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know, unable to deal with a situation. So we all have to

 2 do what we can.

 3 Thank you very much.

 4 At this point I believe this item will be

 5 concluded.

 6 Did you have any closing comments on this?

 7 EXECUTIVE OFFICER GOLDSTENE: No.

 8 CHAIRPERSON NICHOLS: Okay. Thank you.

 9 In that case, we will move to our next item on

10 the agenda, which is the proposed regulation for

11 commercial harbor craft.

12 Actually, before we do that -- sorry -- did we

13 have a legislative update today?

14 EXECUTIVE OFFICER GOLDSTENE: I think that

15 follows this item.

16 CHAIRPERSON NICHOLS: Okay. Good.

17 EXECUTIVE OFFICER GOLDSTENE: Thank you, Chairman

18 Nichols.

19 Today we'll be providing staff analysis of

20 several issues related to the proposed harbor craft

21 regulation that we presented to you last month. The

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22 primary question that you asked staff to evaluate was what

23 would be the impact of accelerating the statewide engine

24 replacement schedule in the proposed regulation.

25 In addition, you asked staff to provide

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 1 additional information on funding opportunities for

 2 excursion vessels, new ferry standards, greenhouse gas

 3 impacts, and military vessel emissions inventory.

 4 Staff has completed its evaluation and is

 5 prepared to provide you the results of their analysis.

 6 I'd like now to have Mr. Todd Sterling of our of

 7 our Stationary Source Division present the staff's

 8 proposal.

 9 CHAIRPERSON NICHOLS: Thank you.

10 EXECUTIVE OFFICER GOLDSTENE: Todd.

11 MR. STERLING: Good morning Madam Chairman and

12 members of the Board.

13 (Thereupon an overhead presentation was

14 Presented as follows.)

15 --o0o--

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16 MR. STERLING: Today I'll be presenting staff's

17 analysis relating to the questions that the Board members

18 raised at the October hearing regarding the proposed

19 regulation for commercial harbor craft.

20 --o0o--

21 MR. STERLING: I will now provide a brief

22 overview of the proposed commercial harbor craft

23 regulation that was described in detail at the October

24 Board hearing.

25 --o0o--

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 1 MR. STERLING: The proposed regulation will

 2 reduce emissions from ferries, excursion vessels,

 3 tugboats, and towboats. The rule requires all unregulated

 4 and Tier 1 engines to be replaced with new certified

 5 engines meeting the most stringent U.S. EPA standards.

 6 We're not modifying these standards, just requiring that

 7 engines meeting them be used in existing and new vessels.

 8 All new harbor craft, including commercial fishing, will

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 9 need to install new certified engines.

10 The rule establishes a schedule that accelerates

11 engine replacement in existing vessels. Two replacement

12 schedules are proposed: An accelerated schedule for the

13 South Coast and a base schedule for the state overall.

14 The engines being replaced in all existing harbor craft

15 will also need to be recertified engines meeting these

16 standards. All vessels will be subject to monitoring,

17 record keeping, and reporting requirements.

18 --o0o--

19 MR. STERLING: Now I will review the questions

20 raised at the last Board hearing.

21 --o0o--

22 MR. STERLING: Last month, the Board directed

23 staff to go back and determine if the proposal could be

24 modified to provide emission reductions earlier. Several

25 areas for consideration were brought up, as listed on this

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 1 slide. Board members wanted to know if the replacement of

 2 Tier 0 engines in the statewide schedule could be

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 3 accelerated. Members were also interested about the

 4 possibility of a more limited approach, where the

 5 replacement of Tier 0 ferry engines would be accelerated.

 6 Staff also heard concern that the recent investment of

 7 cleaner Tier 1 technology, by vessel owners, with either

 8 their own fund and/or public incentive funds, be

 9 recognized in the compliance schedules. There was also

10 concern if the proposal provided sufficient flexibility to

11 those vessel owners who have multiple vessels needing to

12 be replaced in the same year.

13 The following slides provide staff's analysis of

14 these questions.

15 --o0o--

16 MR. STERLING: The key question raised at the

17 last meeting concerned the replacement schedule for Tier 0

18 engines outside the South Coast. To respond to this

19 question, staff evaluated three options for accelerating

20 the replacement of Tier 0 engines. The first two involved

21 accelerating the replacement of all Tier 0 engines on a

22 statewide schedule. We looked at both accelerating engine

23 replacement to align with the South Coast schedule, and on

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24 a schedule that was not as compressed as the South Coast

25 schedule.

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 1 Additionally, since the Board expressed concern

 2 specifically about Tier 0 ferry engines, we looked at

 3 accelerating just the replacement of Tier 0 ferry engines.

 4 --o0o--

 5 MR. STERLING: In evaluating these accelerated

 6 schedules, staff considered multiple factors. These

 7 factors include the emission levels of both the

 8 replacement engine and the engine being replaced. If

 9 engines are replaced earlier, many would be replaced with

10 Tier 2 engines rather than 3. Tier 3 engines emit

11 50 percent less PM than Tier 2 engines and 20 percent less

12 NOx. So a schedule that replaces more engines with a Tier

13 2 rather than a Tier 3 will lose long-term benefits.

14 A second consideration is that late model Tier 0

15 engines are cleaner than older Tier 0 engines. So there

16 is not as much benefit in replacing them early. We'll

17 consider this in more detail in the following slides.

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18 A third factor considered was the impact of an

19 increase in number of engines to be repowered each year if

20 the schedule is accelerated. There is limited capacity

21 for this type of work to be done. Staff made an analysis

22 of the capacity based on talking with about 30 facilities

23 in California that do this type of work. We estimated

24 that the maximum capacity for repowers under the

25 regulation is about 75 vessels per year. Some vessel

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 1 owners have expressed the concern that this number's

 2 unrealistic, citing numbers as low as 24 vessel for year,

 3 based on their experience with the boat yards that their

 4 vessel association members do work with.

 5 MR. STERLING: The impact of compacting the

 6 schedule on the number of owners required to repower

 7 multiple vessels within the same year is another important

 8 factor that was considered.

 9 Board members asked staff to recognize the early

10 investment that some vessel operators have made in Tier 1

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11 technology. In recognition of this, staff considered how

12 an accelerated schedule would offer a 15-year service life

13 to all Tier 1 engines outside the South Coast.

14 --o0o--

15 MR. STERLING: This slide illustrates two factors

16 that are important in evaluating any compliance schedule.

17 The two charts show PM and NOx emission levels for

18 different engine standard. They show that replacing a

19 Tier 0 engine, the two bars on the left of the chart, with

20 a Tier 3 engine, the bar on the far right, instead of a

21 Tier 2, the second bar from the right, will provide

22 greater reductions in both PM and NOx.

23 Since Tier 3 engines do not become available

24 until 2014, as you compress the engine replacement

25 schedule more, Tier 0 engines will be replaced by Tier 2

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 1 engines. This action, while providing reductions more

 2 quickly, will result in less reductions over the life of

 3 the engines.

 4 The other thing it shows is that late model Tier

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 5 0 engines are about 25 to 30 percent cleaner than earlier

 6 Tier 0 engines.

 7 These are important factors for consideration in

 8 acceleration of any schedule.

 9 --o0o--

10 MR. STERLING: This chart illustrates the

11 trade-off between replacing an engine early with a Tier 2

12 engine, or waiting two years, until 2014, when Tier 3

13 engines are available, and replacing it with a Tier 3.

14 The early emissions gains in the first two years are shown

15 in yellow. These reductions are not as beneficial as the

16 long-term reductions gained by waiting two years when Tier

17 3 engines are available. These long-term reductions are

18 shown in blue. The Tier 3 engine provides 25 percent

19 greater PM benefits and 20 percent greater NOx benefits

20 over the 20-year life for the Tier 2 engine. In this

21 example, the loss in long-term benefits is about three

22 times greater than those gained by early implementation.

23 While replacing the engine early is an

24 appropriate trade-off for the South Coast, where they need

25 the early reductions to meet SIP requirements, it is not

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 1 the best option for the rest of the state.

 2 --o0o--

 3 MR. STERLING: Staff analyzed accelerating the

 4 impact of replacement of Tier 0 engines statewide. We

 5 looked at accelerating the same schedule as the South

 6 Coast as well as a less compressed schedule. In either

 7 case, we lose long-term emission reductions due to the

 8 replacement of engines with Tier 2 engines rather than

 9 Tier 3. As shown in the previous slide, this

10 significantly reduces long-term emission benefits. A

11 compressed schedule also either strains or exceeds the

12 repower capacity of the state in several years, and causes

13 additional impact on the regulated community by increasing

14 the number of operators that will need to repower multiple

15 vessels in the same year.

16 Thus, in all cases, compressing the compliance

17 schedule for Tier 0 engines will provide short-term

18 benefits at the expense of greater long-term reductions a

19 year or two later.

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20 --o0o--

21 Staff also looked at accelerating the replacement

22 of Tier 0 engines for just ferries subject to the

23 statewide schedule. If the Tier 0 ferry engines scheduled

24 to be replaced in 2015 and 2016, which are the 1996

25 through 1999 model year engines, are replaced early, in

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 1 2014, when Tier 3 engines become available, no long-term

 2 benefits would be lost. This would accelerate reductions

 3 from those Tier 0 engines replacements by one to

 4 two years.

 5 The 2000 model year Tier 1 engines would still be

 6 replaced in 2015 and 2016, maintaining a 15-year life for

 7 the Tier 1 engines. Based on staff's estimate that less

 8 than ten ferries would be impacted by this acceleration,

 9 this change would not adversely impact the repower

10 capacity, but would increase the economic impact of the

11 rule on ferry owners.

12 --o0o--

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13 MR. STERLING: Staff reviewed the flexibility

14 allowed in the proposal for operators who have multiple

15 vessels that will need to replace engines in the same

16 year. In addition to the one-year extension provided in

17 the proposed regulation, operators may propose an

18 alternative compliance plan which would allow them to

19 space the replacements over a longer time frame.

20 For example, a fleet could replace some engines

21 earlier than the compliance date and some engines later,

22 such that the engine replacements would occur over a

23 longer time frame but the overall emission reductions

24 achieved would be the same or better than if all engines

25 had been replaced by the compliance date.

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 1 However, for vessels with early compliance dates,

 2 the alternative compliance plan is not feasible and the

 3 only option available in this rule is a one-year

 4 extension.

 5 The next slide presents a possible option to

 6 address this issue.

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 7 --o0o--

 8 MR. STERLING: A possible option would be to

 9 provide a phrased compliance schedule for owners with

10 multiple vessels required to comply in the first two years

11 of the implementation. The option presented here would

12 require that a portion of the fleet be repowered each year

13 and that all of the repowers to be completed by 2013.

14 This would allow up to four years for the repowers to be

15 completed, but would not jeopardize the early reductions

16 necessary in the South Coast.

17 --o0o--

18 CHAIRPERSON NICHOLS: Can I just clarify.

19 That would be an amendment that would have to be

20 made to the proposal.

21 MR. STERLING: Yes, ma'am

22 CHAIRPERSON NICHOLS: And that would be done

23 during the 15-day window if we were to do that?

24 MR. STERLING: Yes, ma'am.

25 CHAIRPERSON NICHOLS: Okay. Thanks.

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 1 --o0o--

 2 MR. STERLING: At the October Board hearing, the

 3 Board had several questions for staff. These questions

 4 include funding for excursion vessel repowers, the

 5 economic impact of the proposed regulation on small fleet

 6 operators, after-treatment technology for new ferries, and

 7 the impact of the proposed regulation on greenhouse gas

 8 emission.

 9 The neck several slides will review and provide

10 additional information on those questions.

11 --o0o--

12 MR. STERLING: A question was asked concerning

13 the availability of funding for excursion vessels,

14 specifically Moyer Program funding. The Carl Moyer

15 program has provided several millions of dollars to

16 install new engines on commercial harbor craft. A typical

17 excursion vessel engine replacement would meet the cost

18 effectiveness requirement under the Moyer program. In

19 fact, over the past several years, 12 excursion vessels

20 have been repowered under the Moyer program and other

21 local incentive programs. However, while excursion vessel

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22 repowers can qualify for Moyer funding, they are not as

23 cost effective as ferry and tug repowers. This is due to

24 the lower number of operating hours for excursion vessels

25 compared to ferries and tugs. Since the Moyer program is

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 1 typically oversubscribed, and the district will provide

 2 funding to the most cost effective projects, excursion

 3 vessels are less likely to receive funding compared to

 4 ferries and tugboats.

 5 --o0o--

 6 MR. STERLING: Staff was asked to review the

 7 economic impact to small harbor craft fleets. About a

 8 third of the ferry/excursion category and a third of all

 9 towboats are owned by single vessel owners. A much

10 smaller portion of the tugboat fleet comes under this

11 category.

12 Staff was not able to develop a fleet size or

13 hours-of-operation cutoff for small fleet operators,

14 beyond the proposed 300 hours per year low use cutoff,

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15 that would preserve most of the emission reductions while

16 reducing the economic impact of the regulation.

17 Staff anticipates that the economic impact of the

18 proposed regulation would be greater for excursion vessel

19 owners than ferry, tugboat, or towboat owners, given the

20 recreational nature of their activity.

21 Using actual economic data for three companies

22 operating excursion vessels, as well as an analysis of the

23 estimated costs for a typical excursion vessel repower,

24 staff estimated that the cost of complying with the

25 regulation could be recovered by a 5 to 10 percent

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 1 increase in ticket price.

 2 --o0o--

 3 MR. STERLING: Staff was also asked to reevaluate

 4 after-treatment technologies used on ferries.

 5 During the October Board hearing, European SCR

 6 was mentioned as a proven technology. ARB staff would

 7 agree, but the European ferries would not be a typical

 8 California ferry. The European ferries are very large

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 9 ferries, carrying cars and passengers, similar in size to

10 oceangoing vessels. Staff noted a single ferry designated

11 as a fast ferry. However, our request for additional

12 information on the size of the vessel has not yet received

13 a response.

14 In the United States, the Staten Island ferry,

15 which is also a large ferry that is using an SCR unit to

16 reduce NOx emissions. The Blue and Gold ferry in San

17 Francisco Bay is successful using diesel particulate

18 filters on their auxiliary engines on one of their

19 ferries. However, for demonstration of emission control

20 technology on propulsion engines, the demonstration

21 program involving a private ferry fleet in New York City

22 provides the most permanent information.

23 The New York State Energy Research and

24 Development Authority has completed a demonstration

25 program of emission control technology on private ferries

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 1 in New York. These vessels are very similar in size and

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 2 operation to typical California ferries. While many

 3 technologies were initially planned, the only projects

 4 demonstrated was a diesel oxidation catalyst and a diesel

 5 oxidation catalyst with a fuel-borne catalyst.

 6 As a result of our evaluation, we did not find

 7 information that supported changing the requirement

 8 contained in the proposed regulation.

 9 --o0o--

10 MR. STERLING: Finally, staff was asked to

11 provide additional information on the impacts of the

12 proposed regulation on greenhouse gas emissions.

13 We anticipate that the replacement of Tier 0

14 engines, which are mechanically controlled engines, with

15 Tier 1 engines, which are electronically controlled

16 engines, will provide a small improvement in efficiency on

17 the order of 1 to 2 percent.

18 At this time, it is not clear if other

19 improvements will increase the efficiency of Tier 2 and 3

20 engines compared to Tier 1 engines.

21 Assuming a 1 percent improvement in efficiency,

22 CO2 reductions would be on the order of .007 million

23 metric tons per year.

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24 --o0o--

25 MR. STERLING: In summary, staff found that

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 1 accelerating the compliance schedule beyond what was

 2 originally proposed would result in less emission

 3 reductions, strain, or possibly exceed the repower

 4 capacity of installers, and result in owners having

 5 multiple engines replaced in the same year.

 6 Staff did find that accelerating the replacement

 7 schedule for 1996 to 1999 Tier 0 engines on ferries could

 8 be achieved without a loss of emission benefits.

 9 Staff also found that greater flexibility for

10 owners that have multiple vessels that have to comply in

11 the first two years of the regulation was needed.

12 This concludes my presentation. At this time

13 we'd be happy to answer questions.

14 CHAIRPERSON NICHOLS: Oh, thank you.

15 Before we get into Board member questions and

16 comments, I just want to set the stage a little bit here.

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17 First of all, to make it clear that this item is

18 a continuation of an item that was presented at our last

19 Board meeting. And we did have a full public hearing at

20 that time and we closed the record. So it's not our

21 intention to take additional public testimony at today's

22 meeting. This was put over for Board member discussion.

23 We asked a bunch of questions. And we appreciate your

24 coming back to us with more information.

25 This item is important. And in light of the

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 1 earlier conversation, I think also we should make it clear

 2 that the impact of the operations of these harbor craft is

 3 most directly on people who live closer to the harbors.

 4 And in every area that I know of where there is a harbor,

 5 that tends to be low income and frequently communities of

 6 color.

 7 So there are real direct health -- public health

 8 impacts of these regulations as well as in the kind of

 9 bigger context of the whole region that gets affected by

10 these emissions.

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11 So it's long overdue, but we should move forward

12 on these vessels. And we're really happy that we have

13 this rule before us. It has been the result of a lot of

14 effort. And clearly we're dealing with, you know, vessels

15 that are quite different from each other in some cases.

16 And as you've point out, they have different operating

17 profiles, different kinds of engines and all of that.

18 So, you know, you've done really a great job in

19 putting this together.

20 I do have one concern about the way you took the

21 question about accelerating the turnover. Because we have

22 traditionally, and I think it's correct, focused most of

23 our attention on the South Coast because of the severity

24 of their regional air problem and the need to get the

25 additional tons to meet their SIP commitments. On the

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 1 other hand, there are some very old and some of the worst

 2 engines, I suspect, operating in other parts of the state

 3 as well. And we kind of looked at this just as a South

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 4 Coast versus everywhere else proposition. And I'm

 5 wondering if you gave any thought or if you're able to

 6 give any thought to the possibility of a method of

 7 acceleration that would involve taking the dirtiest, as

 8 you mention, the older Tier 0 engines and requiring them

 9 to come into compliance first. In other words, it's less

10 than, you know, making everybody subject to the same

11 thing, but it would be a way of getting some additional

12 benefits captured at a somewhat earlier stage.

13 Is that something that you're able to lock at?

14 EMISSIONS ASSESSMENT BRANCH CHIEF DONOHOUE: This

15 is Dan Donohoue.

16 The basic design of the original proposal had

17 that the oldest engines and the highest use engines would

18 come in first.

19 CHAIRPERSON NICHOLS: So that's already built

20 into the schedule.

21 EMISSIONS ASSESSMENT BRANCH CHIEF DONOHOUE: So

22 that's built in And with each subsequent band of engines

23 we've then again brought in the higher-use ones, the

24 greater than 1500 hour operation. Then we'll come in with

25 the 300 to 1500 hour of operation engines. And we tried

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 1 to balance those with what we thought was, you know, the

 2 ability for the installation capacity there. So we feel

 3 like that we've designed that.

 4 When we went back and looked at the regulation,

 5 there were some opportunities at least as far as excess

 6 capacity in the 12, 13 time frame. But in pushing the

 7 engines that were above that thing back into there, that's

 8 where we would come up with the issue about moving the

 9 Tier 0 engines to Tier 2 rather than Tier 3.

10 So we really do believe that we have, you know,

11 attempted to get the dirtiest out the quickest and provide

12 a little bit of additional time for those that are

13 particularly the later Tier 0 engines in the 1996 time

14 frame and beyond.

15 CHAIRPERSON NICHOLS: Thanks, Mr. Donohoue.

16 Yes, Ms. D'Adamo first and then Mr. Hill --

17 Supervisor Hill.

18 BOARD MEMBER D'ADAMO: Well, I think staff's done

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19 an excellent job going through the issues. And it appears

20 that you're leaving open the question about acceleration

21 Tier 0 ferry engine replacement. And so I would just like

22 to align myself with actually doing the acceleration.

23 I'm concerned, in addition to the exposures that

24 the Chair raised, to the exposure of passengers on the

25 ferries. So I'd be in favor of that acceleration

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 1 schedule.

 2 CHAIRPERSON NICHOLS: If you'd like to offer that

 3 as an amendment, and we could take that up now.

 4 BOARD MEMBER D'ADAMO: Yes, so moved.

 5 And then I did just have one question. As I

 6 understand it, the excursions, it just wouldn't pencil out

 7 in terms of the economic benefit. But for their

 8 participation in the Carl Moyer program, does Carl Moyer

 9 account for as a factor exposure to passengers? I kind of

10 compare this to the school bus issue, you know, very

11 limited -- very low use. But those that are on those

12 buses are exposed. And, in fact, I know because my

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13 daughter went to her prom last year on one of these

14 excursions. So we are not talking about -- well, we are

15 talking about sensitive populations.

16 DEPUTY EXECUTIVE OFFICER SCHEIBLE: I don't think

17 that Carl Moyer takes that into account. For excursion

18 vessels it would be typically a one -- you know, seldom

19 exposure; whereas for the ferries, it's a repeat

20 population. Ferry owners have indicated to us that they

21 believe that the exposure on the vessel is very low, that

22 most of them are contained in air conditioned and designed

23 so that the exhaust does not get into the cabin.

24 But obviously when you're loading and unloading

25 and in a neighborhood where the ferry pulls in and pulls

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 1 out of, you'll get those benefits.

 2 So we think the issue with the excursion vessels

 3 and exposure is quite a bit different from the potential

 4 for the ferries.

 5 CHAIRPERSON NICHOLS: Other comments?

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 6 Supervisor Case

 7 BOARD MEMBER CASE: I would agree with the

 8 acceleration of the ferry schedule since it looks like

 9 it's something that is certainly feasible to do. And,

10 again, the impact on the neighborhood surrounding the

11 harbors and other places tend to be the lower income

12 neighborhoods that are disproportionately affected.

13 I'm still -- if somebody could explain for me. I

14 realize South Coast went on an accelerated schedule, which

15 would give you more reductions sooner, but forgo long-term

16 reductions. Can you explain to me why they made that

17 trade-off choice? Because we're all concerned with

18 getting this to the lowest level. Maybe it's because they

19 have such a high level currently. But they chose that

20 trade-off, and I'm not real clear on why.

21 DEPUTY EXECUTIVE OFFICER SCHEIBLE: I don't think

22 they chose the trade-off. What we were trying to do was

23 to ensure that we got every possible NOx emission

24 reduction in the South Coast by the 2014 attainment date,

25 which we just had the SIP hearing on. And so we designed

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 1 the regulation to maximize the NOx reductions and still be

 2 what we thought was economically fair to the vessel

 3 owners.

 4 CHAIRPERSON NICHOLS: Well, as I understand your

 5 analysis, the trade-off is not -- doesn't exist in the

 6 same way for South Coast because there's an issue of the

 7 numbers of Tier 3 engines and the capacity to put them in.

 8 So that in effect we're just sending the cleanest engines

 9 there first. Isn't that --

10 DEPUTY EXECUTIVE OFFICER SCHEIBLE: No, no. We

11 do have the problem in the South Coast in that vessels

12 that are repowered in 2013 unless we have early

13 introduction of Tier 4 will not have that engine available

14 for that.

15 CHAIRPERSON NICHOLS: So there's still some

16 degree of trade-off, yeah.

17 DEPUTY EXECUTIVE OFFICER SCHEIBLE: So --

18 actually 2013. So we had to make that trade-off. And the

19 South Coast advised us that that was their preferred

20 strategy to do that.

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21 CHAIRPERSON NICHOLS: Thank you for clarifying

22 that. I had not understood that.

23 DEPUTY EXECUTIVE OFFICER SCHEIBLE: And I think

24 on that because some of the older vessels are done a

25 little earlier in the South Coast, we kind of make up for

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 1 that. But for that particular segment of vessels it is a

 2 problem.

 3 The issue is with the whole fleet there's

 4 about -- there's more than 60 vessels out there that are

 5 kind of in the swing area, that if you move them forward a

 6 year or two you lose the benefits of the better engines.

 7 CHAIRPERSON NICHOLS: Right.

 8 BOARD MEMBER CASE: But their choice was to meet

 9 attainment on the schedule date of 2014, and that was why

10 they made that selection.

11 I presume there's also an issue, if you expand

12 from the South Coast to statewide, that's when we get into

13 a capacity problem, the inability to change out all the

14 engines, the capacity to do that.

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15 DEPUTY EXECUTIVE OFFICER SCHEIBLE: That's

16 correct. And our analysis showed that would be extreme in

17 2013, that that would be -- there would be so many engines

18 moved into the 2013 compliance period.

19 BOARD MEMBER CASE: And there's no real impact

20 with the ferry acceleration.

21 DEPUTY EXECUTIVE OFFICER SCHEIBLE: No, we're

22 only talking about a few vessels. I mean the impact there

23 is an economic impact on the ferry operators, because they

24 will get, you know, a year or two less useful life out of

25 the current engine and have to retrofit -- or replace it

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 1 earlier. But there's no loss in benefit, because it's

 2 still a Tier 3 retrofit under either circumstance.

 3 BOARD MEMBER CASE: And then --

 4 DEPUTY EXECUTIVE OFFICER SCHEIBLE: The other

 5 point I'd like to make is, you know, we do not have the

 6 final schedule for the U.S. EPA rulemaking. And we have

 7 commented on ways that they could improve it, and we're

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 8 hopeful to see that. So obviously for a compliance date

 9 that's well off into the future, when we get that we'll

10 look at our rule and our assumptions here. And if it

11 makes sense to revisit the rule, we could do that at that

12 time.

13 CHAIRPERSON NICHOLS: That would be great.

14 But in general, our experience is that EPA rules

15 move in the wrong direction in terms of --

16 DEPUTY EXECUTIVE OFFICER SCHEIBLE: Yeah, we hope

17 for faster and we fear slower.

18 CHAIRPERSON NICHOLS: Yes.

19 BOARD MEMBER CASE: I'd like to restate my

20 support for moving forward with that. I think it's an

21 appropriate thing to do, and especially given the

22 testimony we had, concerns from communities that get

23 disproportionately affected.

24 CHAIRPERSON NICHOLS: Thank you.

25 Any other comments?

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 1 SUPERVISOR HILL: Yes, a question, Madam Chair.

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 2 And this is regarding the analysis on Slide 10, which I

 3 think has been done very well.

 4 The question I have is: Is the assumption made

 5 that after 2014 on terms of the availability of repower

 6 engines -- I mean is this assuming that they will all be

 7 available at that point in time? Or are you -- you know,

 8 there certainly would be a time frame of availability that

 9 will stretch out for many numbers of years. Does that

10 affect the analysis that was done in terms of the greater

11 PM benefit and the greater NOx benefit?

12 CONTROL STRATEGIES SECTION MANAGER RAINFORTH:

13 This analysis is for an engine and it assumes

14 that the -- and this is really looking at one engine. And

15 it's assuming that, yes, that the Tier 3 would be

16 available in 2014. And there is a phase-in schedule for

17 this where the smaller engines come in earlier, the Tier

18 3, and they move later for the larger engines. But for

19 most of the engines in the commercial harbor craft fleet

20 they'll come in in 2014.

21 SUPERVISOR HILL: And there'll be enough

22 available at that point in time to meet this -- so we're

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23 not going to drag this out for five or ten years that

24 could change the dynamics of this benefit over the long

25 term.

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 1 DEPUTY EXECUTIVE OFFICER SCHEIBLE: The way the

 2 federal works is every new engine manufactured after a

 3 certain date must meet the required standard.

 4 SUPERVISOR HILL: But wasn't -- the question

 5 before and the issue has always been just the availability

 6 of those engines. They may have to be made that. But if

 7 they're not making enough engines to repower the fleets

 8 that we're talking about.

 9 DEPUTY EXECUTIVE OFFICER SCHEIBLE: Well, we

10 think -- it's a nationwide rule. So once they start

11 making them, the supply will not be an issue. The

12 California demand will be a very small portion of the

13 national demand.

14 SUPERVISOR HILL: So that won't be a problem then

15 in terms of meeting this --

16 DEPUTY EXECUTIVE OFFICER SCHEIBLE: That issue,

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17 we don't see it will be a problem.

18 SUPERVISOR HILL: Okay. Thank you.

19 And I agree with the acceleration clause as well.

20 CHAIRPERSON NICHOLS: Thank you.

21 Supervisor Roberts.

22 BOARD MEMBER ROBERTS: Yeah, Madam Chair --

23 CHAIRPERSON NICHOLS: Welcome back, by the way.

24 BOARD MEMBER ROBERTS: -- just a -- thank you --

25 couple quick comments.

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 1 I wanted to just for the record indicate that I

 2 did review the transcript of this, which I missed at the

 3 October meeting.

 4 CHAIRPERSON NICHOLS: Thank you.

 5 BOARD MEMBER ROBERTS: And therefore I'm eligible

 6 to participate, as I understand it.

 7 CHAIRPERSON NICHOLS: I appreciate that.

 8 BOARD MEMBER ROBERTS: Secondly, I'm in agreement

 9 with the comments and changes that have been suggested.

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10 And, thirdly, I would like to perhaps invite you

11 to tour our bay, which has -- it's maybe an equal

12 opportunity polluter and has --

13 CHAIRPERSON NICHOLS: Thank you. That sounds

14 like a great excursion.

15 BOARD MEMBER ROBERTS: -- varied housing types

16 surrounding and in close proximity to the entire bay.

17 CHAIRPERSON NICHOLS: Right. Thank you.

18 And I think, Ms. Riordan, you also wanted to make

19 a comment.

20 BOARD MEMBER RIORDAN: Yes, indeed. Thank you,

21 Madam Chairman.

22 A transcript of this item was made available to

23 me and I have read it, and so feel comfortable in

24 participating with the vote.

25 CHAIRPERSON NICHOLS: Thank you.

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 1 I wanted to ask our Ombudsman, Ms. Quetin, to

 2 describe any other activities that have gone on since the

 3 hearing.

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 4 OMBUDSMAN QUETIN: Chairman Nichols and members

 5 of the Board. I have a very brief comment on the

 6 continued outreach with the affected parties.

 7 Basically since the last month's Board hearing,

 8 staff has had numerous meetings with the Passenger Vehicle

 9 Association, environmental groups, as well as many of the

10 California ferry operators, the South Coast AQMD, and the

11 Bay Area Air District.

12 And that concludes my comments.

13 CHAIRPERSON NICHOLS: Thank you.

14 Are there any additional ex parte communications

15 that anyone needs to put on the record?

16 I see one.

17 BOARD MEMBER D'ADAMO: Yes, I do.

18 Yes, on October 24th I met with Devra Wang, NRDC,

19 in Merced, and Diane Bailey joined via conference call.

20 And their comments were consistent with the testimony that

21 Ms. Wang presented at the last hearing.

22 CHAIRPERSON NICHOLS: Okay.

23 Yes.

24 SUPERVISOR HILL: Thank you, Madam Chair.

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25 On October 24th I met with Devra Wang of NRDC in

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 1 Redwood City, and Diane Bailey joined via conference call.

 2 And their comments were reflective of their testimony at

 3 the last meeting.

 4 CHAIRPERSON NICHOLS: And I met with a group of

 5 environmentalists, although Devra was not one of them.

 6 Bonnie Holmes-Gen and Tim Carmichael, Diane Bailey of

 7 NRDC, and others. And they also reiterated their concerns

 8 about this rule. I understand that they're very

 9 disappointed that we're not able to apply statewide a more

10 accelerated schedule. And I share their disappointed.

11 But I think the staff has made a pretty convincing case

12 that their proposal is really the best that we can do.

13 Others?

14 BOARD MEMBER SPERLING: Yes. And I also met with

15 Diane Bailey and Devra Wang of NRDC. It was consistent

16 with the earlier discussions.

17 BOARD MEMBER CASE: For the record, I had no

18 meetings.

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19 CHAIRPERSON NICHOLS: Okay. Thank you.

20 Well, I think at this point it's time to move

21 forward then, unless -- oh, Mr. Scheible.

22 DEPUTY EXECUTIVE OFFICER SCHEIBLE: Yeah. I

23 heard the Board discuss the issue of accelerating the

24 ferries.

25 CHAIRPERSON NICHOLS: Yes.

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 1 DEPUTY EXECUTIVE OFFICER SCHEIBLE: And in the

 2 staff presentation we presented the issue of additional

 3 flexibility for those vessels that have large fleets that

 4 are affected early on.

 5 Is the Board also considering that as a change?

 6 CHAIRPERSON NICHOLS: I personally think it

 7 really depends on how many are likely to be affected and

 8 what the process is. How would you actually administer

 9 this?

10 DEPUTY EXECUTIVE OFFICER SCHEIBLE: We'd have to

11 work it out through the 15-day process. We think it would

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12 be something that the -- only a very few fleets would be

13 affected, and they'd have to show that they couldn't meet

14 the rule and had this compaction. And then the Executive

15 Officer would have the authority to say, "Okay, you can go

16 on an alternative compliance schedule."

17 CHAIRPERSON NICHOLS: Well, under the

18 circumstances I think that's kind of a safety valve, if --

19 others are nodding their heads. I think we would like to

20 see that change made.

21 DEPUTY EXECUTIVE OFFICER SCHEIBLE: We found at

22 least one fleet that would be very highly impacted in the

23 first two years.

24 CHAIRPERSON NICHOLS: Okay. So with the two

25 amendments that we've now discussed, I think we have the

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 1 item in front of us then.

 2 And we can just have you call the roll would be

 3 fine.

 4 SECRETARY ANDREONI: Supervisor Case?

 5 BOARD MEMBER CASE: Yes.

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 6 SECRETARY ANDREONI: Ms. D'Adamo?

 7 BOARD MEMBER D'ADAMO: Aye.

 8 SECRETARY ANDREONI: Supervisor Hill?

 9 SUPERVISOR HILL: Aye.

10 SECRETARY ANDREONI: Ms. Kennard?

11 BOARD MEMBER KENNARD: Aye.

12 SECRETARY ANDREONI: Mrs. Riordan?

13 BOARD MEMBER RIORDAN: Aye.

14 SECRETARY ANDREONI: Supervisor Roberts?

15 BOARD MEMBER ROBERTS: Aye.

16 SECRETARY ANDREONI: Professor Sperling?

17 BOARD MEMBER SPERLING: Aye.

18 SECRETARY ANDREONI: Chairman Nichols?

19 CHAIRPERSON NICHOLS: Aye.

20 SECRETARY ANDREONI: Motion passes.

21 CHAIRPERSON NICHOLS: Unanimously. Excellent.

22 Thank you.

23 Thanks, everybody. And thanks for all the hard

24 work. I really appreciate the staff. You must be pleased

25 to have reached a milestone. A very long journey.

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