MEETING STATE OF CALIFORNIA AIR RESOURCES BOARD

CAL/EPA HEADQUARTERS BYRON SHER AUDITORIUM SECOND FLOOR 1001 I STREET SACRAMENTO, CALIFORNIA 95814

THURSDAY, SEPTEMBER 18, 2014

9:13 A.M.

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

J&K COURT REPORTING, LLC (916)476-3171APPEARANCES

BOARD MEMBERS Ms. Mary Nichols, Chairperson Ms. Sandra Berg Mr. Hector De La Torre Mr. John Eisenhut Supervisor John Gioia Mayor Judy Mitchell Mrs. Barbara Riordan Supervisor Ron Roberts Supervisor Phil Serna Professor Daniel Sperling

STAFF Dr. Alberto Ayala, Acting Executive Officer Ms. Edie Chang, Deputy Executive Officer Ms. Ellen Peter, Chief Counsel Ms. La Ronda Bowen, Ombudsman Ms. Mary Jane Coombs, Manager, Program Development Section, ISD Ms. Monique Davis, Staff Air Pollution Specialist, Climate Investments Implementation Section, TTD

J&K COURT REPORTING, LLC (916)476-3171APPEARANCES (CONTINUED)

STAFF Mr. Patrick Gaffney, Staff Air Pollution Specialist, Climate Change Program Data Section, ISD Mr. Jason Gray, Manager, Market Monitoring Section Ms. Cynthia Marvin, Chief, Transportation and Toxics Division Ms. Rajinder Sahota, Chief, Climate Change Program Evaluation Branch Mr. Jimmy Steele, Air Resources Engineer, Transportation and Toxics Division Ms. Emily Wimberger, Air Pollution Specialist, ISD

ALSO PRESENT Mr. Alan Abbs, Tehama County APCD Mr. Steven Arita, Chevron Corporation Ms. Susie Berlin, NCPA & MSR Public Power Mr. Damian Breen, Bay Area AQMD Mr. Tony Brunello, CE2 Carbon Capital Ms. Colleen Cadwallader, Sacramento Tree Foundation Mr. David Cox, Coalition for Renewable Natural Gas Ms. Shasa Curl, City of Richmond Mr. Steve Dutra, Tree Lodi Ms. Veronica Garibay, Leadership Council Mr. Frank Harris, Southern California Edison

J&K COURT REPORTING, LLC (916)476-3171INDEX

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Item 14-7-1 Chairperson Nichols 3 Motion 3 Vote 4

Item 14-7-2 Chairperson Nichols 4 Motion 4 Vote 5 Item 14-7-4 Chairperson Nichols 5 Acting Executive Officer Ayala 7 Staff Presentation 9 Mr. Hogo 51 Mr. Breen 52 Mr. Abbs 55 Mr. Jordan 57 Supervisor Williams 60 Mr. Robinson 62 Ms. Lange 67 Ms. Hughes 68 Ms. Ratner 70 Mr. Willis 72 Ms. Nzegwu 73 Mr. Magavern 77 Ms. Rincon 79 Ms. Shankar 81 Ms. Garibay 83 Ms. Prichard 85 Ms. Pendleton 88 Mr. Wilkinson 89 Ms. Oliver 91 Mr. Malorey 92 Ms. Cadwallader 95 Ms. Curl 96 Mr. Mills 97 Ms. Twomey 100 Mr. Larrea 102 Ms. Holmes-Gen 104 Ms. Topp 106 Mr. Wildman 108

J&K COURT REPORTING, LLC (916)476-3171INDEX (continued)

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Item 14-7-7 Chairperson Nichols 227 Acting Executive Officer Ayala 228 Staff Presentation 228 Motion 234 Vote 234

Public Comment 235

Adjournment 236 Reporter's Certificate 237

J&K COURT REPORTING, LLC (916)476-3171PROCEEDINGS CHAIRPERSON NICHOLS: Good morning, everyone. Welcome all to the September 18th, 2014, meeting of the Air Resources Board. And I don't need to ask you to come to order because you're already in order. Let's please rise and say the Pledge.

(Thereupon the Pledge of Allegiance was Recited in unison.) CHAIRPERSON NICHOLS: Madam Clerk, would you please call the roll?

BOARD CLERK JENSEN: Dr. Balmes? Ms. Berg? BOARD MEMBER BERG: Here. BOARD CLERK JENSEN: Mr. De La Torre? Mr. Eisenhut? BOARD MEMBER EISENHUT: Here. BOARD CLERK JENSEN: Supervisor Gioia? BOARD MEMBER GIOIA: Here. BOARD CLERK JENSEN: Mayor Mitchell? BOARD MEMBER MITCHELL: Here. BOARD CLERK JENSEN: Mrs. Riordan? BOARD MEMBER RIORDAN: Here. BOARD CLERK JENSEN: Supervisor Roberts? BOARD MEMBER ROBERTS: Here. BOARD CLERK JENSEN: Supervisor Serna?

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25BOARD MEMBER SERNA: Here. BOARD CLERK JENSEN: Supervisor Sherriffs? Professor Sperling? BOARD MEMBER SPERLING: Here. BOARD CLERK JENSEN: Chairman Nichols? CHAIRPERSON NICHOLS: Here. BOARD CLERK JENSEN: Madam Chairman, we have a quorum.CHAIRMAN NICHOLS: Thank you.

I would note, our two physician members are both missing this morning for completely independent reasons. But I just want to make sure everybody realizes that you better stay well throughout the course of this meeting. We did once have to have them spring into action. That was a day I'll never forget.

A couple of announcements before we get started. First of all, also missing today is Richard Corey, our Executive Officer, is in China. And so filling in for him is our Deputy Executive Officer, Alberto Ayala, who just recently returned from China. If that suggests to you that we're spending a lot of time on issues related to China, that would be correct. Under the MOU that we have with the National Development and Reform Commission in China, there is a lot of activity going on aimed at helping spread some of California's practices, including

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25zero emission investigations in China. So it's very

exciting work.

Anyone who wishes to testify this morning should please fill out a request to speak card. They're available in the lobby or from the Clerk. And we very much appreciate it if you do that before the item comes up so that the Clerk can organize the speakers' list and we can proceed more efficiently.

We also impose a three-minute time limit on oral testimony, but you can submit anything you want in writing. And so hopefully people can find a way to summarize their testimony in three minutes.

All right. First item on our agenda this morning is a consent calendar addressing two research proposals for the Board's consideration. So before we can proceed to vote on these items, I need to ask the Clerk if anybody signed up to testify. No, they did not.

Are there any Board members who would like to remove this from consent and discuss? No.

Seeing none, then we can close the record on these items. They we are both good proposals. I believe you had an opportunity to review them.

BOARD MEMBER RIORDAN: Move approval, Madam Chair.BOARD MEMBER SERNA: Second.

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25CHAIRPERSON NICHOLS: All in favor, please say

aye. (Seven aye votes)

CHAIRPERSON NICHOLS: Opposed? Abstentions? One abstention from Dr. Sperling. Good. Okay.

BOARD MEMBER BERG: I need to abstain. CHAIRPERSON NICHOLS: Also from Ms. Berg. (Two abstentions.) CHAIRPERSON NICHOLS: The next item on the consent calendar is Item Number 14-7-2. This is the maintenance plan and redesignation request for Mammoth Lakes PM10.

Everybody knows PM10 is still a problem in some parts of our state. We're finally at the point where we can designate and put a plan in effect.

Is there anybody who signed up to testify on this item? No.

Any Board member who wishes to remove the item for discussion? Okay.

Then we can close this. And have you all had an opportunity to review this item? Yes. I see heads nodding.Can somebody make a motion, please?

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25BOARD MEMBER BERG: So moved. BOARD MEMBER GIOIA: Second. CHAIRPERSON NICHOLS: All in favor, please say aye. (Unanimous aye vote)

CHAIRPERSON NICHOLS: Opposed? None. No abstentions on this one. All right. The next item is the cap and trade auction proceeds interim guidance on investments. This one is not so quick a matter.

We have an opportunity here as a result of the State Legislature's action to make even greater strides towards reducing greenhouse gas emissions by funding smart projects that will pay long-term dividends. These projects will deliver environmental public health and economic benefits to the people of California, particularly to residents of our most impacted communities.

Governor Brown and the Legislature created the budget and administrative framework for spending the state's portion of the auction proceeds that come through our Cap and Trade Program, which are being now deposited which are held in the Greenhouse Gas Reduction Fund. This spending must be consistent with the three-year investment plan that this Board approved last year.

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25That concludes my presentation. We would be

happy to answer any questions you have.

CHAIRPERSON NICHOLS: I'd like to note this is the first time that I can ever recall that we had a regulatory item where no one has signed up to speak.

Now, I could say that Mr. Steele either has so completely satisfied all of our stakeholders that they are unwilling to even come forward. On the other hand, if this was American Idol we might say, you know, he lost because people didn't come to talk about his item.

BOARD MEMBER ROBERTS: I quickly move approval. BOARD MEMBER RIORDAN: They're probably in shock their fees are going down.

CHAIRPERSON NICHOLS: That could be it. I think we have a motion to approve. And a second.

BOARD MEMBER RIORDAN: Second. CHAIRPERSON NICHOLS: All right. All in favor, please say aye.

(Unanimous aye vote.) CHAIRPERSON NICHOLS: Any opposed? None. Any abstentions? Congratulations. Well done. We do have one witness who signed up for the public comment period, the open period when anyone can stand up and take three minutes to talk about anything

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25that's not covered by one of our agenda items. And the

witness is Mr. Townsend from IETA.

MR. TOWNSEND: Madam Chair, members of the Board, thank you for your time today. I'll be brief.

This topic was mentioned by Mr. Brunello earlier in the day today. I'm now speaking on behalf of the International Emissions Trading Association, or IETA, which is a multi-sector group of more than 140 businesses across California and globally.

We are increasingly concerned about program and market impacts linked to ARB's clean harbor ODS investigation. IETA fully supports ARB's efforts to ensure that offsets are generated in full compliance with relevant regulations. However, the process has taken longer, now four months and running, and lacks the transparency many stakeholders were led to expect.

IETA and others have written letters and reached out to ARB summarizing these concerns and requesting clarity on status of its clean harbor review and anticipated time line for final determination.

We have also worked hard to provide specific suggestions on how to clarify the applicable regulatory language to enable investments in projects and technologies which are needed to make California's program

a success.

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25Further delays and a lack of clarity will lead to

mounting concern and confusion across California's carbon market community. And this touches a range of stakeholders who are directly and indirectly linked to the clean harbors review.

Once more, we request transparency and expediency regarding ARB's review and the timeline by which it will reach a decision on clean harbors.

We also take this opportunity to urge ARB to clarify that regulatory compliance for offset projects should be limited to activities that are relevant to project activities.

Thank you for your time and today's opportunity to comment.

CHAIRPERSON NICHOLS: Thank you. All right. Any additional comments or questions from Board members? If not, we will stand adjourned. See you all in Los Angeles in October.

(Whereupon the Air Resources Board adjourned at 3:34 p.m.)

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25CERTIFICATE OF REPORTER I, TIFFANY C. KRAFT, a Certified Shorthand Reporter of the State of California, and Registered Professional Reporter, do hereby certify:

That I am a disinterested person herein; that the foregoing hearing was reported in shorthand by me, Tiffany C. Kraft, a Certified Shorthand Reporter of the State of California, and thereafter transcribed into typewriting.

I further certify that I am not of counsel or attorney for any of the parties to said hearing nor in any way interested in the outcome of said hearing.

IN WITNESS WHEREOF, I have hereunto set my hand this 2nd day of October, 2014.

TIFFANY C. KRAFT, CSR, RPR Certified Shorthand Reporter License No. 12277

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