PROPOSED 2003 STATE AND FEDERA L STRATEGY FOR CALIFORNIA SIP SECTION V – POTENTIAL IMPACTS



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PROPOSED 2003 STATE AND FEDERAL STRATEGY FOR THE CALIFORNIA STATE IMPLEMENTATION PLAN

SECTION V

POTENTIAL IMPACTS

Release Date: August 25, 2003 Hearing Date: September 24-25, 2003PROPOSED 2003 STATE AND FEDERA L STRATEGY FOR CALIFORNIA SIP SECTION V – POTENTIAL IMPACTS

TABLE OF CONTENTS

CHAPTER A. ENVIRONMENTAL IMPACT ANALYSIS ..................................... V-A-1

1. The California Environm ental Quality Act..................................................... V-A-1 2. Project Alter natives ...................................................................................... V-A-2 3. Potential Adverse Envi ronmental Im pacts.................................................... V-A-3 4. Cumulative Impacts of State Measur es and Local District Measures......... V-A-25 5. Impacts of the Individua l Defined Meas ures............................................... V-A-25 6. Environmental Justice ................................................................................ V-A-35

CHAPTER B. ECONOMIC IMPACT ANALYSIS ................................................. V-B-1

1. Cost of Defined St ate Measur es .................................................................. V-B-2 2. Economic Im pacts........................................................................................ V-B-8 3. Conclusi on ................................................................................................. V-B-11PROPOSED 2003 STATE AND FEDERA L STRATEGY FOR CALIFORNIA SIP SECTION V – POTENTIAL IMPACTS



### Staff Contact List

Subject Contact Email Phone
Environmental Impact

Analysis Darrell Hawkins dhawkins@arb.ca.gov (916) 322-2745

Economic Impact Analysis Reza Mahdavi rmahdavi@arb.ca.gov (916) 323-8704PROPOSED 2003 STATE AND FEDERA L STRATEGY FOR CALIFORNIA SIP SECTION V – POTENTIAL IMPACTS

ENVIRONMENTAL IMPACT ANALYSIS V-A-1 This chapter is unchanged fr om the Section V, Chapter A. Environmental Impact Analysis chapter that was released on May 12, 2003, except for the addition of one footnote.

CHAPTER A. ENVIRONMEN TAL IMPACT ANALYSIS

1. The Californi a Environmental Quality Act

The California Environmental Qualit y Act (CEQA) and ARB policy require an analysis to determine the potential adverse environmental impacts of proposed projects. This chapter presents ARB’s analysis of t he potential adverse environmental impacts of the Proposed State and Federal Strategy (Strat egy). This chapter also summarizes and discusses ARB’s environmental justice policies and identifies the specific strategies in the Proposed Strategy that, if adopted, will reduce air pollution at the community level.

ARB’s program involving adopt ion or approval of standar ds, rules, regulations, and plans has been certified by the Secret ary of Resources as meeting certain environmental standards set forth in CEQA (see Public Resources Code section 21080.5). Hence, ARB need only prepare “functionally equivalent” environmental documents inst ead of Initial Studies, Negative Declarations, and Environmental Impact Reports. In addition, AR B will respond in writing to all significant environmental concerns raised by the public during the public review period or at the Board hearing.

In order to provide for meaningful public review and comment on this environmental analysis, it is im portant to first explain what this analysis is not. This chapter does not set forth in detail the benef icial environmental impacts that will result from the Proposed Strategy. ARB is proposing the measures contained in the Proposed Strategy because they will benefit air quality. The rest of this report discusses the measures and thei r intended benefits. This c hapter focuses primarily on the potential adverse environmental impacts that may result fr om the State defined measures identified in the Strategy.

Furthermore, this chapter cannot and does not contain a detailed, quantitative impact analysis of the control strategies c ontained in the Proposed Strategy. Because the Proposed Strategy is a plan for future ac tion to adopt measures and strategies for which specific regulatory language has not yet been developed, this analysis is necessarily general and qualitative. Each strategy will be developed over time. Some may be developed as incentive or volunt ary programs. Most will be proposed in regulatory format with full public participati on. The regulatory measures will undergo a detailed environmental analysis as requi red by CEQA, will be discussed at public workshops, and will go through the public heari ng process as required by law (see the Administrative Procedure Act, Gov. Code section 11340 et seq.). When specific regulatory language is developed, it will be possible to analyze potential environmental impacts in detail. In this chapter of the Proposed Strategy, potential environmental impacts are estimated to the extent currently feasible.PROPOSED 2003 STATE AND FEDERA L STRATEGY FOR CALIFORNIA SIP SECTION V – POTENTIAL IMPACTS

ENVIRONMENTAL IMPACT ANALYSIS V-A-2 2. Project Alternatives

CEQA requires an Environmental Impact Report (EIR) to describe and evaluate the comparative merits of a range of reasonable alternativ es to a proposed project [CEQA Guidelines Section 15126 (d)]. Alter natives chosen for analysis should feasibly attain the basic objectives of the proposed pr oject. The range of al ternatives required in an EIR is governed by the "rule of reason" t hat the EIR set forth only those alternatives necessary to permit a reasoned choice. An EIR need not consider an alternative whose effect cannot be reasonably ascertained and whose implementation is remote and speculative [CEQA Guidelines Section 15126 (d)(5)(c)].

a. Alternative 1 - ‘No Project’

CEQA requires a specific alternative of ‘no project’ to be evaluated. CEQA documents typically assume that the adoption of a ‘no project’ alternative would result in no further action on the part of the project proponent or lead agency. For example, in the case of a proposed housing developm ent project, adopting the ‘no project’ alternative terminates further considerati on of that housing development or any housing development alternative identif ied in the associated CEQA doc ument. In that case, the existing setting would remain unchanged.

One interpretation of the ‘no project’ al ternative is that if the ‘no project’ alternative was selected, all the measures in the Proposed St rategy are rejected. Since the Proposed Strategy contains all current ly known feasible State strategies or measures that ARB could potentially take to reduce ozone, this would mean that no additional measures on existing sources or measures on uncontrolled sources would be developed. The result would be the continua l deterioration of California air quality as population increases. In addition, Californi a would fail to meet SIP commitments and would be subject to federal sanctions. Water quality would suffer as acidic rain increases and toxic air contaminants are deposited on the ground. Public exposure to toxic materials would increase. Higher le vels of air pollutants would deteriorate aesthetics by increasing haze and would dam age crops. On the positive side, there might not be the small increases in solid and hazardous waste that could result from the

measures.

b. Additional Alternatives -Adopti ng Fewer Strategies or Measures, or Adopting Strategies or Measures wi th Different Emission Standards

As mentioned previously, the Proposed Stra tegy contains all feasible State strategies or measures to reduce ozone that ARB staff is currently aware of. Instead of adopting all of these measures, ARB coul d adopt only some of them. Numerous alternatives therefore exist to adopt various subsets of the measures identified in the Plan. In addition, for each individual meas ure there exists many alternatives for different possible emission standards or levels of control for the sources that are being regulated.PROPOSED 2003 STATE AND FEDERA L STRATEGY FOR CALIFORNIA SIP SECTION V – POTENTIAL IMPACTS

ENVIRONMENTAL IMPACT ANALYSIS V-A-3 It is not possible to examine these many alternatives in detail without engaging in speculation, because the measures ulti mately adopted by ARB will depend on the information that is learned in the future dur ing the regulatory devel opment process. In general, however, ARB staff believes that it will be necessary to adopt all Strategy measures and emission standards that are determined to be feasible, rather than a subset of feasible measures and standards. Th is is because to attain the federal ozone standard in the South Coast and San Joaquin Valley, significant additional emission reductions will be needed beyond t he defined measures specifically identified in the Strategy. Therefore, faili ng to adopt all feasible measures and emission standards would result in failure to meet Californi a’s SIP commitments, and would subject the State to sanctions under the federal Clean Air Act.

3. Potential Adverse Environmental Impacts

The following environmental impact areas were considered for each proposed control measure.

• Water Resources

• Air Quality

• Energy Demand

• Hazards and Hazardous Materials

• Solid / Hazardous Waste

• Noise

• Transportation and Traffic

• Aesthetics

• Agricultural Resources

• Biological Resources

• Cultural Resources

• Geology and Soils

• Land Use and Planning

• Mineral Resources

• Population and Housing

• Public Services

• Recreation

Each environmental impact area is described below. Impacts considered potentially significant are noted in parenthesis at the end of each description. A detailed reference table identifying each measure in the Proposed Strategy, any potential adverse environmental impacts, and some potentia l mitigation measures is at the end of this section.

At this time, some measures have been developed more fully than others and more impacts have been identified. Howeve r, for those less developed strategies, wePROPOSED 2003 STATE AND FEDERA L STRATEGY FOR CALIFORNIA SIP SECTION V – POTENTIAL IMPACTS

ENVIRONMENTAL IMPACT ANALYSIS V-A-4 have attempted to include any potential impact that reasonably could occur, given our present knowledge.

a. Water Resources

This environmental analysis of water resources is divided into two major categories – water quality and water demand. Several potentially significant adverse water quality impacts are identified, includ ing impacts from alternative transportation fuels, and reformulated low-VOC consumer produc ts. However, the cu mulative effect of the Proposed Strategy is expected to be beneficial to water quality. No significant water demand impacts have been identified.

Measures in the Proposed Strategy wit h potential water quality impacts are described further below.

i. Water Quality

Although rain can effectively scrub the air clean, air pollutants absorbed by rainwater can have an adverse impact when deposited into surface waters. NOx and SOx emissions can form acids that can lowe r the pH of sensitive mountain lakes and streams and adversely affect t he flora and fauna. NOx emissi ons can oxidize to nitrate, a powerful fertilizer, and can spur algae growth contributing to lake water turbidity and algae blooms. Organic molecules can be depos ited in surface waters and affect the aquatic plants and animals. Toxic air cont aminants (TACs) can dissolve in rain and eventually stress or kill organisms.

Cumulative Impact: The Proposed Strategy w ould significantly reduce a number of air pollutants and the reductions in deposition will improve overall water quality in California, es pecially in sensitive lakes in t he Sierra Nevada and other eastern mountains. Also, accelerated retirement of older equipment with potentially leaky gasoline or diesel engines will reduce fluid (o il and grease) drips, resulting in cleaner storm water runoff.

The use of alternative fuels is not expec ted to result in greater adverse water quality impacts than the use of regular petroleum-based fuels. A number of regulations are currently in place to minimize the potential impacts from leaks and spills. The reformulation of consumer products to reduce VOC emissions can be monitored to minimize any potential adverse impacts on water quality. The few measures with a potential for adverse water quality impacts would include mitigation strategies to minimize their limited impact. Cumulati ve impacts are expected to be less than significant.

ii. State and Regional Water Boards

California has an extensive regulatory pr ogram to control water pollution. The most important statute governing water qua lity is the Porter-Cologne Act, which givesPROPOSED 2003 STATE AND FEDERA L STRATEGY FOR CALIFORNIA SIP SECTION V – POTENTIAL IMPACTS

ENVIRONMENTAL IMPACT ANALYSIS V-A-5 the State Water Resources Control Board (SWRCB) and the nine regional water quality control boards (RWQCB) broad powers to pr otect surface and groundwater supplies in California, regulate waste disposal, and require cleanup of hazardous conditions (California Water Code §§3000-13999.16). In particular, the SWRCB establishes waterrelated policies and approves water quality control plans, which are implemented and enforced by the RWQCBs. The nine r egional boards include: North Coast, San Francisco Bay, Central Coast, Los Angeles, Central Valley, Lahontan, Colorado River Basin, Santa Ana, and San Diego.

It is the responsibility of each regional board to prepare water quality control plans to protect surface and groundwater suppl ies within its region. These plans must identify important regional water resources and their beneficial uses, such as domestic, navigational, agricultural, industrial, and recr eational; establish wa ter quality objectives, limits, or levels of water constituents or characteristics established for beneficial uses and to prevent nuisances; and present an implementation program necessary to achieve those water quality objectives. Thes e plans also contain technical information for determining waste water discharge requ irements and taking enforcement actions. The plans are typically reviewed and updated every three years (California Water Code §13241).

California dischargers of waste that “coul d affect the quality of the waters of the State” are required to file a report of waste discharge with t he appropriate regional water board (California Water Code §13260). The r eport is essentially a permit application and must contain information required by t he regional board. After receipt of a discharge report, the regional board will issue “waste discharge requirements” analogous to a permit with conditions prescr ibing the allowable nature of the proposed discharge (California Wate r Code §§3263, 13377, and 13378).

iii. National Pollutant Discharge Elimination System Requirements

Most discharges into California’s waters are regulated by the National Pollutant Discharge Elimination System (NPDES), a regulatory pr ogram under the federal Clean Water Act. The NPDES is supervised by U.S. EPA, but administered by the SWRCB. NPDES requirements apply to discharges of pol lutants into navigable waters from a point source, discharges of dredged or fill material into navigable waters, and the disposal of sewage sludge that could result in pollutants entering navigable waters. California has received U.S. EPA approv al of its NPDES program. Pursuant to California’s NPDES program, any waste discharger subject to the NPDES program must obtain an NPDES permit from the appr opriate RWQCB. The permits typically include criteria and water quality objective s for a wide range of constituents. The NPDES program is self-monitoring, requi ring periodic effluent sampling. Permit compliance is assessed monthly by the lo cal RWQCB and any NPDES violations are then categorized and reported to U.S. EPA on a quarterly basis.PROPOSED 2003 STATE AND FEDERA L STRATEGY FOR CALIFORNIA SIP SECTION V – POTENTIAL IMPACTS

ENVIRONMENTAL IMPACT ANALYSIS V-A-6 U.S. EPA has also published r egulations that require certain industries, cities and counties to obtain NPDES permits for sto rmwater discharges [55 CFR (1990)]. The new regulations set forth permit applicati on requirements for classes of stormwater discharges specifically identified in t he federal Clean Water Act. The regulated stormwater discharges include those asso ciated with industrial activity and from municipal storm sewer systems serv ing a population of 100,000 or more.

iv. Discharges to Publicly-Owned Treatment Works (POTWs)

Water discharges to a public sewage system (referred to generically as a POTW), rather than directly to the environment, are not s ubject to the NPDES discharge requirements. Instead, such discharges are subject to f ederal pretreatment requirements under §§307(b) and (c) of the Clean Water Act [33 USC §1317(b)-(c)]. Although these pretreatment standards are enforced directly by U.S. EPA, they are implemented by local sanitation districts (Monahan et al. , 1993). The discharger, however, has the responsibility to ensure that the waste stream complies with the pretreatment requirements of the local system. Any facility using air pollution control equipment affecting water quality must rece ive a permit to operate from the local sanitation district. In cases where facilities modify their equipment or install air pollution controls that generate or alter existing wastew ater streams, owner/o perators must notify the local sanitation district and request that their existing permit be reviewed and modified.

To ensure compliance with wastewater pret reatment regulations , local sanitation districts sample and analyze the wastewater st reams from facilities approximately two to four times per year. Persons who violate Cali fornia’s water quality laws are subject to a wide array of enforcement provisions. In 1990, U.S. EPA revised and extended existing regulations to further regul ate hazardous waste dischargers and require effluent testing by POTWs. To comply with revised permit limits, POTWs may alter their operations or impose more stringent local limits on industr ial user discharges of hazardous wastes (Monahan et al ., 1993). POTWs in California are oper ated by sanitation districts that adopt ordinances establishing permit system s and fee structures. There are 630 POTWs in California.

Alternative Diesel Fuels and Emulsified Diesel – The Proposed Strategies to reduce emissions from on-road, off-road, and stationary diesel-fueled engines could require or encourage the use of alternat ively fueled engines and alternative fuel formulations. Because some alternative di esel fuel formulations and additives could more readily dissolve in water, these cont rol measures have t he potential to adversely impact local ground and surface waters.

Emulsified diesel fuel is diesel wit h a small amount of water mixed in and emulsified until stable. By lowering com bustion temperatures, t he water reduces NOx formation. Use of emulsified diesel ma y have some negative water quality impacts because spilled emulsified diesel is more soluble in water than spilled diesel. The chemicals in the alternative diesel fuels wi ll be evaluated for toxic effects during thePROPOSED 2003 STATE AND FEDERA L STRATEGY FOR CALIFORNIA SIP SECTION V – POTENTIAL IMPACTS

ENVIRONMENTAL IMPACT ANALYSIS V-A-7 health effects evaluation that is required bef ore the fuel receives federal registration prior to approval. The use of these alternative fuels is not expected to result in significantly greater adverse water quality impacts than the use of r egular diesel fuels. A number of rules and regulations are currently in place to minimize the potential impacts from underground leaking storage tanks, and spills from fueling activities, including requirements for the construction of t he storage tanks, requi rements for double containment, and installation of leak detection systems. These regulations minimize the potential for additional leaks from the use of diesel fuels or alternative fuels. (Not Significant)

Consumer Products – Two TACs used in some consumer products, methylene chloride (MeCl) and perchloroethylene (Perc), are specifically exempted from the VOC definition in recognition of their very low ozone-forming capabilities. Some manufacturers could use MeCl or Perc in t heir formulations to reduce the VOC content to meet future limits, creat ing potential adverse environmental impacts for air, soil and water.

ARB staff has recognized the potential for increased use of MeCl and Perc in consumer products and has taken steps to mitigate and limit the use of these compounds in recent Board actions. These ac tions include: the toxics control measure for automotive maintenance and repair activi ties; aerosol adhesives limits in the consumer products regulation; and reactivity limits in the aerosol coating regulations. ARB also currently tracks the use of Me Cl and Perc in regulated consumer products through yearly manufacturer reporting require ments. Further, AR B staff has proposed VOC limits in the past that were achi evable without the incr eased use of TACs. Furthermore, Proposition 65 labeling requi rements discourage manufacturers from reformulating consumer products with TACs.

In the future, if new products contain Perc and MeCl, ARB staff will monitor their use and, if necessary, limit or prohibit their use in additional consumer products. Mitigation measures will be im plemented if a significant pr esence of consumer productrelated Perc is detected in wastewater.

Under these control measures, petrol eum-based products are expected to be reformulated to aqueous-based products to comply with specified VOC emission reduction requirements. Like petroleum- based materials, aqueous materials may lead to adverse impacts to water resources if contaminated products are not handled properly. However, the use of water to reformulate would generally lead to products that would be less toxic than petroleum based materials and generate fewer impacts to water quality. (Not Significant)PROPOSED 2003 STATE AND FEDERA L STRATEGY FOR CALIFORNIA SIP SECTION V – POTENTIAL IMPACTS

ENVIRONMENTAL IMPACT ANALYSIS V-A-8 v. Water Demand

No significant negative impacts on water demand were identified.

Cumulative Impact : None.

b. Air Quality

Cumulative Impacts : ARB staff believes the cumu lative impact of the Proposed Strategy is to substantially improve air qualit y. However, some strategies may involve trade-offs, where emissions of one pollutant may increase slightly in order to more effectively reduce overall emissions and protec t public health. The initial environmental analysis has examined each measure for potent ial adverse air quality impacts. The impacts are divided into four major categorie s – criteria pollutants, air toxics, global warming, and stratospheric ozone depletion.

Potentially significant impacts on criter ia pollutant emissions may occur due to: selective catalytic reduction processes; use of diesel particulate filters; and production of low-sulfur diesel fuel. However, the cu mulative impact of the Proposed Strategy is to reduce emissions of every major criteria po llutant (ROG, NOx, SO x, PM10, PM2.5, and CO).

Potentially significant air toxics impac ts could occur due to reformulation of consumer products and the use of new fuel or alternative fuel additives. However, any new formulations of these products and additives would be closely scrutinized to prevent the addition of toxic compounds. These potential impacts will be more than offset by the substantial reductions in toxi cs from diesel engines required by the Plan. The cumulative impact of the Proposed Strategy is to greatly reduce emissions of toxic compounds.

Potentially significant global warming im pacts could result from measures that may reduce fuel efficiency or increase energy use, strategies that increase natural gas consumption, and consumer product rules. To offset these greenhouse gas increases, local transportation agencies are proposi ng transportation control measures and districts (like the South Coast Air Quality Management District) are proposing strategies that promote fuel efficiency and pollution pr evention. In general, strategies that conserve energy and promote clean technologie s usually also reduce greenhouse gas emissions. Other local agencies may also promote transportation measures, fuel efficient technologies and pollution prevention methods. With some of these mitigating strategies in effect, this Strategy is not expected to have a significant adverse impact on global warming.

No potentially significant stratospheric ozone depletion impacts were identified.PROPOSED 2003 STATE AND FEDERA L STRATEGY FOR CALIFORNIA SIP SECTION V – POTENTIAL IMPACTS

ENVIRONMENTAL IMPACT ANALYSIS V-A-9 i. Criteria Pollutants

The Proposed Strategy will ac hieve significant reductions of criteria pollutant emissions. Some individual strategies, however , may result in slight increases in one pollutant in order to more effe ctively reduce emissions of another.

Cumulative Impact: Potential adverse impacts on criteria pollutant emissions may occur due to: selective catalytic reducti on processes; use of diesel particulate filters; and production of low-sulf ur diesel fuel. However, the cumulative impact of the Proposed Strategy is to reduce emissions of every major criteria pollutant (ROG, NOx, SOx, PM10, PM2.5, and CO) and to benefit overall air quality.

Diesel-Fueled Engines – Measures in the Proposed Strategy to reduce NOx from diesel-fueled engines may necessitate us e of Selective Catalytic Reduction (SCR). SCR reduces NOx into molecular nitrogen and water by injecting ammonia into the exhaust upstream of a catalyst. If too mu ch ammonia is used, the ammonia can slip past the catalyst unreacted (called “ammoni a slip”) and be emitted to the atmosphere. Ammonia slip can worsen as the catalyst ages and becomes less effective. In many SCR installations, ammonia slip must be cont inuously monitored and controlled. A limit on ammonia emissions is normally included in the Permit to Operate for the SCR. (Potentially Significant)

Diesel Particulate Filters – A number of measures in the Proposed Strategy would require the use of diesel particulate filters, add-on devices that are mounted on the exhaust pipe. Certain types of these diesel particulate filters, referred to as passive filters, accelerate the conversion of nitrous oxide (NO) to nitr ogen dioxide (NO2). As such, there is a potential for an adverse e ffect on the concentration and location of peak ozone levels in the State, espec ially near centers of diesel activity, as well as increases in levels of NO2, nitric acid, and secondary particulate matter formation.

Catalyst manufacturers are aware of the issue and preliminary analysis suggests that the impacts may be adequately mitigated by designing the system to limit the NO to NO2 conversion rates. In the near term, the advantages of getting diesel particulate filters into operation to reduce risk from diesel PM and allowing the technology to develop and mature should offset any limited adverse impacts. (Potentially Significant)

Low Sulfur Diesel Fuel – Low sulfur diesel fuel requirements may necessitate increased hydrotreating of fuel to remo ve sulfur, which would require increased hydrogen production. Hydrogen production, in tu rn, would require energy, which could increase criteria pollutant (particularly NO x), as well as produce an increase in CO2 emissions. The most acute impact of this process change and emissions increase could be in the communities near refinerie s. Air district permitting programs will evaluate and mitigate the air quality and environm ental impacts to the extent feasible. (Potentially Significant)PROPOSED 2003 STATE AND FEDERA L STRATEGY FOR CALIFORNIA SIP SECTION V – POTENTIAL IMPACTS

ENVIRONMENTAL IMPACT ANALYSIS V-A-10 Electrification of Equipment – Electric forklifts, dockside electrical hookups for larger marine vessels, the addition of vapor recovery at marinas and other strategies may increase electricity demand from power plants. The increase in power production will increase emissions (primarily NOx) fr om power plants somewhat. Air district permitting programs are in place to limit t hese emission increases. Overall, emissions should decrease significantly as fuels such as diesel and propane are replaced by the much cleaner natural gas burned at power plants. (Not Significant)

Forklift Purchases – Requirements for zero-emission forklifts (currently electric technology) may cause users to buy and rent larger capacity forklifts fueled by propane or diesel or to delay purchases of new elec tric forklifts and use older and dirtier forklifts longer. Use of these larger or older forkli fts would increase emissions. This regulation will be developed with full consider ation of the limits of elec tric forklifts and the needs of forklift operators. Exemptions for specific applications may be included. This issue will be thoroughly studied to minimize unintended emissions increases. (Potentially Significant)

ii. Air Toxics

Cumulative Impact: ARB staff believes that t he Proposed Strategy as a whole will substantially reduce emissions of TACs. However, some strategies may involve a slight increase in emissions of one pollutant in order to more effectively reduce overall emissions or health risk. Potentially sign ificant air toxics impacts could occur due to reformulation of consumer products and the use of new fuel or alternative fuel additives. However, any new formulations of these products and additives would be closely scrutinized to prevent the addition of toxic compounds. The cumulative impact of the Proposed Strategy is to reduce emissions of toxic compounds.

A brief description of potential impacts of the strategies is provided below.

Consumer Products – The consumer products measures would reduce organic gas emissions by requiring reformulation to reduce VOC content . A number of VOCs currently used in consumer product formulat ions, such as ethylene-based glycol ethers, trichloroethylene (TCE), and toluene, hav e also been identified as toxic air contaminants. When a product is reformulat ed to meet new VOC limits, however, a manufacturer could use small amounts of a c hemical, not used befor e, that may be a toxic air contaminant. This potential impact will need to be evaluated and mitigated as reformulation options are reviewed durin g the development of new VOC limits.

Two particular TACs used in some consumer products, methylene chloride (MeCl) and perchloroethylene (Perc), are spec ifically exempted from the VOC definition because of their very low ozone-forming capabili ties. As a result, some manufacturers may choose to use MeCl or Perc in their re formulations to reduce the VOC content in meeting future limits. In the future, if new products contain Perc and MeCl, ARB staffPROPOSED 2003 STATE AND FEDERA L STRATEGY FOR CALIFORNIA SIP SECTION V – POTENTIAL IMPACTS

ENVIRONMENTAL IMPACT ANALYSIS V-A-11 will monitor their use and, if necessary, limit or prohibit their use in additional consumer products.

Under these control measures, petrol eum-based products are expected to be reformulated to aqueous-based products to comply with specified VOC emission reduction requirements. The use of wate r to reformulate w ould generally lead to products that would be less toxic than petro leum based materials and generate fewer impacts to air quality. (Not Significant)

Fuel Additives – Before proposing rules requiring fuel additives, staff will evaluate the chemicals in the additives for t heir toxic effects. Since additives are federally regulated, they wil l undergo a health effects evaluation prior to approval. (Not Significant)

iii. Global Warming

In general, strategies that promote clean technologies usually also reduce greenhouse gas emissions. However, some of the individual measures in the Proposed Strategy may result in an increase in the release of greenhouse gases.

Cumulative Impact: Potentially significant gl obal warming impacts may occur due to measures that may slightly reduce f uel efficiency or increase energy use. In addition, strategies that promote natural gas (methane) may increase the potential for methane leaks to the atmosphere. Fina lly, greenhouse gas emissions resulting from consumer product measures could be potentially significant. These potential impacts could be mitigated by local traffic control m easures and by fuel conservation education. With these or other mitigating strategies in e ffect, this Strategy is not expected to have a significant adverse impact on global warming.

Diesel-Fueled Engines – Proposed Strategy measures to reduce emissions from diesel-fueled engines could require the use of new diesel engines, engine modifications, alternatively fueled engines, add-on control devices such as particulate filters and catalysts, low-sulfur diesel f uel, alternative fuel formulations, or other strategies. These strategies have the pot ential to slightly reduce fuel economy and increase greenhouse gas emissions. Thes e impacts may be mitigated as other engine features become more efficient to meet air pollution emission standards. (Potentially Significant)

Mandatory Chip Reflash – During the 1990s, some engine manufacturers programmed the computer chips in diesel engines to maximize power and fuel efficiency with result that NOx emissions were higher. This was in violation of federal and State air pollution regulations. A Pr oposed Strategy measure would accelerate correction of this problem by requiring co mputer chips to be reprogrammed to reduce NOx emissions before they are brought in for rebuild. Greenhouse gas emissions couldPROPOSED 2003 STATE AND FEDERA L STRATEGY FOR CALIFORNIA SIP SECTION V – POTENTIAL IMPACTS

ENVIRONMENTAL IMPACT ANALYSIS V-A-12 increase slightly due to a decrease in fuel efficiency. (Potentially Significant)

Natural Gas – Natural gas (methane) is a clean burning fuel but is also a potent greenhouse gas. Strategies that promote natural gas use (in place of diesel fuel, for example) may increase the risk of methane leaks to the atmosphere. (Potentially Significant)

Diesel Particulate Filters – A number of measures in the Proposed Strategy would require the use of diesel particulate filters. These particulate filters must be periodically regenerated by burning off excess hydrocarbons trapped on the filter. Active regeneration methods use external fuel or energy to heat the filter and regenerate it. (Not Significant)

Off-Road Spark Ignition Engines – Retrofit emission controls for off-road spark ignition vehicles and equipment could decreas e fuel efficiency slightly and increase carbon dioxide emissions. (Potentially Significant)

Consumer Products – Alternative compounds used to meet lower VOC limits in the Proposed Strategy’s consumer produc ts measures could be greenhouse gases. For aerosol products to meet the VOC limit s in the proposed regulations, manufacturers may choose to replace some or all of the typical hydrocar bon propellants with HFC152a or CO2, both of which are greenhouse ga sses. HFC-152a has no ozone depletion potential, does not contribute to the formation of ground-level ozone, is low in toxicity, and is only mildly flammable. In additi on, HFC-152a has the lowest global warming potential of all the HFCs and an atmospheric lifetime of only 1.5 years. Due to the high cost of HFC-152a (as much as five to se ven times greater t han other hydrocarbon propellants), it is anticipat ed that manufacturers will use as little HFC-152a as possible when reformulating their aerosol products. Consequently, the impact on global warming from increased use of HFC-152a should be neglig ible. However, further analysis of the properties and effects of HFC-152a is needed. Should the analysis reveal significant impacts, ARB staff would reassess the control strategy. CO2 used as a replacement for hydrocarbon propellants would be a recycled byproduct from existing processes and would therefore not contribute to global warming. (Not Significant)

iv. Stratospheric Ozone Depletion

Cumulative Impact : One strategy had a potential impact on the stratospheric ozone layer, but the impact is not considered significant.

Consumer Products – Some HCFCs are still used in consumer products as propellants and are exempt VO Cs under the existing and propos ed regulations. It is unknown if there will be an increased use of these compounds in meeting lower VOCPROPOSED 2003 STATE AND FEDERA L STRATEGY FOR CALIFORNIA SIP SECTION V – POTENTIAL IMPACTS

ENVIRONMENTAL IMPACT ANALYSIS V-A-13 limits. However, all HCFCs are cla ssified as group II ozone-depleting compounds by U.S. EPA and are scheduled for phase out bet ween 2004 and 2030. Because of the phase out, manufacturers may prefer to use propellants other than HCFCs. We therefore anticipate that the impact on ozone depletion due to HCFCs will be negligible, or there may be an environment al benefit as manufacturers switch to more benign alternative propellants. (Not Significant)

c. Energy Demand

Cumulative Impact: ARB staff has identified some potentially significant adverse energy impacts for some individual measures. Potentially significant impacts include: reduced fuel economy due to so me diesel engine strategies and increased electricity demand due to electrification of equipment and vehicles. Fuel economy impacts may be mitigated as ot her engine features become more efficient to meet air pollution emission standards. Electricity dem ands can be offset somewhat if equipment is charged at night when electricity demand is low. Alternative methods of generating electricity, such as solar panels or fuel cells, might also be incorporated. The cumulative impact of all of the State SI P measures could be a small but measurable increase in energy demand.

Mobile, Stationary, and Portable Diesel-Fueled Engines – Proposed Strategy measures to reduce emissions from diesel -fueled engines could require the use of new diesel engines; engine modifications; alte rnatively fueled engine s; add-on control devices such as particulate filters and catalyst s; low-sulfur diesel fuel; alternative fuel formulations; or other strategies. These st rategies have the potential to cause a small decrease in fuel economy. Fuel econom y impacts may be mitigated as other engine features become more efficient to meet air pollution emission standards. (Potentially Significant)

Alternative Fuels: Emulsified Diesel – Emulsified diesel fu el is diesel with a small amount of water mixed in and emulsifi ed until stable. By lowering combustion temperatures and affecting combustion chem istry, the water reduces NOx formation. Negative effects include a small fuel effi ciency penalty and a decrease in available
power. (Potentially Significant)

Low Sulfur Diesel Fuel – Low sulfur diesel fuel requirements may necessitate increased hydrotreating of fuel to remove sulfur, which would require additional energy consumption. (Potentially Significant)

Mandatory Chip Reflash – During the 1990s, some diesel engine manufacturers programmed the computer chips in diesel engines to maximize power and fuel efficiency with the result that NOx emissions were higher. A Proposed Strategy measure would accelerate correction of this problem by requiring computer chips to bePROPOSED 2003 STATE AND FEDERA L STRATEGY FOR CALIFORNIA SIP SECTION V – POTENTIAL IMPACTS

ENVIRONMENTAL IMPACT ANALYSIS V-A-14 reprogrammed to reduce NOx em issions before they are brought in for rebuild. Diesel fuel usage could increase due to a slight decrease in fuel efficiency. (Potentially Significant)

Electrification

– Measures in the Proposed Strategy for electrification of forklifts and other equipment can provide significant reductions of air pollutant emissions. However, these projects can create a gr eater demand for electricity to charge or operate the equipment. These demands can be offset somewhat if equipment is charged at night when electricity demand is lo w. Alternative methods of generating electricity, such as solar panels or f uel cells, might also be incorporated. (Potentially Significant)

Diesel Particulate Filters

– A number of measures in the Proposed Strategy would require the use of diesel particulate filters, add-on devices that are mounted on the exhaust pipe. These particulate filter s must be periodically regenerated by burning off excess hydrocarbons trapped on the filt er. Active regeneration methods use external fuel or energy to heat the filter and r egenerate it. However, the additional energy required should not be significant. (Not Significant)

Fuel Vapor Recovery – The addition of vapor recovery at marinas and improvements for aboveground tanks may in crease electrical use slightly. (Not Significant)

d. Hazards/Human Health

The purpose of the Proposed Strategy is to help California attain the federal onehour ozone and PM10 standards. ARB’s goal is to ensure that all individuals in California, especially children and the elderl y, can live, work, and play in a healthy environment. Each of the measures in the Proposed Strategy is intended to reduce the health risks from air pollution. The m easures would reduce the pollutants that contribute to adverse health impacts, includi ng: ozone, inhalable particles (including soot and dust), carbon monoxide, and toxic emis sions (like particles emitted from diesel engines and benzene).

Cumulative Impact on Human Health: The cumulative impact of the Proposed Strategy will be to reduce human health risk. However, measures in the Proposed Strategy to reduce emissions from cons umer products could have local human health impacts.

Cumulative Impact on Human Hazards: Vapor recovery for marina fueling stations and use of selective catalytic r eduction have known hazard impacts which can and will be mitigated. Reformulation of cons umer products could increase the use of exempt but more flammable VOC solvents su ch as acetone and methyl acetate. With mitigation measures in effect, the cumu lative impact of the Proposed Strategy on hazard risk is not projected be significant.PROPOSED 2003 STATE AND FEDERA L STRATEGY FOR CALIFORNIA SIP SECTION V – POTENTIAL IMPACTS

ENVIRONMENTAL IMPACT ANALYSIS V-A-15 i. Hazardous Materials

Hazards are related to the risks of fire, explosions, or releases of hazardous substances in the event of accident or upset conditions. Hazards are thus related to the production, use, storage, and transport of haz ardous materials. Industrial production and processing facilities are potential sites fo r hazardous materials. Some facilities produce hazardous materials as their end product, while others use such materials as an input to their production processes. Examples of hazardous materials used by consumers include fuels, paints, paint th inner, nail polish, and solvents. Hazardous materials may be stored at facilities produci ng such materials and at facilities where hazardous materials are part of the production processes. Storage refers to the bulk handling of hazardous materials before and a fter they are trans ported to the general geographical area of use. Currently, hazar dous materials are transported throughout California in great quantities via all modes of transportation including rail, highway, water, air, and pipeline.

State law requires detailed planning to ensure that hazardous materials are properly handled, used, stored, and disposed of to prevent or mitigate injury to health or the environment in the event that such mate rials are accidentally released. The Office of Emergency Services (OES) enf orces these requirements. Federal laws, such as the Emergency Planning and Communi ty-Right-to-Know Act of 1986 (also known as Title III of the Superfund Amendments and Reauthorization Act or SARA) impose similar requirements.

The U.S. Department of Transportation (U .S. DOT) has regulat ory responsibility for the safe transport of hazardous material s between states and to foreign countries. U.S. DOT regulations govern all means of transportation, except for those packages shipped by mail. Hazardous materials sent by U.S. mail are co vered by U.S. Postal Service (USPS) regulations. U.S. DOT regulations are contained in 49 CFR; USPS regulations are in 39 CFR. Common carri ers are licensed by t he California Highway Patrol (CHP), pursuant to the California Vehicle Code, §32000. This section requires licensing of every motor (common) carrier who transports, for a fee, in excess of 500 pounds of hazardous materials at one time and every carrier, if not for hire, who carries more than 1,000 pounds of hazardous ma terial of the type requiring placards. Common carriers conduct a large portion of their business in the delivery of hazardous materials.

The CHP and Caltrans have primary res ponsibility for enforcing federal and State regulations and responding to hazardous mate rials transportation emergencies. The CHP enforces hazardous materials and hazardous waste labeling and packaging regulations that prevent leak age and spills of material in transit and provide detailed information to cleanup crews in the event of an accident. Vehicle and equipment inspection, shipment preparation, container identification, and shipping documentation are all part of the responsibil ity of the CHP. The CHP also conducts regular inspectionsPROPOSED 2003 STATE AND FEDERA L STRATEGY FOR CALIFORNIA SIP SECTION V – POTENTIAL IMPACTS

ENVIRONMENTAL IMPACT ANALYSIS V-A-16 of licensed transporters to assure regulator y compliance. Caltrans has emergency chemical spill identific ation teams at 72 locati ons throughout California.

Pursuant to the Emergency Services Act, California has developed an Emergency Response Plan to coordinate emergency services provided by federal, State, and local government agencies and private persons. Response to hazardous materials incidents is one part of this plan. The plan is administered by OES, which coordinates the responses of other agencie s including U.S. EPA, CHP, Department of Fish and Game, the applicable RWQCB, and local fire departments (see California Government Code, §8550).

In addition, pursuant to the Hazardous Materials Release Response Plans and Inventory Law of 1985 (the Business Plan Law), local agencies are required to develop “area plans” for response to releases of hazardous materials and wastes. These emergency response plans depend to a large ex tent on the business plans submitted by persons who handle hazardous materials. An area plan must include pre-emergency planning of procedures for emergency res ponse, notification and coordination of affected government agencies and responsib le parties, training, and follow-up. Hazardous materials incidents are reported to OES, which compiles and archives the information.

ii. Public Health

The Toxic Air Contaminant Identification and Control Act (Health and Safety Code §§ 39650 et seq ., Food and Agriculture Code Sections 14021 et seq .) established California’s two-phased program to identify and c ontrol air toxics. In the first phase (risk assessment), ARB selects substances for revi ew, considering criteria relating to “the risk of harm to public health, amount or pot ential amount of emissions, manner of, and exposure to, usage of the substance in Ca lifornia, persistence in the atmosphere, and ambient concentrations in the community” (H ealth and Safety Code § 39666(f)). One example of an identified TAC is particu late matter from diesel-fueled engines.

In the risk management phase of the program, ARB reviews the emission sources of an identified TAC to determine if any regulatory action is necessary to reduce the risk. The analysis includes a revi ew of controls already in place, the available technologies and associated costs for reducing emissions, and the associated risk.

Also in the risk management phase, ARB, work ing closely with the air districts, is responsible for developing control measures for all identified toxic air contaminants except those used as pesticides. Pesticides are evaluated in a similar process by the Department of Pesticide Regulat ion. Following ARB adoption of measures to control a specific toxic compound, the districts must adopt equal or more stringent regulations for the stationary sources in their jurisdiction. Regulations to control airborne toxic emissions from mobile source s are the responsibility of ARB.PROPOSED 2003 STATE AND FEDERA L STRATEGY FOR CALIFORNIA SIP SECTION V – POTENTIAL IMPACTS

ENVIRONMENTAL IMPACT ANALYSIS V-A-17 The Air Toxics Hot Spots Program (Health and Safety Code §§ 44300-44384) requires facilities to report their air toxics emissions, ascertain health risks, and to notify nearby residents of significant risks. Facilitie s that pose a significant health risk to the community are required to reduce t heir risk through a risk management plan.

iii. Worker Safety Requirements

The California Occupational Safety and Health Administra tion (Cal/OSHA) and the Federal Occupational Safety and Health Administration (OSHA) are the agencies responsible for assuring worker safety in the handling and use of chemicals in the workplace. In California, Cal/OSHA assu mes primary responsibility for developing and enforcing workplace safety regulations. Under the authority of the Occupational Safety and Health Act of 1970, OSHA has adopted num erous regulations pertaining to worker safety (contained in 29 CFR). These regulati ons set standards for safe workplaces and work practices, including the reporting of accidents and occupational injuries. Some OSHA regulations contain standards relating to hazardous materials handling, including workplace conditions, employee protection require ments, first aid, and fire protection, as well as material handling and storage. Bec ause California has a federally approved OSHA program, it is required to adopt regulations that are at least as stringent as those found in 29 CFR.

Cal/OSHA regulations concerning the use of hazardous materials in the workplace (detailed in CCR, title 8) incl ude requirements for employee safety training, availability of safety equipment, accident and illness prevention programs, hazardous substance exposure warnings, and emergency action and fire prevention plan preparation. Cal/OSHA enforces hazard co mmunication program regulations containing training and information requirements, includi ng procedures for ident ifying and labeling hazardous substances. The hazard communica tion program also requires that Material Safety Data Sheets (MSDSs) be available to employees and that employee information and training programs be documented. These r egulations also require preparation of emergency action plans (escape and evac uation procedures, rescue and medical duties, alarm systems, and emer gency evacuation training).

Both federal and State laws include spec ial provisions for hazard communication to employees in research laboratories, incl uding training in chemical work practices. The training must include instruction in me thods for the safe handling of hazardous materials, an explanation of MSDSs, use of emergency response equipment and supplies, and an explanation of the build ing emergency response plan and procedures. Chemical safety information must also be av ailable at the workplace. More detailed training and monitoring is required for the use of carcinogens, ethylene oxide, lead, asbestos, and certain other chemicals lis ted in 29 CFR. Emergency equipment and supplies, such as fire extinguishers, safety showers, and eye washes, must also be kept in accessible places. Compliance with thes e regulations reduces the risk of accidents and worker health effects.PROPOSED 2003 STATE AND FEDERA L STRATEGY FOR CALIFORNIA SIP SECTION V – POTENTIAL IMPACTS

ENVIRONMENTAL IMPACT ANALYSIS V-A-18 The National Fire Code (NFC), Standar d 45 (published by the National Fire Protection Association) contains standards fo r laboratories using chemicals that are not requirements, but are generally employed by organizations in order to protect workers. These standards provide basic protection of life and property in laboratory work areas through prevention and control of fires and explosions, and also serve to protect personnel from exposure to non-fire health hazards. While NFC Standard 45 is regarded as a nationally recognized standar d, the California Fire Code (24 CCR) contains State standards for the use and storage of hazardous materials and special standards for buildings where hazardous ma terials are found. Some of these regulations consist of amendments to NFC Standard 45. California Fire Code regulations require emergency pre-fire plans to include training programs in first aid, the use of fire equipment, and methods of evacuation.

Consumer Products

– In meeting lower VOC limits, there is a slight potential that products may become more flammable if reformulation increases the use of highly flammable exempt VOC solvents such as acet one and methyl acetate. This could be of concern in the manufacture, storage, shipping and end use of the reformulated products. In many instances, however, m anufacturers can use other, less flammable, exempt solvents and/or water borne formulations. (Potentially Significant)

Marina Vapor Recovery

– Unlike vehicle service station fueling, gasoline vapors recovered during marina fueling operations ar e not easily transferred back to the marina gasoline storage tank. At vehicle service stat ions, the storage tank is in close proximity to the dispenser, while at marinas, the st orage tank may be several hundred feet away at a higher elevation.

The marina vapor recovery measure may involve collection of vapors at the dispenser into a carbon canister system. These systems have been used in refinery operations to collect organic vapors. As wit h all gasoline vapor re covery systems, there is a potential to form an explosive gas mixtur e when the vapors mix with air. This is an especially critical concern with boats si nce the boat hull can collect leaking heavy gasoline vapors. The State Fire Marshall reviews all vapor recovery equipment designs and procedures to assure that they will not cause any undue risk. The U.S. Coast Guard would probably also have to approve the system. A more detailed analysis will be provided when regulations implementing this measur e are proposed for adoption. (Potentially Significant)

Selective Catalytic Reduction (SCR)

– Selective catalytic reduction may be used on large diesel engines to reduce NOx in the exhaust. Ammonia or urea is used to react with the NOx, in t he presence of a catalyst, to form nitrogen gas and water. In some SCR installations, anhydrous ammonia is used. There are known safety hazards related to the storage and handling of this vola tile and poisonous liquid. These hazards must be addressed in the initial system des ign and periodically in hazard assessments. (Potentially Significant)PROPOSED 2003 STATE AND FEDERA L STRATEGY FOR CALIFORNIA SIP SECTION V – POTENTIAL IMPACTS

ENVIRONMENTAL IMPACT ANALYSIS V-A-19 Fuel Additives

– Before proposing rules requiring fuel additives, staff will evaluate the chemicals in the additives for t heir toxic effects. Since additives are federally regulated, they wil l undergo a health effects evaluation prior to approval. (Not Significant)

Cargo Tank Vapor Recovery – Cargo tank vapor recovery measures in the Proposed Strategy will prevent the escape of gasoline vapors contained in cargo tanks and delivery hoses. Gasoline vapors can be explosive or flammable if not handled properly. Thus, vapor recovery systems must be designed to eliminate the risk of explosion or fire. The Stat e Fire Marshal reviews all vapor recovery equipment designs and procedures to assure that t hey will not cause any undue risk. (Not Significant)

Diesel Particulate Filters

– A number of measures in the Proposed Strategy would require the use of diesel particulate filters. Some safety concerns include reduced visibility from the driver’s seat due to new equipment mounted near eye level, particularly on off-road equipment such as bulldozers, backhoes, and tractors. ARB staff believes that proper engi neering design can mitigate or eliminate these potential problems. (Not Significant)

Another property of diesel particulate filt ers is that they mu st be regenerated by burning off excess hydrocarbons trapped on the f ilter. Active regeneration methods use external fuel or energy to heat the filter and r egenerate it. Some small potential exists for a runaway regeneration that could pose a fire hazard. Proper engineering design should mitigate or eliminate t hese potential risks. Diesel parti culate filter measures will be written to assure that t he design is proven effective. (Not Significant)

Alternative Fuels: Compressed Natural Gas (CNG) – Proposed Strategy incentive programs and in-use strategies may require or promote t he use of alternative fuels, particularly compressed natural gas (CNG ). This presents a potential safety issue due to the increased use and handling of gaseous fuels. While CNG is flammable, it has been demonstrated in recent years that the fire risks from CNG use are known, manageable, and reasonable. CNG is an increas ingly common fuel which is developing a proven safety record. (Not Significant)

e. Solid / Hazardous Waste

Cumulative Impact : The cumulative impact of all strategies in the Proposed Strategy would be to create a small but potent ially significant increase of both solid and hazardous wastes. To mitigate these im pacts, ARB will work with the California Department of Toxic Substances Control (D TSC) and the California Integrated Waste Management Board (CIWMB) to reduce wast e production in these and other areas.PROPOSED 2003 STATE AND FEDERA L STRATEGY FOR CALIFORNIA SIP SECTION V – POTENTIAL IMPACTS

ENVIRONMENTAL IMPACT ANALYSIS V-A-20 Several Proposed Strategy measures ma y produce small amounts of solid or hazardous wastes. The strategies with potentia l impacts are: controls for diesel-fueled engines and vehicles, use of particulate filt ers, a pilot program to replace emission controls on older light duty vehicles, electrif ication of forklifts and other equipment, and gasoline vapor recovery for marinas. The potential impacts of these and other measures on solid or hazardous waste are described below.

i. Solid Waste

Solid waste consists of residentia l wastes (trash and garbage produced by households), construction wastes, commercia l and industrial wastes, home appliances and abandoned vehicles, and sludge residues (w aste remaining at the end of the sewage treatment process). CCR title 14, Divis ion 7, provides the State standards for the management of facilities t hat handle and/or dispose of solid waste. CCR title 14, Division 7, is administered by the CI WMB and the designated Local Enforcement Agency (LEA). The designated LEA for each county is the County Department of Environmental Health.

CCR title 14, Division 7, establishes gener al standards to provide required levels of performance for facilities t hat handle and/or dispose of solid waste. Other title 14 requirements include operational plans, clos ure plans, and post-closure monitoring and maintenance plans. Title 14 covers various solid waste facilities including but not limited to landfills, material recovery facilit ies (MRFs), transfer stations, and composting facilities.

ii. Hazardous Waste

Hazardous materials are substances with certain physical properties that could pose a substantial present or future haz ard to human health or the environment when improperly handled, disposed, or otherwis e managed. As defined in CCR title 22, Division 4.5, Chapter 11, Article 3, hazar dous materials are grouped into the following four categories based on their properties: toxi c (causes human health effects), ignitable (has the ability to burn), corrosive (causes severe burns or damage to materials) and reactive (causes explosions or generates toxic gases). A hazardous waste is any hazardous material that is discarded, abandoned, or to be recycled. The criteria that render a material hazardous also make a waste hazardous (Health and Safety Code, § 25151). If improperly handled, hazardous mate rials and wastes can result in public health hazards if released to the soil or groundwater or through airborne releases in vapors, fumes, or dust.

Under the Resource Conservation and Recovery Act (RCRA), U.S. EPA regulates the generation, trans portation, treatment, storage, and disposal of hazardous waste. RCRA was amended in 1984 by the Hazardous and Solid Waste Act (HSWA), which affirmed and extended the concept of regulating hazardous wastes from generation through disposal. HSWA specifically prohibits the use of certain techniques for the disposal of some types of hazar dous wastes. Under RCRA, individual statesPROPOSED 2003 STATE AND FEDERA L STRATEGY FOR CALIFORNIA SIP SECTION V – POTENTIAL IMPACTS

ENVIRONMENTAL IMPACT ANALYSIS V-A-21 may implement their own hazardous waste pr ograms in lieu of RCRA as long as the state program is at least as stringent as the federal RCRA requ irements. U.S. EPA approved California’s program to implement federal regulations as of August 1, 1992.

DTSC administers the Hazardous Waste Control Law (HWCL). Under HWCL, DTSC has adopted extensive regulations gov erning the generation, transportation, and disposal of hazardous wastes. HWCL differs little from RCRA; both laws impose “cradle to grave” regulatory systems for handling hazardous wastes in a manner that protects human health and the environment. Regulatio ns implementing HW CL are generally more stringent than regulations implementing RCRA. HWCL regulations list over 780 hazardous chemicals, as well as nearly 30 more common materials that may be hazardous, and establish criteria for ident ifying, packaging, and labeling hazardous wastes. They prescribe management practi ces for hazardous wastes; establish permit requirements for hazardous wa ste treatment, stor age, disposal, and transportation; and identify hazardous wastes that c annot be disposed of in landfills.

Under both RCRA and HWCL, hazardous waste manifests must be retained by the generator for a minimum of three year s. Hazardous waste manifests list a description of the waste, its intended desti nation, and regulatory information about the waste. A copy of each manifest must be filed with DTSC. The generator must match copies of hazardous waste manifests with ce rtification notices from the treatment, disposal, or recycling facility. Hazardous waste as defined in the Code of Federal Regulations title 40 (40 CFR) 261.20 and C CR title 22, Article 9 (including listed substances, 40 CFR 261.30) is disposed of in Class I landfills. California has enacted strict legislation for regulating Class I landfills (Health and Safety Code, §§25209 - 25209.7). For example, the treatment zone of a Class I landfill must not extend more than five feet below the initial surface and the base of the zone must be a minimum of five feet above the highest anticipated elev ation of underlying gr oundwater (Health and Safety Code, §25209.1(h)). The Health and Safety Code also requires Class I landfills to be equipped with liners, a leachate collection and removal system, and a groundwater monitoring system (Health and Safety Code, §25209.2(a)). Such systems must meet the requirements of DTSC and the SWRCB (Health and Safety Code, §25209.5).

Hazardous waste can also be transpor ted to permitted facilities outside of California. The nearest out-of-state landfills ar e U.S. Ecology, Inc., located in Beatty, Nevada; USPCI, Inc., in Murray, Utah; and Envirosafe Services of Idaho, Inc., in Mountain Home, Idaho. Incineration is prov ided at the following out-of-state facilities: Aptus, in Aragonite, Utah and Coffeyville, Kans as; Rollins Environmental Services, Inc., in Deer Park, Texas and Baton Rouge, Loui siana; Chemical Waste Management, Inc., in Port Arthur, Texas; and Waste Research & Reclamation Co. in Eau Claire, Wisconsin (SCAQMD, 1996).

Diesel-Fueled Engines and Vehicles – The recommended measures to reduce emissions from diesel-fueled engines and vehi cles could require the use of new diesel engines or add-on control devices such as parti culate filters and catalysts. PotentialPROPOSED 2003 STATE AND FEDERA L STRATEGY FOR CALIFORNIA SIP SECTION V – POTENTIAL IMPACTS

ENVIRONMENTAL IMPACT ANALYSIS V-A-22 adverse impacts include increased scrapping of diesel engines and vehicles, and impacts due to handling and disposal of co llected particulate matter. The impact of accelerated vehicle scrapping can be largely mitigated by recycling. (Potentially Significant)

Diesel Particulate Filters – A number of measures in the Proposed Strategy would require use of diesel particulate f ilters. Diesel particu late filters will probably produce a small amount of waste ash for dispos al. This waste is estimated at about 10 to 150 grams of ash per vehicle per year and is projected to be considered a hazardous material due to zinc content. While most larger maintenanc e facilities can be expected to handle, collect, and dispose of the material properly, as a hazardous waste, it is less certain how smaller facilities will handle waste ash. The filters themselves will eventually also be retired. Some filters contai n a precious metal catalyst that is valuable for recycling and reclaiming. Other spent filters may not be worth recycling and may be disposed of at a proper landfill. We do not expect that the spent f ilters themselves will be considered a hazardous material. (Potentially Significant)

Motor Vehicles – Replacement of Old Emission Control Parts – Several strategies will evaluate the benef its of replacing key emission control parts with new parts on older vehicles which exceed their or iginal certification standards. Parts to be replaced include catalysts, carbon canisters, fuel lines and oxygen sensors. Catalysts normally contain precious metals and ar e recycled. The other replaced components would probably be disposed of in landfills. (Potentially Significant)

Electrification – Electrification of forklifts and other equipment can provide significant reductions of air pollutant emissions . However, electrification strategies may result in the production and use of a significant number of batteries. These batteries are normally recycled and the recycle rate for lead- acid batteries is currently over 95%. However, the increase in the number of spent batteries to be processed would potentially have significant impacts on the recycling industry and on the disposal system for non-recyclable materials. Leasing, deposit, or rebate programs for electric batteries could be required to increase recycling. A spent battery exchange for battery replacement could also reduce waste impac ts. With these mitigation measures in place, battery disposal impacts should not be significant. (Not Significant)

Forklift Scrapping – The recommended measure to reduce emissions from forklifts could require the replacement of older forklifts with new electrical equipment. Potential adverse impacts include increased scrapping of forklifts and engines. The impact of accelerated vehicle scrapping can be largely mitigated by recycling. (Not Significant)

Marina Vapor Recovery – A marina vapor recovery measure may involve collection of vapors at the dispenser into a carbon collection device (carbon bed). AsPROPOSED 2003 STATE AND FEDERA L STRATEGY FOR CALIFORNIA SIP SECTION V – POTENTIAL IMPACTS

ENVIRONMENTAL IMPACT ANALYSIS V-A-23 marinas have fairly low gasoline throughputs, vapors may be collected over a period of several days before the carbon is recycled. At this time, ARB believes that the carbon would be recycled rather than discarded as wa ste. A more detailed analysis will be provided when regulations implementing this program are proposed for adoption. (Potentially Significant)

Small Off-Road Engines – Lower emission standards for new non-handheld lawn and garden equipment may require emissi on control parts, such as catalysts, that may ultimately be discarded into landfills. Recycling of catalysts could mitigate much of the impact. (Not Significant)

f. Noise

Cumulative Impact : The cumulative effect of the Proposed Strategy will not have a potentially significant impact on noise. Some air pollution strategies described in the Proposed Strategy, such as measures that prom ote the electrification of vehicles and forklifts, may reduce noise.

Mobile, Stationary, and Portable Diesel-Fueled Engines – The recommended measures to reduce emissions from diesel-f ueled engines could require the use of addon control devices such as particulate f ilters and catalysts and engine modifications. This could result in a potential increase in noise levels due to exhaust system changes to accommodate add-on controls. However, testing of current add-on controls has shown no increase in noise and ARB staff does not expect future adverse noise impacts (Not Significant).

g. Transportation and Traffic

No element of the Proposed Strategy is expected to have negative impacts on transportation or traffic. Al though many control measures in the Proposed Strategy call for emission reductions from motor vehicles, these control measures rely on technological changes, which will not impact transportation or traffic.

h. Aesthetics

No element of the Proposed Strategy is expected to degrade the natural beauty of California. Instead, the Proposed Strat egy will have significant positive impacts on aesthetics. Regional haze wi ll be reduced by Proposed Strategy elements that reduce hydrocarbon, nitrogen oxide, and particulate matter emissions. Acid rain (which damages trees, lakes, historic buildings and rock formations, etc.) will be reduced by measures that r educe NOx emissions.PROPOSED 2003 STATE AND FEDERA L STRATEGY FOR CALIFORNIA SIP SECTION V – POTENTIAL IMPACTS

ENVIRONMENTAL IMPACT ANALYSIS V-A-24 i. Agricultural Resources

The Proposed Strategy is not expected to cause any adverse impacts on the agricultural resources of California. Ozone pollution causes significant crop yield loss in California. The Proposed Strategy will help reduce ozone levels and consequently reduce crop loss resulting from ozone damage.

j. Biological Resources

The Proposed Strategy is not expected to cause any adverse impacts on the biological resources of California. We be lieve that the proposed measures will improve air quality and consequently, will improve t he habitat of our biological resources.

k. Cultural Resources

The Proposed Strategy is not expected to cause any adverse impacts on the cultural resources of California. We believe that the propos ed measures will reduce ozone and acidic compounds in the air. Oz one, which causes oxidation, and airborne acids are both known to cause deteriorati on of archaeological, paleontological, and geological features.

l. Geology and Soils

The Proposed Strategy is not expected to cause any adverse impacts on geology or soils.

m. Land Use and Planning

The Proposed Strategy is not expected to cause any adverse impacts on land use and planning.

n. Mineral Resources

The Proposed Strategy is not expected to cause any adverse impacts on mineral

resources.

o. Population and Housing

The Proposed Strategy is not expected to cause any adverse impacts on population and housing.

p. Public Services

The Proposed Strategy is not expected to cause any adverse impacts on public services.PROPOSED 2003 STATE AND FEDERA L STRATEGY FOR CALIFORNIA SIP SECTION V – POTENTIAL IMPACTS

ENVIRONMENTAL IMPACT ANALYSIS V-A-25 q. Recreation

The Proposed Strategy is not expected to cause any adverse impacts on recreation. By reducing the number of da ys with unhealthy air quality, ARB expects that our parks and outdoor recreational facilities co uld see increased usage by children, the elderly, asthmatics, and others with sensitiv e airways or chronic breathing problems.

4. Cumulative Impacts of St ate Measures and Local District Measures

For each environmental impact area, the cumulative environmental impacts of the State Strategy are discussed above. This section addresses the cumulative environmental impacts of the State Strategy combined with the impacts of the plans of the local air districts. To address thes e combined impacts, the cumulative impacts discussion contained in the South Coast Air Quality Management District’s Draft Environmental Impact Report (EIR) fo r the 2003 Air Quality Management Plan (SCAQMD Plan), released in April 2003, is hereby incorporated by reference.

Because of the serious air quality problem in the South Coast Air Basin, the SCAQMD has defined the greatest present need for new emission reductions, and the SCAQMD Plan has outlined the most comprehens ive set of measures to achieve these reductions. The measures set forth in the SCAQMD Plan therefore constitute a “worst case” scenario for cumulative impacts. While it is possible that future SIP revisions for other districts may contain measures that are not discu ssed in the SCAQMD Plan, at this time we do not know what such hypothetical future measures may be and it would be speculative to attempt to ev aluate them. For the purposes of this analysis, therefore, the most reasonable approach is to utilize the SCAQMD Plan as a “worst case” scenario.

ARB staff has reviewed and considered the cumulative impacts analysis contained in the SCAQMD EIR and concurs with its approach and conclusions. This analysis considers the cumulative impacts of the measures contained in the State Strategy combined with the measures in the SCAQMD Plan. The SCAQMD analysis can be found in Chapter 4 of the SCAQMD EIR, entitled “Environmental Impacts and Mitigation Measures.” To avoid redundancy, it is appropriate to incorporate this analysis by reference rather than repeat it here. The SCAQMD EIR can be found on the SCAQMD internet site at: http://www.aqmd.gov/ceqa/doc uments/2003/aqmd/draftEA/ AQMP/AQMP_DEIR.html

. 5. Impacts of the Individual Defined Measures

The State and federal measures in the Proposed Strategy will help make progress toward our goal of healthy air for a ll Californians. Each of the defined State measures was evaluated to identify adverse environmental impacts. The following table lists each of the measures, any potentia lly significant environmental impacts, and possible mitigation methods.PROPOSED 2003 STATE AND FEDERAL STRATEGY FOR CALIFORNIA SIPSECTION V – POTENTIAL IMPACTSENVIRONMENTAL IMPACT ANALYSISV-A-26Table V-A-1: Potential Adverse Environmental Impacts ofthe Proposed 2003 State and Federal Strategy for the California SIPNumberDescriptionPotential Adverse EnvironmentalImpactsPotentialMitigation MeasuresMOBILE SOURCESLight and Medium-Duty VehiclesLT/MEDDUTY-1Replace or Upgrade Emission ControlSystems on Existing Passenger Vehicles --Pilot Program.Waste: Some increased disposal offaulty emission control parts.Recycle parts and/or catalyst whenfeasible.LT/MEDDUTY-2Improve Smog Check to Reduce Emissionsfrom Existing Passenger and CargoVehicles.Waste: Some increased disposal offaulty emission control parts.Recycle parts and/or catalyst whenfeasible.On-Road Heavy-Duty Diesel Engines and VehiclesON-RDHVYDUTY-1Augment Truck and Bus HighwayInspections with Community-BasedInspections.None IdentifiedNone RequiredON-RDHVYDUTY-2Capture and Control Vapors from GasolineCargo Tankers.None IdentifiedNone RequiredPROPOSED 2003 STATE AND FEDERAL STRATEGY FOR CALIFORNIA SIPSECTION V – POTENTIAL IMPACTSENVIRONMENTAL IMPACT ANALYSISV-A-27Table V-A-1: Potential Adverse Environmental Impacts ofthe Proposed 2003 State and Federal Strategy for the California SIPNumberDescriptionPotential Adverse EnvironmentalImpactsPotentialMitigation MeasuresON-RDHVYDUTY-3Pursue Approaches to Clean Up the Existingand New Truck/Bus Fleet – PM In-UseEmission Control, Engine Software Upgrade,On-Board Diagnostics, Manufacturers’ InUse Compliance.Air: Potential for passive particulatefilters to emit higher levels of NO2affecting ozone, NO2, nitric acid, andsecondary particulate.Energy: Potential fuel efficiency lossdue to controls.Waste: Filter ash and spent filter maybe a hazardous waste.Waste: Potential increase in engineand vehicle scrapping.Waste: Some increased disposal offaulty emission control parts.Hazards/Human Health: Potential fueladditives could be hazardous.Water: Emulsified diesel may disperseinto surface water easily.Limits on NO to NO2 conversionrates.Design system to reduce backpressure and require back pressuremonitoring.Promote safe handling, collection,and recycling.Promote recycling of engines andvehicles.Recycle parts and/or catalysts whenfeasible.Additives must be proven safe.Require spill prevention plan.PROPOSED 2003 STATE AND FEDERAL STRATEGY FOR CALIFORNIA SIPSECTION V – POTENTIAL IMPACTSENVIRONMENTAL IMPACT ANALYSISV-A-28Table V-A-1: Potential Adverse Environmental Impacts ofthe Proposed 2003 State and Federal Strategy for the California SIPNumberDescriptionPotential Adverse EnvironmentalImpactsPotentialMitigation MeasuresOff-Road Compression-Ignition EnginesOFF-RDCI-1Pursue Approaches to Clean Up the ExistingOff-Road Equipment Fleet (CompressionIgnition Engines) -- Retrofit Controls.Air: Potential for passive particulatefilters to emit higher levels of NO2affecting ozone, NO2, nitric acid, andsecondary particulate.Energy: Potential fuel efficiency lossdue to controls.Waste: Filter ash and spent filter maybe a hazardous waste.Hazards/Human Health: Potential fueladditives could be hazardous.Water: Emulsified diesel may disperseinto surface water easily.Limits on NO to NO2 conversionrates.Design system to reduce backpressure and require back pressuremonitoring.Promote safe handling, collection,and recycling.Additives must be proven safe.Require spill prevention plan.OFF-RDCI-2Implement Registration and InspectionProgram for Existing Off-Road Equipment toDetect Excess Emissions [CompressionIgnition Engines].Waste: Some increased disposal offaulty emission control parts.Recycle parts and/or catalyst whenfeasible.Off-Road Large Spark-Ignition EnginesOFF-RDLSI-1Set Lower Emission Standards for New OffRoad Gas Engines [Spark-Ignition Engines25 hp and Greater].None IdentifiedNone RequiredPROPOSED 2003 STATE AND FEDERAL STRATEGY FOR CALIFORNIA SIPSECTION V – POTENTIAL IMPACTSENVIRONMENTAL IMPACT ANALYSISV-A-29Table V-A-1: Potential Adverse Environmental Impacts ofthe Proposed 2003 State and Federal Strategy for the California SIPNumberDescriptionPotential Adverse EnvironmentalImpactsPotentialMitigation MeasuresOFF-RDLSI-21Clean Up Existing Off-Road Gas EquipmentThrough Retrofit Controls [Spark-IgnitionEngines 25 hp and Greater].Waste: Some increased disposal offaulty emission control parts.Air: Potential decrease in fuel economycould increase carbon dioxideemissions.Energy: Potential decrease in fueleconomy.Recycle parts and/or catalyst whenfeasible.Design retrofit controls to minimizeimpact on fuel economy.Design systems to minimizeadverse impacts on fuel economy.OFF-RDLSI-31Require Zero Emission Forklifts WhereFeasible -- Lift Capacity <8,000lbs.Air: Potential increase in purchases oflarger and/or diesel forklifts to avoidelectric could increase emissions.Air: Increase in emissions fromelectrical power plants.Air: Potential for older and dirtierforklifts to be kept longer.Energy: Increase in demand forelectrical power.Waste: Potential increase in forkliftscrapping.Waste: Potential increase in batterywaste.Regulation will be written toconsider and minimize unintendedemission increases.Air district permitting programs tolimit emissions increases.Regulation will be written toconsider and minimize unintendedemission increases.Charge batteries at night.Use solar panels or fuel cells.Promote recycling of engines andvehicles.Promote battery recycling.1OFF-RD LSI-2 and OFF-RD LSI-3 from the May draft have been consolidated into a new measure named OFF-RD LSI-2: Clean Up OffRoad Gas Equipment Fleet Through Retrofit Controls and New Emission Standards (Spark-Ignition Engines 25 hp and Greater). Pleaserefer to Section II for more information.PROPOSED 2003 STATE AND FEDERAL STRATEGY FOR CALIFORNIA SIPSECTION V – POTENTIAL IMPACTSENVIRONMENTAL IMPACT ANALYSISV-A-30Table V-A-1: Potential Adverse Environmental Impacts ofthe Proposed 2003 State and Federal Strategy for the California SIPNumberDescriptionPotential Adverse EnvironmentalImpactsPotentialMitigation MeasuresSmall Off-Road EnginesSMALLOFF-RD-1Set Lower Emission Standards for NewHandheld Small Engines and Equipment --Like Weed Trimmers, Leaf Blowers, andChain Saws [Spark-Ignition Engines Under25 hp].None IdentifiedNone RequiredSMALLOFF-RD-2Set Lower Emission Standards for New NonHandheld Small Engines and Equipment --Like Lawnmowers [Spark-Ignition EnginesUnder 25 hp].Waste: Potential for catalyst systemsto be sent to landfill.Promote recycling of catalysts.PROPOSED 2003 STATE AND FEDERAL STRATEGY FOR CALIFORNIA SIPSECTION V – POTENTIAL IMPACTSENVIRONMENTAL IMPACT ANALYSISV-A-31Table V-A-1: Potential Adverse Environmental Impacts ofthe Proposed 2003 State and Federal Strategy for the California SIPNumberDescriptionPotential Adverse EnvironmentalImpactsPotentialMitigation MeasuresCommercial Marine Vessels and PortsMARINE1Pursue Approaches to Clean Up the ExistingHarbor Craft Fleet -- Cleaner Engines andFuels.Air: Potential for passive particulatefilters to emit higher levels of NO2affecting ozone, NO2, nitric acid, andsecondary particulate.Air: Potential for ammonia emissionsfrom NOx controls.Air: Potential decrease in fuel economy(add on control devices, alternativefuels) could increase carbon dioxideemissions.Air: Expanded use of alternative fuelscould increase emissions at refineries.Energy: Potential fuel efficiency lossdue to controls.Waste: Filter ash and spent filter maybe a hazardous waste.Waste: Potential increase in enginescrapping.Hazards/Human Health: Potential fueladditives could be hazardous.Water: Emulsified diesel fuel oradditives may disperse into surfacewater easily.Hazards/Human Health: Potential forammonia storage hazards.Ensure systems are properlydesigned to minimize conversion ofNO to NO2. Establish cap on NO2emissions.Monitor and control ammonia.Promote increases in fuel efficiency.Air district permitting programs tolimit emissions increases.Design to reduce back pressure andrequire back pressure monitoring.Promote safe handling, collection,and recycling.Promote recycling of engines.Additives must be proven safe.Require spill prevention plan andsafe storage practices.Require proper facility design withhazard assessment.PROPOSED 2003 STATE AND FEDERAL STRATEGY FOR CALIFORNIA SIPSECTION V – POTENTIAL IMPACTSENVIRONMENTAL IMPACT ANALYSISV-A-32Table V-A-1: Potential Adverse Environmental Impacts ofthe Proposed 2003 State and Federal Strategy for the California SIPNumberDescriptionPotential Adverse EnvironmentalImpactsPotentialMitigation MeasuresMARINE2Pursue Approaches to Reduce Land-BasedPort Emissions – Alternative Fuels, CleanerEngines, Retrofit Controls, Electrification,Idling Restrictions.Air: Potential for passive particulatefilters to emit higher levels of NO2affecting ozone, NO2, nitric acid, andsecondary particulate.Air: Potential decrease in fuel economy(add on control devices, alternativefuels) may increase emissions ofcarbon dioxide.Air: Expanded use of alternative fuelscould increase emissions at refineries.Energy: Potential decrease in fueleconomy due to controls.Energy: Potential increase in electricityuse due to electrification.Waste: Filter ash and spent filters maybe a hazardous waste.Waste: Potential increase in enginescrapping.Hazards/Human Health: Potential fueladditives could be hazardous.Water: Emulsified diesel fuel oradditives may disperse into surfacewater easily.Ensure systems are properlydesigned to minimize conversion ofNO to NO2. Establish cap on NO2emissions.Promote increases in fuel efficiency.Air district permitting programs tolimit emissions increases.Design to reduce back pressure andrequire back pressure monitoring.Promote energy conservation.Promote safe handling, collection,and recycling.Promote recycling of engines.Additives must be proven safe.Require spill prevention plan andsafe storage practices.Conventional and Alternative FuelsFUEL-1Set Additives Standards for Diesel Fuel toControl Engine Deposits.Hazards/Human Health: Potential fueladditives could be hazardous.Additives must be proven safe.PROPOSED 2003 STATE AND FEDERAL STRATEGY FOR CALIFORNIA SIPSECTION V – POTENTIAL IMPACTSENVIRONMENTAL IMPACT ANALYSISV-A-33Table V-A-1: Potential Adverse Environmental Impacts ofthe Proposed 2003 State and Federal Strategy for the California SIPNumberDescriptionPotential Adverse EnvironmentalImpactsPotentialMitigation MeasuresFUEL-2Set Low-Sulfur Standards for Diesel Fuel forTrucks/Buses, Off-Road Equipment, andStationary Engines.Energy: Increase in energy use forrefining to remove sulfur.Air: Production of cleaner fuels couldincrease emissions at refineries.Promote energy conservation.District to require NSR and BACTon all modifications.CONSUMER PRODUCTS, VAPOR RECOVERY, AND PESTICIDESConsumer ProductsCONS-1Set New Consumer Products Limits for 2006.Air: Potential use of TACsWater: Potential use of TACsHazards: Potential flammabilityOther: Potential global warming, ozonedepletionAir, Water, Hazards: Monitor usageand prohibit manufacturers fromreformulating usingparadichlorobenzene, MeCl andPerc or other TACs.Global Warming: not yet identifiedOzone depletion: not yet identifiedCONS-2Set New Consumer Products Limits for 2008– 2010.Air: Potential use of TACsWater: Potential use of TACsHazards: Potential flammabilityOther: Potential global warming, ozonedepletionAir, Water, Hazards: Monitor usageand prohibit manufacturers fromreformulating using MeCl and Percor other TACs.Global Warming: not yet identifiedOzone depletion: not yet identifiedPROPOSED 2003 STATE AND FEDERAL STRATEGY FOR CALIFORNIA SIPSECTION V – POTENTIAL IMPACTSENVIRONMENTAL IMPACT ANALYSISV-A-34Table V-A-1: Potential Adverse Environmental Impacts ofthe Proposed 2003 State and Federal Strategy for the California SIPNumberDescriptionPotential Adverse EnvironmentalImpactsPotentialMitigation MeasuresFueling and Vapor RecoveryFVR-1Increase Recovery of Fuel Vapors fromAboveground Storage Tanks.Energy: Increase in electrical use.Promote energy conservation.FVR-2Recover Fuel Vapors from GasolineDispensing at Marinas.Waste: generates gasoline vaporcollection devices (carbon beds).Energy: Increase in electrical use.Develop recycling program toregenerate gasoline vapor collectiondevices.Promote energy conservation.FVR-3Reduce Fuel Permeation Through GasolineDispenser Hoses.None IdentifiedNone RequiredPesticidesPEST-1Implement Existing Pesticide StrategyNone IdentifiedNone RequiredPROPOSED 2003 STATE AND FEDERA L STRATEGY FOR CALIFORNIA SIP SECTION V – POTENTIAL IMPACTS

ENVIRONMENTAL IMPACT ANALYSIS V-A-35 6. Environmental Justice

In December 2001, ARB adopted a set of policies and associated actions that provide the framework for incorporating environmental justice into ARB’s programs consistent with the directives of State law. The proposed policies and actions are based on State law, which describes " environmental justice" as "the fair treatment of people of all races, cultures, and incomes wit h respect to the development, adoption, implementation, and enforcem ent of environmental laws, regulations, and policies." ARB’s environmental justice policies will help ensure that we take into account neighborhood impacts as we prioritize and develop controls and pollution-prevention strategies.

The environmental justice policies touch virtually every ARB program, including motor vehicles, air-quality planning, toxics, research, enforcement, and air monitoring. They apply to all communities in California but recognize that extra efforts may be needed in some communities due to historical land-use patterns, limited participation in public processes in the past, and a greater concentration of air pollution sources in these communities.

The Proposed Strategy incorporates envir onmental justice policies in order to help prioritize our activities to reduce public exposure to air toxics as well as regional pollutants whose sources are concentrated in some communities. While all of the proposed State measures would result in better air quality for residents throughout California, we are making measures that cut exposure and risk in communities with high air pollution burdens a high priority for development. These include strategies to capture emissions from gas car go tankers, retrofit trash trucks, restrict idling for trucks and buses, augment the truck inspection program in communities with high truck traffic, clean up port-related sources, and reduce f uel vapors from gasoline storage and refueling.

ARB has placed a high priority on contro lling particulate emissions from diesel engines, the dominant source in California of known risk from air toxics. Several measures outlined in the Pr oposed Strategy have their or igin in the Diesel Risk Reduction Plan, which lays out a three pronged approach to reduce emissions and the associated risk from diesel PM: (1) new regulatory standards for all diesel-fueled engines to reduce diesel PM emissions 90 percent from current levels; (2) retrofit of inuse engines; and (3) the use of low sulfur f uel to provide the quality of diesel fuel needed by the advanced diesel PM emission controls.

ARB staff is committed to working with districts, local governments and affected communities to improve statewide compli ance for all air pollution sources, whether under ARB or district jurisdiction. AR B staff has already begun to incorporate environmental justice perspectives into our progr am activities. ARB staff is working with districts to assure that all air pollution complaints are promptly investigated and that feedback is provided to the public on the actions taken in response to those complaints. ARB staff is also working with the local air districts to improve accessibility ofPROPOSED 2003 STATE AND FEDERA L STRATEGY FOR CALIFORNIA SIP SECTION V – POTENTIAL IMPACTS

ENVIRONMENTAL IMPACT ANALYSIS V-A-36 information regarding enforcement activities, including notices of violations, monetary penalties, and other settlement of violations. ARB is also reviewing its own enforcement activities and redirecting efforts where we c an achieve a more direct community benefit.

Another matter of concern in communities stems from historic land use patterns and practices that have led to siting of air pollution sources in close proximity to homes and schools. In addition to working to reduc e air toxics, ARB staff is developing a handbook intended to provide more information to decision-makers at the local level.

In addition to the specific measures in the Proposed Strategy, ARB staff has identified ideas in the long-term strategy that will move the State toward zero and nearzero technologies. ARB will work with loca l governments to look for new opportunities to apply these far reaching technologies in co mmunities -- for exampl e, using converted electric or fuel-cell postal-delivery vehi cles and public transit buses in affected neighborhoods.PROPOSED 2003 STATE AND FEDERA L STRATEGY FOR CALIFORNIA SIP SECTION V – POTENTIAL IMPACTS

ECONOMIC IMPACT ANALYSIS V-B-1 This chapter is unchanged from the Section V, C hapter B. Economic Impact Analysis chapter that was released on June 25, 2003, except for the addition of two footnotes.

CHAPTER B. ECONOMIC IMPACT ANALYSIS

ARB staff has estimated the statewide costs and economic impacts that could result in 2010 from implementation of t he defined State measures in this Proposed Strategy. This analysis includes the co sts and economic impacts of all proposed measures identified for sources under State jurisdiction, including mobile sources, fueling infrastructure, and consumer products.

Because the specific sources and approaches to achieve the reductions from the long-term strategy (also known as the black box) are not yet defined, we have no reasonable basis to estimate the potential cost of this element. When specific measures to implement this long-term st rategy are identified in a subsequent SIP revision, we will evaluate the corresponding economic impacts.

The proposed SIP measures, when adopted, are likely to cause technological changes that may increase the production co sts for regulated industries. Increased costs would have an initial contractionary effect on those industries, which in turn could affect other related industries, either negatively or positivel y. For example, industries that provide supplies and services to affe cted industries could experience a reduction in demand for their products and services. On the other hand, suppliers of environmental products and services could experience an increas e in their sales. The net effect on the California economy of these activities hi nges on the extent to which products and services are obtained locally. Using a dynamic model of t he California economy (E-DRAM), 2 we estimated the net effects of t hese activities on affected industries and the overall economy. Based on this model, the California industries affected most by the planned control measures are those engaged in the production, distribution, sales, and use of on-road and off-road motor v ehicle and mobile equipment, fueling infrastructure, and consum er products.

Annual direct costs of all defined St ate measures would be approximately $770 million statewide and $265 million in t he South Coast in 2010. Increased costs that would result from the proposed measur es are projected to reduce California’s economic output by roughly $1.5 billion (0 .06 percent) and Califor nia employment by less than 1,300 jobs (0.01 percent) in 2010. Personal income would also be projected to decline by roughly $1.3 billion (0.09 perc ent), implying that personal income of an average California household would fall by about 26 cents per day. The proposed measures, however, would also bring signific ant social benefits (including less illness and medical expense, and fewer lost work and sc hool days) to Californians. In its report

2 For a complete description of E-DRAM, see Peter Berck, “Developing a Methodology for Assessing the Economic Impacts of Large Scale Environmental Regul ations”, Prepared for California Air Resources Board, November 1999.PROPOSED 2003 STATE AND FEDERA L STRATEGY FOR CALIFORNIA SIP SECTION V – POTENTIAL IMPACTS

ECONOMIC IMPACT ANALYSIS V-B-2 to Congress in 1999, the U. S. EPA found that t he monetized benefits of the Clean Air Act exceed its compliance costs by a ratio of four to one. 3 Based on this report, ARB staff estimates that each dollar spent on cl ean air in California generates, on average, three dollars in social benefits that improve the quality of life.

1. Cost Of Defined State Measures

Most of the defined State measures rely on the application of current technologies to achieve additional emission reductions. Some measures, however, rely on the anticipated development of new technol ogies. The implementation of these control measures may change the ways many products are manufactured, distributed, and used. Whether these changes require the reformulation of a consumer product, retrofit of diesel trucks and buses, or cl ean-up of the existing harbor craft fleet, we assumed that they would impose costs on businesses. This analysis provides estimates of those direct costs.

ARB staff estimated the cost of eac h defined State measure using the most reliable information currently available. Fo r those measures where data were available, staff developed control costs directly based on the application of current technologies. For most control measures, however, staf f estimated control costs indirectly by multiplying the cost-effectiveness estimate by the emission reductions associated with the proposed measure.

The control costs in this report repres ent rough estimates of the costs of the proposed measures and may change when mo re specific regulatory language is developed. There is an extensive public pr ocess to develop each plan measure into a regulation or program - ARB staff gather detailed industr y-specific information and assess the potential costs to business, gov ernment, and consumers. The measures will be discussed at public workshops, and proposed regulations will go through the public hearing process as required by law. When s pecific regulatory lan guage is developed, it will be possible to analyze potential cost and economic impacts in more detail. This information will be presented with each regulat ory proposal for Board consideration.

a. Cost-Effectiveness Estimates

Cost-effectiveness is a measure of the unit cost of reducing a pollutant, and varies by pollutant and control strategy. The estimated cost-effectiveness of past ARB control measures to reduce volatile organic compounds (VOC) from consumer products has ranged from under $0.50 per pound ( $1,000 per ton) to about $6 per pound ($12,000 per ton). To reduce NO x+HC from mobile sources, the range varied from less than $0.50 per pound ($1,000 per ton) to about $5.60 per pound ($11,000 per ton). These estimates are generated as part of regulatory development process and have typically turned out to be higher than the ac tual costs. Figures V-B-1 and V-B-2 show cost-effectiveness estimates for California consumer products and mobile source and

3 U.S. EPA Report to Congress, “The Benefits and Costs of t he Clean Air Act 1990 to 2010”, November 1999.PROPOSED 2003 STATE AND FEDERA L STRATEGY FOR CALIFORNIA SIP SECTION V – POTENTIAL IMPACTS

ECONOMIC IMPACT ANALYSIS V-B-3 fuel measures approved by ARB since the la te 1980s. Cost-effectiveness numbers are presented in historical do llars and therefore are not adjusted for inflation.

Figure V-B-1 Cost-Effectiveness Values for Select ed Consumer Products Regulations

Figure V-B-2 Cost-Effectiveness Values for Selected Mobile Source and Fuel Regulations Aerosol Paints 3.03

Antiperspirants 0.85 Consumer Products

1.70

Consumer Products

1.00 Consumer Products

0.51 Consumer Products

0.70 Aerosol Coatings 1.57

Consumer Products

0.40 Aerosol Coatings 0.74 Aerosol Adhesives 6.02

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Board Hearing YearDollars per Pound of VOC Reduction

0.4 NOx LDV RFG 2

5g HDD

0.25 HC LDV

OBD 1 2-Stroke Lawn

LEV 4-Stroke Lawn Off-Rd Diesel

Off-Rd Motorcycle Med. Duty

Truck Off-Cycle LDT
2.4g HDDE NTE & ESC Test Off-Rd

CI 2007 HDDE Outboard

Marine

Fuel Container Transit Bus Inboard Marine OBD 2 Enhanced

Vapor Recovery On-Rd Motorcycle

0 1 2 3 4 5 6

1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004
Board Hearing YearDollars per Pound of Ozone Precursor LDV – light duty vehicle HDD – heavy-duty vehicle HC – hydrocarbon OBD – on-board diagnostics RFG – reformulated gasoline LEV –low-emission vehicle MDT – medium-duty truck LDT – light-duty truck HDDE – heavy-duty diesel engine NTE – not-to-exceed ESC – Euro p ean Stationar y C y clePROPOSED 2003 STATE AND FEDERA L STRATEGY FOR CALIFORNIA SIP SECTION V – POTENTIAL IMPACTS

ECONOMIC IMPACT ANALYSIS V-B-4 For the purpose of this analysis, ARB sta ff makes a conservative assumption that future emission reductions will be more ex pensive to obtain than the past reductions. This is because firms are required to meet more stringent air quality standards or to control unregulated emission sources. In the past, however, businesses have always found innovative ways to meet standards at co sts much lower than estimated by staff. We believe that this trend will continue in the future. For example, the South Coast District estimated the cost of NOx reduction from a natural gas-fired power plant to be about $25,000 per ton in 1988 compared to t he industry estimate of $45,000 per ton. By 1995, when the rule requirements became effe ctive, the actual cost of NOx control from power plants was about $12, 000 per ton. Similarly, st aff estimated the cost to control evaporative emissions from vehicl es to be about $170 per vehicle in 1990 while the industry estimate was about $783 per vehicle. When the regulation was implemented, it became clear t hat the actual cost of the regulation was closer to the lower estimate.

The cost-effectiveness estimates us ed for the proposed State measures averaged about $9,200 (from $1,100 to $22,000) per ton of ROG emissions reduced, and about $8,300 (from $1,100 to $22,000) per ton of NOx emissions reduced. Tables V-B-1 and V-B-2 provide cost-effe ctiveness rankings of the defined State measures for both ROG and NOx reductions (see Table I-2 for the full name of each measure). All cost-effectiveness numbers are in constant 2002 dollars per ton.PROPOSED 2003 STATE AND FEDERA L STRATEGY FOR CALIFORNIA SIP SECTION V – POTENTIAL IMPACTS

ECONOMIC IMPACT ANALYSIS V-B-5 Table V-B-1 Cost-Effectiveness Ranking of the Defined Statewide Measures for ROG Reduction

Statewide Measures Average C/E (2002 $/ton) Rank Estimated Statewide ROG Red. (TPD) Estimated Statewide Cumulative

ROG Red. (TPD) SMALL OFF-RD-2 $1,100 1 14.9 14.9

SMALL OFF-RD-1 $1,600 2 4.0 18.9

ON-RD HVY-DUTY-3 $2,200 3 8.1 27.0

OFF-RD LSI-2** $3,000 5 2.8 30.4

ON-RD HVY-DUTY-1 $3,000 6 0.3 30.7

LT/MED-DUTY-2 $3,200 7 16.1 46.8

ON-RD HVY-DUTY-2 $4,000 8 13.8 60.6

FVR-3 $4,000 9 1.1 61.7

FVR-1 $4,000 10 0.3 62.0

CONS-2 $4,480 11 28.1 90.1

CONS-1 $4,480 12 5.4 95.5

OFF-RD LSI-3** $7,500 13 1.3 96.8

FVR-2 $8,000 14 0.3 97.1

MARINE-2 $11,000 15 0.3 97.4

OFF-RD CI-1* $21,000 16 18.4 115.8

LT/MED-DUTY-1 $22,000 17 27.0 142.8
* The primary purpose of this measure is to reduce toxic diesel particulate; the ROG control is a secondary benefit.

** OFF-RD LSI-2 and OFF-RD LSI-3 from the Ma y draft have been consolidated into a new measure named OFF-RD LSI-2: Clean Up Off-Road Gas Equipment Fleet Through Retrofit Controls and New Emis sion Standards (Spark-Ignition Engines 25 hp and Greater). Please refer to Section II for more information.PROPOSED 2003 STATE AND FEDERA L STRATEGY FOR CALIFORNIA SIP SECTION V – POTENTIAL IMPACTS

ECONOMIC IMPACT ANALYSIS V-B-6 Table V-B-2 Cost-Effectiveness Ranking of the Defined Statewide Measures for NOx Reduction

Statewide Measures Average C/E (2002 $/ton) Rank Estimated Statewide NOx Red. (TPD) Estimated Statewide Cumulative

NO x Red.

(TPD) SMALL OFF-RD-2 $1,100 1 2.4 2.4

SMALL OFF-RD-1 $1,600 2 0.4 2.8

OFF-RD LSI-1 $2,100 3 1.9 4.7

ON-RD HVY-DUTY-3 $2,200 4 21.9 26.6

OFF-RD LSI-2* $3,000 6 5.8 40.5

LT/MED-DUTY-2 $3,200 7 24.3 64.8

OFF-RD LSI-3* $7,500 8 4.9 69.7

MARINE-2 $11,000 9 0.3 70.0

LT/MED-DUTY-1 $22,000 10 26.9 96.9

*OFF-RD LSI-2 and OFF-RD LSI- 3 from the May draft hav e been consolidated into a new measure named OFF-RD LSI-2: Clean Up Off-Road Gas Equipment Fleet Through Retrofit Controls and New Emis sion Standards (Spark-Ignition Engines 25 hp and Greater). Please refer to Section II for more information.

b. Annual Costs

Annual direct costs of all near-term c ontrol measures are estimated to be approximately $770 million stat ewide and $265 million in the South Coast in 2010. Annual statewide costs repr esent about 0.03 percent of the California Gross State Product (GSP) in 2010. GSP measures the total economic activity in California.

ARB also recognizes that the defined St ate and local control measures are not sufficient to meet ozone attainment goals in the South Coast by 2010. ARB staff has proposed to lead a multi-agency (State, local, and federal) effort and public process beginning in 2004 to identify and adopt long -term strategies. Because of great uncertainty associated with the sources and approaches for potential long-term control strategies, this analysis does not include the costs of such control strategies. When those strategies are identified in a subs equent SIP revision by 2007, we will evaluate the corresponding economic impacts. This process will consider long-term strategies needed for ozone attainment in the San Joaquin Valley as well.

Table V-B-3 provides estimates of to tal annual costs of the proposed control measures by source categories for the St ate and South Coast in 2010. Stationary andPROPOSED 2003 STATE AND FEDERA L STRATEGY FOR CALIFORNIA SIP SECTION V – POTENTIAL IMPACTS

ECONOMIC IMPACT ANALYSIS V-B-7 area sources account for about 7 percent of annual plan costs statewide. About 95 percent of the costs associated with stationary and area sources are due to new VOC limits for consumer products. All co sts are stated in constant 2002 dollars.

Mobile source control measures account for 93 percent of annual control costs, of which about 68 percent stem s from on-road mobile source s control measures. The control measure to replac e or upgrade emission control systems on existing passenger vehicles accounts for the bulk of the cost increase.

Table V-B-3 Statewide Estimates of Total Annual Cost s of the Defined State Measures for 2010 (Millions of 2002 Dollars)

South Coast Cost Statewide Cost % of Total Stationary and Area Sources: Consumer Products $23 $55 7 Fueling and Vapor Recovery $ 1 $ 3 0 Total for Stationary and Area Sources $24 $58 7

Mobile Sources: On-Road: Light- and Medium-Duty Vehicles $165 $480 62 Heavy-Duty Vehicles $ 16 $ 44 6 Subtotal for On-Road $181 $524 68 Off-Road: Off-Road Compression Ignition Engines $39 $141 18

Off-Road Large Spark-Ignited Engines $11 $ 28 4 Small Engines $ 5 $ 9 1 Marine Vessels and Ports $ 4 $ 12 2 Subtotal for Off-Road $59 $190 25

Total for Mobile Sources $240 $714 93

Total $264 $772 100

In order to estimate the total impact of the statewide co sts on the California economy, we reclassified these costs acco rding to the E-DRAM’s industrial sector classifications. The model has 30 industrial sectors. 4 Of these 30 sectors, five would be affected directly by the defined control m easures. Table V-B-4 provides estimates of total annual costs by affected industries. About 70 percent of total annual costs would be borne by the motor vehicle industry. A ll off-road control measures, except Marine

4 For complete definitions of industrial sectors in the E-DRAM model, see Peter Berck, E. Golan and B. Smith, “Dynamic Revenue Analysis for California”, Ca lifornia Department of Finance, Summer 1996, pp. 16-25, and Peter Berck, “Developing a Methodology fo r Assessing the Economic Impacts of Large Scale Environmental Regulations", Prepared for Califor nia Air Resources Board, February 2000, p. 7.PROPOSED 2003 STATE AND FEDERA L STRATEGY FOR CALIFORNIA SIP SECTION V – POTENTIAL IMPACTS

ECONOMIC IMPACT ANALYSIS V-B-8 Vessels and Ports, are reclassified under gaso line and diesel power engines industry in the E-DRAM model. This industry would acco unt for 23 percent of the statewide SIP total annual costs. Table V-B-4 Statewide Estimates of Total Annual Costs of the Defined State Measures by Affected Industries for 2010 (Millions of 2002 Dollars) Affected Industrial Sectors in E-DRAM South Coast Annual Costs Statewide Annual Costs %Total

Consumer Chemicals $ 23 $ 55 7 Gasoline- and Diesel- Powered Engines $ 55 $178 23 Motor Vehicles $181 $524 69 Transportation $ 4 $ 12 1 Other Services $ 1 $ 3 0 Total $264 $772 100

2. Economic Impacts

Control costs provide a means to esti mate the direct expenditures that will be incurred by California businesses, gover nments, and individuals to meet the requirements of the proposed c ontrol measures. These costs would, in turn, bring about additional (indirect) changes in the California economy that may increase the overall costs of the defined measures to the economy. Increased control costs, for example, may result in higher product prices . California firms may respond by cutting back production and decreasing employmen t. On the other hand, the proposed measures may also increase demand for environmental products and services, thus inducing firms supplying those products and se rvices to expand their production and increase their hiring of workers.

This change in costs will in turn affe ct other industries both negatively and positively. The net effect on the California economy of thes e activities hinges on the extent to which products and services ar e obtained locally. Using a macroeconomic model, staff estimated the net effects of t hese activities on affected industries and the overall economy. The California industri es and individuals affected most by the proposed control measures are those engaged in the production, distribution, sales, and use of on-road and off-road motor vehicles and mobile equipment, fueling infrastructure, and consumer products.

The economic model, however, does not account for the enormous benefits to California businesses and citizens that air qua lity regulations will bring. We believe that actions to improve air quality reduce prem ature death from cardiopulmonary causes, hospitalizations from acute respiratory dis ease, aggravation of asthma, lost work days, as well as school absences, and increase natur al resources and work force productivity. Control programs also induce significant adv ancement of clean technologies. Based on the U.S. EPA report to Congre ss, ARB staff estimated that the benefits to California of currently adopted air pollution control measures exceed their costs by a ratio of about 3PROPOSED 2003 STATE AND FEDERA L STRATEGY FOR CALIFORNIA SIP SECTION V – POTENTIAL IMPACTS

ECONOMIC IMPACT ANALYSIS V-B-9 to 1. That is, each dollar spent on clean ai r generates on average three dollars in social benefits that improve the quality of life.

a. Environmental-Dynamic Reve nue Analysis Model (E-DRAM)

The overall impact of all direct and indire ct economic effects associated with the proposed control measures are estimated using a computable general equilibrium (CGE) model of the Califor nia economy. A CGE model simulates various economic relationships in a market economy where prices and production adjust in response to changes caused by regulations to establish the equilibrium in markets for all goods and services and factor of production (i.e., labor and capital). The CGE model used for this analysis is a modified version of the California Department of Finance's Dynamic Revenue Analysis Model (DRAM). 5 The new modified model is called Environmental-DRAM (E-DRAM). 6 E-DRAM describes the relationships among California producers, California consumers, government, and the rest of the world. Changes to the model enable it to asse ss the economic impacts of large-scale environmental regulations. The economic im pact results are estimated in terms of changes in the State output, personal income, and employment.

As stated above, E-DRAM is a CGE model that describes the relationship among California producers, Californi a consumers, government, and t he rest of the world. The model consists of over 1,000 equations desig ned to capture the interactions between 30 California sectors, 2 factor sectors (labor and capital), 7 household sectors (classified by income level), 1 investment sector, and 36 government sectors (8 federal, 21 State, and 8 local), and the rest of the world.

Data for the industrial sectors originat ed with the Bureau of Economic Analysis of the U.S. Department of Commerce, based on the Census of Business – a detailed survey of companies conducted in the U.S. ever y five years. The conversion of national data to updated California data is accompli shed by Impact Analysis for Planning (IMPLAN), a program that pr imarily utilizes state-leve l employment data to scale national-level industria l data down to the size of a state.

In much the same way as firms, hous eholds are also aggregated. California households were divided into categories based upon their taxable income. There are seven such categories in the model, each one corresponding to a California personal income tax marginal tax rate (0, 1, 2, 4, 6, 8, and 9.3 percent). Thus, the income for the “one-percent” household is calculated by addi ng up the income from all households in the one-percent bracket.

Similarly, the expenditure of the one- percent household on agricultural goods is calculated by adding up all expenditures on agricultural goods for these households.

5 For a complete description of DRAM, see Peter Be rck, E. Golan and B. Smith, "Dynamic Revenue Analysis for California", California Department of Finance, Summer 1996.
6 Berck, Peter, "Developing a Methodology for Assessing the Economic Impacts of Large Scale Environmental Regulations", Prepared for Calif ornia Air Resources Board, February 2000.PROPOSED 2003 STATE AND FEDERA L STRATEGY FOR CALIFORNIA SIP SECTION V – POTENTIAL IMPACTS

ECONOMIC IMPACT ANALYSIS V-B-10 The total expenditure on agricultural goods is found by adding the expenditure of all households together.

b. Overall Economic Impact

Increased costs of the def ined measures would affect the California economy through many complex interactions. E-DRAM was developed to simulate many of these complex interactions. Using the model, ARB staff in consultation with UC Berkeley researchers conducted an assessment of t he economic impacts of the new State measures on the Ca lifornia economy.

Table V-B-5 summarizes the impacts of the defined State measures on the California economy for fiscal year 2010. Si nce the current E-DRAM model is built to reproduce the economic conditions of fiscal year 1998/99, we first extrapolated the model out to 2010 based on state population, personal income, and industry-specific forecasts. 7 Annual costs of the proposed measur es were then adjusted to fiscal year 2010.

The results of the E-DRAM simulation s how that the costs of the proposed State measures would reduce Ca lifornia economic output by roughly $1.5 billion (0.06 percent) and California employment by less than 1, 300 jobs (0.01 percent) in 2010. Personal income would also decli ne by roughly $1.30 billion (0.09 percent), implying that personal income of an aver age California household would fall by less than $95 per year, which amounts to about 26 cents per day.

Table V-B-5 Economic Impacts of the Defined State Measures on the California Economy in Fiscal Year 2010 California Economy Without Statewide Measures With Statewide Measures Difference % Total

Output (Billions) $2,331.11 $2,329.65 $1.46 0.06 Personal Income (Billions) $1,513.95 $1,512.64 $1.31 0.09 Employment (thousands) 16,689 16,688 1.3 0.01

3. Conclusion

Total annual direct costs associated with all proposed defined State measures are estimated to be approximately $770 million in 2010. Accounting for indirect costs, these measures would be expected to reduc e California economic output by about $1.5 billion, personal income by about $1.30 billion, and employment by less than 1,300. In the context of the State’s economy, the econom ic impacts of the measures are small and are not expected to impos e a noticeable impact on the California

7 For a more detail description of the E-DRAM extrap olation to “out years”, please see “Benefits of Reducing Demand for Gasoline and Diesel,” a joint report to California Air Resources Board and California Energy Commission prepared by Arthur D. Little, Inc., March, 2002.PROPOSED 2003 STATE AND FEDERA L STRATEGY FOR CALIFORNIA SIP SECTION V – POTENTIAL IMPACTS

ECONOMIC IMPACT ANALYSIS V-B-11 economy. The defined State measures w ould also bring about significant health, economic and social benefits to Californians . These benefits, which are difficult to express solely in economic terms, are not quantified in this analysis. Prior analyses have estimated that the benefit s of California’s air quality regulations exceed the costs by a ratio of about 3 to 1. Therefore, implementation of the proposed measures would be expected to improve the well-being of Californians.