. Professor Dwyer has reviewed 16 that letter. We would like to have it made a part of 17 the record in this proceeding, and he has some brief 18 comments based on that letter. 19 MR. CHAIRMAN: That's fine. Thank you. 20 MR. DWYER: Good afternoon, Mr. Chairman, 21 and members of the Board. My name is John Dwyer, I'm a 22 Professor of Law at the University of California at 23 Berkeley. I was initially going to talk to you about 24 the ex parte issue, but that was settled. So I have no 25 comments unless there's question you may have. 140 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 I was, just moments ago, given the letter 2 by Mike Azanoff (phonetic), who is a friend and 3 colleague of mine, who addressees some of the issues 4 about whether or not a hearing officer should come from 5 OAH or ARB, and I wanted to highlight a couple of points 6 about his letter. 7 I think -- I'm not quite sure what it was 8 in response to precisely, what questions were asked of 9 him, but I think overall the letter is important that 10 the appointment of OAH hearing officers rather than 11 in-house hearing officers for the very significant 12 recall cases. 13 In particular, Mike's letter in the third 14 paragraph speaks specifically that the critical issue 15 involves the heavy-duty vehicle roadside smoke and spec 16 regulations. He, of course, does not make any reference 17 here to the important recall cases; he's focused really 18 on low-stakes high-volume cases, which I think, from my 19 own professional opinion, as an environmental law and 20 administrative law expert, are perfectly appropriate for 21 in-house cases. 22 He also notes at the very bottom of the 23 first page and top of the next page that the kinds of 24 cases that go to OAH, and he says specifically, "OAH's 25 client agencies tend to refer only occasional rather 141 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 important cases to OAH, not the steady, high volume flow 2 cases." And that's exactly what's at stake here in 3 these recall cases. We are talking about cases that may 4 occur once every few years. They're exceedingly high 5 stakes cases involving tens of millions, up to $100 6 million, possibly very high stakes for the public as 7 well in terms of air quality. These are really the most 8 fundamentally important cases. 9 Thirdly, the issue he focuses on here with 10 these high-volume low-stakes cases happens to be 11 expertise about trucks. He mentions trucks repeatedly 12 in the letter and in particular the emissions they may 13 issue. 14 As Professor Ogden pointed out, the 15 expertise that is most desired in the rare, occasional 16 cases is the kind that's going to have to be learned 17 just for those cases, and that is to say case 18 management. OAH has the ability, I believe, to provide 19 large case management. It has the facilities, it has 20 the computerized docketing management that ARB would 21 have to come up to speed once every few years if a 22 subject case arose. 23 The last point he makes is on costs, but I 24 think that issue is no longer a serious matter of 25 contention at this point. That's to say the OAH is 142 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 expensive, as are hearing procedures for any agency, 2 including in-house. But I believe the AAMA is positive 3 the industry will share those costs, if there's no 4 additional cost, to go into OAH. 5 CHAIRMAN DUNLAP: Okay. Any questions of 6 the witness? I'm not looking for one, I'm just asking. 7 MS. EDGERTON: I reserve my right. 8 CHAIRMAN DUNLAP: I know you do. 9 Bill Grier. 10 MR. GRIER: Thank you. 11 CHAIRMAN DUNLAP: Just one moment, if you 12 would. 13 MR. GRIER: Okay. 14 MR. CALHOUN: Let me just raise one 15 question here. I think what I'm hearing is that there 16 may be some cases that are serious, serious than others, 17 and if there is an agreement with the industry 18 concerning the -- concerning in-house hearing officer, 19 is there a possibility that some language could evolve 20 from whatever written determination is going to be made 21 that would allow an appeal of that. 22 MR. KENNY: Actually, the process does 23 provide for an appeal, Mr. Calhoun. 24 What we're really talking about here is 25 sort of the exhaustive administrative remedies once the 143 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 executive officer has issued, for example, a recall 2 order to a company. What the company has the right to 3 do at that point in time is to request a recall hearing. 4 And what would occur basically is that that recall 5 hearing would occur before an administrative law judge. 6 And the real issue we're debating here is 7 whether the administrative law judge will be at the Air 8 Resources Board or be at the Office of Administrative 9 Hearings. Wherever that judge is, however, once that 10 judge has made a recommended decision, that decision is 11 going to be coming before you as a Board member and the 12 Board as a whole. 13 And the Board is then going to make the 14 final determination as to what they believe the decision 15 to be. If in fact the industry at that point is 16 uncomfortable with the Board's solution or the Board's 17 recommendation, the industry again has an appeal right. 18 And it can go to the civil courts, and they can 19 challenge the decision here. 20 What we're really looking at is the 21 initial phase of the administrative process in which 22 we're trying to provide an efficient, cost-effective 23 expert hearing that will move as rapidly and quickly as 24 possible so that we can get the matter to the Board for 25 the next stage. 144 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 MR. CALHOUN: Is it conceivable then that 2 some range could be developed that would provide them 3 with the kind of assurances regarding theories that they 4 have? 5 MR. KENNY: We tried to do that in the 6 sense that -- what I have heard from them in speaking 7 with them is that their primary fear is that in trying 8 to reach a settlement of these issues at the early first 9 stage, it is much more difficult for them to convince 10 their clients that in fact a settlement is possible when 11 we have an ALJ from the Air Resources Board involved in 12 the case. 13 The difficulty I have with that is that 14 the Air Resources Board ALJs are set up in such a way 15 they're entirely independent. They do make decisions 16 that the Air Resources Board staff does not like, and 17 that is their absolute right to do. We have separated 18 them off from the Air Resources Board in order to try to 19 foster that independence further. 20 So what we're really talking about is 21 which way do we go from a cost-effective emission 22 expertise standpoint. We think, in fact when you weigh 23 these things, the expertise and the efficiency and the 24 cost effectiveness are very important to make sure we 25 can move these cases along, as opposed to the potential 145 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 of them languishing at the Office of Administrative 2 Hearings for long periods of time and also at great 3 costs to us. When we're talking about $125 an hour, I 4 guess maybe that's insignificant to some, but that's 5 essentially a thousand dollars a day. And when we're 6 talking about long hearing, that is a lot of money for 7 the Air Resources boards. 8 MR. CALHOUN: I guess the question that 9 staff changing -- we may all be gone next week and 10 polices change. What form would this assurance take? 11 You mentioned earlier about giving the industry some 12 kind of assuring. Would this be some type of a 13 regulation or what? How would this -- what form would 14 it take? 15 MR. KENNY: I think what the industry 16 would hopefully be comfortable with is I could send them 17 a letter laying out the institutional structure of the 18 Air Resources Board and where the ALJs fit within that 19 structure and the rationale for why that structure is 20 designed that way, which I would be designed to fully -- 21 to emphasize the fact that this independence is very 22 important. 23 MR. CALHOUN: And the procedures 24 Kingsley -- 25 MR. KENNY: Yes. But I think what we have 146 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 done here is something that does not exist in probably 2 any other state agency that I can think of in state 3 government. In other state agencies, the ALJs actually 4 report and are supervised by the staff. We have 5 actually done something very unique here specifically in 6 response to the request and the interests of the 7 industry. 8 MR. DWYER: If I could respond, just a 9 moment? 10 A couple of things. One is these 11 hearings. Though they are in the initial stages, as 12 Mr. Kenny points out, they are fundamentally important, 13 even though the Board makes the ultimate decision. 14 That's because these things do not take a few hours, 15 they may take 80, 90, a hundred days. They're lengthy, 16 technically complex hearings where the hearing officer 17 reaches a proposed decision. 18 Moreover, the administrative record is 19 fixed at that point. It can't be -- unless it's sent 20 back to the hearing officer for more, what the Board 21 sees in the record is what the Board gets; what the 22 Superior Court sees in the record is what it gets. 23 These hearings need to be managed in a fundamentally 24 sound manner. And so even though they're initialed, 25 it's hardly easy to brush them aside. 147 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 In terms of the efficiency and cost, 2 there's no reason to think OAH is any less efficient 3 than ARB. Quite the contrary, there's always manageable 4 cases suggesting it's quite efficient. 5 And the cost issue while important, as I 6 say it's been substantially set aside by the willingness 7 to share the costs of the hearing. And I might 8 reemphasize here while it is important to get these done 9 efficiently and move them along expeditiously, we are 10 talking about very substantial public and private 11 interests at stake here: hundreds of millions of dollars 12 as well as environmental quality. It seems to me it is 13 very important in these cases to make sure these are 14 handled precisely right. 15 It turns out in other states and in the 16 federal government there really is much more of a 17 separation then there is in these hearings here. What 18 we find is that the larger cases are, in fact, going to 19 be heard by outsiders, not by insiders. Increasingly, 20 states are moving to that approach because of the very 21 kinds of concerns the industry is raising here. 22 MR. KENNY: If I can make one quick 23 comment? 24 We're also talking about a different 25 situation here in which there is a Board. This Board 148 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 ultimately hears the matters. 2 CHAIRMAN DUNLAP: That's what's hanging me 3 up. What's hanging me up is the fact -- I get the fact 4 if you want to appeal you need to go to the Superior 5 Court. I've been educated on that. But it's going to 6 be the Board that's going to hear -- that's going to see 7 that record and is going to be able to discuss that. 8 That's troubling me. Because we're ultimately going to 9 make the decision, correct? 10 MR. DWYER: If I can respond to that? The 11 answer is quite correct. The Board does make its own 12 independent judgment on the matter. What's important 13 though is the way in the which the administrative record 14 is compiled and collected. It's not simply a mechanical 15 process where someone is documenting papers as they come 16 in. There's all kinds of decisions that need to made in 17 the course of discovery, admissibility of -- 18 CHAIRMAN DUNLAP: See, that's the dilemma 19 I have. The staff is saying they can do that well, they 20 have expertise, they want to do that well. You're 21 saying that some party that's going to be -- we're going 22 to pick a person in a pool of people and they're going 23 to do that better. And you're standing here -- that's 24 my concern about the advocacy I'm hearing today. You're 25 saying to me that somebody from a pool unfamiliar with 149 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 the history, the goals, the objectives, any of that 2 stuff, is going to do it better than our own ALJs. 3 MR. DWYER: I believe -- 4 CHAIRMAN DUNLAP: And fundamentally I'm 5 amazed to hear that asserted by AAMA. I'm amazed at 6 that. 7 MR. DWYER: The expertise -- 8 CHAIRMAN DUNLAP: And sustained. 9 Sustained. I've been hearing this from every witness, 10 and I heard it the other day. So I'm trying to 11 understand that logic. Maybe, Steve, it's something you 12 need to stand up and explain to us. 13 MR. DWYER: If I could give you one quick, 14 Chairman Dunlap, and that is that the expertise that's 15 developed in the course of hearing hundreds of roadside 16 smoke case is unrelated to the expertise that arises in 17 cases, and there's no comparative advantage in having 18 ARB administrative law judges hear such cases over an 19 OAH attorney. I guess perhaps -- or perhaps you and the 20 rest of the Board and staff -- 21 CHAIRMAN DUNLAP: Wait a second. 22 MR. DWYER: The comparative advantage of 23 knowing polices is the same involvement that concerns 24 other people in terms of predisposition. 25 CHAIRMAN DUNLAP: So that predisposition 150 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 is a negative in your view? 2 MR. DWYER: Yes. 3 CHAIRMAN DUNLAP: Or that awareness is a 4 negative? 5 MR. DWYER: That's correct. It's not the 6 only issue. The other is expertise in terms of case 7 management in my mind are substantially important. 8 CHAIRMAN DUNLAP: But case management has 9 nothing to do with substance of what's at issue, as you 10 asserted few moments ago. 11 MR. DWYER: I believe there's no 12 comparative advantage on substantive issues. 13 CHAIRMAN DUNLAP: I would disagree with 14 that, and in a few minutes I think I'll get to 15 demonstrate this disagreement by a vote, my vote. 16 MRS. RIORDAN: Mr. Chairman. 17 CHAIRMAN DUNLAP: Yes. 18 MRS. RIORDAN: If I might. It appears to 19 me, and, Professor, I would hope you might agree, that 20 what we're talking about is somewhat theoretical. We 21 really don't have a practical experience except maybe 22 back in 1989 or something here at this Board. It would 23 seem to me that the position that this group ought to be 24 taking, and I consider you an advocate of their 25 position, is for us to have the most competent people to 151 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 be used in this process and not to be advocating that 2 they sit here or they sit -- or they're somehow related 3 to us. I think competency is the most critical thing, 4 because conceivably you could go outside and get perhaps 5 someone who is not competent. 6 I have not dealt with a lot of these 7 administrative law judges, but I would bet that in that 8 spectrum there are really excellent ones and maybe there 9 are some that are less excellent. And that would be, I 10 would hope, the position all of you would be taking is 11 you go out and you hire the very best people to staff 12 this particular position that you wish to staff. 13 Because you don't have any record of us holding bias or 14 not holding bias at this point in time. And I guess I'm 15 as troubled as the chairman because of the lack of -- no 16 one has raised competency at all. 17 MR. DWYER: Mrs. Riordan, I think your 18 point is well taken, that is to say competency is highly 19 important in these issues. My point is somewhat to the 20 side of that. It was that there's comparative advantage 21 in competence in coming from in-house rather than out of 22 house. 23 The concerns I think about predisposition 24 arise not only because of the socialization, but people 25 encounter being staff attorney ten years or five years. 152 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 But it's also, as I understand the procedures are 2 currently constructed, people have the opportunity to 3 get promoted within the agency away from their position 4 as an administrative law judge. 5 If one were to look at the federal 6 government's laws model, for example, those 7 administrative law judges that are technically within 8 EPA are actually under the control of the Office of 9 Personnel Management and may not be promoted to senior 10 staff positions within EPA. They get no potential 11 benefits in the future for pleasing or no disadvantages 12 for displeasing agency officials. Their career tracks 13 are utterly and permanently independent. That is not 14 the case here as I understand the structure that's being 15 set up. 16 MR. KENNY: If I may ask a quick question? 17 How is OAH any different? 18 MR. DWYER: I don't believe it's at all 19 realistic that anyone from OAH expects or even would 20 apply for a senior staff position at the ARB. 21 MR. KENNY: That's not my question. My 22 question is can someone at OAH apply for senior staff 23 position anywhere in state government? 24 MR. DWYER: The concern is whether there's 25 any chance that they're going to happen here. We have 153 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 some experience, I believe. It was on the record 2 earlier of Ms. Walsh has gone from being ALJ to being 3 senior staff position here at the agency and that's the 4 general counsel. There's no doubt about Ms. Walsh's 5 very high competence, her independent judgment and so 6 forth. That's not the issue. The issue is always with 7 any individual now. It's what the future will hold. 8 There will be different people and it's not right, I 9 think, to personalize this at a level of saying you're 10 doubting my staff or you're doubting the integrity of my 11 people. It's not about that at all. It's about instead 12 setting up a process that seems independent and fair 13 minded to all parties. 14 CHAIRMAN DUNLAP: No, sir, I'm asserting 15 to you -- let me make it plain. You cannot have it both 16 ways. You cannot stand here as a representative of the 17 automobile industry and tell us that we are not going to 18 play fair, that we may shaft you later, that you're 19 questioning the integrity, the commitment, the 20 partnership on the one hand; and on the other hand, 21 you're saying, no, you're really not. You're just 22 trying to keep your legal options later that you haven't 23 been able to demonstrate to my, I guess, satisfaction 24 that your assertions ought to be -- ought to result in 25 the modification of staff recommendation. That's my 154 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 point. 2 Perhaps I am being a little bit harder on 3 you. You haven't been here before; you haven't worked 4 with us. Because the advocacy you've undertaken -- and 5 it's not meant to be personal to you, it's the position 6 that you represent. 7 MR. DWYER: I appreciate that. 8 CHAIRMAN DUNLAP: That's why I'm 9 interested in hearing from the association directly 10 about some kind of "C" change relative to how we're 11 being viewed. 12 MR. DWYER: I'll sit down after this last 13 comment, and I'll try to make a point that may be 14 unpersuasive to you, but I think it's a difference that 15 may be more obvious to lawyers who litigate and less 16 obvious to those who sit the position of the Board and 17 are not litigators. 18 In rule making and other kinds of 19 regulatory matters, permitting, and so forth, all 20 interested parties -- and by this I include the full 21 spectrum from environmental groups to industry as well 22 as other governmental entities as cities and so forth -- 23 generally recognize that having a constructive, 24 productive relationship is the right way to proceed in 25 these matters. What people really want to do is to find 155 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 common ground, if it's available. If it's not, then at 2 some point the Board votes and you have a result. But 3 the point is to seek common ground. And people find 4 that their generally productive relationships are better 5 for industry, they're better for consumers, they're 6 better for the environment over the long hall. 7 Adversarial litigation is a completely 8 different ball game. At that point the productive 9 relationship has broken down. At that point people 10 really are at loggerheads. You really at that point 11 brought in the people wearing body armor. It's a real 12 fight. It is, to paraphrase someone else, it is war by 13 another means. So it isn't a trust and partnership for 14 that issue. 15 CHAIRMAN DUNLAP: You're talking about a 16 different animal. What we're talking about here is a 17 process, a system set up to recommend or to provide the 18 Board with a record. 19 Now I appreciate the lecture about full 20 body contact legal fights. That isn't what we're 21 talking about here. We're talking about having a person 22 preparing a record for the Board then to consider to 23 make a decision. The other stuff you're talking about 24 takes place if you choose to fight or you disagree with 25 what the position of the Board is. 156 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 So I'm talking -- the way I'm trying to 2 look at this issue is: How can this Board get the best 3 package it can to make an informed decision about 4 whether or not to honor a recall or something along 5 those lines. That's what I'm talking about. 6 And, again, the point is being missed. 7 But I'll say it again. We would see -- any time you got 8 into a situation that a recall would be involved, it 9 would be a failure as much -- but certainly we would 10 share with the industry that you're representing today. 11 That is not something that happens frequently. It's not 12 something that we welcome. We want the regulatory 13 programs to work well. We're not looking to set up 14 fights or disadvantage you procedurally. I've said that 15 and I'll say it again. I mean that sincerely. I don't 16 believe it's the staff's intention to do that. So I 17 think -- I've heard from you. I appreciate that 18 perspective that you have. I think I would move on with 19 the other witnesses. 20 MR. DWYER: Thank you. 21 MS. EDGERTON: Mr. Chairman, can I make a 22 comment? 23 CHAIRMAN DUNLAP: Please. 24 MS. EDGERTON: I wanted to make the 25 comment with a lot of respect for the partnership that 157 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 has evolved between the Air Board and I know that the 2 chairman and the representatives of the auto makers and 3 staff have worked very hard for that, and I don't want 4 anything in this discussion to jeopardize that. So I 5 want to be very mindful of that, so that we can disagree 6 without making it of higher consequence. 7 I can shed some light as a lawyer. I 8 think one of the things I'm hearing, Mr. Chairman, is, 9 and other members of the Board, is some of my colleagues 10 at the bar -- underneath everything, the subtext case 11 here is that management for huge cases is a huge complex 12 issue. If you're talking about having two 13 administrative law judges, it seems to me -- I'm not 14 quite sure because I'm not a magistrate at U.S. 15 District Court. I did clerk for a Court of Appeals, but 16 not for a District Court. I'm not sure how much staff I 17 would need to manage an enormous case over ten years or 18 over five years with all the auto companies, all of 19 their counsel, all of their briefs, all of their 20 technical expertise, and I, Lynne Edgerton, am the 21 administrative judge for the ARB. I'm not sure you 22 wouldn't see me coming to you saying I need a staff 20. 23 I need ten legal paraprofessionals; I need 18,000 24 experts. I'm just saying I don't know. But this is 25 what I am hearing and what is connecting with in terms 158 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 of my legal background and what they mean when they're 2 saying complex cases. They're saying something that's 3 qualitatively and quantitatively different in the legal 4 profession. 5 The second thing is, of course, we all 6 agree we want to have the best possible record on major 7 cases, and I think that's common ground. Because our 8 decisions are only as good as the underlying evidentiary 9 hearing on the facts. 10 The difficulty that I see here, and I 11 think it's real, and there may be ways to protect, to 12 work it out, if we want to, is that we're dealing with 13 proposals for the future, but there is a past. And the 14 past is that our esteemed general counsel was ALJ for 15 three years, she did actually reverse about 10 percent 16 of the cases that came before her. So she was not a 17 push over. She did reverse the staff about 10 percent 18 of the time, but then she did, after that, go back into 19 the Office of Legal Counsel and become our esteemed 20 general counsel. That is what they see. They also see 21 real honest to goodness ARB Office of Legal Counsel 22 attorneys moving from being hired in 1989 and 1994 23 straight into staff positions and then over to "AJLs." 24 So even though you're setting up a 25 procedure where that is unlikely to happen or they're 159 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 unlikely to be influenced by conflicts, there doesn't 2 seem to be a procedure that would -- for example, say 3 somebody who has been in the legal office can't occupy 4 the "AJL" position, or something that would give some 5 confidence that it wasn't a revolving door. And it may 6 be the perception of the past that is working it's way 7 into this as well. 8 So those are two issues that perhaps make 9 more understandable some of their concerns. And it's 10 not very often I am in the position of making the case 11 for the auto manufacturers. So -- but I do understand 12 that. It does come through as quite honest and 13 legitimate to me. 14 CHAIRMAN DUNLAP: Okay. That's fair. 15 Yes, Mrs. Rakow. 16 MRS. RAKOW: What I heard was the concern 17 was the ALJ moving into a more senior management 18 position in the ARB. Am I correct? Is that what I 19 heard? 20 MR. DWYER: One of the many concerns. 21 MRS. RAKOW: Perhaps we can model 22 something on -- I believe there's a state law or 23 regulation that says an agency person cannot move into 24 another position, private position where they had been 25 involved in regulating that particular area. There are 160 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 all kinds of ways to solve problems. 2 CHAIRMAN DUNLAP: I think one of the -- 3 I'm not hearing they're asking for that. 4 MRS. RAKOW: No, I -- 5 CHAIRMAN DUNLAP: Mike Kenny's got to come 6 up with some guidance. 7 MRS. RAKOW: The other thing I was hearing 8 was the complexity of the case management. And the 9 letter from the OAH -- I hated initials -- did indicate 10 that every new judge that was hired by them went to the 11 Administrative Law Courts at the National Judicial 12 College. And I would like to know whether our potential 13 ALJs would be doing the same thing. 14 MR. KENNY: They have already done so. 15 MRS. RAKOW: They already have done so. I 16 knew they would be. 17 MR. KENNY: With regard to your 18 questioning about -- something that would prevent kind 19 of a revolving door syndrome. State conflict laws do 20 prevent anyone from essentially engaging or 21 participating in decision from the opposite side when 22 they have worked on that decision. There is a -- there 23 are a couple of limitation. 24 There is one limitation, which is 25 essentially a lifetime exclusion for the exact same 161 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 issue, and then there are other limitations that are 2 one-year terms that are associated essentially if you 3 leave state office you may not appear in any kind of 4 representational capacity for pay before the agency that 5 you left for a period of one year. Those things exist 6 in the state law right now. There is nothing in the 7 state law that prevents any state employee from 8 essentially trying to obtain a position anywhere in 9 state service. 10 The reference that Mr. Dwyer made to the 11 federal law, which does have that kind of prohibition, 12 does not exist in California. Anyone who works at the 13 Air Resources Board can go to any position anywhere in 14 state government. The same would be true for anyone who 15 works at the Office of Administrative Hearings. They 16 can go anywhere in state government. So we don't have 17 those kinds of limitations in the state law. 18 CHAIRMAN DUNLAP: Thank you. 19 Next witness. 20 MR. MACOMBER: Mr. Chairman, I'm prepared 21 to wrap up. We have no more witness. 22 We have our proposal before us. You have 23 an opportunity under the new bill of rights under the 24 APA to be more protective. Your existing policy to 25 maintain under the old regulations are there. I don't 162 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 see any reason to change that approach. We recommend 2 you continue to use the OAH for these proceedings, and 3 I'm confident the result will be well managed, very fair 4 procedures. 5 Thank you very much. 6 CHAIRMAN DUNLAP: The court reporter and I 7 need a restroom break, so why don't we take five minutes 8 and we'll do that. 9 (Recess.) 10 CHAIRMAN DUNLAP: Is there any other 11 witnesses? You're welcome to have the two other 12 witnesses, if you would like. 13 MR. MACOMBER: No more witnesses. 14 CHAIRMAN DUNLAP: Let me make a couple 15 more comments, I think, and then we can get on and we'll 16 talk to Mr. Kenny about some possibilities here. 17 First and foremost, the thing that 18 concerns me about this issue, and I've tried to say it, 19 maybe not well. Number one, the Board is ultimately 20 going to make a decision, the decision, about any recall 21 or like issue. I reviewed the process by which that one 22 follows to get in here, one that has to be handled with 23 the highest personal integrity. It has to be handled 24 very carefully. It has to be handled by experienced 25 people. I think we owe that to you, and you need to 163 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 expect that will be the case. 2 Secondly, I think that, in my opinion, the 3 industry needs to think about the fact that the Board is 4 ultimately going to make that decision. I'm troubled 5 about the concern that somehow that won't be done 6 straight. I'm concerned not so much because you said it 7 per se, but I'm concerned about the perception perhaps 8 we have about our staff or about ourselves that you may 9 have about us. That worries me. I see that as a real 10 serious concern. 11 I've tried and my Board member colleagues 12 have as well, and I would like to believe our staff has, 13 tried to get predictable and consistent as possible in 14 how we operate. If what I'm hearing is we haven't done 15 that as well as we might, then we'll redouble our 16 efforts to make sure we're even more predictable. 17 The advocacy that I've heard today, well I 18 know well meaning and focused on preserving options, is 19 I think disagreement in what I would have hoped would 20 have been a relatively small point. But, obviously, 21 it's not for the reasons that you testified today. 22 So what I think we have an obligation to 23 do today as a Board is to talk to the staff about those 24 areas that the advocates have asserted are worrisome to 25 them and do all we can to mitigate those concerns or 164 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 address them directly. 2 So what I would like to do, with my Board 3 and colleagues' help, because my memory isn't always 4 perfect, is take a few minutes and talk to Mr. Kenny and 5 Michael about procedures and process. 6 Now, Mike, I'm going to start off by 7 asking two specific things. One, there's a two-year 8 window by which we will use OAH; correct? 9 MR. KENNY: Yes. 10 CHAIRMAN DUNLAP: We have, as I know it, I 11 think there's only one recall issue in the works at 12 present where there's been some talk about that where 13 there's contention. 14 MR. KENNY: There's actually two orders 15 that have been issued. 16 CHAIRMAN DUNLAP: There's a second one, so 17 there's two. Mike, is it likely that these two will be 18 dealt with in that two-year window? 19 MR. KENNY: The first of those two are 20 already in process and will not be changed by anything 21 by the Board did today. 22 The second one essentially would 23 probably -- 24 CHAIRMAN DUNLAP: But it's an OAH process? 25 MR. KENNY: Yes. 165 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 And the second one, if in fact it goes to 2 a hearing, would also go to the OAH process. 3 CHAIRMAN DUNLAP: So the two that are out 4 there are going to be handled the way you desire. 5 MR. TERRIS: Actually, they'll be handled 6 under old procedure. 7 CHAIRMAN DUNLAP: But it's an OAH process, 8 that's what I mean. 9 Now, Mike, under your packet that you have 10 before us, let's say -- I know the lawyers are going to 11 jump on this. I'll have to be careful what I'm going to 12 say on this. Let's say there's a piece -- if these 13 procedures were adopted and then six months from now it 14 became an issue and merged, another recall, and we heard 15 from some source or read or whatever that this is going 16 to be a really big issue, something beyond what we've 17 ever had before. This Board has the ability to tell you 18 to go to OAH process, correct? 19 MR. KENNY: We can always utilize the OAH 20 process. 21 CHAIRMAN DUNLAP: We can do that even if 22 it's beyond our two-year window. We can dictate that, 23 correct? 24 MR. KENNY: The Board wouldn't necessarily 25 dictate that, because essentially what we would have is 166 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 the recall order would go out and if the recall was 2 challenged by the company -- 3 CHAIRMAN DUNLAP: That's what I'm talking 4 about is the challenge. 5 MR. KENNY: Then what would happen is that 6 we would have the option even beyond the two-year period 7 to go to OAH. 8 CHAIRMAN DUNLAP: Does industry agree with 9 that, that can happen? 10 MR. MACOMBER: My understanding is they 11 would have to make some kind of finding about lack of 12 resources. But under that rule we can do that. 13 CHAIRMAN DUNLAP: All right. There was 14 some talk about -- Kingsley made a good point earlier, 15 which we made you to make it so. What exactly was that 16 again? 17 MR. KENNY: That there be an institutional 18 structural change at the Air Resources Board of the 19 administrative law judges. What you had asked me to do 20 was to ensure the fact we put that out in some kind of 21 formalized fashion. So we will do that. 22 CHAIRMAN DUNLAP: You guys would see that 23 as a positive and would like that? 24 MR. MACOMBER: We would like to see that 25 and maybe have an opportunity to comment on it. 167 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 MR. KENNY: We'll work with you on it. 2 CHAIRMAN DUNLAP: So it can be worked on 3 together. 4 Does the Board have anything else they 5 want to add to that or subtract? 6 MS. EDGERTON: I believe there was the ex 7 parte issue that you all agreed to that should be in 8 writing. 9 MR. KENNY: Actually, what the staff would 10 propose is that we modify the proposal to the Board to 11 reflect the industry's ex parte language, which I 12 believe was encompassed in Exhibit G; correct? 13 MS. EDGERTON: Thank you. 14 MR. MACOMBER: H. 15 MR. KENNY: H. 16 CHAIRMAN DUNLAP: Now, back to Michael. 17 I'm going to ask another question that just occurred to 18 me. 19 If there is a recall decision validated or 20 confirmed by the Board that was contested, what legal 21 means -- what legal path would industry have to file? 22 Superior Court, right, they to Superior Court judge? 23 MR. KENNY: Yes. Correct. 24 CHAIRMAN DUNLAP: And the judge would look 25 at the record, right, which is what you're inserting is 168 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 complete and is as whole as possible. And then that 2 judge would make a determination whether to support the 3 Board's action or reverse it. 4 MR. KENNY: Correct. 5 CHAIRMAN DUNLAP: And then if let's say 6 they supported it, where would the industry go if they 7 still wanted to appeal? Would it go to the next level? 8 MR. KENNY: Yes. 9 CHAIRMAN DUNLAP: And let's say the 10 supported it, where would the industry go if they wanted 11 to -- it would go to the next level? 12 MR. KENNY: Yes. 13 CHAIRMAN DUNLAP: Superior Court. And 14 then it could go to the Supreme Court, I would imagine. 15 MR. KENNY: Yes. 16 CHAIRMAN DUNLAP: Now, the one point that 17 I think, as far as I'm concerned, holds water with your 18 assertion is the completeness of that record: making 19 sure that that record is as whole and as fair as 20 possible. Now, and I don't want to get into back and 21 forth, but I want to muse on the point for a minute. 22 What I think you were asserting to the 23 Board is the fact that you could get -- you're willing 24 to roll the dice with an OAH judge and you think your 25 odds of getting a better, more complete package is with 169 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 this unnamed, unknown, entity person, rather than having 2 a ALJ at ARB deal with it. I'm assuming -- this is 3 where I have got my dander up, was that you're assuming 4 that somehow -- I'm reading into this -- that the 5 state's ALJ is not going to want to have a complete as 6 record or is going to bias it or something. 7 Why I have a fundamental problem with that 8 is: (a) the assertion that it would be somehow 9 potentially less than fair or equitable (a); and (b) 10 with the experience of this person, life experience, 11 past work experience, whatever it is, would not give 12 them sufficient expertise and perspective to benefit 13 everybody. Because the Board -- I would like to think 14 people we know what we're talking about -- we put them 15 through the paces, and if we saw holes, we would ask why 16 they're holes. You know what I'm saying? 17 MR. MACOMBER: Are you asking us to 18 respond? 19 CHAIRMAN DUNLAP: Please. 20 MR. MACOMBER: Our point -- we agree with 21 you that the Board needs the most accurate, complete 22 record it can get. We feel that if you have a 23 professional OAH hearing officer doing this for you, 24 people who had some experience in dealing with 25 high-stakes kinds of cases, that you would more likely 170 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 to get that kind of result. It's actually in the 2 Board's own interest to move in this direction. It's 3 truly a win-win situation. That's our perspective on 4 it. 5 CHAIRMAN DUNLAP: Okay. And, again, I've 6 tried to say this and I'll try again. If there's a high 7 stakes recall that emerges, I believe that's a 8 reflection certainly on your industry but it's also a 9 reflection upon our Board because we want things to 10 work. We don't want to play a game of, gosh, you have 11 more emissions and failures and problems and the press 12 writing about how we couldn't collectively do this well. 13 There's something buying in I think that you have with 14 us relative to your success that it seems to me hasn't 15 been as pronounced and insertions as it might have been 16 on your side. You're welcome, Kingsley -- 17 MR. MACOMBER: My only comment is you need 18 to distinguish between a normal working relationship on 19 regulatory issues with the industry as with the Board 20 and it's staff. The occasional situation, whereas the 21 professor said, we've had a breakdown in that 22 relationship: the parties can't agree. Then you're in a 23 true litigation situation. I want to emphasize -- 24 CHAIRMAN DUNLAP: But the breakdown would 25 happen, the true breakdown would be real if you 171 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 disagreed with the Board's deliberation on that. Then, 2 then you're going to, by your actions, going to take it 3 to a court and then through your full body contact work. 4 MR. MACOMBER: The breakdown occurs prior 5 to that. When you say the normal recall situation, the 6 staff will talk with the manufacturer in question at 7 length and see if some kind of solution can be reached. 8 If there are serious grievances on the interpretations 9 of the regulations or relevant facts, that's when you 10 have the breakdown; that's when you need a truly neutral 11 arbiter from a place like OAH to come in and collect a 12 strong record for you. 13 CHAIRMAN DUNLAP: Yes. 14 MRS. RAKOW: Question. What are the 15 proposals for a party being able to go to OAH to handle 16 a case rather than to our ALJ? 17 MR. KENNY: During the first two years 18 following the adoption of this regulation, if it's 19 adopted by the Board, what would happen is that all the 20 matters of this type would go to OAH. 21 MRS. RAKOW: After the two years, I'm a 22 party and I don't want the ARB person to handle it. 23 MR. KENNY: What would happen is if you 24 are the industry party and you are essentially subject 25 to recall order, for example, and you wanted a hearing, 172 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 you would not have the option of essentially going to 2 OAH. The matter would be at ARB unless ARB determined 3 in fact resource limitations were such that it would be 4 better for ARB to send it to OAH. 5 MRS. RAKOW: Could I petition the Board to 6 go to OAH? 7 MR. KENNY: Yes, I think that can be done. 8 The other thing that I want to lay out, 9 too, I think it has been raised but not addressed is the 10 issue of the record. 11 We are talking here about administrative 12 law and administrative proceedings. The record in 13 administrative setting is a far different record than 14 one would see in a civil setting. The laws of evidence 15 are a little bit different in administrative setting 16 than they are in a civil setting, and what you really 17 ultimately end up with in an administrative setting is a 18 record in all reality generally is going to encompass 19 everything. We're not talking about rules of evidence 20 that are going to be applied very strictly in an 21 administrative setting that result in the administrative 22 record not having certain material in it. So I think 23 that's a bit of a miss -- I don't know the word to use 24 here. Here's a little bit of disconnecter in the sense 25 that the record is going to be complete whether it's 173 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 done at the Air Resources Board or whether that record 2 is done at the Office of Administrative Hearings. 3 CHAIRMAN DUNLAP: When an item -- the 4 record would come to us, wouldn't industry have the 5 opportunity to point out any shortcomings? 6 MR. KENNY: Yes. 7 CHAIRMAN DUNLAP: And then I would hope, 8 certainly we would want an explanation of why there was 9 a hole there, why you guys felt it was so one sided or 10 absent some reason. I think we would want to talk about 11 that, and I think that would matter to us. I think it 12 would have a bearing on how we view what -- put us in 13 this place. 14 MR. MACOMBER: There would be an 15 opportunity for the industry to comment on the 16 recommended decision of a hearing officer in your public 17 hearing that's heard at the end of this whole process to 18 make your final decision. But I have to emphasize that 19 that recommendation from the hearing officer is 20 absolutely critical, and that person can make judgements 21 about credibility of witnesses; he or she is going to be 22 making judgments about admissibility evidence. We want 23 the most neutral arbiter on those kinds of problems. 24 CHAIRMAN DUNLAP: Any other questions? I 25 guess we can close the record at this point. And ask -- 174 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 MR. TERRIS: Chairman. 2 CHAIRMAN DUNLAP: Yes. 3 MR. TERRIS: Two comments. 4 CHAIRMAN DUNLAP: We'll close the record, 5 but we'll ask you to go through the written summations. 6 Go ahead. 7 MR. TERRIS: Received two comments. One 8 was referred to already by Professor Dwyer a letter from 9 Professor Michael Azanoff, Professor of Law at UCLA 10 School of Law. He submitted a letter after speaking 11 with me Tuesday afternoon. 12 I called him after meeting with Professor 13 Dwyer, and basically Professor Dwyer was raising points 14 that we seemed to be contrary to in the Law Revision 15 Commission Report. In talking, I spoke briefly with him 16 and asked him for basically a general letter to address 17 the points of the propriety of using in-house 18 administrative law judges in these types of cases, and 19 basically identify types of cases we hear at the ARB. I 20 followed it up by sending him a copy of the notice of 21 proposed regulations, and, unfortunately, I believe -- I 22 haven't been able to speak with him since -- 23 misconstrued these regulations as covering the citation 24 process. But the general gist of his letter, the 25 context of it makes it clear. 175 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 He was speaking -- I should back up and 2 say the letter identifies him as the principal 3 consultant to the Law Revision Commission, and he 4 teaches classes in administrative law judge, has written 5 treatises on the subject in law review articles. 6 He believes it's appropriate, the letter 7 basically goes on to say that "It's appropriate for the 8 ARB to use in-house ALJs for both high volume type cases 9 and low volume technical disputes." He makes a claim in 10 general, The Office of Administrative Hearing judges are 11 not equipped to hear highly technical cases, that 12 they're basically generalists, whose specialty is making 13 credibility determinations, and that most of their cases 14 involve -- are limited to professional and occupational 15 licensing cases. That 95 percent of all administrative 16 cases, as been stated here already, are heard by 17 in-house administrative law judges and they include 18 highly technical matters that involve cases that require 19 detailed knowledge of industry. He specifically points 20 out to Public Utility Commission, the Agricultural Labor 21 Relations Board, and Occupational Health and Safety 22 Commission. 23 And he then went on to say that the recent 24 amendments to the APA should basically guarantees 25 in-house administrative hearing officers would have the 176 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 ability to conduct fair hearings and it's guaranteed by 2 provisions that provide for separation of functions as 3 party contacts and exclusivity of the record. 4 I should say our regulations go well 5 beyond all those provisions and go further than is 6 required by the APA. 7 The final point is he believes use of OAH 8 Administrative Law Judges would result in much slower 9 hearings because the judges are going to have to be 10 brought up to speed as to policy and technical 11 regulations. 12 Second written comments came in from the 13 California Trucking Association. They came in yesterday 14 morning, and I was able to just look at them briefly 15 this morning. There are 70 separate requests for 16 changes for petition regulations and the heavy-duty 17 roadside inspection roadside regulations. Most of them 18 are what I would consider to be nonsubstantive. They're 19 editorial changes, and we'll be able to incorporate many 20 of them into 15-day changes. 21 CHAIRMAN DUNLAP: Okay. I'll now close 22 the record on this agenda item. However, the record 23 will be reopened when the 15-day notice of public 24 availability is issued. Written or oral comments 25 received after the hearing date or before the 15-day 177 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 notice is issued will not be accepted as part of the 2 official record on this agenda item. When the record is 3 reopened for a 15-day comment period, the public may 4 submit written comments on the proposed changes which 5 will be considered and responded to in the final 6 statement of reasons for the regulation. 7 Ex parte communications? Just a reminder 8 to Board members, while we may communicate off the 9 record with outside persons regarding Board rule making, 10 we must disclose the names of our contacts and the 11 nature of the contents on the record. This requirement 12 applies specifically to communications which take place 13 after notice of the Board hearing has been published. 14 Are there any communications which need to 15 be disclosed? 16 Yes. Ms. Edgerton. 17 MS. EDGERTON: Last night about 9:30 to 18 10:30 I met with Professor Ogden, Tim McCann, Bill 19 Grier, Steve Douglas, Rob Ellis, Stuart Drake, and 20 Kingsley Macomber, and the subject of the meeting was 21 their concerns about the OAH versus ALJ procedure and 22 also their concerns about the ex parte issues, which 23 have been discussed today. 24 CHAIRMAN DUNLAP: All right. I have one. 25 On the 22nd of September I met with Kingsley, Ray 178 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 Buttacovoli, Steve Douglas, Rob Gassaway in a conference 2 call with Sam Leonard, Mark Slywynsky, Bill Canever, 3 Mike Grice, Tim McCann, and Stuart Drake, I believe that 4 was all, talked about the items they talked about with 5 you. 6 Mr. Kenny, you want to take a second and 7 say anything and then we'll look at the resolution. 8 MR. KENNY: I think probably most of what 9 needs to be said has been said. 10 I guess my recommendation is going to be 11 that the Board adopt staff recommendations as proposed 12 with the modifications that we have talked about. 13 Appendix H, as proposed by the industry regarding -- 14 with respect to ex parte contacts, and also that the 15 Board direct staff put together a formalized document 16 that reflects the institutional change designated at the 17 Air Resources Board with regard to the location of the 18 ALJs. 19 CHAIRMAN DUNLAP: As it relates to this, 20 I'm sure, it's in there, I don't recall it specifically, 21 but I would like to have you put in focus in a prominent 22 way about the Board's ability to retain it's ability to 23 retain feasibility to appoint an OAH if they decide to. 24 I want that in the package in a prominent way. 25 Also I take -- I guess my view is the 179 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 exchange has been informative. Also, I think perhaps 2 perceptions out in the community and among the 3 regulatory community does not always line up, perhaps, 4 with our view of the world. I know I've learned 5 something today, and I've encouraged staff to learn from 6 that view and make sure we redouble our efforts to be 7 above reproach, honest, and consistent and forthright 8 when we deal with those we regulate so that we are 9 predictable. 10 So with that, I think I will then call the 11 question we have before us. The resolution is that 12 amended on those items that we've previously discussed 13 resolution 98-48. 14 The Chair would entertain a motion and 15 second to adopt the proposal. 16 MRS. RIORDAN: I would so move, 17 Mr. Chairman. 18 CHAIRMAN DUNLAP: All right. Moved by 19 Mrs. Riordan, seconded by Supervisor Patrick. 20 Any discussion? 21 We'll proceed with voice vote. All those 22 in favor say aye. 23 (Chorus of ayes.) 24 Any opposed? 25 (No response.) 180 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 Very good. Motion carries. 2 We have one item left, that is 3 administrative -- excuse me, that is open comment 4 period. Although no formal action may be taken, we 5 provide an opportunity for members of the public to 6 directly address the Board on items of interest that do 7 not appear on today's agenda. We're asking each witness 8 limit his or her testimony to topics that are within the 9 subject matter of the jurisdiction of the Board. To 10 ensure everyone has a chance to speak, we're asking each 11 witness limit their testimony to five minutes or so. 12 We have before us, I guess, Terry Ellis 13 who has been patient. Terry, we invite you to come up. 14 We have one other individual that signed 15 up. Nope. Is that it? Okay. 16 Terry, welcome. 17 MR. ELLIS: Thank you, Mr. Chairman. 18 Good afternoon, Chairman Dunlap and Board 19 members, specifically our hometown Supervisor Barbara 20 Patrick. 21 The focus of my comments are two fold, and 22 I think hopefully ending today on a positive note for 23 the Board will be a pleasure. 24 First off, thank you; and second off, 25 welcome to Bakersfield. Let me explain a little bit 181 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 further. The thank you is for allowing staff, Mr. 2 Kenny, and both mobile and stationary source 3 environment in which to develop two very important 4 things that were birthed in concept right here in 5 Bakersfield. 6 The first is a number of years ago we 7 envisioned something EPA and CARB said couldn't be done, 8 but as of this month, the one year anniversary of the 9 operation of the Statewide Portable Equipment Program 10 that we celebrate was birthed here many years ago. It's 11 been a long and lengthy process. We would like to thank 12 the staff and the Board for providing that environment. 13 Out of that program, the incentives were 14 embedded within it to bring forth new and innovative 15 ideas. And I know we've talked a lot this morning and 16 at breakfast and here again today about diesel engines, 17 and one of those concepts that were birthed primarily 18 relates to diesel engines. 19 I'm the regulatory affairs manager for a 20 drilling contractor here, but we have a new sister 21 company that we call Clean Cam Technology Systems. We 22 have a patented and EPA Certified Retrofit Program and 23 rebuild kit through EPA, and now as of yesterday, here 24 are 17 pages from Mr. King's office signed by head of 25 stationary resource. The certifications or the 182 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 executive orders for new cleaner diesel technology that 2 would take 40 and 50 year old diesel engines and make 3 them run cleaner and run emissions that not only are 4 certified to new engine levels for 1996, but certified 5 beyond 2001 levels. 6 So as part of the Portable Equipment 7 Program and the fact that the embedded incentives within 8 industry to find new and innovative ideas to flexibly 9 take what we call a moving stationary source -- there's 10 no such thing in Title 1 and Title 2 in the Clean Air 11 Act, but that's what we are. The technology has been 12 birthed here, and we would like to thank, again, 13 Mr. Kenny and his staff both mobile source and 14 stationary source. 15 And it's historical in the fact that next 16 month you will adopt or have presented to you the 17 procedures for which a certification can take place for 18 a stationary retrofit and rebuild kit. It doesn't even 19 exist. So the cooperative efforts between mobile and 20 stationary on ongoing basis for over a year between our 21 companies, the technologies and putting together the 22 process to certify doesn't even exist yet, but you will 23 have an opportunity in October to deal with that. 24 So all said, a big thank you: cooperative 25 effort on all parts, El Monte, Sacramento and everybody 183 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 in between here and the folks in Bakersfield. 2 I'll leave you again with a welcome to 3 Bakersfield. In the 60s and 70s we said welcome to 4 Bakersfield: sun, fun, stay, play. We along the line 5 somewhere in the 80s lost that and it was a private joke 6 of something like welcome to Bakersfield, but it's a dry 7 heat. 8 I would like to leave you with hopefully a 9 new tradition will catch on: Welcome to Bakersfield, 10 the birth place of visionary, clean air technology and 11 ideas. 12 CHAIRMAN DUNLAP: Thank you. 13 I appreciate your patience, too. 14 Also, we have one more open comment 15 witness, and that's Steve Douglas of AAMA. 16 Steve. 17 MR. DOUGLAS: Thanks, Chairman. Steve 18 Douglas with the American Automobile Manufacturers' 19 Association. 20 And I wanted to address a couple of your 21 comments earlier about trust about partnership. I don't 22 want those to go by. I think we do -- I think we enjoy 23 tremendous trust, and I think we have considerable 24 goodwill between the Board members and your staff and 25 our industry. I know I work with them on a daily basis, 184 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 and in fact that's the reason I'm in California. 2 I'm not an attorney and I didn't want to 3 address the issue, the previous issue. But I can tell 4 you I don't come before the Board -- I think that I've 5 come before you more times in support of this past 6 proposal than in opposition, so I don't think I 7 continuously oppose ARB regulations. 8 But I don't want you to think either that 9 our opposition to the previous issue was in any way a 10 question of the integrity or the honesty or the 11 competence of your staff or of the Board itself. In 12 fact, I think you have every right as the Chairman, as 13 the Board, and as the staff to be very proud of what I 14 believe is a good agency. I think you have a lot of 15 people who are honest, who work hard, who are very 16 bright, and they are forthright and predictable and 17 trustworthy. 18 I think for myself and for our industry, I 19 think the same is true. So I just want to make those 20 comments so that we don't leave on a bad note. 21 CHAIRMAN DUNLAP: I appreciate your coming 22 up to the mike to do that. 23 The thing that I have always tried to 24 leave you with, and I think our Board has too, is that 25 we can't get to clean air alone. We're right now 185 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 there's regulations we talked to you about are getting 2 at really small bits of the solution, and we know we're 3 asking you to do some remarkable things; and we need you 4 to be successful. So my frustration isn't so much about 5 your preserving your legal options, I respect that. As 6 a matter of fact, Ms. Edgerton reminded me of that at 7 our break. You guys are big companies. You have to 8 preserve your options. I respect that. 9 But at the same time it's worrisome to me 10 when you presume things have the potential or are likely 11 to go badly. That pessimism is what I was worried 12 about. But I appreciate you taking the time to do that. 13 We remain committed to work as closely 14 with you as possible and while still providing the 15 distance we need to regulate you effectively. We'll 16 make this work. You made your points. Kingsley, I 17 think, provided a reasonable defense of your position, 18 and I respect that. And I would like to have been able 19 to support you today. It pains me we couldn't support 20 you today. But at the same time we're going to make a 21 commitment to you all, certainly among this Board, and I 22 know each of my Board members feel this way, we'll 23 pledge to you to watch this process so it's not 24 perceived as being unfair or certainly that bias against 25 you. That's an obligation we have. 186 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 And, again, it's about trust and it's 2 about that experience. I will defend the close working 3 relationship we have with your industry to anybody that 4 wants to criticize it, because we can't get there 5 without working with you closely. 6 So despite the fact you didn't get 7 everything you wanted today on this, we still leave with 8 some goodwill. I'm a little bit frustrated about your 9 worries, and I want to do what I can to address that so 10 you don't feel that way in the future. But we need you. 11 We need you to be effective. So from my part, that's 12 what I wanted to say. 13 Any of my colleagues can add to that, 14 you're welcome to or subtract. 15 Thank you, Steve. 16 All right. If there's nothing else, then 17 we will adjourn this, this September meeting of the 18 California Air Resources Board. 19 * * * 20 21 22 23 24 25 187 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 STATE OF CALIFORNIA ) ) ss. 2 COUNTY OF KERN ) 3 4 I, Kimberlee R. Miller, CSR 10869, a 5 Certified Shorthand Reporter in and for the State of 6 California, do hereby certify; 7 That the foregoing proceeding was taken 8 down by me in shorthand at the time and place named 9 therein and was thereafter reduced to typewriting under 10 my supervision; that this transcript is a true record of 11 the testimony given by the witnesses and contains a 12 full, true and correct record of the proceedings which 13 took place at the time and place set forth in the 14 caption hereto as shown by my original stenographic 15 notes. 16 I further certify that I have no interest 17 in the event of the action. 18 EXECUTED THIS day of , 19 1998. 20 21 Kimberlee R. Miller, CSR #10869 22 23 24 25 188 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900