MEETING STATE OF CALIFORNIA AIR RESOURCES BOARD

JOE SERNA, JR. BUILDING CALIFORNIA ENVIRONMENTAL PROTECTION AGENCY BYRON SHER AUDITORIUM, SECOND FLOOR

1001 I STREET SACRAMENTO, CALIFORNIA

FRIDAY, APRIL 24, 2009

8:30 A.M.

TIFFANY C. KRAFT, CSR, RPR CERTIFIED SHORTHAND REPORTER LICENSE NUMBER 12277

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APPEARANCES

BOARD MEMBERS Ms. Mary D. Nichols, Chairperson Dr. John R. Balmes Ms. Sandra Berg Ms. Dorene D'Adamo Ms. Lydia Kennard Dr. John Telles Mr. Ken Yeager

STAFF Mr. James Goldstene, Executive Officer Mr. Tom Cackette, Chief Deputy Executive Officer Ms. Ellen Peter, Chief Counsel Mr. Michael Scheible, Deputy Executive Officer Ms. Lynn Terry, Deputy Executive Officer Ms. Kathleen Quetin, Ombudsman Mr. Joe Calavita, On Road Controls Branch, Mobile Source Control Division Mr. Kurt Karperos, Chief, Air Quality and Transportation Planning Branch, Planning and Technical Support Division Ms. Kyra Naumoff, Climate Action and Research Planning Section, Research Division Ms. Monica Vejar, Board Clerk

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APPEARANCES CONTINUED ALSO PRESENT Mr. Mel Assagai, Strategic Counsel Mr. Mark Aubry, Smith Electric Vehicles Mr. Damian Breen, Bay Area AQMD Mr. Jay Friedland, Plug-In America Mr. Jamie Hall, CalSTART Mr. Henry Hogo, South Coast AQMD Ms. Eloisa Kleinentich, BTH Ms. Aleecia Macias, California Energy Comission Ms. Laura Marion, APTERA Mr. Matt Miyasato, SCAQMD Mr. Noel Perry, Next10.org Ms. Colleen Quinn, Vectrix Mr. Max Scheder-Bieschin, Barefoot Motors Mr. John Shears, CEERT

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INDEX PAGE

Item 09-4-8 Chairperson Nichols 5 Executive Officer Goldstene 5 Staff Presentation 5 Q&A 11 Mr. Hogo 12 Motion 14 Vote 14

Item 09-4-5 Chairperson Nichols 14 Executive Officer Goldstene 15 Staff Presentation 16 Mr. Perry 32 Ms. Kleinentich 34 Board Discussion 37 Motion 51 Vote 51 Items 09-4-6 & 09-4-7 Chairperson Nichols 52 Executive Officer Goldstene 53 Staff Presentation 55 Ms. Macias 70 Ms. Marion 72 Mr. Shears 75 Mr. Scheder-Bieschin 76 Mr. Breen 80 Mr. Friedland 83 Mr. Hall 86 Mr. Miyasato 88 Mr. Assagai 92 Ms. Quinn 93 Ms. Holmes-Gen 96 Mr. Aubry 98 Board Discussion 102 Motion 110 Vote 110

Adjournment 110 Reporter's Certificate 111

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1 PROCEEDINGS 2 CHAIRPERSON NICHOLS: The April 24th Board 3 meeting will come to order. This is the continuation. 4 We'll jump right into it. 5 Will the Clerk please call the roll? 6 BOARD CLERK VEJAR: Dr. Balmes? 7 BOARD MEMBER BALMES: Here. 8 BOARD CLERK VEJAR: Ms. Berg? 9 BOARD MEMBER BERG: Here. 10 BOARD CLERK VEJAR: Ms. D'Adamo? 11 BOARD MEMBER D'ADAMO: Here. 12 BOARD CLERK VEJAR: Ms. Kennard? 13 BOARD MEMBER KENNARD: Here. 14 BOARD CLERK VEJAR: Mayor Loveridge? 15 Ms. Riordan? 16 Supervisor Roberts? 17 Professor Sperling? 18 Dr. Telles? 19 Supervisor Yeager? 20 BOARD MEMBE YEAGER: Here 21 BOARD CLERK VEJAR: Chairman Nichols? 22 CHAIRPERSON NICHOLS: Here. 23 BOARD CLERK VEJAR: Madam Chairman, we have a 24 quorum. 25 CHAIRPERSON NICHOLS: We're expecting Dr. Telles

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1 shortly. 2 Dr. Sperling is excused, because he's in 3 Washington testifying in the House Public Works Committee 4 on the low-carbon fuel standard. 5 And all the others who are not here are excused 6 for a very good cause. But that was one I thought was 7 worth mentioning. 8 There are two changes in today's agenda. The 9 first change is in the order of items on the agenda. We 10 are going to first hear Agenda Item 9-4-8, the status 11 report on the State Implementation Plan, our State 12 Strategy for the State Implementation Plan. And we'll 13 consider approval of a proposed revision to the State 14 Implementation Plan that would reflect implementation of 15 the 2007 State Strategy. Afterwards, we will continue the 16 agenda as noticed in the public agenda. 17 Secondly, immediately following the staff 18 presentation on the air quality improvement program 19 guidelines and funding plan, Agenda Items 09-4-6 and 20 09-4-7. 21 My fellow Board members and I invite all you to 22 join us outside on the corner of 10th and I Streets to 23 view some of the technology that's going to be on display 24 that is an example of the kinds of equipment that are 25 going to be paid for through the Air Quality Improvement

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1 Plan in the upcoming fiscal year. So basically we approve 2 the money first, then go get to look at the good things 3 the money is going to buy. And Mr. Cackette is going to 4 lead us out on this expedition outside the building, but 5 it's only just outside the front door. 6 I have to also repeat the logistical 7 announcements in case there's anyone here who isn't 8 familiar with our procedures. 9 Anyone who wishes to testify needs to sign up 10 with the clerk of the Board over here. You have the 11 option to include your name on the speaker card. 12 Also, we remind people that speakers need to 13 stick to a three-minute time limit, although we might have 14 to impose a shorter limit if there's some reason why 15 that's necessary to do. 16 We would appreciate it if you would state your 17 full name when you arrive at the podium and put your 18 testimony into your own words rather than reading it. 19 It's much more effective for us to listen to it that way, 20 and your written testimony will be in the record. 21 Finally, I have to point out the emergency exists 22 at the rear of the room and to remind you that in the 23 event of a fire drill or any alarm going off, we're to 24 exit through those doors in the rear of the auditorium and 25 wait downstairs outside the building until the all-clear

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1 signal is given. 2 I think that's enough for that. 3 And we can now move into the status report on 4 implementation of the 2007 State Strategy for meeting the 5 federal 8-hour ozone standard. 6 Mr. Goldstene. 7 EXECUTIVE OFFICER GOLDSTENE: Thank you, Chairman 8 Nichols. Good morning, members. 9 The SIP revision before you today is a technical 10 update that demonstrates ARB's progress in achieving new 11 emission reductions needed to meet federal air quality 12 standards. 13 The U.S. EPA has been reviewing the 2007 SIP and 14 requested some specific revisions that would facilitate 15 the approval process. Staff will briefly summarize the 16 proposed revision. 17 Kurt Karperos, Chief of our Air Quality and 18 Transportation Planning Branch, will make the 19 presentation. Kurt. 20 (Thereupon an overhead presentation was 21 presented as follows.) 22 AIR QUALITY AND TRANSPORTATION PLANNING BRANCH 23 CHIEF KARPEROS: Thank you, Mr. Goldstene. Good morning, 24 Board members. 25 As Mr. Goldstene just said, I will describe the

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1 proposed technical amendment to the SIP to aid U.S. EPA 2 approval. And I'll begin with a brief SIP status report. 3 --o0o-- 4 AIR QUALITY AND TRANSPORTATION PLANNING BRANCH 5 CHIEF KARPEROS: The State Strategy the Board approved in 6 2007 committed ARB to reduce oxides of nitrogen, reactive 7 organic gases, sulfur oxides, as well as directly emitted 8 particulate matter by various amounts in various years. 9 These reductions are in addition to the benefits we 10 achieve from regulations already in place. 11 The enforceable legal commitment is for specific 12 emission reductions in various years, along with a 13 schedule for developing new control measures for ARB to 14 achieve new reductions. 15 In the 18 months since the Board approved the 16 State Strategy, you have taken action on 14 17 pollution-reducing rulemakings. Eleven of those 18 rulemakings implement measures outlined in the State 19 Strategy. 20 But just as with past SIPS, staff has developed 21 additional ways to reduce emissions that weren't 22 envisioned in the plan. 23 The Board has adopted three rules that were not 24 described in the State Strategy, but the reductions from 25 those rules will count toward the SIP commitment.

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1 --o0o-- 2 AIR QUALITY AND TRANSPORTATION PLANNING BRANCH 3 CHIEF KARPEROS: This slide lists the categories for which 4 ARB adopted rules in 2007 and 2008 to achieve new 5 reductions. 6 In terms of magnitude, the most significant of 7 these rules are the cleaner in-use heavy-duty diesel truck 8 rule adopted in 2008 and the off-road equipment rule 9 adopted in July 2007. 10 As a result of 2008 legislative action, there 11 will be a loss of emission reductions in the critical 2014 12 attainment year for PM2.5. As we track progress on SIP 13 implementation, we will need to track both emission levels 14 and reductions to determine and mitigate any SIP 15 shortfalls. 16 The other rules listed here target combustion 17 emissions from other mobile sources and their fuels, plus 18 evaporative emissions from fuels and consumer products. 19 The last three rules listed on this slide -- 20 light-duty vehicle catalyst replacement, greenhouse gases 21 from heavy-duty vehicles, and large spark ignition engines 22 are the ones that I mentioned that were not identified in 23 the plan, but will help us fulfill ARB's SIP commitment. 24 --o0o-- 25 AIR QUALITY AND TRANSPORTATION PLANNING BRANCH

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1 CHIEF KARPEROS: The first emission reduction deadline in 2 2007 SIP is 2014, when the South Coast and San Joaquin 3 Valley must attain the PM2.5 standard. 4 With its actions since adopting the State 5 Strategy, California now has in place programs and 6 regulations that will achieve 87 percent of the NOx 7 reductions needed for PM2.5 attainment in the South Coast 8 and 95 percent of the NOx reductions needed to meet the 9 same standard in the San Joaquin Valley. NOx reductions 10 are the key to attainment in both regions. 11 Although not shown on this slide, California has 12 achieved 93 percent of the NOx reductions needed from 13 near-term measures for ozone attainment in the San Joaquin 14 Valley and 90 percent of the NOx reductions needed in the 15 South Coast. 16 This accounting does not include the additional 17 reductions that are still needed from long-term measures 18 made possible by future technological advances as part of 19 the longer-term SIP commitment. 20 We must achieve substantial new emission 21 reductions by 2023, the 8-hour ozone standard deadline. 22 Today's status report does not address the longer-term SIP 23 commitment, but our SIP revision does describe the process 24 we will use to develop a longer term strategy. 25 --o0o--

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1 AIR QUALITY AND TRANSPORTATION PLANNING BRANCH 2 CHIEF KARPEROS: Now let me turn to the SIP revision 3 itself. 4 As I mentioned earlier, U.S. EPA requested that 5 we include information in the SIP to aid their approval of 6 the plan. U.S. EPA is asking for this information 7 specifically in the context of its three-part approval 8 criteria for SIPS that, like California's, rely on 9 enforceable commitments to reduce emissions. 10 The first criterion is that the commitment be for 11 a limited portion of the needed emission reductions. As I 12 just described, with approximately 90 or more percent of 13 the needed near-term reductions accounted for with adopted 14 regulations, staff believes this test is clearly met. 15 U.S. EPA's second approval criterion is that the 16 State is capable of fulfilling its commitment. ARB's 17 track record speaks for itself. ARB's performance in 18 meeting its obligations both under this SIP and prior SIPs 19 is solid evidence the State is capable of adopting 20 regulations to which it commits. 21 U.S. EPA's third approval criterion is that the 22 commitment be for a reasonable and appropriate period of 23 time. 24 The rulemaking schedule in the SIP runs through 25 2012, with most of it done by 2010, which meets that

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1 criterion. 2 --o0o-- 3 AIR QUALITY AND TRANSPORTATION PLANNING BRANCH 4 CHIEF KARPEROS: So that U.S. EPA can conclude the 5 emission reductions in California's enforceable commitment 6 from yet to be adopted measures is a limited proportion of 7 emission reduction needed for attainment, the proposed 8 revision quantifies for U.S. EPA the benefits of the 9 recently adopted State measures. 10 Related to its criteria, U.S. EPA has also asked 11 that ARB commit to revise the SIP as may be appropriate in 12 2010. This will give U.S. EPA the assurance it needs that 13 ARB will continue to meet the criteria on an ongoing 14 basis. 15 Next, U.S. EPA also asked for more detail on the 16 development of long-term strategies to meet the 2023 17 attainment deadline for the 8-hour ozone standard in the 18 South Coast and San Joaquin Valley. 19 In response for the SIP, staff outlined the 20 coordinated public research efforts with U.S. EPA and the 21 two air districts. 22 Finally, for editorial clarity, the proposed 23 revision also incorporates emissions reductions in 24 Sacramento from the State Strategy now that the Board 25 approved it last month.

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1 --o0o-- 2 AIR QUALITY AND TRANSPORTATION PLANNING BRANCH 3 CHIEF KARPEROS: In closing, staff recommends that you 4 approve the clarifying SIP revision to provide the 5 additional information requested by U.S. EPA to aid in 6 approval of California's SIP. 7 Thank you. That concludes the staff 8 presentation. 9 CHAIRPERSON NICHOLS: Thank you. That was very 10 clear. 11 Are there any questions of staff before we go to 12 the public testimony? Yes. 13 BOARD MEMBER BERG: Yes. Good morning. 14 In calculating out the adopted rules, could you 15 just review with us what the impacts will be for the 16 on-road rule changes that were made through the budget and 17 if it's accounted for here? 18 AIR QUALITY AND TRANSPORTATION PLANNING BRANCH 19 CHIEF KARPEROS: The numbers I quoted in terms of the 20 percent progress and our ability to demonstrate to U.S. 21 EPA that we have -- that we are meeting their approval 22 criteria for the SIP included the original benefits of the 23 construction rule as it was adopted. 24 We've looked at the potential impact of that. It 25 certainly in terms as I was saying in the presentation, we

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1 will need to account for that as we move forward towards 2 the attainment deadline. 3 But in terms of how it doesn't -- the numerical 4 impact is small enough and less than a percent in terms of 5 how much progress we've made towards fulfilling our 6 commitment. 7 BOARD MEMBER BERG: Thank you. You're very kind. 8 It was the off-road rule, not the on-road rule. 9 And secondly, if we look at doing a mid-course 10 review in 2010, it might be very interesting data to be 11 looking at what the effect of the economy might be having 12 on our air quality. Even though we certainly don't like 13 this downturn, there might be some benefits to air 14 quality. And it will be interesting looking at that data 15 as well. 16 Thank you very much. 17 CHAIRPERSON NICHOLS: Thank you. 18 Your questions illustrate the fact that this is a 19 constantly moving process that we're engaged in. And 20 every one of these submittals is taken at a certain point 21 in time, even though the train may have moved on and the 22 elephants may have gone in the opposite direction. That 23 seems to have happened here. 24 But anyhow, we do have some progress to report. 25 And I think it's -- I'm really heartened by the fact that

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1 we are able to close the big gap on the unknown portion of 2 the commitments, having sat on the other side of this 3 issue at EPA. 4 Everybody always knew that California had a great 5 program and California was going to do things that nobody 6 else could do, as we demonstrated once again yesterday. 7 But the Clean Air Act has some very precise requirements 8 in terms of tons that have to be reduced. And it's very 9 nervous-making when you just get a big promise without any 10 detail attached to it. And obviously there's not a lot 11 more detail. It's very encouraging. 12 I show only one witness signed up to speak on 13 this, and that's Henry Hogo. 14 Good morning, Mr. Hogo. 15 MR. HOGO: Good morning, Madam Chair, members of 16 the Board. 17 I'm Henry Hogo, Assistant Executive Deputy 18 Officer of our Mobile Source Division at the South Coast 19 AQMD. 20 I want to make two comments this morning relative 21 to the action. 22 First, I want to commend the Board and your staff 23 for the significant progress made in implementing the SIP 24 through your rulemaking. They're a very challenging 25 rulemaking, and we really appreciate that effort.

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1 Also want to commend staff for the progress made 2 with U.S. EPA towards an approvable SIP. That's the 3 action you're taking today. 4 We do have very short comments. 5 The first is that the proposed SIP revision 6 contains a commitment to achieve future emission reduction 7 in total. If there is a shortfall in adopting specific 8 measures, other measures or strategies will be identified 9 to make up the shortfall. We believe to strengthen this 10 commitment that commitments should be extended to existing 11 regulations in the case that these existing regulations do 12 not achieve the benefits that were to be realized when you 13 adopted the rule. So we believe that can strengthen your 14 commitment on the SIP. 15 The other comment is that we just want to be 16 mindful that the large black box that we have in the South 17 Coast that despite the significant progress, we need to 18 move expeditiously towards identifying specific measures 19 or strategies to make up for that black box. And so we 20 need to move as quickly as possible. And we really want 21 to see a SIP revision earlier than 2020 in order to look 22 at the black box. 23 With that, I just want to say that the South 24 Coast AQMD staff is looking forward to working with your 25 staff as you identify these measures in the black box.

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1 Thank you. 2 CHAIRPERSON NICHOLS: Thank you. 3 Were there any other cards submitted on this 4 item? 5 BOARD CLERK VEJAR: No. 6 CHAIRPERSON NICHOLS: Okay. Well, I think we 7 actually have a resolution here that we need to act on. 8 Do we have any other remarks, Mr. Goldstene or 9 Mr. Karparos, anything else we need to do before we bring 10 this resolution up? 11 EXECUTIVE OFFICER GOLDSTENE: No. Not at this 12 time. 13 BOARD MEMBER D'ADAMO: I'll move adoption of the 14 resolution. 15 BOARD MEMBER BALMES: Second. 16 CHAIRPERSON NICHOLS: Okay. All in favor -- all 17 in favor please say aye. 18 (Ayes) 19 CHAIRPERSON NICHOLS: Any opposed? 20 Great. Thank you very much. 21 Now we return to the agenda as it was previously 22 organized. We have an early action item that was 23 identified under AB 32, which is to develop guidance and 24 protocols to assist small businesses in reducing 25 greenhouse gas emissions. These are voluntary guidelines.

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1 They're not regulatory. But the belief is that there is 2 an interest and certainly an opportunity out there for 3 small business to both assist in improving our greenhouse 4 gas emissions profile and also to develop cost effective 5 measures that they can take themselves that will help with 6 energy efficiency. 7 So we need to hear a progress report on how this 8 is doing. Mr. Goldstene. 9 EXECUTIVE OFFICER GOLDSTENE: Thank you, Chairman 10 Nichols. 11 Of course, small businesses are an essential part 12 of California's economy. And the AB 32 Scoping Plan 13 underscored the need for us to provide tools to assist 14 businesses with transitioning to a low-carbon future. 15 In response, staff's been developing an online 16 toolkit that will help businesses identify meaningful and 17 cost effective actions that they can take as part of our 18 statewide effort to reach our 2020 greenhouse gas goals. 19 Staff from the Research Division has led this 20 effort with a lot of support from other State agencies and 21 several other -- many external stakeholders. 22 Kyra Naumoff of our Research Division will make 23 the staff presentation. 24 (Thereupon an overhead presentation was 25 presented as follows.)

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1 MS. NAUMOFF: Thank you, Mr. Goldstene. Good 2 morning, Madam Chair and members of the Board. 3 We are pleased to introduce to you ARB's small 4 business toolkit that will help small businesses 5 participate in California's efforts to reduce greenhouse 6 gas emissions, and in many instances, save money. 7 This measure was identified by the Board as an AB 8 32 early action in 2007. 9 Before I discuss the toolkit, I will highlight 10 the importance of the small businesses both in terms of 11 California's economy and in meeting California's climate 12 change goals as outlined in AB 32. 13 I will then discuss our resource portal, 14 CoolCalifornia.org, home of the small businesses toolkit. 15 The remainder of the presentation will focus on 16 the toolkit itself. 17 --o0o-- 18 MS. NAUMOFF: California's 3.4 million small 19 businesses employed 13.8 million Californians and 20 generated $149 billion in 2007. They are clearly an 21 important contributor to California's economy. 22 Small business owners are also a hard-working and 23 creative group of people. In many cases, they work on 24 tight margins with limited time and constantly wear 25 multiple hats.

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1 This creative drive will be an important asset in 2 helping California meets its climate change goals. 3 --o0o-- 4 MS. NAUMOFF: Given the importance of small 5 businesses to California's economy, ARB analyzed the 6 impact that implementation of Scoping Plan measures will 7 have on them. While most of the measures in the Scoping 8 Plan will not impact small business directly, our analysis 9 concluded that the primary impacts AB 32 will have on 10 small businesses include changes in the costs of goods, 11 services, and energy. 12 The Scoping Plan specifically recognizes the need 13 to work in partnership with California small businesses 14 and reiterated the importance of developing a small 15 business toolkit to provide a one-stop shop for technical 16 and financial resources to facilitate voluntary GHG 17 emission reduction and cost savings strategies. 18 We will continue working with the many business 19 associations, organizations, and other State partners that 20 can contribute resources, input, and expertise. 21 --o0o-- 22 MS. NAUMOFF: CoolCalifornia.org is our 23 overarching resource portal designed to provide all 24 Californians with tools to voluntarily reduce GHG 25 emissions. Tools have been developed for small

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1 businesses, local governments, and individuals. Staff 2 will introduce the local government toolkit at the May 3 Board meeting. 4 Future plans to improve the website include 5 developing tools and resources for youth, school, and 6 community organizations, and translating the site into 7 other languages, including Spanish and Chinese. 8 Though there are many existing resources that 9 promote climate-friendly action, they are not organized in 10 a central location. CoolCalifornia.org strives to do just 11 that, while also providing a unique carbon footprint 12 calculator and social networking capacities that are 13 California specific. Staff worked with the web designers 14 and stakeholders to create a site that is clear and user 15 friendly. 16 --o0o-- 17 MS. NAUMOFF: A strength of CoolCalifornia.org is 18 its partnership of five government, academic, and 19 non-governmental organizations. Collectively, the 20 partners have the expertise to develop site content and 21 experience to broadly distribute the information. 22 Our key partners are NEXT 10 and UC Berkeley. 23 NEXT 10 is a non-governmental organization that creates 24 tools and provides information that fosters a deeper 25 understanding of the critical issues effecting all

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1 Californians. They provided website design, expertise, 2 and financial support. 3 The Berkeley Institute for the Environment at 4 U.C. Berkeley is currently building an online California 5 business-specific carbon footprint calculator for the 6 toolkit. 7 --o0o-- 8 MS. NAUMOFF: To facilitate stakeholder input, 9 staff presented at meetings with California small business 10 leadership, including the California Small Business 11 Association, the National Association of Women Business 12 Owners in Sacramento, and the National Federation of the 13 Independent Business. 14 Staff conducted a public workshop in Sacramento 15 last December to preview the draft toolkit and highlight 16 California success stories. One of the key discussion 17 items focused on the most effective way to disseminate the 18 toolkit. 19 Staff followed up by partnering with the 20 California Business, Transportation, and Housing Agency. 21 They committed to disseminating printed and online copies 22 of the toolkit via their extensive network of economic 23 development agencies across the state. 24 Throughout the development process, the toolkit 25 has been constantly improved by valuable comments from our

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1 technical review panel, shown on the slide, and from small 2 business owners. 3 --o0o-- 4 MS. NAUMOFF: Discussions with stakeholders were 5 instrumental in guiding the toolkit development process. 6 Via these conversations, staff learned that it 7 was critical to: 8 Emphasize that cost savings often go hand in hand 9 with emission reduction strategies; 10 Highlight success stories that can be replicated 11 by other small business owners; 12 Concisely discuss how AB 32 will impact small 13 businesses; 14 Provide business to business networking 15 opportunities; 16 And develop a plan to actively distribute the 17 toolkit so that small businesses across the state can use 18 it. 19 These suggestions are reflected in part by the 20 icons shown on the left-hand side of the screen that are 21 currently displayed on the CoolCalifornia.org home page. 22 --o0o-- 23 MS. NAUMOFF: Toolkit development also included 24 web and literature reviews and a review of similar 25 programs to emulate successful strategies.

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1 Five precedents in particular informed toolkit 2 development. They are the California utility programs, 3 California green business programs, Flex Your Power, 4 EnergyStar, and the Carbon Trust. 5 As just two examples of these programs' success, 6 under the EnergyStart program, Americans saved enough 7 energy in 2008 to avoid GHG emissions equivalent to those 8 from 29 million cars while saving $19 billion on their 9 utility bills. 10 Similarly, since 2001, the Carbon Trust has 11 helped participants and their energy efficiency and carbon 12 emissions reduction programs in the UK save over $1.4 13 million worth of energy and reduce carbon dioxide 14 emissions by 17 million metric tons according to 15 independent auditors. 16 All of these effective programs have clear, well 17 developed resources on-line and in print as well as 18 targeted marketing and distribution campaigns. ARB is 19 using similar approaches to develop the small business 20 toolkit. 21 --o0o-- 22 MS. NAUMOFF: Building on this foundation of 23 stakeholder engagement and program review, the small 24 business toolkit was designed as a one stop shop to 25 provide California-specific information that

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1 cost-effectively facilitates voluntary GHG reductions. 2 Sites that currently host related information are linked 3 to CoolCalifornia.org so that a busy small business owner 4 need only go to a single site to be directed to all online 5 resources. For those businesses without internet access, 6 printed materials will be available. 7 Toolkit components include: Specific 8 climate-friendly actions to save money; information about 9 where to find money to get started; California success 10 stories; a business-specific carbon footprint calculator; 11 and a small business award program. The toolkit is 12 currently available online at CoolCalifornia.org. 13 --o0o-- 14 MS. NAUMOFF: Staff realized that the bottom line 15 is most important to small businesses, even under the best 16 of economic conditions. As such, we have worked hard to 17 convey the message that actions to reduce GHG emissions 18 can be no or low cost and save money, though payback 19 periods vary. 20 The toolkit has eight action areas designed to 21 save money and reduce GHG emissions. They are: Save 22 energy, drive less and drive clean, use green energy, save 23 water, recycle and cut waste, buy green, be a green 24 business, and build green. 25 Each how to save money page as shown on the

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1 screen is organized similarly. A table of contents at the 2 top of the page directs users to no-cost, low cost, and 3 long-term energy savings strategies. The resources 4 section on the right-hand side of the page points users to 5 related sites with additional information. 6 --o0o-- 7 MS. NAUMOFF: In addition to the online 8 resources, staff developed concise down-loadable check 9 lists for each money-saving strategy to facilitate action. 10 This is part of a sample checklist for saving energy. 11 In addition to specific actions, the checklist 12 has information on initial investment costs, annual cost 13 savings, and GHG reduction potential. A comprehensive 14 checklist can be downloaded from the small business home 15 page. 16 Alternatively, specific check lists can be 17 downloaded for each money saving strategy. 18 --o0o-- 19 MS. NAUMOFF: Another tool for tuning up 20 businesses is information about funding options to get 21 small businesses started on climate friendly retrofit 22 projects. 23 Considering only monies available to facilitate 24 energy efficiency upgrades, there is approximately $800 25 million available for 2009 for general energy efficiency

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1 and $300 million for low-income energy efficiency 2 according to information from the California Public 3 Utility Commission. Though there are no energy efficiency 4 funds strictly allocated for small businesses, businesses 5 can apply for existing funds. To help small businesses 6 navigate the application process, staff compiled links to 7 all the programs that service small businesses, such as 8 utility programs, third-party providers, searchable 9 incentive databases, and so forth. 10 Additionally, this page contains information 11 about on-bill financing, a program where an electric 12 utility offers upgrades to its small business customers 13 and loans to pay for the upgrades. All investor-owned 14 utilities are required to implement on-bill financing 15 programs in the 2009-2011 cycle. 16 The site also has social networking capacity so 17 that busy users can easily e-mail, print, and/or share 18 this page's resources with interested users on sites like 19 Facebook and others. 20 --o0o-- 21 MS. NAUMOFF: A central element of the toolkit 22 are California's success stories. Staff compiled examples 23 of real businesses that are already saving money and 24 reducing GHG emissions. These are easy ways for small 25 businesses to learn what their counterparts are doing and

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1 pursue similar strategies. 2 Small businesses can also upload their story to 3 share both success and challenges. 4 Moving forward, we will continue to add new 5 success stories to the toolkit. On CoolCalifornia.org, 6 users can both view snapshots as shown for each of the 7 eight ways to save money or click through the view case 8 study details. I will highlight components of the case 9 study next. 10 --o0o-- 11 MS. NAUMOFF: Harmony Farm Supply and Nursery in 12 Sebastopol is a store, nursery, and photovoltaic panel 13 dealer. 14 Working with the Small Business Energy Alliance, 15 Harmony Farm conducted a comprehensive lighting upgrade. 16 These changes immediately cut energy consumption in half. 17 The facility's heating and cooling systems were upgraded 18 with an EnergyStart qualified programmable thermostat. 19 This comprehensive package, after subtracting financial 20 incentives from the Small Business Energy Alliance, cost 21 the owners $3,000. 22 After making energy efficiency upgrades, Harmony 23 considered other steps to reduce their energy consumption 24 and decided to install a 37 kilowatt solar array. 25 Harmony's energy efficiency and renewable energy

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1 efforts collectively save more than $7,000 each year and 2 prevent the emissions of about 40 tons of carbon dioxide 3 annually. 4 This is just one example of a case study web 5 visitors will find that describes a California small 6 business taking action to cost effectively reduce its 7 energy use and in doing so improve its bottom line and 8 reduce GHG emissions. 9 --o0o-- 10 MS. NAUMOFF: Operating under the adage if you 11 can't measure it, you can't change it, staff contracted 12 with the U.C. Berkeley's Institute of the Environment to 13 design a simple carbon footprint calculator for small 14 businesses that use California-specific emission factors. 15 This calculator allows for a 30 second carbon 16 footprint estimate by entering sector, annual revenue, and 17 location data. If businesses are interested in a more 18 accurate carbon footprint estimate, they can enter 19 additional information about their facility, energy and 20 fuel consumption, transportation habits, and goods and 21 services procurement. 22 After viewing their carbon footprint, the 23 calculator helps businesses develop a personalized plan to 24 reduce emissions by providing information on GHG savings 25 of recommended actions and corresponding financial

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1 metrics, like up-front cost, payback period, net cost 2 savings, and investment rate of return. 3 --o0o-- 4 MS. NAUMOFF: Staff also developed an awards 5 program to incentivize, recognize, and reward early 6 leadership. This program is based on existing models. 7 Some models, like EnergyStart, Flex Your Power, and the 8 Waste Reduction Award Program recognize businesses that 9 have taken action in a specific area, such as energy 10 conservation or waste reduction. 11 Other programs, like the Governor's Environment 12 and Economic Leadership award, have a climate change 13 award, but tend to recognize high level extraordinary 14 businesses and organizations. 15 This new award will recognize multiple California 16 small businesses that demonstrate climate leadership by 17 implementing and promoting climate friendly practices. 18 Applicants will be eligible for one of two awards. For 19 the CoolCalifornia excellence award, each business will be 20 evaluated individually and up to 20 awards will be 21 presented. Approximately five 'Small Business of the 22 Years' awards will be awarded to the businesses that 23 demonstrate exceptional climate change management 24 practices and communication. 25 Applicants will be scored by selected experts.

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1 Award winners will be able to use the CoolCalifornia 2 winner logo in their window and on other materials to 3 publicize their achievements. 4 --o0o-- 5 MS. NAUMOFF: Staff is committed to developing a 6 comprehensive toolkit distribution strategy. A key avenue 7 will be working in partnership with stakeholders to share 8 the toolkit through existing networks coordinated by 9 California small business leadership. For example, both 10 the air districts and California.gov will post a link to 11 CoolCalifornia on their home pages. 12 Business Transportation and Housing is committed 13 to promoting the toolkit by working through local economic 14 development agencies. 15 We are also going to be working with the Office 16 of Climate Change to organize multiple community forums 17 across the state to introduce online and printed toolkit 18 versions and facilitate connections to local resources. 19 Staff regularly give toolkit presentations at 20 conferences and trade fairs and is willing to make 21 presentations for interested business associations. We 22 are also working closely with ARB's Office of 23 Communications to develop a marketing strategy. 24 --o0o-- 25 MS. NAUMOFF: The toolkit is a continually

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1 evolving resource. Our plan is to continue to incorporate 2 stakeholder suggestions and research results to increase 3 toolkit effectiveness. 4 To measure success in the short term, staff will 5 conduct toolkit pilot testing with small businesses around 6 the state to gauge and improve the toolkit's utility. 7 Staff will measure web hits and other web-based parameters 8 to gain an understanding of the number and type of users. 9 In the long term, staff seek to use interactive 10 pledges, challenges, and maps to measure public 11 participation. Staff are also working on metrics to 12 measure and estimate actual GHG emissions reductions and 13 to monitor and evaluate the toolkit's effectiveness. 14 To improve the toolkit, staff's first priority is 15 to develop a printed version. We will continue to work 16 with the web design team to add functionality to upload 17 media like photos and web-based seminars, more complex 18 tools such as a virtual business energy audit, additional 19 social networking features, and will incorporate results 20 from in-house research. 21 --o0o-- 22 MS. NAUMOFF: Staff initiated in-house research 23 to further inform toolkit development by evaluating how 24 environmentally sustainable behavior is motivated among 25 California businesses.

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1 The first research objective will be completed in 2 partnership with California's Employment Development 3 Department. This department is conducting a statewide 4 green jobs survey. Staff added questions to this survey 5 to assess climate-friendly practice implementation 6 barriers, resources necessary to reduce GHG emissions, and 7 perceived benefits of achieving GHG emissions reductions. 8 Fifty thousand California businesses will be surveyed in 9 May. 10 The second research objective will be completed 11 by staff. A sample of the 20 to 30 small businesses will 12 complete a survey about environmental attitudes and 13 business practices and participate in a monitoring 14 exercise to track business heating, electricity, and water 15 consumption, vehicle usage, and waste generation. This 16 data will be used to create a customized action plan for 17 each business designed to promote cost effective 18 climate-friendly action. One year later, participants 19 will be asked to provide information on the measures 20 implemented. 21 This information will be used to design next 22 generation strategies and incentive programs to facilitate 23 successful GHG emissions reductions within the business 24 community. 25 --o0o--

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1 MS. NAUMOFF: Many small businesses across the 2 state have already demonstrated that they can improve 3 their bottom line with climate friendly actions. 4 Collectively, these actions can help California reach its 5 2020 GHG emissions reduction goals. 6 Moving forward, staff will continue to work with 7 small business leadership to improve and widely distribute 8 the toolkit. 9 Throughout the process, it's instructive to keep 10 in mind that the EnergyStart campaign started in 1992 as a 11 voluntary labeling program, saved businesses, 12 organizations, and consumers about $19 billion in 2008, 13 and avoided GHG emissions equivalent to those from 29 14 million cars. 15 Similarly, since 2001, the Carbon Trust helped 16 participants in their energy efficiency and carbon 17 emissions reductions programs save over $1.4 billion worth 18 of energy and reduce carbon dioxide emissions by 17 19 million metric tons. 20 Staff looks forward to moving the small business 21 toolkit and CoolCalifornia.org along in a similar 22 trajectory. 23 Thank you for your attention. We would be 24 pleased to answer any questions. 25 CHAIRPERSON NICHOLS: We have two witnesses.

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1 They're actually partners and collaborators of ours. And 2 I'd like to hear from them, and then we can have some 3 discussion. 4 We'll start with Noel Perry from NEXT 10. 5 Welcome, Noel. 6 MR. PERRY: Thank you, Chairman Mary. 7 My name is Noel Perry, and I'm the founder of 8 NEXT 10. NEXT 10 is a nonpartisan, nonprofit organization 9 located in Palo Alto, California. And NEXT 10 is working 10 at the intersection of the environment, the economy, and 11 quality of life issues in California. 12 I'm honored to be here today to talk a little bit 13 about the work of NEXT 10 with the Air Resources Board and 14 also our other esteemed partner. 15 As a venture capitalist and businessman, I'm very 16 impressed with the resources that the California Air 17 Resources Board has brought to the CoolCalifornia site and 18 specifically, as we're focused on today, small businesses 19 in California. I thought the report that was done by Kyra 20 was excellent. I could go on and on about the importance 21 of small business in California, but I think she did a 22 really good job highlighting what the contribution is. 23 And specifically, quite simply, in business, most 24 businesses in California are small, with under 150 25 employees. And I think it's really significant that the

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1 California Air Resources Board is reaching out to small 2 business California, because small business California is 3 the life blood of California. 4 I just want to say a little bit about what NEXT10 5 has produced. We've produced the California green 6 innovation index. And the index is focusing on the 7 economy and the environment as relates to AB 32 and the 8 successful implementation of it. And check it out, if 9 you'd like to look at it. It's not partisan. I think 10 it's documenting the work that's happening here in the 11 state of California, specifically focused on the economy, 12 green jobs, and how we reduce greenhouse gas emissions. 13 I'd like to compliment the California Air 14 Resources Board for what happened yesterday with the low 15 carbon fuels. I guess that was an early action item. And 16 so we are honored to be here working on another project 17 that was an early action item which is the CoolCalifornia. 18 CHAIRPERSON NICHOLS: Not quite as many witnesses 19 on this one. 20 MR. PERRY: Right. I guess today is a little 21 easier to come up here and speak. 22 I would like to thank Mary for her leadership. 23 I'd like to thank Bob Croes and all the staff that we're 24 working with on this project. And it's a real honor. 25 I would like to really say how tremendous it is

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1 to work with the California Air Resources Board, because I 2 see it as the leader in the nation and actually the world 3 as one of the most respected and esteemed regulatory 4 bodies that is leading the world in terms of reduction of 5 greenhouse gas emissions. So keep up the fabulous work. 6 Last, but not least, I want to thank Sara Henry, 7 the NEXT 10 program manager who's been working very 8 closely with CARB. Congratulations, and thank you for 9 letting me speak. 10 CHAIRPERSON NICHOLS: We hate to cut people off 11 when they're complimenting us, but we have to keep the 12 time limits. 13 Thank you so much, Noel, for all your support. 14 And really you've added a lot to this document, which is 15 very much appreciated. Thank you. 16 Go ahead. 17 MS. KLEINENTCH: Good morning. My name is Eloisa 18 Kleinentich. I'm Assistant Deputy Secretary of Business 19 Transportation and Housing Chairwoman and to the Board. 20 I just wanted to talk a little bit about what BT 21 and H is doing and how we got involved and really jumped 22 on this excellent opportunity and your great staff here at 23 the ARB. 24 Secretary Bonner has a regional economic recovery 25 and work plans. And what we're trying to do is trying to

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1 get from the bottom up is understand what infrastructure 2 projects locals have focused on as being important for 3 their communities. But what we also have asked is what 4 can we do to support small businesses, specifically in 5 these difficult economic times. 6 Secretary Bonner put green teams as one of those 7 options. What we'd like to do -- our initial idea was to 8 go and create a website and get all of the organizations 9 within the state together. But when I ran into your great 10 team, as I mentioned, here at the ARB, I thought this is 11 great. I'll have the opportunity to work with them. 12 So what we were able to do, thanks to the 13 information that we received from them, is work together 14 to really focus some of the content for small businesses. 15 We work with all the economic developers throughout the 16 state. That's county, regional, and cities all have some 17 sort of economic development effort. What they're telling 18 us is they would like some sort of tools they can use to 19 bring to the table with small businesses. 20 So what we've teamed up is again based on the 21 website information, filling some of the information on 22 small businesses, is how can we, in fact, help them. What 23 we will do with that is teaming up with ARB is get the 24 information out to the economic developers about what 25 these options are. And in our responses back to local

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1 communities on their regional economic recovery work 2 plans, we'll also be referencing the website 3 CoolCalifornia, so they can also work with their 4 businesses as well. 5 So we find that this is a great opportunity for 6 cross pollenization. It's a great toolkit. It's been a 7 pleasure to work with the excellent staff at ARB. And 8 it's great that we're all coming together to support small 9 business. 10 So thank you. 11 CHAIRPERSON NICHOLS: Thank you very much. 12 I'd like to open this discussion. I know we 13 could take a day on this issue and it would be very 14 productive, but we have people on this Board who have some 15 real expertise in this area that I would also like to hear 16 from, other than just myself. 17 I just want to start off by saying I think this 18 is a very good start. I think it's well organized. It's 19 thoughtful. But the most important thing that I want to 20 flag about this is that it has to be road tested. And it 21 hasn't really been yet. And where we need the help is not 22 just to count the number of hits that come to a website, 23 but to actually find out whether people are taking action 24 as a result of this and what they need in order to enable 25 them to do that, because they disconnect between what

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1 government thinks it's offering no matter how good it is 2 and what people actually do is very large as we all know 3 in many programs. And finding ways to actually get this 4 information to people in a format that's useable that they 5 can act on is not an easy thing at all. 6 One of the reasons why I think having these two 7 partners that are here today is tremendously valuable to 8 us is they have different networks. They come from 9 different backgrounds. They have different resources 10 literally available to them than we do. 11 But, you know, I have to acknowledge the fact 12 that yesterday we heard from an array of people who have 13 Chamber of Commerce and small business in their titles who 14 are hearing nothing but that AB 32 and the Air Resources 15 Board are going to cost them a lot of money and create 16 havoc in the state. And I don't think that they're part 17 of this process at all. Maybe we can't get every 18 individual in the state or every group in the door. But 19 I'd sure like to find a way to do something about that 20 disconnect. 21 So I'd like to open the discussion up to the 22 Board members. Start with you, DeeDee, I guess, or you. 23 BOARD MEMBER KENNARD: Well, first of all, I had 24 a pre-briefing, and I'm really very impressed with the 25 work that staff has done.

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1 And I think this is the first step in engaging 2 the small business community, in educating them. But most 3 importantly, at the end of the day, it's going to be the 4 economics. If you're a small business owner, and 5 particularly in this environment, you're struggling just 6 to survive. And if this can help to create the nexus and 7 the information to convince that small business owner that 8 this is going to increase their margins of profitability, 9 I think we'll have a real win here. 10 And this is a great first step at getting people 11 educated in this vain and that they can participate in 12 reducing emissions and still be profitable. And that will 13 be the key I think for the small business owners. 14 So I'm really excited about this. 15 Congratulations on this good work. Again, this is another 16 just beginning for us, and I think it's very exciting. 17 CHAIRPERSON NICHOLS: Great. Thank you. 18 DeeDee. 19 BOARD MEMBER D'ADAMO: Well, I agree with the 20 comments that the Chair made about the groups that were 21 here yesterday. 22 I'd like to know from staff, did you meet with 23 any of the representatives? We did see a number yesterday 24 that were here yesterday and on several previous 25 occasions. So did you meet with any of those individuals?

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1 RESEARCH DIVISION MANAGER MORA: We met initially 2 with the Hispanic Chamber. So we went over the concept of 3 the toolkit. We've been trying to arrange a meeting, but 4 we certainly look forward to working with them in the 5 future. We have a couple of meetings set up in the next 6 few weeks. So we will continually improve the toolkit as 7 we get feedback from the various groups. There will 8 always be an opportunity to provide. 9 BOARD MEMBER D'ADAMO: Terrific. 10 I just think we need to find a constructive place 11 for those groups to go. 12 And I agree with Ms. Kennard that if it results 13 in a savings, if they see that connection, that that might 14 be one way to peak their interest. 15 And then I think a key is going to be 16 distribution. It's going to involve a lot of work getting 17 out into the communities. And a lot of these businesses 18 don't even have time to go to their local chamber 19 meetings. So figuring out a way to get beyond just 20 organization meetings and somehow getting the information 21 out to individuals that are just busy working well beyond 22 9:00 to 5:00. 23 CHAIRPERSON NICHOLS: Right. 24 Yes, Supervisor. 25 BOARD MEMBER YEAGER: Thank you.

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1 Thank you, Kyra, for the follow-up information 2 that you sent me. I was able to forward it on to a lot of 3 green organizations in Santa Clara Valley, and hopefully 4 we'll have some of our success stories to site. 5 And then as we had talked about, and I think you 6 were going to follow up on it, if we could track where 7 users go after they've been to this website, it's 8 always -- and I know there are programs that are out 9 there. Just be curious to know what additional 10 information are they looking for that they couldn't find 11 at the website. And then we can figure out if we didn't 12 want to include that or do a link or whatever. I think it 13 will give us additional information. 14 And is there a way for similar businesses or 15 government agencies to sort of talk with each other? 16 Because all these businesses and whether you're a school 17 or city just sort of have different needs and are going to 18 be wanting different information. Will there be a 19 category for schools? How can you just sort of zero in on 20 like businesses or services? 21 MS. NAUMOFF: Sure. That's a great question. 22 When you go to the home page, the top of the home 23 page area, there is a horizontal navigation bar that lists 24 the different sectors: Government, business, community, 25 and organizations.

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1 And we are also going to a Phase 2 development 2 where we're exploring more social networking opportunities 3 to give, for example, businesses the opportunity to create 4 a page that they can post their own things if they're 5 interested in that and do those same type of things for 6 the local government. We can follow up with you on that, 7 because we'll be having those discussions within the next 8 week. 9 BOARD MEMBER YEAGER: You'd be able to cross 10 reference you can go to all the school districts that are 11 listed or all the nurseries that are listed or restaurants 12 just to figure out -- and maybe it's a little bit to the 13 social networking you're saying if there is perhaps a way 14 for people to comment. I applied for this loan; it was 15 really easy. Or I applied for this loan, and it was a 16 nightmare. Whatever it is. I tried this, and it didn't 17 save me any money, you know. In that way, you can sort 18 of -- they can all talk to each other to some extent. 19 MS. NAUMOFF: That point came up in another 20 briefing sharing the challenges. We're going to have some 21 sort of online blogging opportunities for businesses to do 22 that. We have talked about that idea with actual business 23 owners and chambers at a meeting organized by Marty 24 Keller, and they seem very receptive to that opportunity 25 as well. We expect to see that as part of the toolkit

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1 down the line. 2 BOARD MEMBER YEAGER: One last point. I'm more 3 familiar with government, but there's a lot of businesses 4 and government agencies that are doing a lot. Is it going 5 to be their responsibility to log onto the website and put 6 down what they're doing, or is it our responsibility to 7 find out what others are doing and then include that? 8 Because the latter is going to take a lot more staff time, 9 but it's going to be a lot more comprehensive, because, 10 you know, a lot of businesses and government agencies are 11 really being very serious about this. And so there's a 12 lot of information out there. I'm not sure how you're 13 going to collect it. 14 MS. NAUMOFF: I think it's going both ways. At 15 this point, it's been staff mostly trying to compile the 16 resources, but clearly that list isn't comprehensive. So 17 as we have these community forums across the state as we 18 just extend our network and have our marketing and 19 outreach campaigns, hopefully more governments and 20 businesses that are already doing things will contact us 21 as well. So I think that is going to be going in both 22 directions. 23 BOARD MEMBER YEAGER: Great. It's very exciting. 24 CHAIRPERSON NICHOLS: Sandy. 25 BOARD MEMBER BERG: It is very exciting, and I

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1 congratulate staff. You've done an outstanding job in 2 taking the first step. 3 I think I'm disappointed that we don't have some 4 representatives here from small business, and we did have 5 quite a few people yesterday. And so I think we see what 6 one of our challenges is. They obviously do go over the 7 agenda, and they do attend and come and testify. And yet 8 it would have been very helpful to get some feedback 9 today. 10 So I think that for me that is an indication of 11 some of the challenges we're going to face on providing 12 what Chairman Nichols said is a valuable tool that they 13 actually will get valuable information. The value's here. 14 We just have to figure out how to get the value 15 proposition out. 16 The other thing I think as a Board member and 17 somebody that meets with these people is I also can say, 18 wait a minute. These are the tools that are available, 19 and so I would like to assist in that. And as we roll 20 these things out, being able to have that information as 21 I'm having meetings so that I can pass on that information 22 and have a little accountability from both sides. I know 23 there's a great deal of intrepidation, a great deal of 24 uncertainty, but sometimes you have to push them up to a 25 momentum where they start seeing the positive rather than

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1 the negative. And so if we could be mindful of that. 2 As we go into the social networks -- and I'm not 3 of the generation that really understands all that 4 dynamic. But after seeing what happened with the black 5 car situation on the cool paints, which I did get a 6 tremendous amount of calls about -- I could have almost 7 sold out of my black paint. We would really need to 8 monitor those blogs and make sure that we have like 9 information and accurate information for people to read. 10 And so it would be important if we venture into that that 11 we would commit the staff resources to monitor, to 12 respond, and to keep the conversation flowing from all 13 opinions. So that would be an observation that I would 14 have. 15 And I would be happy to help in any of the 16 marketing strategies as we look to getting this out. 17 But congratulations. It's a great first step, 18 and I look forward to participating. 19 Thank you. 20 CHAIRPERSON NICHOLS: Thank you. 21 Doctor. 22 BOARD MEMBER TELLES: Yes, so my first question 23 is to Ms. Naumoff. 24 So, Kyra, when you were measuring wood stove 25 emissions in Guatemala a few years ago, did you ever think

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1 you would be doing the CoolCalifornia website? 2 MS. NAUMOFF: I'm still looking for the link. 3 BOARD MEMBER TELLES: Very proud of your work 4 here. Another former student. School of Public Health at 5 Berkeley. 6 But more seriously and to follow up on Ms. Berg's 7 comments, I think we -- this is a great toolkit. And 8 you're talking about surveying 50,000 businesses. But 9 there are 3.4 million businesses. 10 And I think that in the area of climate change in 11 greenhouse gas emissions, we're, as we talked about 12 yesterday, in a different ballpark than the air quality 13 regulations that we've been used to for the last number of 14 decades. So I think we have to have a different 15 communication strategy. 16 You know, I think it's great how we get op-ed 17 pieces in the L.A. Times about the low-carbon fuel 18 standard. I think we're very good at doing that. And I 19 commend the communication staff. But to market this kind 20 of stuff and get the word out that climate change, AB 32 21 regulations are more than gobbledygook, which is what most 22 people think they are, we have to figure out a way to do 23 that. And it's probably an entirely different type of 24 communication and marketing strategy than we've ever been 25 used to. So I don't know if staff has been thinking about

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1 that. 2 But the only thing I can compare from my own 3 experience is the California Department of Health Human 4 Services then put a lot of resources into professional 5 marketing about smoking and stop smoking. Those campaigns 6 were very effective. They were also very expensive and 7 very slick. People knew what they were doing in 8 developing those slick adds. 9 Are we moving in that direction? Because I think 10 it would be -- it's really probably important not just for 11 us to feel good about getting the word out, but so that 12 the public, all sectors, small businesses, in particular, 13 we're focused on is engaged in working with us, because if 14 the public isn't engaged, we aren't going to get there. 15 CHAIRPERSON NICHOLS: Right. I'm pretty 16 convinced that there is a strong overlap between what 17 we're trying to do or the product we're trying to sell, if 18 you will, and the Flex Your Power campaign and previous 19 campaign to get people involved in energy conservation. 20 There are some additional items, of course, that we're 21 talking about here in terms of, you know, products for 22 re-doing your auto air conditioning. 23 I mean, there are going to be some other 24 approaches other than just energy conservation. But most 25 of the stuff is really about energy conservation, using

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1 energy more efficiently. And there is a lot to learn 2 about what's worked and what hasn't worked in the past. 3 The twist or connection between that and 4 greenhouse gases kind of cuts two ways. I agree with 5 several people who said that for a lot of the folks that 6 are listening to this, greenhouse gases are just some 7 weird thing that people are talking about now that 8 environmentalists are trying to get you scared about. And 9 there is a substantial minority, but it's not a fringe of 10 people, who feel that this whole issue is just one more 11 thing they don't want to worry about. They'd rather not 12 hear about it, thank you very much. 13 And I do think that since we are obviously -- we 14 have to talk about it, because we're required to by AB 32, 15 making the connection between that and other things that 16 do resonate like energy efficiency and independence from 17 foreign oil and saving money are the ways that we're going 18 to succeed. So we don't have to cover up what our agenda 19 is, but we have to talk to people about something that 20 they're actually willing to hear about. And I think 21 that's going to be the key to this. 22 And it is going to involve marketing techniques 23 that we are not familiar with. I think it's actually 24 perfect that someone who has a background in public health 25 is working on this project, because that's exactly the

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1 same kind of approach that we have to take here. 2 Sandy. 3 BOARD MEMBER BERG: We might be able to piggyback 4 on some of those programs, as you said, that wouldn't be 5 as expensive. 6 And the other thing, it might be a great 7 opportunity to go to some of the business schools and see 8 who would like to take a project on marketing this type of 9 program and coming up with a campaign and get some of that 10 younger generation that really is embracing these changes 11 and how would they get the word out. 12 So we might want to -- we've got some dynamite 13 business schools in this state. And if a few of the 14 schools and a couple of student teamed up if that was 15 their project, we might be get some really interesting 16 ideas. 17 CHAIRPERSON NICHOLS: That's terrific. 18 BOARD MEMBER KENNARD: Mary, I had one other 19 thought. 20 That is in listening to this conversation, I want 21 us to be very careful about the expectation, because this 22 is all phenomenal work. But to expect that us as Board 23 and staff can make a huge and phenomenal impact on this is 24 really I think unfair and that we ought to have some 25 measurable expectations about the numbers of businesses we

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1 actually can reach by utilizing organizations like NEXT 10 2 and the chamber, et cetera. Because as a matter of 3 reality, we're not going to reach a huge number of 4 businesses, particularly in these initial years. And so I 5 just want us to be careful about not putting that kind of 6 pressure on staff and ourselves to believe we can all of a 7 sudden miraculously get a huge number of small businesses 8 engaged. 9 CHAIRPERSON NICHOLS: Do you have any 10 suggestions? Maybe this is another one of those business 11 school type projects. But, you know, how to develop a 12 realistic plan for what we should be targeting so we would 13 be able to really measure our success. 14 BOARD MEMBER KENNARD: I think that in 15 coordinating with the chambers and other organizations to 16 kind of take a pole on what is realistic. Is it ten 17 percent of the population of small businesses? Is it one 18 percent? 19 I think it would be really helpful if we had kind 20 of a target as opposed to just out there nebulously saying 21 we're going to reach out to small businesses. Because if 22 we don't have a target, we never can be successful, 23 because we don't know what the number is. 24 CHAIRPERSON NICHOLS: That's a very good point. 25 I hope we can address that and fold that into your

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1 thinking. And obviously there's a lot of interest on the 2 part of the Board in staying abreast of what you're 3 saying. So keep us posted. 4 BOARD MEMBER BERG: And there certainly are other 5 programs out there that we can measure against as well. 6 So I think that's an excellent point. 7 CHAIRPERSON NICHOLS: Okay. If we're done with 8 this item, which I think we are -- thank you for those who 9 came to join with us today. 10 If there's anybody that doesn't get the joke 11 about black paint, you can ask one of the ARB staff 12 people. They'll explain it to you. 13 We need a Resolution here. What are we doing 14 with the Resolution? 15 EXECUTIVE OFFICER GOLDSTENE: You're directing us 16 to continue to work on this. 17 CHAIRPERSON NICHOLS: We're directing you to 18 continue to work on this. 19 BOARD MEMBER BERG: I move on Board Resolution 20 9-4-5, instructing staff to move forward. 21 CHAIRPERSON NICHOLS: We don't have a quorum at 22 the moment to pass a Resolution. People left. 23 BOARD MEMBER KENNARD: It's still an important 24 issue. 25 EXECUTIVE OFFICER GOLDSTENE: The discussion has

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1 been very helpful. 2 CHAIRPERSON NICHOLS: You don't need a Resolution 3 anyway. But I think you have the sense of the Board. We 4 wish you to continue working on this project. 5 EXECUTIVE OFFICER GOLDSTENE: Thank you. 6 CHAIRPERSON NICHOLS: Thank you. 7 BOARD MEMBER BALMES: I heard that. 8 CHAIRPERSON NICHOLS: We still need one more. We 9 need six. 10 Normally, when we have a nice feel good item like 11 this, we don't also have to pass a Resolution. But staff 12 seems to wish to have a Resolution. We have one, and it's 13 good. 14 BOARD MEMBER KENNARD: I'll move it. 15 BOARD MEMBER BERG: Second. 16 CHAIRPERSON NICHOLS: All in favor say aye. 17 (Ayes) 18 CHAIRPERSON NICHOLS: Thank you very much. 19 When Dr. Balmes was commenting on the effective 20 anti-smoking campaign, I remember hearing a very 21 interesting briefing from one of the professionals that 22 was involved in designing those commercials about how they 23 had developed them. And it focused on the fact which I 24 think most people realize, although we don't like it, is 25 we all respond better to negative commercials than we do

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1 to positive. So all of the commercials they did that were 2 designed to make people understand why it would be good to 3 quit smoking were not nearly as effectives as the ones 4 that focused on evil tobacco industry people who were 5 coercing you to do things that were bad for your health. 6 So I guess we can say the same thing. 7 We are now ready for the next two items, which 8 we're going to take up together, because they're directly 9 related. They both address implementation of the air 10 quality improvement program, which we call AQIP, ARB's 11 newest incentive program. And this is a program which was 12 created by a bill called AB 118 signed into law by 13 Governor Schwarzenegger in 2007. It was a priority for 14 then Assembly Speaker Nunez who worked very hard to create 15 this program, which provides money for incentives for 16 transforming vehicle fuels and technologies. 17 And so we now have the opportunity to put 18 together guidelines for how this money is to be spent. 19 And so we're going to be looking at a regulation for this 20 funding plan regulation which will define how the funding 21 program will work for fiscal year 2009-2010. It gives us 22 the opportunity to spend $42 million for projects in the 23 next fiscal year and establishes our priorities also for 24 the funding cycle, describes the projects that we would 25 fund, and sets funding targets for each of these projects.

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1 This will be an annual event, but hopefully we 2 will have priorities which will stretch out for more than 3 one year at a time so that people can see the direction 4 that we're going in. 5 So we'll take up the funding plan and the 6 guidelines at the same time and hear testimony on both of 7 these items together. 8 Mr. Goldstene, would you introduce this item, 9 please? 10 EXECUTIVE OFFICER GOLDSTENE: Thank you, Chairman 11 Nichols. 12 AB 118 creates three new incentive programs 13 providing up to $200 million in annual funding through 14 2015 to support introduction of alternative fuels and 15 reduce greenhouse gas and smog emissions. 16 The funding is administered by ARB, the 17 California Energy Commission, and the Bureau of Automotive 18 Repair. 19 Today, we are asking the Board to approve two 20 proposals that would enable us to move forward with ARB's 21 part of AB 118, the air quality improvement guidelines, 22 and the plan for expending this year's funding. 23 AQIP provides over $40 million annually for ARB 24 to invest in clean vehicle and equipment projects to 25 reduce criteria pollutants and toxics. The projects will

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1 also provide significant ancillary greenhouse gas 2 benefits. 3 AB 118 expands ARB's portfolio of air quality 4 incentives, providing the opportunity to fund projects 5 that do not fit within the statutory framework of existing 6 incentive programs, such as the Carl Moyer Program, Goods 7 Movement, and Lower Emission School Bus Programs. 8 These existing programs focused on near-term 9 reductions to reduce ozone and particulate matter 10 pollution and cut exposure to toxics. We propose to use 11 AB 118 funds to help achieve commercializing the advanced 12 technologies necessary to help meet post-2020 SIP goals 13 and 2050 climate change goals. This fills a critical 14 niche in ARB's air quality investment portfolio. 15 This funding will provide an economic stimulus 16 for California by accelerating development and deployment 17 of tomorrow's vehicles and improvement, providing a boost 18 to local advanced technology manufacturers, and 19 stimulating the California market for the next generation 20 of green workers needed to support these technologies. 21 Today's proposal builds upon the action the Board 22 took last September by approving the AB 118 guidelines. 23 As we noted at that time, those guidelines were narrowly 24 limited in scope to ensure the projects ARB and the Energy 25 Commission fund under AB 118 complement and do not

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1 interfere with California's existing air quality programs. 2 Today's proposals focus on the broader 3 administrative guidelines for implementing the AQIP and 4 air funding plan for the upcoming year. 5 As part of today's presentation, staff will also 6 provide an update on the roll-out of the new air quality 7 loan program for trucks being funded with our fiscal year 8 2008 AQIP Money. 9 Joe Calavita of the On-Road Controls Branch will 10 provide you with a detailed description of staff's 11 proposal. 12 Joe. 13 (Thereupon an overhead presentation was 14 presented as follows.) 15 MR. CALAVITA: Thank you, Mr. Goldstene. Good 16 morning, Chairman Nichols and members of the Board. 17 --o0o-- 18 MR. CALAVITA: We're excited to be here today to 19 kick off ARB's newest incentive many program. I'll start 20 today's presentation with some background on the AB 118 21 legislation and the air quality improvement program. I'll 22 then provide an overview of three components of the AQIP: 23 Our proposed regulatory guidelines, which 24 establish the program's administrative requirements; 25 ARB's new Truck Loan Program funded by the AQIP

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1 this year; 2 Our proposed funding plan to guide expenditure of 3 $42 million in AQIP year two funds. 4 --o0o-- 5 MR. CALAVITA: First some background on AB 118 6 and how it fits in with California's other air quality 7 incentive programs. 8 --o0o-- 9 MR. CALAVITA: The state now has over half a 10 billion dollars available annually to invest in clean air. 11 Each of these six incentive programs have different 12 statutory provisions and fill particular niches, but they 13 fit together to form a complementary portfolio that can 14 help us meet both our near-term and long-term air quality 15 goals. 16 Traditionally, ARB's incentive programs have 17 focused on near-term reductions to reduce ozone, 18 particulate matter, and air toxics. AB 118 builds on 19 these successes and creates three new programs. 20 The first provides $30 million a year to expand 21 the Bureau of Automotive Repair's car scrap program. 22 We'll propose implementation guidelines for this program 23 at the June Board meeting. 24 AB 118 also provides up to 120 million annually 25 to the California Energy Comission for alternative and

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1 renewable fuels and vehicles to help meet our climate 2 change goals. The Commission just approved its investment 3 plan this week, so this funding will be rolling out 4 shortly. 5 Finally, the AQIP, ARB's program, provides over 6 $40 million annually for clean vehicle and equipment 7 projects to reduce criteria pollutants and toxics. 8 Statute provides broad flexibility for this funding. Our 9 first year of AB 118 funding is being directed to the 10 Truck Loan Program, which I'll describe in a few minutes. 11 AQIP naturally complements the Carl Moyer 12 Program, Goods Movement Bond Program, and Lower Emission 13 School Bus Program, providing the opportunity to focus on 14 advantaged technologies that don't fit within these 15 program's statutory framework. 16 --o0o-- 17 MR. CALAVITA: Now I'll briefly summarize the 18 proposed AQIP guidelines. 19 --o0o-- 20 MR. CALAVITA: Statute requires the AQIP 21 guidelines to be adopted as regulations. The proposed 22 guidelines provide the AQIP's overarching administrative 23 requirements establishing the rules for how we'll run the 24 program. The guidelines are intended to remain mostly 25 static over the AQIP's eight funding years, so they've

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1 been crafted to allow the types of projects, funding 2 mechanisms, and other program elements to evolve. 3 --o0o-- 4 MR. CALAVITA: The proposed regulation 5 establishes the robust administrative requirements 6 necessary to ensure that AQIP will be implemented in 7 accordance with statutory provisions. 8 At the same time, the proposed regulation 9 provides sufficient flexibility to encourage the 10 development of new emerging emission control technologies. 11 We held four rounds of public workshops over the 12 past year to develop today's proposal. We've received 13 positive feedback supporting the guidelines, and we've had 14 no requests for changes. 15 --o0o-- 16 MR. CALAVITA: I'll now change gears a little bit 17 and provide an update on how we're using year one AQIP 18 funds to launch the Truck Loan Program, as known as PLACE. 19 We introduced the Board to this program last 20 December as a way to assist truckers impacted by the two 21 regulations adopted that month. 22 --o0o-- 23 MR. CALAVITA: The Truck Loan Program helps 24 truckers get more reasonable financing terms for purchase 25 of new and used trucks, exhaust retrofits, and SmartWays

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1 energy efficiency upgrades. 2 We estimate that ARB's $42 million appropriation 3 will leverage about $300 million in financing. 4 Today's tightening credit market makes this 5 program even more critical than when it was originally 6 conceived. The target participant is what we refer to as 7 the nearly bankable truck owner, one that doesn't quite 8 conform to conventional loan underwriting standards, yet 9 is not so risky as to be considered unbankable. 10 --o0o-- 11 MR. CALAVITA: The loan program has two 12 components. The first is a loan guarantee program run 13 through the State Treasurer's Office Capital Access 14 Program, also known as CalCAP. We spoke to you briefly 15 about this at last month's Board meeting during our update 16 on ARB truck incentives. 17 The CalCAP loan program kicked off just this 18 week. Truck owners can now access loans either through 19 participating lenders or truck dealerships. 20 We're heard a number of truck owners have already 21 submitted loan applications which are with banks being 22 processed. 23 We're also launching a second component to 24 provide additional financing options, such as interest 25 rate buy downs, lease buy backs, or extended re-payment

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1 periods. These alternative financing options will be 2 available starting this summer. 3 We will closely monitor the Truck Loan Program 4 and evaluate future funding each year as part of the 5 annual AQIP funding plan. 6 --o0o-- 7 MR. CALAVITA: I'll now shift into the core of 8 the presentation, the proposed funding plan for the coming 9 fiscal year. 10 Our vision is for these funds to advance the next 11 generation of technologies needed to meet longer term SIP 12 and climate change goals. This compliments the Moyer and 13 bond program's focus on near-term reductions from fully 14 commercialized vehicles and equipment. 15 --o0o-- 16 MR. CALAVITA: The cornerstone of the proposed 17 funding plan is $25 million to accelerate the deployment 18 of hybrid trucks and buses. This is a category where we 19 believe an initial large investment can have an impact on 20 truck and bus fleet makeup and help advance hybrid 21 technology. 22 We anticipate this funding commitment will help 23 these vehicles become established in the market, much the 24 way hybrid cars are now established. 25 We're also proposing investments in the next

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1 generation of passenger vehicles, lawn and garden 2 equipment, and off-road work vehicles. The 9 million 3 proposed for demonstration projects target technologies 4 that are not yet ripe for commercialization, but that show 5 near-term promise. 6 --o0o-- 7 MR. CALAVITA: This slide identifies the ten 8 types of AQIP projects authorized by AB 118. Our proposal 9 covers these six of the ten allowable project types. 10 Substantial investments in air quality research, 11 work force training, and light-duty vehicle scrap are 12 being made by the Energy Commission and Bureau of 13 Automotive Repair pots of AB 118 funding, so we're 14 deferring funding for these categories this year. 15 --o0o-- 16 MR. CALAVITA: You may be wondering how the 17 proposed funding plan for this year fits into our 18 long-term vision for AQIP. We expect that as hybrid 19 trucks and buses are produced in larger numbers, vehicle 20 costs will decline to the point that funding is no longer 21 needed. 22 At the same time, hybrid off-road equipment and 23 marine vessel technology should mature and could be a good 24 candidate for future year AQIP funds. 25 --o0o--

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1 MR. CALAVITA: Similarly, we anticipate funding 2 for electric residential mowers will help encourage 3 further development of this technology, to the point that 4 electric equipment becomes available for use in the 5 commercial sector where the bulk of emissions occur. 6 --o0o-- 7 MR. CALAVITA: Our funding allocation for ZEVs is 8 based on the number of vehicles expected in the next year. 9 As production of these vehicles ramps up further, we may 10 recommend additional funding in future years. 11 As with the other deployment projects proposed 12 for funding today, we expect these vehicles to eventually 13 be self-sustaining so incentives would no longer be needed 14 in the longer term. 15 Of course, each year's funding plan will be 16 dictated by on-the-ground circumstance and is ultimately 17 predicated upon Board approval. 18 --o0o-- 19 MR. CALAVITA: On to a summary of the proposed 20 projects. 21 Hybrid technology can significantly reduce 22 criteria pollutant, air toxic, and greenhouse gas 23 emissions, particularly in delivery vans, work vehicles, 24 urban buses, trash trucks, and other vehicles with high 25 stop and go or idling duty cycles.

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1 Hybrid trucks and buses are now on the market in 2 multiple configurations and models. But because they're 3 being built in small numbers, their price is typically too 4 high to justify their purchase based on fuel economy 5 savings alone. This project would provide a voucher for 6 about half the incremental cost of these vehicles -- 7 --o0o-- 8 MR. CALAVITA: -- which is between 10 to $35,000 9 depending upon vehicle weight. 10 Our funding would accelerate deployment of about 11 the first thousand vehicles in California, helping pave 12 the way for the medium and heavy-duty hybridization 13 measure in Climate Change Scoping Plan. 14 --o0o-- 15 MR. CALAVITA: The next project is for incentives 16 to purchase zero-emission and plug-in hybrid passenger 17 vehicles, neighborhood electric vehicles, zero emission 18 motorcycles, and zero emission commercial vehicles. 19 This project's proposed structure and rebate 20 amounts are modeled after ARB's successful alternative 21 fuel incentive program, which is sunsetting this spring. 22 For the first time, we're also proposing 23 incentives for zero emission medium- and heavy-duty 24 commercial vehicles, such as electric delivery vans. 25 --o0o--

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1 MR. CALAVITA: The next project would augment 2 local air districts' popular and successful lawn and 3 garden equipment replacement programs. The project would 4 fund replacement of gas powered lawn and garden equipment, 5 typically residential lawn mowers with cordless electric 6 equipment. 7 District programs have been limited in scope due 8 in part to lack of funding. And this project would invest 9 significant State funds in this category for the first 10 time. 11 We anticipate this program will enable districts 12 to fund an additional eight to 10,000 zero emission lawn 13 mowers. 14 All air districts designated as non-attainment 15 for the federal 8-hour ozone standard would be eligible 16 with a focus on those districts with the worst air 17 quality. Districts would be required to match each dollar 18 of AQIP funding with a dollar of local funds. 19 --o0o-- 20 MR. CALAVITA: The final vehicle deployment 21 project is for zero emission agricultural utility terrain 22 vehicles, or UTVs. The equipment population of these 23 vehicles in the California agricultural industry is second 24 only to that of tractors. 25 Electric agricultural UTVs are available for sale

PETERS SHORTHAND REPORTING CORPORATION (916) 362-234565

1 today, but their higher cost relative to gas-powered UTVs 2 can defer their purchase. The proposed rebates equal 3 about half the vehicle incremental cost. Recreational 4 vehicles would not be eligible for funding. 5 --o0o-- 6 MR. CALAVITA: We're proposing to administer 7 these projects differently than the Carl Moyer or Goods 8 Movement Incentive Programs. We've used the lessons 9 learned from these existing programs and the statutory 10 flexibility provided by AB 118 to craft streamlined, 11 transparent, and user-friendly funding mechanisms. 12 The first three projects listed here would allow 13 purchasers to access and redeem vouchers or rebates as 14 part of their typical purchase transaction and would use 15 common statewide funding protocols. 16 You may hear comments today suggesting other 17 funding mechanisms. However, we believe the 18 administrative structure we're proposing is consumer 19 friendly and provides the simplest most transparent 20 mechanism to accelerate deployment of these technologies. 21 The proposed AQIP guidelines complement our 22 proposal by providing the framework for robust oversight 23 and accountability. 24 We'll conduct competitive solicitations for an 25 air district, CAPCOA, or other qualified public or private

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1 organizations to administer each of the first three 2 projects listed here. 3 The lawn and garden equipment replacement 4 project, the fourth deployment project, is intended to 5 allow multiple air districts to fold AQIP funding into 6 their existing programs. 7 --o0o-- 8 MR. CALAVITA: I'll now move on to the 9 demonstration projects we're proposing to fund. To 10 identify projects, we held 12 public work group meetings 11 with local air districts, technology providers, vehicle 12 and equipment manufacturers, and other interested 13 stakeholders. 14 The off-road focus of our proposed demonstration 15 project was made in coordination with the Energy 16 Commission, which focuses its AB 118 demonstration project 17 funds on the on-road sector. We targeted those 18 technologies which show the most promise for 19 commercialization within the next three years. 20 As mentioned earlier, we believe the technologies 21 proposed for demonstration today could be good candidates 22 for rebate funding to accelerate their deployment in 23 future years. 24 --o0o-- 25 MR. CALAVITA: This slide identifies the five

PETERS SHORTHAND REPORTING CORPORATION (916) 362-234567

1 proposed vehicle and equipment categories and funding 2 targets for demonstration projects. The $9 million 3 proposed for demonstration projects represents about 20 4 percent of the total AQIP funding allocation. 5 Eligible technologies, including hybrid and zero 6 emission technologies, are detailed in the proposed 7 funding plan. 8 We believe air districts are uniquely suited to 9 administer demonstration projects for vehicle and 10 equipment types that most impact their regions. 11 Solicitations for demonstration project administrators 12 would be staggered over the 2009-2010 fiscal year and 13 would allow for funding of projects in the five categories 14 listed here. 15 --o0o-- 16 MR. CALAVITA: The bulk of this program's 17 benefits aren't from the vehicles that are directly 18 funded, but are ancillary benefits from accelerating 19 initial deployment of proven advanced technologies. 20 These accrue by helping increase production and 21 bring down vehicle and equipment costs to the point where 22 they can be competitive. 23 By bringing these technologies into the main 24 stream, our projects will also help accelerate technology 25 transfer, for example, hybrid technology transfer from

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1 on-road trucks to off-road equipment. 2 Finally, these projects will increase 3 California's exposure to these technologies, reducing 4 consumer reluctance to invest in unfamiliar vehicles and 5 equipment. 6 Accelerating deployment of the next generation of 7 vehicles and equipment will also provide an economic 8 stimulus for California and help position the state for 9 green job growth over the next several decades. 10 --o0o-- 11 MR. CALAVITA: Finally, we're proposing 12 contingency measures providing the Executive Officer the 13 authority to adjust the funding plan in certain 14 circumstances. 15 For example, should California receive federal 16 stimulus funding for the technologies in this plan, the 17 Executive Officer would have the flexibility to shift up 18 to five percent of AQIP funds to where they may be more 19 needed. 20 We're also keeping an eye on the Truck Loan 21 Program. Should this program be so popular more funding 22 is needed this year, the Executive Officer could divert up 23 to $10 million from this funding plan to truck loans. 24 And we'll be updating you on the status of the 25 Truck Loan Program and all the projects funded this year

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1 when we bring our proposed year three funding plan to you 2 for your consideration next spring. 3 --o0o-- 4 MR. CALAVITA: In conclusion, we recommend the 5 Board adopt the proposed air quality improvement program 6 guidelines and approve the proposed funding plan for 7 fiscal year 2009-2010. 8 CHAIRPERSON NICHOLS: Thank you. 9 I don't have a witness list on this item. 10 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: The 11 next step is to go outside and look at the vehicles that 12 we showed on the slide. 13 CHAIRPERSON NICHOLS: We're going to take a break 14 first. All right. Sorry. I thought we were going to do 15 it the opposite way. I've been confused before. 16 In that case, we will adjourn briefly, like for 17 15 minutes I would say probably, to go out the back way 18 and down the stairs and out to the street on the 10th 19 Street side. We'll follow you. 20 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: We've 21 got -- I think there's probably about eight or nine pieces 22 of equipment. They're labeled with the kind of incentives 23 they are. There's somebody to talk about each one if you 24 have interests. But we can go relatively quickly down the 25 line and hit the street. We'll start at the right-hand

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1 side and go towards I Street toward the Citizen Hotel. 2 CHAIRPERSON NICHOLS: Okay. Great. Thank you. 3 (Thereupon a recess was taken.) 4 CHAIRPERSON NICHOLS: The first name on my list 5 is Aleecia Macias from the California Energy Comission. 6 The other Board members are in the back, but they 7 can hear you. 8 EXECUTIVE OFFICER GOLDSTENE: Chairman Nichols, 9 before she starts, I'd like to say we've been very happy 10 with the work we've been doing with the Energy Commission 11 and are very proud of the partnership we have with them. 12 CHAIRPERSON NICHOLS: Very glad to hear that. 13 MS. MACIAS: Thank you, Mr. Goldstene. 14 Good morning, Chairman Nichols and members of the 15 Board. I feel kind of awkward saying that. 16 CHAIRPERSON NICHOLS: They're not physical, but 17 they're there virtually. 18 MS. MACIAS: My name is Aleecia Macias. I am 19 representing the California Energy Commission today in 20 support of the Air Quality Improvement Program guidelines 21 and the 2009-10 funding plan. 22 The Energy Commission has worked closely with the 23 Air Resources Board staff over the last year to ensure our 24 respective programs and the proposed funding allocations 25 are complementary.

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1 Staff have held a number of coordination meetings 2 and supported our program development. So we also 3 appreciate the Air Resources Board staff. 4 And today at the Board meeting, the potential 5 adoption of the guidelines and the funding program, we 6 wrap up a big week for alternative fuels in California. 7 You may be aware on Earth Day the Energy Commission 8 adopted the investment plan for the Alternative Fuel and 9 Vehicle Technology Program. The Air Resources Board Air 10 Quality Improvement Program and Energy Commission's 11 Alternative Renewable Fuel and Vehicle Technology Program 12 couldn't be timelier with the availability of federal 13 moneys through the stimulus package. 14 California has the potential to double the 15 investment in alternative fuels that come into our state. 16 And these programs offer investment that is critical to 17 California's alternative fuel industry, allowing for 18 growth in our economy, green job creation, and more. 19 And I would like to thank the Air Resources Board 20 staff for the partnership we've shared in developing these 21 programs. We support the adoption of both the AQIP 22 guidelines and funding plan today as the next step towards 23 bringing alternative fuels to the marketplace. And we 24 look forward to continuing our partnership to make these 25 programs a success.

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1 Thank you for your time. 2 CHAIRPERSON NICHOLS: Thank you very much. This 3 is a real partnership, and it's so far I think 4 unprecedented really historically that we've had two 5 agencies working so effectively to make sure that our 6 funds go further than they would have separately. 7 So I know that's what the Governor's insisting on 8 and hopefully will put us in good stead for getting more 9 stimulus money as well. 10 So thank you. 11 CHAIRPERSON NICHOLS: Okay. Laura Marion from 12 APTERA. 13 (Thereupon an overhead presentation was 14 presented as follows.) 15 MS. MARION: Good morning. 16 --o0o-- 17 MS. MARION: My name is Laura Marion, and I'm the 18 Chief Financial Officer of APTERA Motors. And I'm pleased 19 to have the opportunity to speak with you this morning. 20 APTERA understands the broad purpose of the Air 21 Quality Management Improvement Program, and we support the 22 staff proposals on both the guidelines and 2009-2010 23 funding plans. 24 Next slide. 25 --o0o--

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1 MS. MARION: Particularly as it relates to 2 encouraging greater adoption of light-duty clean vehicles 3 through the use of the Clean Vehicle Rebate Program. We 4 believe that one of the challenges that has been impeding 5 the adoption of clean light-duty vehicles to date has been 6 the limited number of options available to consumers in 7 the market. 8 --o0o-- 9 MS. MARION: Very few zero emission vehicles 10 available on the market today are freeway capable and 11 affordable. And ATPERA believes increased adoption of 12 clean vehicles will require a broader selection of choices 13 for consumers that are both freeway capable and 14 affordable. 15 --o0o-- 16 MS. MARION: That's why APTERA strongly supports 17 the inclusion of two- and three-wheeled vehicles known as 18 ZEMs in the clean vehicle rebate program. Including ZEMs 19 increases the product choices that are available for 20 consumers and importantly provides additional 21 transportation alternatives that are both freeway capable 22 and affordable. 23 APTERA's corporate mission, in fact, is to 24 provide consumers with personal transportation that is 25 highly efficient, which aligns very closely with the

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1 objectives of AB 118. 2 --o0o-- 3 MS. MARION: Our first vehicle to market is the 4 APTERA 2e, a prototype of which you just saw outside. The 5 APTERA 2e is a two passenger plug-in electric vehicle, 6 which will be in production starting in the fourth quarter 7 of this year. 8 --o0o-- 9 MS. MARION: The APTERA 2e is an ideal commuter 10 vehicle. It offers 100 mile range per charge freeway 11 capability with a top speed of 90 miles an hour and an 12 affordable price point of 25 to $40,000. 13 In addition, consumers do not need any special 14 infrastructure at home to drive an APTERA 2e, as it 15 recharges on a conventional 110 volt outlet. 16 In addition to supporting California's AB 118 17 objectives, APTERA is supporting California's economic 18 development. We are headquartered in northern San Diego 19 County and will be manufacturing our vehicles there. 20 Our direct employment will add more than 300 jobs 21 in California by year end 2010, and our sales and supply 22 chains will add or protect even more California jobs. 23 APTERA appreciates ARB's leadership in improving 24 California's air quality by supporting increased adoption 25 of light duty-clean vehicles through use of rebates.

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1 We're particularly pleased the staff proposals recognizes 2 the important role that ZEMs have to play in the clean 3 vehicle space. 4 We support the adoption of the staff proposals 5 for the AB 118 guidelines and funding plan. And we 6 encourage the staff and the Board to consider increasing 7 both the rebate amounts and the total rebate dollars 8 available to further enhance the adoption of light-duty 9 clean vehicles. 10 Thank you very much for your time. 11 CHAIRPERSON NICHOLS: Thank you. That's quite an 12 exciting looking vehicle. Appreciate your bringing it. 13 Okay. John Shears with CEERT. 14 MR. SHEARS: Good morning, Chair Nichols and 15 members of the Board. Here we are again. 16 Just want to echo Aleecia's comments. And this, 17 indeed, is an historic week here in California with the 18 Energy Commission approving the AB 118 component 19 investment plan, the OAL approving their regulations, and 20 low-carbon fuel standard yesterday, and today ARB launches 21 its program. 22 And I want to thank and commend the ARB staff 23 who've been diligent, I must say, in reaching out and 24 making sure that they had received a lot of input on 25 designing this program. There's been a lot of very good

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1 thinking that has gone into designing this program. 2 Look forward to working with ARB and with the 3 Energy Commission going forward on the rest of this 4 program and also in helping go after some of the federal 5 stimulus money starting on Monday. 6 We support and urge that you approve the 7 regulations -- to approve the proposed regulations and the 8 funding program. Thank you. 9 CHAIRPERSON NICHOLS: Thank you very much. 10 Max Scheder-Bieschin from Barefoot Motors. 11 (Thereupon an overhead presentation was 12 presented as follows.) 13 MR. SCHEDER-BIESCHIN: Good morning, Madam Chair, 14 members of the Board. My name is Max Scheder-Bieschin. 15 I'm co-founder of Barefoot Motors. We design and assemble 16 100 percent electric off-road utility vehicles. And we 17 thank you for the opportunity to speak today. 18 We want to convey our support for staff's 19 recommendation to include 1.3 million for electric 20 agricultural work vehicles in the proposed 2009-2010 AQIP 21 funding plan. 22 At Barefoot Motors, we have integrated best of 23 class electric propulsion technologies and innovative 24 design to develop rugged, high performance, market-driven 25 vehicles.

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1 Our focus is on agricultural and land management 2 application, ideal environment for the power and torque of 3 electric motors. 4 Our earth utility vehicle is a zero-emissions 5 vehicle. It's clean and quiet and can be powered by 6 renewable energy sources. 7 Next slide. 8 --o0o-- 9 MR. SCHEDER-BIESCHIN: The bin you see is a great 10 bin for harvesting, for example. Fully loaded, it weighs 11 1200 pounds. 12 --o0o-- 13 MR. SCHEDER-BIESCHIN: Barefoot Motors is a 14 relatively young company, but has conducted extensive 15 on-farm field testing in the development of our product. 16 We have received positive reviews from trade publications 17 as well as from excited customers. 18 We are just completing final testing and have 19 interests in place to take us through our summer's 20 production. 21 The type of customers include wineries, dairies, 22 forest owners, ranchers, eco resorts, and orchards. 23 Next slide. 24 --o0o-- 25 MR. SCHEDER-BIESCHIN: I look forward to coming

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1 back to you in three years and showing how setting aside 2 just three percent of your budget turned the tide and made 3 clear once and for all the potential of electric vehicles. 4 --o0o-- 5 MR. SCHEDER-BIESCHIN: Just the last couple 6 comments. 7 Comment, the range question as this is perceived 8 Achilles' heel of the EV industry. This we address by 9 matching the technology with the appropriate applications. 10 The average size of California's farms, 76,000 of them, is 11 349 acres. Do the math, and you will know why we see 12 farmers pleasantly surprised. We don't need 300-mile 13 range. Crisscrossing your land 30 to 40 times during the 14 day is just fine. 15 A comment to cost, the reason AQIP's plan is so 16 spot on. Initially, yes, our up-front cost will be about 17 40 percent more. But because you spend 25 to $3,000 less 18 in fuel and don't spend 25 to 3,000 on engine maintenance 19 and the like, customers pencil out spending 20 percent 20 less over the life of the vehicle. 21 This brings me full circle as to why I will be 22 back here in three years congratulating you. The five per 23 vehicle you set aside under AQIP covers less than 24 one-seventh of one percent of ATVs on California farms 25 today. This credit will help jumpstart California's

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1 efforts to demonstrate the benefits of electric vehicles 2 and will do so in conjunction with those that feed our 3 country. 4 This is great directional leadership you are 5 showing at a time when our country wants to go cleaner and 6 wants to know more about how our food is made. Thank you. 7 CHAIRPERSON NICHOLS: Thank you. One question. 8 BOARD MEMBER D'ADAMO: How long does it take to 9 recharge and what type of power outlet? 10 MR. SCHEDER-BIESCHIN: Standard plug, 110 or 220 11 volt outlet. The on-board charger takes seven hours and 12 the option for two on-board chargers will be three and a 13 half hours. 14 Every hour you charge it, you increase the seat 15 time, as we call it, of three to eight hours for the 16 vehicle you increase it 25 percent. 17 CHAIRPERSON NICHOLS: Thanks. 18 Have you had any feedback about the lack of 19 noise? Do people appreciate that? 20 MR. SCHEDER-BIESCHIN: People love it. People 21 love it. It's incredible. I have a video here, but I ran 22 out of time. During the interview, the vehicle is on and 23 you hear the birds chirping in the orchard. 24 CHAIRPERSON NICHOLS: That's great. Thank you. 25 MR. SCHEDER-BIESCHIN: Thank you.

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1 CHAIRPERSON NICHOLS: Okay. Damian Breen. 2 MR. BREEN: Good morning, Chairperson Nichols, 3 and members of the California Air Resources Board. 4 I'm here this morning representing the Bay Area 5 Air Quality Management District. And I would like to 6 thank you for the opportunity to provide comments on the 7 Air Quality Improvement Funding Plan for fiscal year 8 09-10. 9 In general, the Bay Area Air District strongly 10 supports ARB's efforts to provide funding through AB 118 11 to accelerate the deployment of technologies and programs 12 that look to the future of air quality throughout the 13 state. However, there are two particular issues in the 14 proposed funding plan that we believe may keep it from 15 achieving its overall goals. 16 Firstly, the Bay Area Air Districts feels ARB's 17 definition where the greatest air quality impact can be 18 identified may be too narrow. Based on our review of the 19 proposed funding plan, it seems ARB's focus is decidedly 20 on areas in non-attainment of the federal ambient air 21 standards for criteria pollutants. 22 While the Bay Area Air District applauds this 23 goal of improving air quality in these areas, we feel this 24 program needs also to address areas with specific health 25 concerns. For example, the Bay Area's home to

PETERS SHORTHAND REPORTING CORPORATION (916) 362-234581

1 approximately 22 percent of California's population, and a 2 number of those citizens, those living in the west Oakland 3 community, are highly impacted by toxic diesel particulate 4 emissions. It is important that highly impacted areas 5 like these are also addressed in the funding plan by 6 targeting at least some of the efforts to address areas 7 with toxic concerns. 8 Secondly, the Bay Area Air District feels that 9 many local air districts are better equipped and 10 positioned than unknown third-parties to administer 11 incentive programs that achieve AB 118's goals. 12 ARB's current planning for the AQIP requires that 13 the bulk of funding be distributed through third party 14 vendors through competitive processes that via their 15 statewide nature limited local air district's 16 participation. ARB staff has argued this will make 17 participation easier and that that will get advanced 18 emission reduction technologies into the field earlier. 19 However, the Bay Area Air District feels without those 20 technologies operating in areas where they can be most 21 effective, such as highly impacted communities, and 22 without thought to sustainable infrastructure, these 23 technologies may actually be harmed by ARB's current 24 planning. 25 We would propose that similar to the advanced

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1 technology demonstration projects local air districts be 2 allowed to compete for funding based on the merits of the 3 projects they can solicit. This funding approach would 4 provide air districts with the ability to seek affordable 5 funding from inventive programs, the California Energy 6 Commission portion of the 118 program, local 7 Transportation Commission funds, and be able to support 8 and coordinate the infrastructure needed for these 9 projects to succeed. 10 We at the Bay Area Air District appreciate all 11 the hard work that ARB staff has done on the development 12 of these programs and believe they represent a valuable 13 contribution to the improvement of air quality statewide. 14 We understand that you may not be able to act on 15 these suggestions today, but by considering and 16 incorporating the Bay Area Air District's suggestions, 17 these programs and the AQIP as a whole can have an even 18 greater chance of success now and in the future. 19 And thank you for your attention, and I'm 20 available to answer questions. 21 CHAIRPERSON NICHOLS: Thank you. I appreciate 22 your comments. I just wanted to reflect this is the first 23 year of this program. And I think the staff has done a 24 good job of balancing a lot of different considerations. 25 But I share your fondness for competitive grant

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1 programs in the sense I think they always get people 2 thinking more creatively and give you an opportunity to 3 see an array of different kinds of ideas come forward. So 4 I hope that would be something that we would be able to 5 consider next time around. Thank you. 6 Jay Friedland. 7 MR. FRIEDLAND: And actually it's a real pleasure 8 to be here on this kind of a day. 9 So, first, thank you, Chairman Nichols and 10 members of the Board. And I want to especially thank 11 staff today. I am here to specifically comment on the ZEV 12 Clean Vehicle Rebate Program. But I overall I want to 13 just say what a pleasure it's been to work with staff. 14 They've done a tremendous job in putting together this 15 program, and we feel that it's just been a really, really 16 great process. So they deserve a lot of kudos. 17 CHAIRPERSON NICHOLS: Thank you. 18 MR. FRIEDLAND: As everyone knows, Plug-In 19 America's goal is to get more vehicles on the road. That 20 is our fundamental approach. We want to get more plug-ins 21 on the road. We feel the AQIP program does exactly that. 22 There are key components to it that make a significant 23 difference. We're particularly pleased with the range of 24 vehicles that are covered, everything from ZEMs, the zero 25 emission motor cycles, all the way through zero emission

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1 commercial vehicles. 2 The one thing I guess that I would also add is 3 that basing the program -- at least that part of the 4 program on the very successful AFIP program was an 5 excellent idea, because what it does is allows this money 6 to get out quickly and get into consumers' hands. We 7 really fundamentally believe that getting consumer 8 awareness increasing and getting consumers in vehicles and 9 getting vehicles in showrooms are the key things that are 10 going to create the tipping point for mass acceptance of 11 these vehicles. 12 So one of the things I want to just mention is we 13 come to you in a time where it's a very different time 14 frame. We now have nine OEMs that have announced either 15 plug-in hybrids or pure electric vehicles. It's a very, 16 very different time. 17 The key ask I would say today we would like you 18 this year to consider potentially allocating more money to 19 this program. And beyond that, looking at the out years. 20 Obviously, we want to show a success. 21 One of the things we believe that can happen by 22 allocating more money, we can attract some of the early 23 deployment programs, particularly for plug-in hybrids. 24 And right now, if you look at the numbers, really after 25 you give out the money to the commercial vehicles, which

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1 is about 150 commercial vehicles, you only end up with 2 about 400 full ZEVs or about 600 plug-in hybrids or, you 3 know, the combination of 600 or 700 zero emission 4 motorcycles. 5 So clearly, the funding when you go look at the 6 zero emission motorcycle space, they're talking about 7 thousands of vehicles. Nissan is talking about deploying 8 thousands of vehicles next year. If you look at Chevrolet 9 or General Motors, there's also many, many vehicles there. 10 So we really just like to encourage you. And our 11 proposal is to increase from five million to nine million 12 that number of vehicles or to potentially look at the 13 commercial vehicles and move them over to the hybrid 14 program, which would allocate about three million more 15 into direct consumer rebates. 16 CHAIRPERSON NICHOLS: Thank you. 17 I was just going to ask you the question, because 18 I know you're counting numbers of vehicles. But it seems 19 to me that for air quality and also market development 20 purposes that demonstrating these commercial vehicles is a 21 really important piece. 22 MR. FRIEDLAND: And we believe really the range 23 of vehicles having everything from zero emission 24 motorcycles all the way up to your commercial vehicles, 25 really the commercial vehicles I like to say, you know,

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1 one of the requirements should be as you give money is 2 that somewhere very large on the side of them they should 3 say they're zero emission vehicles as part of the program. 4 You know, so those are rolling billboards for the program. 5 CHAIRPERSON NICHOLS: Thank you. 6 MR. FRIEDLAND: Thank you. 7 CHAIRPERSON NICHOLS: Jamie Hall followed by Matt 8 Miyasato. 9 MR. HALL: Thank you, Madam Chairman and members 10 of the Board, for giving us an opportunity to provide 11 comment here. 12 I'm here on behalf of the CalSTART and the Hybrid 13 Truck Users Forum to express strong support for the AQIP 14 program guidelines and the funding plan for the first 15 year. 16 We commend the staff for their work in developing 17 this hybrid truck and bus voucher incentive program, which 18 is really what I want to focus on. We think this 19 visionary approach should really serve as a model for 20 other technology commercialization efforts in California 21 and around the county. 22 Hybrid trucks and buses are a valuable next 23 generation technology that really provide significant 24 greenhouse gas criteria emission and petroleum reduction 25 benefits. This technology is on the cusp of full

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1 commercialization, but high initial purchase costs really 2 acting as a barrier. These are largely due to low sales 3 and production volumes at this stage in the 4 commercialization process. 5 The hybrid voucher incentive program directly 6 addresses this barrier by providing a buy down right at 7 the point of purchase. This approach is consistent with 8 the recommendations from our hybrid truck users forum 9 working groups and will be far more valuable than the tax 10 credit or other indirect buy down mechanism. 11 The voucher program should jumpstart the 12 commercialization of hybrid technologies. And the need 13 for public support, as Joe mentioned in his presentation, 14 should disappear as volumes increase and costs come down. 15 The beauty of this program from our standpoint is really 16 its simplicity. It's a straight forward, user friendly, 17 transparent, and easy to understand program. 18 This meets the needs of both fleet operators and 19 manufacturers without creating additional barriers or 20 administrative burdens. We believe this is the best 21 approach and do not recommend further complicating the 22 program by adding geographical or other restrictions 23 beyond those contained in the staff recommendations. 24 California's innovative policy will help the 25 state meet its 2020 greenhouse gas goals. It will also

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1 help jumpstart an industry with economic and environmental 2 benefits, including the creation and retention of green 3 jobs in advanced vehicle manufacturing. We believe this 4 hybrid voucher program can and should serve as a national 5 model, and we are working to make this happen. 6 Thank you again for the opportunity to provide 7 input today and throughout this process. The staff has 8 been great to work with. And we think you definitely 9 should adopt the plan as is. 10 CHAIRPERSON NICHOLS: Well, CalSTART has been 11 keeping this flame going for a long time now. It's much 12 appreciated. 13 Mr. Miyasato, followed by Mel Assagai. 14 (Thereupon an overhead presentation was 15 presented as follows.) 16 DR. MIYASATO: Thank you, Madam Chair, members of 17 the Board, I have some slides. 18 --o0o-- 19 DR. MIYASATO: For the record, I'm Dr. Matt 20 Miyasato, the Assistant Deputy Executive Officer for 21 Technology Advancement at the South Coast AQMD. 22 I'm providing on behalf of the South Coast staff 23 our comments and input on the proposed funding plan as 24 well as the guidelines. 25 --o0o--

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1 DR. MIYASATO: Overall, we're very supportive of 2 the program, specifically the staff's recommendation for 3 maintaining flexibility. You noticed on the staff 4 presentation slide four that showed half a billion dollars 5 of investment incentive. But you also noticed it could be 6 a bit convoluted and confusing with all of those funding 7 incentive programs as adopted with all the regulatory 8 requirements. So who could argue the goal of the program 9 to reduce criteria pollutants. We certainly wouldn't want 10 to argue that and support that. 11 We also support staff's focus in areas that do 12 not already incorporate incentive fundings. If you click 13 the mouse one more time, we urge the Board to direct staff 14 to propose an integrated review of a comprehensive program 15 that looks at all of the incentive programs and identify 16 which technologies can be funded under each of those 17 programs and then use the flexibility that's allowed by AB 18 118 to perhaps go after additional emission reductions 19 that aren't afforded by the incentive programs. So have 20 an integrated and comprehensive approach to how you invest 21 that half a million dollars in incentives. 22 Next slide. 23 --o0o-- 24 DR. MIYASATO: And we're extremely interested in 25 these incentive programs, because as you know, we have the

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1 worst air quality not only in the state, but in the 2 nation. And we are faced with reducing NOx emissions from 3 many different sectors. But you'll notice in our 4 different inventories the off-road heavy-duty diesel 5 equipment and heavy-duty diesel trucks are the two bad 6 actors that we have to face. You can see the tons per day 7 of NOx emissions reductions that were required to meet our 8 PM2.5 standard and the 2023 ozone standard. They're about 9 200 tons per day as well as almost 400 tons per day. It's 10 a huge amount. 11 So what we really need are the cleanest available 12 technologies brought to bear as soon as possible. 13 If you go to the next slide. 14 --o0o-- 15 DR. MIYASATO: What we recommend is the funding 16 plan incorporate funding of the cleanest technologies. 17 For example, 2010 compliant heavy-duty trucks. There are 18 engines available now that meet that requirement. We 19 would further suggest that instead of dedicating the full 20 25 million to hybrid trucks, that some of those funds be 21 used for these cleanest available technologies. And also 22 give the priority to the cleanest technologies in each of 23 those different categories. 24 We further suggest that the environmental justice 25 portion of the guidelines not be just a nice to have, but

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1 that you really have them address it in each and every 2 solicitation. Instead of would discuss each of these 3 things, we would suggest shall discuss and provide higher 4 priority projects that are located in environmental 5 justice areas. 6 One final comment, Madam Chair. We are looking 7 forward to working with your staff in implementation of 8 this program, specifically in our lawn mower exchange 9 program. I might note we just opened our exchange program 10 this week, close to 5,000 units, 90 percent have been 11 reserved since Tuesday so it's clear we do need additional 12 funding, because it's going to be an oversubscribed 13 program. And we're looking forward to working with you in 14 the future. 15 CHAIRPERSON NICHOLS: Good. Thank you. 16 On the environmental justice overlay on this, one 17 of the problems I think we're finding this year is that 18 districts differ a lot in terms of how they designated 19 environmental justice areas. The boundaries are in some 20 places very small. In others, they are very huge. Not 21 just based on numbers of people, but on sort of political 22 decisions that were made, policy decisions I should say. 23 I don't need to minimize it. But this is one of those 24 things we need to be working on. And we are with our 25 friends at OEHHA to try to clarify it.

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1 BOARD MEMBER BALMES: I would just respond by 2 saying we have one screening that we funded, which I would 3 still like to see us try to move into use. I know OEHHA 4 is working on other tools. But we need these tools to 5 assess cumulative impacts. 6 CHAIRPERSON NICHOLS: And this should be applied 7 in the area of grant programs as well. So that's a 8 consideration I'd like to see pushed forward as we move on 9 with this grant program. 10 Okay. For the next speaker we have Mr. Assagai 11 and Colleen Quinn. 12 MR. ASSAGAI: Good morning, Madam Chair and 13 members. I'm Mel Assagai for Navistar. Our subsidiaries 14 produce the IC brand school bus and commercial school 15 buses workhorse brand chassis for motorhomes and the 16 durastar which was demonstrated out front. We're in very 17 strong support of the staff's AQIP guidelines and the 18 funding. We think this staff has gone out and become a 19 partner with industry in producing the kind of 20 technologies that meet the challenges of the state. 21 You have through this program helped us develop 22 products that lower emissions and lower greenhouse gas 23 emissions at the same time. 24 As you know, in Napa, we have a school bus that's 25 a plug-in hybrid that has twice the fuel efficiency of

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1 other low-emission buses and 40 percent less greenhouse 2 gas emissions. 3 We also have trouble trucks like the one you -- 4 well, similar in technology to the one that Mr. Williams 5 demonstrated out front that provide immensely lower 6 greenhouse gas emissions and greater fuel efficiency. 7 We think your program and this plan have been 8 able to jumpstart the kind of technologies California 9 needs to meet its greenhouse gas emissions reductions. 10 And we are very much excited to work with you in that 11 quest. And very proud to announce today that ours is the 12 first company to get certification for its electric diesel 13 electric hybrid technologies for both buses and trucks. 14 So thank you very much for your outreach. And 15 thank you so much for your cooperation. We look forward 16 to working with you. 17 CHAIRPERSON NICHOLS: Thank you. Appreciate your 18 comments. 19 Colleen Quinn and then Bonnie Holmes-Gen. 20 (Thereupon an overhead presentation was 21 presented as follows.) 22 MS. QUINN: Thank you, Madam Chairman and Board. 23 My name is Colleen Quinn. I'm here representing Vectrix. 24 --o0o-- 25 MS. QUINN: We're here to support the proposed

PETERS SHORTHAND REPORTING CORPORATION (916) 362-234594

1 funding plan for the AB 118 Air Quality Improvement Plan, 2 AQIP. Specifically, I'm here to talk about the rebate 3 program for zero emission motorcycles. 4 You were able to see our vehicle out front. We 5 are the world's first zero emission high performance, 6 street legal, mass produced consumer electric vehicle in 7 the world. And we have participated successfully in your 8 AFIP program. 9 We worked closely with your staff to ensure that 10 the spirit and implementation of the plan has addressed 11 your goals and objectives. 12 This morning I want to share with you some data 13 that I think will be informative to all of you to tell you 14 how this program has been working. And most importantly, 15 how consumer acceptance and market impact for these 16 vehicles has impacted in California and also to review the 17 fact that once again California has been put in front -- 18 in the forefront of critical policies that are now being 19 replicated nationally. 20 --o0o-- 21 MS. QUINN: Little background on Vectrix. You're 22 able to see the vehicle out front. But we hold over 36 23 relevant patents in this vehicle. We are a leader in the 24 electric vehicle technology. And as a result, we have 25 over 200 man years of development into this vehicle.

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1 We have taken this technology from our C&D into 2 commercialization through internal development. We have 3 produced over 2,000 electric vehicles. 4 It is a two-wheel vehicle run on 3.7 kilowatt 5 hour nickel metal hydride battery. It has a maximum speed 6 of 62 miles an hour that accelerates from zero to 50 in 7 6.8 seconds. It recharges in 2.5 hours with a range of 35 8 to 55 miles. 9 --o0o-- 10 MS. QUINN: I think one of the things that you 11 were attempting to do with this program is to determine 12 whether or not there would be an impact on the California 13 market. 14 Well, California is Vectrix's most successful 15 market in the United States, accounting for over 16 one-quarter of all of our sales in the country. The 17 rebate has helped to lower the cost differential between 18 the Vectrix vehicle and its all-gas equivalent, but by 19 lowering that number from 60 percent to 33 percent. 20 --o0o-- 21 MS. QUINN: The other point I want to make is 22 electric motorcycles are an integral part of the green 23 technology economy and provide jobs in California. We 24 have the largest distribution network in the country with 25 82 dealers, eleven of which are in California contributing

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1 to supporting 220 jobs in the state. Our motor controller 2 component manufacturer is also located in the state. 3 --o0o-- 4 MS. QUINN: I think another important point that 5 you're worried about is what kind of usage will these 6 vehicles get. Well, one thing is certain. Vectrix 7 consumers use their vehicles as a commuting alternative to 8 their cars. We have polled consumers all over the state, 9 and you can see that we have an average of 4,000 vehicle 10 miles traveled per year. 11 CHAIRPERSON NICHOLS: You have ran out of time. 12 MS. QUINN: Well, thank you very much. I just 13 want to say we support the program and hope that you will 14 continue the $1500 rebate. 15 CHAIRPERSON NICHOLS: Thank you. We appreciate 16 the data that you brought also as well as the motorcycle. 17 Bonnie Holmes-Gen, followed by Mark Aubry. 18 MS. HOLMES-GEN: Chairman, Nichols and Board 19 members, first of all, congratulations again on your 20 historic decision yesterday. And we are pleased to be 21 here again today to support the investment plan, the 22 guidelines for the AB 118 AQIP program, and to be part of 23 the launch of this important program for spending $50 24 million a year in air quality funding. 25 And I wanted to comment that we agree with the

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1 funding priorities in the plan. We do appreciate the 2 staff's hard work and have to compliment the staff on 3 their level of effort to outreach and include us, even 4 when we're harried and running around on so many projects. 5 And also I do appreciate that the Air Board and 6 the CEC staff had a very good level of coordination. It's 7 important to ensure we're maximizing the use of the whole 8 $200 million and covering the basis and getting the 9 funding out for key technologies. 10 And when we start off getting engaged in this 11 effort, we were concerned that the funding should be 12 focused on a few key areas to maximize the impacts on 13 technology development deployment. And we do think the 14 final recommendations are doing that and focusing funding 15 a big chunk on the hybrid heavy-duty technologies and 16 smaller but still very important chunks on EV and hybrid 17 electric deployment for heavy duty. 18 I wanted to just comment that this funding is 19 especially important in these difficult fiscal times. And 20 it's so important to have this funding. And former 21 Speaker Nunez got this bill passed, and it wasn't easy at 22 the time. It was a difficult project. And we really look 23 forward to the Board reporting back to the Legislature in 24 the next year and briefing them on a tremendous success 25 that you're going to be achieving with this funding.

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1 And I think that will be very, very helpful in 2 ensuring the Legislature continues support for this 3 program. So we support the effort. Thank you for the 4 hard work. And let's get going with it. 5 CHAIRPERSON NICHOLS: Thank you for all of your 6 help in securing the funding in the first place. 7 Mr. Aubry. 8 MR. AUBRY: Good morning. 9 CHAIRPERSON NICHOLS: Good morning. 10 MR. AUBRY: My name is Mark Aubry. I'm Vice 11 President of Sales for Smith Electric Vehicles. 12 Thank you for everyone being here on the Board 13 and everyone of the Air Resources Board staff. 14 This is an historical moment and certainly has 15 been an historical week. And we fully support the passing 16 of this AQIP bill and certainly the $20,000 per vehicle on 17 the commercial electric vehicle side. 18 From an historical standpoint, Smith Electric 19 vehicles has over 90 years of experience and numerous 20 major corporations across Europe and now into North 21 America that will be taking some of our largest commercial 22 products and also in coordination with Ford Motor Company 23 later on this year and begin using some of the money that 24 today will be passed by the Air Resources Board. 25 I think one of the things that we would like to

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1 notice is that the support of Air Resources Board shows 2 once again California's leadership in leading the nation 3 and changing air transportation. As we begin production 4 in July of 2009, one of our major plans is to steer the 5 numerous launch partners that we have to replace our 6 current short hall vehicles with our vehicles in order to 7 begin using the Air Resources Board resources and helping 8 increasing California jobs. And also inconclusive of 9 that, the universities involvement teaching and training 10 students and in-house mechanics how to work with 11 all-electric commercial vehicles. 12 With that being said, we fully support it. Thank 13 you for all the hard work that Joe Calavita and his team 14 did. Look forward to working with the Air Resources Board 15 staff. 16 CHAIRPERSON NICHOLS: Thank you. Thank you for 17 coming today. 18 Okay. I have no further witnesses. I think it 19 is time to close the record. Having received written 20 testimony as well as staff comments and put those into the 21 record, and we are not going to need to grant any 22 extensions for the comment period, so we can close the 23 record on Agenda Item Number 6. That will then put us in 24 the position to move to consideration and a vote. 25 I think we should disclose any ex partes

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1 communications, if there are any. Anybody have any to 2 report? 3 BOARD MEMBER BALMES: Before we do that, I 4 actually wanted to bring up questions. 5 CHAIRPERSON NICHOLS: We can ask questions or -- 6 BOARD MEMBER BALMES: We already moved to the ex 7 parte. 8 CHAIRPERSON NICHOLS: We can continue to ask 9 questions. I'll back off. 10 BOARD MEMBER BALMES: This is actually for Dr. 11 Telles who -- 12 CHAIRPERSON NICHOLS: Yes, he was not able to be 13 here today unfortunately. 14 BOARD MEMBER BALMES: He has one of his kids is 15 in the hospital in San Jose. 16 But he asked me to bring up whether -- doesn't 17 sound like for this year, but maybe in the future these 18 moneys could be used for non-vehicle technologies. 19 Specifically, I'm going to read what he said so I don't 20 misquote him. 21 "A good use would be to have grants for biofuel 22 plants in the San Joaquin Valley to be used to help them 23 acquire NOx filters. In our polluted valley, these plants 24 have to get expensive filters. The expense of these 25 filters has limited the expansion of projects like methane

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1 digesters on dairies. With 2,500,00 dairy cattle in the 2 San Joaquin Valley, we can make a lot of methane." 3 So I'm just passing that on from Dr. Telles. 4 EXECUTIVE OFFICER GOLDSTENE: Thank you. Give us 5 a moment. 6 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: If that 7 example -- it doesn't have to do with transportation, then 8 it doesn't work here. But things like biofuel plants that 9 provide transportation fuel are one of the subjects at the 10 Energy Commission $120 million or so a year is aiming at. 11 EXECUTIVE OFFICER GOLDSTENE: We'll pass that 12 comment on to the Energy Commission. 13 BOARD MEMBER BALMES: Maybe you could get back to 14 Dr. Telles. 15 EXECUTIVE OFFICER GOLDSTENE: We'll do that. 16 BOARD MEMBER BALMES: Thank you. 17 CHAIRPERSON NICHOLS: Another comment, yes. 18 BOARD MEMBER D'ADAMO: I can't find the slide 19 that I wanted to refer to. 20 Did you have two separate presentations? I 21 thought it was all one. There was a slide that referred 22 to the different programs, funding programs. 23 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Page 2. 24 If you have a double one like we do, it's page 2 of this. 25 BOARD MEMBER D'ADAMO: Oh, there it is. A long

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1 last couple of days. 2 So slide four. This is not the time to get into 3 a discussion about the on- and off-road rules. But 4 looking at this reminds me of the tremendous need that we 5 have. And I know that we have got infusion of funds in 6 the program. But I think staff is really supporting 7 use -- big portion of those funds for locomotives. 8 So I'm wondering if staff could come back to us 9 at some point with a discussion sort of honed in on the 10 on- and off-road rule strategies for incentive funds. 11 I think with what Dr. Telles talked about 12 yesterday, his concern about the impact that these rules 13 are having on certain regions of the state, that might be 14 a good way to channel, you know, some of our energy. 15 CHAIRPERSON NICHOLS: Yes. I think an overview 16 of the strategy behind how we allocate this money and 17 where the big gaps are if we see them, it would be I think 18 useful, because the Legislature keeps creating new 19 different programs instead of taking an overview of what's 20 there in existing programs. So we may need to do that for 21 them. 22 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: I think 23 we have at least three different events coming up between 24 now and December, the end of the year, that recap parts of 25 the on- and off-road rule. And so maybe what we can do is

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1 each time we come back, we should not make it the sole 2 subject, but we can include an update on where we are on 3 funding. So like when -- in July, we're going to do the 4 revisions for the budget change that effects the off-road 5 rule and we could at least at that time summarize how the 6 pilot program for funding is going in the valley and 7 whether, you know, your other Moyer things. Because some 8 of the changes we're making are aimed at reducing the 9 costs of the program. So we can do that. And then we've 10 got on-road truck rule revisions I think were coming back 11 in September or October on that. Not revisions, but to 12 update you on that program. 13 So would that be okay, every time we come back 14 we'll include something on funding? 15 BOARD MEMBER D'ADAMO: Sure. That would be fine. 16 I didn't mean to have the focus be on the valley, 17 statewide. But also to put it in perspective when we see 18 large amounts of money, 250 million, 200, et cetera, what 19 does that mean in terms of how far that gets us with 20 compliance? 21 EXECUTIVE OFFICER GOLDSTENE: We can make sure 22 when we present that we're able to show the context of 23 where it fits in. As Chairman Nichols said, where the 24 gaps might be. 25 CHAIRPERSON NICHOLS: How far we have to go.

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1 Those sounds like such big sums, and of course they are. 2 Yet in comparison to the need, oftentimes, they're really 3 a drop in the bucket. 4 I need to push back a little bit on your comment 5 though, Mr. Cackette, about the digester projects. I 6 would agree with you if they were building a digester and 7 using the gas to create electricity to pump on the farm or 8 something like that. But if they were using it to create 9 a fuel that could be used in a vehicle, then it would be 10 eligible. 11 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Yes. 12 CHAIRPERSON NICHOLS: I know there's been some 13 different views about what the best ways to handle many of 14 these agricultural -- but dairy digesters are the biggest 15 focus I know for us at this point. 16 But there are different technologies that can be 17 used for everything, from tree trimmings to clippings and 18 all of that that where people have a real choice as to 19 what the product is they want to produce, whether they 20 want to try to go to a gas or to electricity. I don't 21 know if we're trying to direct that kind of thinking one 22 way or another. 23 ON-ROAD CONTROL REGULATIONS BRANCH CHIEF 24 KITOWSKI: If we can interject. 25 The statute actually does prohibit us from making

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1 infrastructure or fuel-related projects within our 2 funding. So the comment back to CEC really is where this 3 project, even if the digester was used to make a fuel, it 4 still is a CEC project. 5 CHAIRPERSON NICHOLS: It's not within our ARB 6 pot. But it's within AB 118. You're right of course. 7 Sorry. Thank you. 8 Yes. 9 BOARD MEMBER D'ADAMO: Sorry to take up so much 10 time, but this reminds me. I have received so many 11 comments from dairymen and from dairy associations about 12 the challenge with criteria pollutants. 13 So I think not just handing it off to CEC, but 14 maybe if we could get Ms. Terry and others to work -- put 15 together a meeting and do some follow-up on the air 16 quality piece as well. There seems to be a lot of angst 17 out there in the ag community. 18 DEPUTY EXECUTIVE OFFICER TERRY: Yes, actually 19 there is. We are working with our technical staff as we 20 speak over the next few weeks to try to pull together a 21 comprehensive overview of this issue. And it is primarily 22 in the valley, because as Chairman Nichols talked about, 23 there are lots of different potential decisions about the 24 form of the project, what the ultimate fuel is, whether it 25 goes in a pipeline, whether it goes into a fuel cell

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1 versus a diesel engine. 2 So our technical staff are working on sort of a 3 more comprehensive overview that we think could help frame 4 the issue. And once that's done, perhaps it might be 5 something appropriate to present to the Board at some 6 point for -- 7 CHAIRPERSON NICHOLS: Well, particularly if there 8 are opportunities to work in conjunction with the Energy 9 Commission on this, that would be good. This is one of 10 the thorniest issues I have encountered yet given the 11 difficulties that different people seem to have of 12 defining what the problem is, what the project is. We 13 know there is technology out there. We know there is a 14 better way to do things than what we're doing today. But 15 we seem to be having a hard time getting a collective 16 vision of where we're headed. I know Ms. Terry and her 17 staff have been doing a lot of work on this issue. I'm 18 glad to hear it's not stalled. 19 Okay, yes. 20 BOARD MEMBER YEAGER: Yes. Thank you. 21 I'm wondering if staff could talk more about the 22 idea of this third-party vendor. I know that some of the 23 air districts for a lot of good reasons think they're in a 24 better position with this. I'm a little worried about 25 paying additional overhead costs perhaps depending on who

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1 was hired. 2 What kind of evaluation process are we going to 3 have to see how they are distributing the funds? 4 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Let me 5 tell you why we have third party vendor. Under State 6 budgetary rules, the general theme is when we get money, 7 we got to get rid of it real quick. We have to spend it 8 or contract or do whatever is supposed to be done with it. 9 On many of these incentive programs, what we need 10 is the money could be out there for two or three years, 11 because we don't know when exactly some of these new 12 technologies will come into place and when they'll start 13 ramping up. So we've chosen to use a second party, 14 contract with them to be the bank that then distributes 15 the incentives to whichever sector is being done. That's 16 the reason why we have to do it that way versus just 17 leaving it, for example, at the State. 18 BOARD MEMBER YEAGER: Air districts couldn't play 19 that role of being a bank? 20 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Yes, 21 they could. So we have had discussions with them about 22 whether they would be interested, either CAPCOA as a group 23 or even one air district who would be willing to do this 24 on a statewide basis. 25 In other words, not only pay the money for

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1 projects in their areas, but also Bay Area and South Coast 2 as well. And we've asked them for a proposal. We haven't 3 got one yet. We're still talking to them. And they 4 certainly can compete along with private sector people for 5 that contract to distribute funds if they wanted to. 6 There's still time for them to do that. Let me just ask 7 if there's -- 8 ON-ROAD CONTROL REGULATIONS BRANCH CHIEF 9 KITOWSKI: I also think it's -- you've heard from a number 10 of commenters today that they believe the approach that we 11 have is streamlined and will allow for the efficient 12 operation. 13 I think it's important that one other fact get on 14 the table. The legislative -- there isn't legislative 15 overlay related to this in that the legislation does 16 require a competitive aspect to the funding. So, for 17 instance, the Board could not say we like your voucher 18 program for heavy-duty hybrids, but we want to go through 19 and assign so much to South Coast, so much to Bay Area, so 20 much to each district. That would not be consistent with 21 the legislative direction. There needs to be a 22 competitive point in there some place. And as Mr. 23 Cackette said, CAPCOA as an entity is certainly allowed to 24 compete in that. 25 BOARD MEMBER YEAGER: Just one other question.

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1 I know some of these programs are just going to 2 be available to a certain number of the air districts. 3 I'm just wondering if in the future we'll be able to 4 broaden it so that all the air districts in the area in 5 this state will be able to apply for them, or what the 6 timing it might be on that. 7 ON-ROAD CONTROL REGULATIONS BRANCH CHIEF 8 KITOWSKI: There actually are not any of the categories 9 that are limited. Any one of the categories are open to 10 all air districts. There is only one category, 11 specifically lawn and garden, that has extra points for 12 the air districts that are in more severe attainment 13 areas. So they get bonus points. But every air district 14 is allowed to compete for the funds across each and every 15 category. 16 BOARD MEMBER YEAGER: That wasn't my 17 understanding. Thank you for that clarification. 18 CHAIRPERSON NICHOLS: All right. Can we move 19 forward now? Are we ready? 20 So at this time, not only is the record closed, 21 but it's time to move towards a vote, which means we have 22 to go through the disclosure of ex partes. I'll start. I 23 don't have any. 24 BOARD MEMBER BALMES: Neither do I. 25 BOARD MEMBER BERG: I had a phone call on April

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1 22nd with South Coast Air Quality and Henry Hogo and Matt. 2 BOARD MEMBER YEAGER: I had conversations with 3 Bay Area Air Quality Management District. 4 CHAIRPERSON NICHOLS: As you would expect. 5 Great. 6 Anybody on this side here? No. No. 7 I think we're ready to have a motion and vote, I 8 think. 9 BOARD MEMBER D'ADAMO: Move adoption of -- do you 10 want to do separate ones? 11 CHAIRPERSON NICHOLS: We can do them together. 12 BOARD MEMBER D'ADAMO: Move adoption of 13 Resolution 09-3-2 and 09-3-3. 14 CHAIRPERSON NICHOLS: Okay. 15 BOARD MEMBER BALMES: Second. 16 CHAIRPERSON NICHOLS: All in favor please say 17 aye. 18 (Ayes) 19 CHAIRPERSON NICHOLS: Any opposed? 20 Very good. It's done. 21 We've had no sign-ups for general comment at this 22 time, so therefore we will stand adjourned. 11:27 AM 23 (Thereupon the California Air Resources Board 24 adjourned at 11:27 a.m.) 25

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1 CERTIFICATE OF REPORTER 2 I, TIFFANY C. KRAFT, a Certified Shorthand 3 Reporter of the State of California, and Registered 4 Professional Reporter, do hereby certify: 5 That I am a disinterested person herein; that the 6 foregoing hearing was reported in shorthand by me, 7 Tiffany C. Kraft, a Certified Shorthand Reporter of the 8 State of California, and thereafter transcribed into 9 typewriting. 10 I further certify that I am not of counsel or 11 attorney for any of the parties to said hearing nor in any 12 way interested in the outcome of said hearing. 13 IN WITNESS WHEREOF, I have hereunto set my hand 14 this 8th day of May, 2009. 15 16 17 18 19 20 21 22 TIFFANY C. KRAFT, CSR, RPR 23 Certified Shorthand Reporter 24 License No. 12277 25

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