CARB Board mtg transcript 11-15-07

BOARD MEETING.
STATE OF CALIFORNIA
AIR RESOURCES BOARD

JOE SERNA, JR. BUILDING
CALIFORNIA ENVIRONMENTAL PROTECTION AGENCY CENTRAL VALLEY AUDITORIUM, SECOND FLOOR
1001 I STREET SACRAMENTO, CALIFORNIA

THURSDAY, NOVEMBER 15, 2007
9:00 A.M.

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

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

ii
APPEARANCES

BOARD MEMBERS Page 1CARB Board mtg transcript 11-15-07

Ms. Mary D. Nichols, Chairperson
Ms. Judith G. Case
Ms. Dorene D'Adamo Ms. Lydia Kennard Mr. Jerry Hill
Mrs. Barbara Riordan Dr. Daniel Sperling
STAFF Mr. Tom Cackette, Chief Deputy Executive Officer Mr. Tom Jennings, Chief Counsel Mr. Michael Scheible, Deputy Executive Officer Ms. Lynn Terry, Deputy Executive Officer Ms. Kathleen Quetin, Ombudsman Mr. Alvaro Alvarado, Ph.D., Health and Ecosystems Assessment Section, Research Division Ms. Lori Andreoni, Board Secretary Mr. Richard Corey, Assistant Chief, RD Mr. Dan Donohoue, Chief, Stationary Source Division Mr. Robert D. Fletcher, Chief, Stationary Source Division Ms. Narcisco Gonzalez, Air Pollution Specialist, Stationary Source Divsion Mr. Kurt Karperos, Chief, Air Quality and Transportation Planning Branch, PTSD

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

iii
APPEARANCES CONTINUED
STAFF Mr. Rob Oglesby, Legislative Director, Office of Legislative Affairs Ms. Cherie Rainforth, Manager, Control Strategies Section, SSD Mr. Todd Sterling, Air Pollution Specialist, Control Strategies Section, SSD
Page 2CARB Board mtg transcript 11-15-07

Mr. Dennis Wade, Air Pollution Specialist, Air Quality and Transportation Planning Branch

ALSO PRESENT Ms. Nidia Bautista, Coalition for Clean Air Mr. Todd Campbell, Clean Energy Mr. Tim Carmichael, Coalition for Clean Air Mr. Manuel Cunya Mr. Francisco Dacosta, Director, Environmental Justice Advocacy Mr. Mike Eaves, California Natural Gas Vehicle Coalition Mr. Sean Edgar, Clean Fleets Coalition Mr. Randal Friedman, U.S. Navy Mr. Jim Ganduglia, California Trucking Association Mr. Marc Geller, Plug In America Ms. Bonnie Holmes-Gen, ALA Bishop Ernest Jackson, Grace Tabernacle Community Church Ms. Sara Jackson, Earth Justice Mr. Kurt Karperos, Chief, Air Quality and Transportation Planning Branch, PTSD Mr. Mark Keppler, The Maddy Institute

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

iv
APPEARANCES CONTINUED

ALSO PRESENT Mr. David Lighthall, Central Valley Wealth Policy Institute at CSU, Fresno Mr. Bill Magavern, Sierra Club of California Mr. Paul Martin, Western United Dairymen Mr. Christopher Muhammad Mr. Brent Newell, Center on Race, Poverty and the Environment
Mr. Nick Robinson Page 3CARB Board mtg transcript 11-15-07

Mr. Seyed Sadredin, San Joaquin Valley APCD Ms. Sarah Sharpe, Coalition for Clean Air Mr. Ron Silva, Westar Transport Ms. Carolina Simunovic, Fresno Metro Ministry Ms. Daniella Simunovic, Center on Race, Poverty and the Environment Ms. Kate Stevens, Office of Community and Economic Development Mr. Mark Sweeney, NGV American
Mr. Alvin Valeriano Mr. Peter Weber, California Partnership in SJV Mr. Paul Wuebben, South Coast AQMD

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

v INDEX PAGE Pledge of Allegiance 1
Item 7-11-1 Chairperson Nichols 2 Executive Officer Goldstene 3 Staff Presentation 4 Q&A 9 Mr. Dacosta 17 Mr. Muhammad 18 Bishop Jackson 21 Q&A 23

Item 7-10-6 Chairperson Nichols 26 Executive Officer Goldstene 26 Staff Presentation 27 Q&A 40 Motion 44 Ombudsman Quentin 52 Ex Partes 52 Vote 55
Item 7-11-4 Chairperson Nichols 57 Board Member D'Adamo 58 Board Member Case 60 Executive Officer Goldstene 61 Staff Presentation 62 Mr. Lighthall 91 Ms. Holmes-Gen 94 Page 4CARB Board mtg transcript 11-15-07

Mr. Newell 97 Mr. Carmichael 99 Mr. Robinson 101 Ms. Simunovic 104 Ms. Simunovic 108 Mr. Silva 112 Ms. Stevens 114 Mr. Valeriano 117 Ms. Sharpe 119 Ms. Bautista 122 Mr. Ganduglia 126 Mr. Keppler 128 Mr. Edgar 131 Mr. Weber 135 Ms. Jackson 140

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

vi
INDEX CONTINUED PAGE Mr. Cunya 143 Mr. Martin 147 Q&A 153
Item 7-11-5 Chairperson Nichols 175 Motion 175 Vote 175

Item 7-11-6 Chairperson Nichols 176 Executive Officer Goldstene 176 Staff Presentation 178 Q&A 189 Mr. Wuebben 192 Mr. Magavern 194 Mr. Campbell 202 Mr. Eaves 207 Mr. Sweeney 210 Mr. Friedman 213 Mr. Geller 215 Mr. Carmichael 217 Ms. Holmes-Gen 219 Q&A 223 Motion 231 Vote 233

Item 07-11-3 Chairperson Nichols 234 Staff Presentation 234
Public Comment Mr. Carmichael 254 Adjournment 259 Reporter's Certificate 260 Page 5CARB Board mtg transcript 11-15-07

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

1
1 PROCEEDINGS 2 CHAIRPERSON NICHOLS: Good morning, ladies and 3 gentlemen. We're going to get our meeting underway. 4 We're still assembling, but we have a quorum and we need 5 the get the business part of the meeting going. 6 So I will start now by declaring that this 7 meeting is called to order. And we will begin the with 8 Pledge of Allegiance. 9 (Thereupon the Pledge of Allegiance was 10 Recited in unison.)
11 CHAIRPERSON NICHOLS: And now the clerk of the
12 Board will call the roll. 13 SECRETARY ANDREONI: Ms. Berg? 14 Supervisor Case?
15 BOARD MEMBER CASE: Here.
16 SECRETARY ANDREONI: Ms. D'Adamo?
17 BOARD MEMBER D'ADAMO: Here. 18 SECRETARY ANDREONI: Supervisor Hill?
19 SUPERVISOR HILL: Here.
20 SECRETARY ANDREONI: Ms. Kennard? 21 Mayor Loveridge?
22 Mrs. Riordan?
23 BOARD MEMBER RIORDAN: Here. 24 SECRETARY ANDREONI: Supervisor Roberts? 25 Professor Sperling?

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

2
Page 6CARB Board mtg transcript 11-15-07

1 BOARD MEMBER SPERLING: Here.
2 SECRETARY ANDREONI: Chairman Nichols?
3 CHAIRPERSON NICHOLS: Here. 4 SECRETARY ANDREONI: Chairman Nichols, we have a 5 quorum. 6 CHAIRPERSON NICHOLS: Thank you. 7 I should announce here at the beginning of the 8 meeting that although there is an item on the agenda for a 9 closed session, which we always put out in case we need 10 it, that we are not planning to have a closed session 11 today. 12 I want to make sure that if there's anybody who's 13 not familiar with the procedures here, that they know that 14 if they wish to testify on any item, they should see the 15 clerk of the Board over here in front and pick up a 16 card -- a speaker card. And to make sure that anyone who 17 is planning to speak understands that we generally impose 18 a three-minute time limit on all speakers as a way to make 19 sure that we get through the business of the day. 20 If you have written testimony, we will read it. 21 And we would appreciate it if you could just summarize it.
22 It will be entered into the record. 23 I also need to point out that there are exits at 24 the back of the room. In the event of a fire, we're 25 required to evacuate the room immediately by going

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

3 1 downstairs. And that hasn't happened to us so far, happy 2 to say. But it's important that we be prepared, as recent 3 events have showed us, emergencies strike when you're not 4 ready for them. Page 7CARB Board mtg transcript 11-15-07

5 Good morning. 6 Okay. We will begin with our first item, which 7 is the health update.
8 And I'll turn it over to the staff. 9 EXECUTIVE OFFICER GOLDSTENE: Thank you. Good 10 morning. 11 In previous health updates, staff has presented 12 results on the effects of air pollution on health outcomes 13 in the general adult population and in children. Today, 14 staff will focus on studies that describe disparities and 15 exposure to air pollution in poor and minority communities 16 and how these disproportionate exposures may lead to
17 adverse health outcomes. 18 These studies exam the effects of particulate 19 matter, air toxics, and traffic-related pollutants on 20 infants and children living in environmental justice 21 communities, especially those located near roadways. The 22 findings suggest an association between air pollution and 23 birth outcomes and academic performance of students. It's 24 ARB's goal to ensure that all Californians can live in a
25 healthful environment.

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

4 1 Dr. Alvaro Alvarado from our Health and Exposure 2 Assessment Branch will make the staff presentation. 3 CHAIRPERSON NICHOLS: Thank you, Mr. Goldstene. 4 (Thereupon an overhead presentation was 5 Presented as follows.)
6 --o0o-- 7 MR. ALVARADO: Thank you, Mr. Goldstene. Good
Page 8CARB Board mtg transcript 11-15-07

8 morning, Chairman Nichols and members of the Board. In 9 this health update, I'll discuss the results of three 10 recent studies evaluating the association between air 11 pollution exposures and health outcomes in relation to 12 environmental justice.
13 --o0o--
14 MR. ALVARADO: Senate bill 115 defines 15 environmental justice as the fair treatment of people of 16 all races, cultures, and incomes with respect to the 17 development of environmental laws, regulations, and 18 policies. In addition, the Board approved environmental 19 justice policies in 2001 to establish a framework for 20 incorporating environmental justice into all of ARB's 21 programs. 22 Minority and low income communities report and 23 research suggests that some neighborhoods experience 24 higher air pollution exposures than others. These 25 exposures are a result of the cumulative impacts of air

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

5 1 pollution from multiple sources. 2 The issue of environmental justice raises the 3 challenging question of whether disparities in 4 environmental exposures result in unequal health outcomes. 5 Today's health update will present recent findings from 6 three studies investigating this question.
7 --o0o--
8 MR. ALVARADO: Results from two of these studies 9 are summarized here. The first study was conducted by 10 researchers at UCLA. They examined the association 11 between traffic density and increased risk of pre-term Page 9CARB Board mtg transcript 11-15-07

12 births in Los Angeles County. The investigators found 13 that traffic-related air pollution disproportionately 14 affected neighborhoods with high levels of poverty and 15 unemployment. For example, low socioeconomic status 16 neighborhoods near high traffic areas showed a 30 percent 17 increased likelihood of pre-term births compared to low 18 traffic neighborhoods for all women. 19 In another study, researchers from Yale 20 University investigated the association between maternal 21 exposure to air pollution and birth weight. This research 22 was conducted in Connecticut and Massachusetts, and the 23 investigators found an association between PM2.5 exposure 24 and low birth weight for all mowers. However, they found 25 an even greater effect for infants of African American

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

6 1 mothers compared to white mothers.
2 --o0o--
3 MR. ALVARADO: While children's health is 4 certainly affected by the air quality in their homes and 5 neighborhoods, they spend much of their day in school. In 6 this study, the investigators examined the link between 7 school performance and the risk of adverse respiratory 8 outcomes among school children in the Los Angeles Unified
9 School District. 10 School performance was measured by the Academic 11 Performance Index, which is based on standardized tests 12 administered to students in grades two through twelve. 13 The results from this study suggest that there is a 14 decrease in the performance of schools located in census
Page 10CARB Board mtg transcript 11-15-07

15 tracts with the highest respiratory risk, and schools with 16 the highest proportion of Latino and African American 17 students had the highest respiratory risk. 18 While many factors contribute to a child's 19 educational achievem4ent, the disparity in academic 20 performance associated with respiratory risk persists even 21 after controlling for factors that traditionally influence
22 educational achievement.
23 --o0o--
24 MR. ALVARADO: ARB has a number of studies 25 underway in environmental justice communities. We

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

7 1 deployed a network of monitors near the ports of L.A. and 2 Long Beach to evaluate the air pollution in harbor 3 communities. The ARB is also developing health risk 4 assessments for several rail yards across the state. 5 We are conducting modeling studies to estimate
6 the health risks from diesel exhaust in West Oakland. In 7 this study, we will estimate the impact of diesel 8 particulate matter emissions from the Port of Oakland, 9 marine vessels in the San Francisco Bay, and locomotive 10 and truck activity. 11 The ARB is also funding several studies on 12 children with asthma, including some from areas of lower
13 socioeconomic status in both northern and southern 14 California, as well as in the Central Valley. The names
15 of the studies are listed on this slide.
16 --o0o-- 17 MR. ALVARADO: Additional studies funded by the
18 ARB are shown on this slide. We have contracted with Page 11CARB Board mtg transcript 11-15-07

19 researchers to investigate the association between air 20 pollution and birth outcomes in poor and minority
21 communities. 22 In Oakland, our contractors are working with the 23 organization Communities for a Better Environment to map
24 West Oakland with handheld GPS units. As shown in the 25 photograph, community members were recruited to locate

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

8 1 emission sources and places frequented by children and the 2 elderly in their neighborhood. 3 We are working with researchers to develop an 4 environmental justice screening tool. The tool will map 5 the sources of air pollution and the demographic profile 6 of neighborhoods throughout the state. And, finally, as 7 part of the Governor's report on Climate Scenarios, ARB is 8 working with researchers to estimate the impacts of global 9 climate change on environmental justice communities in
10 California.
11 --o0o--
12 MR. ALVARADO: The results of these studies 13 presented today and others add to the body of evidence 14 suggesting that disparities in environmental exposures 15 remain, which demonstrates a continued need to include 16 environmental justice in the development of environmental 17 laws, regulations, and policies. 18 ARB is currently engaged in a number of efforts 19 to improve local air quality, such as the Goods Movement 20 Emission Reduction Program. We will also continue to 21 investigate how air pollution affects residents of low
Page 12CARB Board mtg transcript 11-15-07

22 income and minority neighborhoods as part of our research 23 on vulnerable populations, and to incorporate these 24 programs in our programs -- to incorporate these findings 25 in our programs.

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

9 1 This concludes the health update, and we'd be 2 happy to answer any questions. 3 Thank you very much. 4 CHAIRPERSON NICHOLS: Thank you very much. 5 Do Board members have any questions about the
6 research?
7 Yes. 8 BOARD MEMBER RIORDAN: I have a request.
9 On slide three there are two studies that are 10 highlighted. Which was in California? 11 MR. ALVARADO: California was the top study. 12 BOARD MEMBER RIORDAN: The top study? 13 MR. ALVARADO: And it -- yes, it was in Los 14 Angeles. 15 BOARD MEMBER RIORDAN: Was it just a huge, huge 16 study? What I'm leading to is I'd like to look at that 17 study if it's not something that's just -- 18 MR. ALVARADO: I'll be happy to send it to you. 19 BOARD MEMBER RIORDAN: Thank you very much. I 20 appreciate that.
21 CHAIRPERSON NICHOLS: Other Board member 22 questions? 23 I think generally speaking, from what I can tell, 24 ARB has probably the most robust program in this area of 25 any agency in the country, if not in the world. It's not Page 13CARB Board mtg transcript 11-15-07

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

10 1 huge. But the research that we have funded has been 2 significant research, and has really helped pinpoint these 3 issues. And I think it's something that we've gotten 4 positive feedback on from the communities that are most at 5 risk, and I'm certainly pleased with that. 6 I'm also pleased with the fact that you're 7 looking for ways to incorporate this research, so that 8 it's not just a matter of saying things are bad but 9 hopefully really trying to develop some strategies that 10 can help pinpoint it. 11 And I'm particularly pleased that the Research 12 Division is looking at ways that we can tie global air 13 pollution issues to these community-based issues. Because 14 even though we recognize that the greenhouse gas emissions 15 are going to affect people the world over, we know that on 16 a worldwide basis poor communities are the ones that are 17 going to be the most impacted by sea level rise, by 18 changes in temperatures and so forth. And so it may be 19 that we are paving the way for something that can have 20 relevance in other places as well. 21 So I just really want to commend you on the work 22 and to encourage you to keep on making sure that we are 23 made aware of it as it moves forward and not just through 24 these kind of periodic updates. But also, you know, if 25 significant work comes in, to make the Board members aware

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

11
Page 14CARB Board mtg transcript 11-15-07

1 of it. 2 Okay. Any other -- yes. 3 No? Okay.
4 BOARD MEMBER CASE: Just one comment.
5 CHAIRPERSON NICHOLS: Yes. 6 BOARD MEMBER CASE: You know, what's amazing is 7 to see an added impact on newborns in areas that are close 8 to high density traffic. Is there anything that's 9 happening in terms of trying to -- as I traveled to 10 Sacramento, I just noticed how many housing subdivisions 11 are being lined up right next to Highway 99. And I 12 believe I recently read that Los Angeles Unified decided 13 not to place two schools at the intersection of several 14 freeways. 15 But I think we should be looking in terms of 16 where the Legislature is for making those connections 17 also. Because as a local elected official in the county 18 we don't do a lot of permitting of housing subdivisions. 19 That really happens in the cities. But the cities 20 continue to just move forward and permit large 21 subdivisions next to big highway systems. And maybe that 22 needs to somehow be a connection to get this type of 23 research into the cities through the League of Cities, is 24 one opportunity. Because I'm very troubled when I see 25 subdivisions continuing to be built adjacent to highways.

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

12 1 That puts those families at great risk. And often it is 2 the affordable housing that's going there as opposed to 3 the higher-end housing. So I think anything we can do to 4 connect that would be really important. Page 15CARB Board mtg transcript 11-15-07

5 CHAIRPERSON NICHOLS: There is a land-use 6 handbook that was prepared by the Air Board, which I know 7 has been put out. But I understand that it's not 8 necessarily being used as well as it should be. I don't 9 know if anybody wants to comment on that. But my 10 impression is that although there are some community 11 groups that use it or try to use it in the context of 12 permitting proceedings, by that point it's often kind of 13 an adversarial process. And that what we really need to 14 be doing is getting upfront earlier with the land use 15 planning agencies and getting them to look not only at 16 locations but also design of projects. 17 I mean the case of the schools, for example, you 18 know, there's a 500-foot rule, which I believe is now law, 19 that you can't site a school within 500 -- a new school 20 within 500 feet of a freeway. 21 But in places like Los Angeles where it's very 22 congested, you know, maybe you put the back of the school 23 where there's, you know, walls close to the freeway and 24 have the place where the children might be outside being 25 exposed, you know, on the other side. There's still more

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

13
1 research to be done I think in the area of what barriers 2 and physical changes -- I know there's some research out 3 there about sound walls; you know, if they're huge enough, 4 you know, they can maybe make a difference. But I think 5 this is an area where there is really more work that needs
6 to be done. 7 BOARD MEMBER CASE: My suggestion would be is to
Page 16CARB Board mtg transcript 11-15-07

8 work through League of Cities. And I assume there's an 9 organization for elected school boards, that working 10 through those entities and educating those who are policy 11 makers might have a greater impact than working with the 12 planners, because the planners are going to move forward 13 with whatever gets put before them in terms of projects. 14 And I think the policy makers really need to make that 15 statement clearly when they can see this correlation 16 between location of housing and schools adjacent to 17 highways on both unborn children as well as the lungs of
18 the children that are at those schools or homes. 19 BOARD MEMBER RIORDAN: Madam Chairman, our 20 advisory document that you referenced is an excellent one,
21 and the staff worked hard to disseminate that information. 22 And just recently I had a conversation with our new 23 Executive Officer and explaining to him from the local 24 government viewpoint. We have to continually disseminate 25 that information. Because recognize your council members

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

14 1 change ever two or four years. Your boards of supervisors 2 change, and when they change, planning commissions change, 3 planning directors can change. It's an evolution, and we 4 just have to stay on top of it. And our document I 5 thought was wonderful because it got very specific about 6 the advice, how many feet, how many yards, how many -- and 7 I think it's still relevant today. Doesn't probably need 8 much updating at all. It's just we've got to get it out 9 to all the new people who are in elective office and their 10 planning commissioners and their planning directors.
11 DEPUTY EXECUTIVE OFFICER TERRY: If I could Page 17CARB Board mtg transcript 11-15-07

12 just -- brief comment. 13 We did do an outreach in conjunction with CAPCOA 14 after the Board adopted that guidance, and it was 15 specifically designed for local government officials. But 16 I think it's time to do that again. And CAPCOA was very 17 helpful exerting leadership at the local level. So that 18 would be my suggestion. 19 CHAIRPERSON NICHOLS: I'd appreciate that. 20 There's definitely a role for CAPCOA given their 21 membership is made up of local elected officials. So 22 that's great.
23 SUPERVISOR HILL: Madam Chair? 24 CHAIRPERSON NICHOLS: Yes, please. 25 SUPERVISOR HILL: If I could just add.

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

15 1 You know, it seems at our last meeting or the 2 previous meeting to that we talked about this issue. And 3 if I remember correctly -- you know, we're struggling as 4 local officials with the transit-oriented development 5 concept, and that's exactly where people in local 6 government is looking at especially in the urban areas to 7 place housing and mixed use, you know, some commercial, 8 but housing especially in those transit corridors. And 9 just reinforcing, I think we need as much help as we can 10 and guidance so that we don't make the mistakes that can 11 cause and aggravate the problems we're just discussing in
12 the review. 13 So if I could get a copy of that land-use 14 handbook, I would appreciate it too. So thank you.
Page 18CARB Board mtg transcript 11-15-07

15 CHAIRPERSON NICHOLS: Yeah, I think continued 16 efforts to find ways to get the information out and to do 17 training on it where it's appropriate would be really an 18 important avenue. 19 Also, I'm sure we're going to be talking about 20 this as we move forward in implementation of AB 32. But 21 putting together the scoping plan for AB 32 has made it 22 clear that the Air Board has to play a more assertive role 23 than it has before in really identifying the relationship 24 between land-use patterns and increases in vehicle miles 25 traveled and greenhouse gas emissions, which obviously

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

16 1 affects conventional air pollution as well. 2 So I think this is an area where you're going to 3 see an increasing presence on the part of the Air Board.
4 Yes. 5 BOARD MEMBER D'ADAMO: Well, I degree. And I'm 6 just thinking, as the information goes out, that it should 7 also include a statement that there is expected to be 8 perhaps some action along the lines of incorporating 9 climate change, you know, at some point into the document 10 to get folks realizing that, you know, we're not just 11 talking about criteria pollutants here and this is a 12 long-term process. 13 A suggestion that I would have -- I imagine that 14 there's a planners association and that they probably get 15 together annually to have conferences. Maybe if there's a 16 way we could get on their agenda and disseminate the 17 information -- the document and also the message about 18 climate change. Page 19CARB Board mtg transcript 11-15-07

19 DEPUTY EXECUTIVE OFFICER TERRY: We actually have 20 done that in the past, so we can do it again. 21 CHAIRPERSON NICHOLS: We have a card that's just 22 come in. This is not a public comment hearing item, but 23 we do welcome comments from the public. And there is one
24 card here from Mr. Dacosta. 25 You can come forward and speak at the microphone

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

17
1 here.
2 Is it on this item? 3 Yes. Did you have a comment on this item? 4 MR. DACOSTA: Yes, ma'am. 5 CHAIRPERSON NICHOLS: Okay. 6 MR. DACOSTA: My name is Francisco Dacosta. I'm 7 the Director of Environmental Justice Advocacy. And I was 8 listening to some of your comments as to how air pollution 9 and other pollution adversely impacts people of color. 10 And while I was listening to your comments, as the 11 Director of Environmental Justice Advocacy -- and I'm 12 headquartered in San Francisco -- one of the things that 13 the public where there are people of color or they live 14 anywhere, like, for example, in San Francisco, we need to 15 have empirical data about cumulative pollution. And while 16 somehow some of you policy makers are focused on 17 particulates, especially PM2.5, we in San Francisco and 18 the Bayview -- and that's why some of us have come all the 19 way here to testify, and Supervisor Hill has heard me
20 before and I've seen him before and he more or less knows 21 what I stand for. I'm here to state to you in your policy
Page 20CARB Board mtg transcript 11-15-07

22 making that you need to pay attention to cumulative 23 pollution; and when it comes to the Bayview, radiological 24 elements, heavy metals that affect our children. 25 So what happens is we could be speaking about

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

18 1 climate change, global warming, in the future the oceans 2 and the seas rising. But our immediate concern is the
3 health of our children. Hundreds and hundreds of our 4 children are dying. And this element of compassion for 5 our children should be incorporated into your policies. 6 Now, I was born in Africa and I've traveled all 7 over the world. I've written extensively on global 8 climate change to my website. But I'm here to tell you 9 that as I listen to some sort of vague and general 10 statements about particulates, we need to pay attention to 11 cumulative pollution. 12 Thank you very much. 13 CHAIRPERSON NICHOLS: Thank you, Mr. Dacosta. 14 We also have a card from Christopher Muhammad. 15 MR. MUHAMMAD: Board members, I came here today 16 because of the subject matter, environmental justice. And 17 of great concern is what is taking place in San Francisco, 18 where a corporation went into an already impacted 19 community and began to develop on a former or actually 20 current superfund site in Bayview Hunters Point that had 21 historically been the site of nuclear testing, nuclear
22 waste from World War II. This site is on the EPA 23 superfund site. And this community has been continuously
24 bombarded with asbestos levels that are horrific. 25 Yet all of the regulatory bodies have appeared to Page 21CARB Board mtg transcript 11-15-07

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

19 1 look the other way because of this corporation that 2 appears to have purchased silence and capitulation on so 3 many levels. I'm speaking of the Lanar Corporation, that 4 has been a bad actor in other parts of this state and, 5 quite frankly, a bad actor all over this country. Yet in 6 San Francisco there's been no concern appeared to have 7 been raised regarding asbestos levels that have reached 8 into 80,000 particulates per square meter, 50,000, 60,000, 9 yet the Cal/EPA says there's no safe levels of asbestos 10 exposure for residents. Yet in San Francisco, 10, 20 feet 11 away from this superfund site children are being exposed
12 to horrific levels of asbestos and no one seems to care. 13 The air quality district, the Bay Area Air 14 Quality Management District violated Lanar for over 380 15 days of willful and intentional violations, yet to this 16 day they've not been filed one dollar. 17 I am heartened by the recent ruling of the air 18 board -- district in San Francisco, the Bay Area Air 19 District, in which they agreed that they would fine Lanar 20 the maximum penalty. Our concern is that Lanar is not 21 able to lobby and push their weight on this body to 22 hopefully minimize and blunt any kind of regulatory action 23 that you may take to allow a corporation to come in in a 24 community that's one of the highest asthmatic rates in the 25 country, highest cancer rate, highest bronchitis and other

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

20
Page 22CARB Board mtg transcript 11-15-07

1 respiratory problems. 2 The San Francisco School Board passed a unanimous 3 resolution calling for the immediate work stoppage of that 4 work going on out there. 5 So there's a number of issues that are impacting 6 this community. But none more important than what's 7 happening right here in San Francisco, California, where 8 we have the EPA, the ATSDR, all of them headquartered two 9 miles from this community, yet we're talking about oil 10 spills but nobody's talking about children being impacted 11 by a rogue company that has literally poisoned this 12 community with untold amounts of asbestos, not monitored, 13 not regulated, and it appears to be getting away with
14 literal murder. 15 So I hope that this body as you're deliberating 16 will consider the issue of Bayview Hunters Point and the 17 Lanar Corporation. 18 Thank you. 19 CHAIRPERSON NICHOLS: Thank you, Mr. Muhammad. 20 Thank you for making the trip up here to keep us informed 21 and on target with what the real issues are in front of
22 us. 23 I just wanted to comment, both of you made 24 statements about cumulative impacts. And we are -- 25 obviously the Air Resources Board, we're here focused on

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

21 1 air quality. And yet we have to be mindful when we do 2 health risk assessments of any type that people don't just 3 breathe one pollutant at a time and they're not just 4 exposed through one mechanism at a time. It is a matter Page 23CARB Board mtg transcript 11-15-07

5 of overall body burden and public health that we're 6 dealing with here. I think that's one of the reasons why 7 the kind of research that was being reported on here is so 8 important, is that it helps to filter out the other types 9 of exposures and focus just on the air. But that's for 10 the purpose of telling us hopefully what we can do better 11 in our jobs to make sure that we're doing everything we 12 can to address the real public health concerns here. 13 So I really do appreciate your concern on this 14 issue and your coming here today. 15 Is there anybody else who wished to comment on
16 this item? 17 Yes, sir. 18 MR. JACKSON: Good morning, Chairman and Board 19 members. I am Bishop Ernest Jackson, and I pastor Grace 20 Tabernacle Community Church, which is located in Bayview 21 Hunters Point and is considered to be at ground zero of 22 this Lanar construction that's going on. And I have 23 personally witnessed the effects that Lanar Corporation 24 has had on the people in this community as well as people 25 in my congregation.

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

22 1 On many occasions I'm called to the emergency 2 room where many people are sick and suffering and they're 3 members in the community and of my church. And they are 4 being significantly impacted almost on a daily basis by 5 the work that is going on. 6 What really disheartens me the most is that after 7 exhausting all of our efforts even up to the Mayor's
Page 24CARB Board mtg transcript 11-15-07

8 Office, to the Board of Supervisors, to Department of 9 Public Health, and to the different air quality boards in 10 the EPA, we have had very little support in terms of 11 getting some results. And we feel that these issues need 12 to be raised at the highest level because children are 13 dying. We are now looking retrospectively at a lot of 14 people that we felt that just had asthma for -- congenital 15 asthma, other reasons. Now the environment has -- we know 16 that the environment has significantly affected them. 17 There are other biological issues that are 18 affecting these residents as well and is yet to be 19 determined because we cannot get the Department of Public 20 Health to do an adequate assessment. And they have 21 actually downgraded the effects that this construction has
22 had on the residents. 23 We are in urgent need of your help and your 24 support, that you would take this to heart and put it on 25 your agenda and even have further exploration and

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

23
1 discussion about this. 2 We are coming to you as all independent citizens 3 and very concerned citizens. And we feel that if we can 4 just get the ear of someone that will rise to the 5 occasion, that we can get some action done. 6 Thank you. 7 CHAIRPERSON NICHOLS: Thank you. 8 Mr. Hill -- Supervisor, did you want to comment
9 on -- 10 SUPERVISOR HILL: Thank you, Madam Chair. I
11 would like to. Page 25CARB Board mtg transcript 11-15-07

12 And this issue has been thoroughly exhausted by 13 the Bay Area Air Quality Management District Board, San 14 Francisco Public Health, and the EPA, have all looked at 15 the subject and the ground level asbestos that is 16 occurring during the construction project and the moving 17 of the earth that's going on there. 18 The timing of the project and when the -- the
19 monitors that the air district has installed at the 20 project are also, I guess I should say, many more in the 21 quantity than is required and the level of asbestos that 22 would determine and trigger work stoppages is at a level
23 that is much lower than would be the normal standard. 24 They've been monitoring it. 25 One of the questions that came up at our recent

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

24 1 meeting, they had -- in fact, I asked for question of how 2 many complaints were raised. And Mr. Muhammad mentioned
3 that there's a school at the location and he made 4 references to the number of children, and there were no 5 complaints registered. And there were two complaints that 6 were received by the air district over this issue. 7 And they have been thoroughly analyzing the 8 public health hazard of any -- whenever it would occur.
9 And I think we're all sensitive to the issues that we 10 heard in the health report today. And I can assure this 11 Board that the air district is watching this very closely 12 and carefully. And whatever penalties that are in order 13 will be -- and sanctions will definitely be rendered to 14 the construction company and Lanar in this regard. So
Page 26CARB Board mtg transcript 11-15-07

15 they -- 16 CHAIRPERSON NICHOLS: Well, I appreciate hearing 17 that. One of the things I think that is expected of us 18 because of the Air Resources Board's overarching role in 19 air quality is that we will monitor the activities of 20 local districts and try to make sure that we're keeping a 21 high level of concern and focus, as we're going to be 22 spending a good deal of time later today on the San 23 Joaquin Valley. And we often hear from the South Coast on 24 specific issues that they need. I haven't heard so much, 25 at least since I've been here, about issues in the Bay

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

25
1 Area. So I think it is of interest to know that there is 2 a well-organized and well-focused community there that has 3 been seeking and demanding real vigilance on the part of 4 air quality officials. 5 SUPERVISOR HILL: And because of that, Madam 6 Chair, that is why the air district has taken I think 7 extraordinary steps to monitor this carefully, to make 8 sure that there is no health risk occurring because of the 9 excavation and the construction that's going on in that 10 project. 11 CHAIRPERSON NICHOLS: Well, I appreciate that. 12 We've now been put on notice that there is this 13 concern. So I think we'll just, you know, continue to 14 watch the situation and appreciate your vigilance. 15 SUPERVISOR HILL: I would be happy to make sure 16 that the Executive Director gets a report from the air
17 district as to what the circumstances are around that. 18 CHAIRPERSON NICHOLS: I think we would appreciate Page 27CARB Board mtg transcript 11-15-07

19 that. 20 SUPERVISOR HILL: Be happy to do that. 21 And I know -- just one other issue. The Board of 22 Supervisors in San Francisco took up the issue and did not
23 move it forward either. 24 CHAIRPERSON NICHOLS: Right. Well, and many 25 times different political bodies find themselves, you

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

26 1 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
Page 28CARB Board mtg transcript 11-15-07

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

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

27 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-- 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-- Page 29CARB Board mtg transcript 11-15-07

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

28 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 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

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

29
Page 30CARB Board mtg transcript 11-15-07

1 slide. Board members wanted to know if the replacement of 2 Tier 0 engines in the statewide schedule could be
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 24 a schedule that was not as compressed as the South Coast
25 schedule.

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

30 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-- Page 31CARB Board mtg transcript 11-15-07

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. 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

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

31 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
Page 32CARB Board mtg transcript 11-15-07

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 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

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

32 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 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 Page 33CARB Board mtg transcript 11-15-07

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

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

33 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
Page 34CARB Board mtg transcript 11-15-07

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.
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

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

34 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-- 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 Page 35CARB Board mtg transcript 11-15-07

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.

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

35 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.
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
Page 36CARB Board mtg transcript 11-15-07

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.

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

36
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 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 Page 37CARB Board mtg transcript 11-15-07

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

37 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, 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

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

38
Page 38CARB Board mtg transcript 11-15-07

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 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

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

39 1 in New York. These vessels are very similar in size and 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 Page 39CARB Board mtg transcript 11-15-07

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.
24 --o0o-- 25 MR. STERLING: In summary, staff found that

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

40 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
Page 40CARB Board mtg transcript 11-15-07

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. 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

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

41 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. 11 So it's long overdue, but we should move forward Page 41CARB Board mtg transcript 11-15-07

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

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

42 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 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
Page 42CARB Board mtg transcript 11-15-07

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

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

43 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 Page 43CARB Board mtg transcript 11-15-07

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

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

44
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 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
Page 44CARB Board mtg transcript 11-15-07

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

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

45 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? 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 Page 45CARB Board mtg transcript 11-15-07

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

46 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. 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

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

47
Page 46CARB Board mtg transcript 11-15-07

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.
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

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

48 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 Page 47CARB Board mtg transcript 11-15-07

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 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?

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

49 1 SUPERVISOR HILL: Yes, a question, Madam Chair. 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,
Page 48CARB Board mtg transcript 11-15-07

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 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.

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

50 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 Page 49CARB Board mtg transcript 11-15-07

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, 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.

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

51 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. 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.
Page 50CARB Board mtg transcript 11-15-07

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.

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

52 1 I wanted to ask our Ombudsman, Ms. Quetin, to 2 describe any other activities that have gone on since the 3 hearing. 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, Page 51CARB Board mtg transcript 11-15-07

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

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

53 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. 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.
Page 52CARB Board mtg transcript 11-15-07

22 DEPUTY EXECUTIVE OFFICER SCHEIBLE: Yeah. I 23 heard the Board discuss the issue of accelerating the
24 ferries.
25 CHAIRPERSON NICHOLS: Yes.

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

54
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 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 Page 53CARB Board mtg transcript 11-15-07

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

55
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.
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.

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

56
Page 54CARB Board mtg transcript 11-15-07

1 All right. We'll sort of take a break while we 2 shift the personnel here. 3 I'm going to ask -- Rob Oglesby, I know you're 4 next up. But we have Board members with some schedule 5 issues. Is it okay with you if we shift your item to the 6 end of the meeting and get right into the next item for
7 actual Board action? 8 I really appreciate that. Thank you very much. 9 And while we're shifting here, I also want to 10 mention that we are going to take a lunch break today. 11 And I'm going to invite Board members to pick up their 12 lunch and join me in a room that's nearby here, which is 13 Training Room 2, which is right out the hall and around to 14 the left, and invite members of the audience who are here
15 and interested to come as well. This is one of a series 16 of briefings that we are doing for people in the Agency 17 and members of the public who are available on matters of 18 interest in the field of air pollution. 19 Today's session involves the unveiling of a new 20 green innovation index, which has been produced and 21 sponsored by a group called Next Ten, a nonprofit 22 organization. And they focus on the area of innovation
23 and the interaction between the environment and the 24 economy and quality of life issues for California. 25 They've been working to develop this index as a way to

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

57 1 gauge progress around the state on a number of key 2 indicators to really help us understand the role that 3 innovations and technology can play in reducing greenhouse 4 gas emissions while improving the economy. Page 55CARB Board mtg transcript 11-15-07

5 So it's a really innovative and interesting 6 approach I think to helping the public and others 7 understand -- public and experts too -- understand the 8 relationship between technology and environmental 9 improvement. And so I'm hoping that we can get a good 10 audience for them to unveil their project. 11 We will now turn to the next item on our agenda, 12 which is the issue about accelerating air quality progress 13 in the San Joaquin Valley. 14 I personally was not on the Board at the time 15 that this item first came up last June. But I received 16 the transcript early on and read it, and since that time 17 have been following the hard work of our staff and of the 18 two Board members who took on an expedited role here, one 19 of whom has just walked out of the room. So I'm not sure 20 if we're expecting her back in a second or not. 21 Maybe we should wait just a moment. 22 And I did want to thank both Supervisor Case and 23 Board Member D'Adamo for their role in leading the task 24 force, and invite them if they wanted to begin by making a 25 few comments on the process that you were engaged in.

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

58 1 BOARD MEMBER D'ADAMO: Okay. Thank you, Madam
2 Chair. 3 I would just like to briefly remind everyone of 4 why we formed the task force and where we left off when we 5 were last before the Board at the June hearing in Fresno. 6 I did make a motion that we adopt the plan because I felt 7 at that time that unfortunately we could not -- we didn't
Page 56CARB Board mtg transcript 11-15-07

8 have the emission reductions available in order to close 9 the gap. But I also felt that there was significant 10 testimony and even frustration by a large number of those 11 that appeared before us, frustrated about the process and 12 also concerned that perhaps we didn't look into this fully 13 and deeply enough. 14 So I thought that it was important to -- despite 15 the fact that I felt that we should approve the plan, I 16 thought it was important to give ourselves a little bit 17 more time and that we form a formal process in order to do 18 that. So I suggested a task force and was elected as the 19 chair of the task force. So I spent a great deal of time, 20 along with staff and Supervisor Case, in the valley. 21 And I would just like to go through the three 22 goals that I felt we needed to pursue with the task force. 23 First of all, I felt that it was important that 24 we engage in outreach directly with all of the
25 stakeholders.

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

59 1 It also seemed that communications were fairly 2 poor, just generally speaking, whether it be communication
3 between the district and stakeholders or between our staff 4 or our Board members. I just felt that it was important 5 to engage in as much direct communication as possible. 6 We set out to hold four task force meetings. We 7 ended up holding five, and three community meetings. We 8 did that. In addition, I participated in an environmental 9 justice tour and in multiple private meetings, conference
10 calls. 11 And so I felt that we did in fact accomplish that Page 57CARB Board mtg transcript 11-15-07

12 goal as well, namely a transparent, open process. 13 And then the third goal was to fully discuss ways
14 that we could reach attainment sooner. And staff will be 15 going through its analysis -- first of all, its 16 description of our efforts and also the analysis. 17 So what I'd like to do is, once staff has 18 completed its description of the specific efforts, maybe 19 provide some additional comments once staff has put it in 20 greater context. 21 And I would like to really thank the efforts of 22 Ms. Terry and her staff. It wasn't just five meetings 23 and -- task force meetings and community meetings. But 24 each meeting took hundreds of hours for them to prepare 25 and be able to fully respond to the questions that had

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

60 1 been raised at the previous meetings, preparation of 2 reports, et cetera. So they really do deserve to be 3 complimented. 4 Thank you. 5 CHAIRPERSON NICHOLS: Thank you. 6 Supervisor Case, you were absent when I thanked 7 you for your service. So I'll thank you again and invite 8 to you make any opening comments before we move into the 9 staff presentation concerning your efforts with the task
10 force. 11 BOARD MEMBER CASE: Well, I certainly would agree 12 that the process was a good forum to have an open 13 dialogue. Sometimes we sit up here at the dais and it's 14 somewhat stifled. And I'm sure people in the audience
Page 58CARB Board mtg transcript 11-15-07

15 feel that the time limitation is difficult to deal with. 16 And I want to thank those who participated consistently at 17 every meeting. We had members from the environmental 18 community, the health care environmental interests. It 19 was everybody at the same table. 20 And I too would like to compliment staff. When 21 questions arose, they could be answered at that particular 22 meeting. They were brought forward. They were analyzed. 23 They were re-presented. 24 I think the good news is is we found a number of 25 areas of improvement. It was really quite dramatic.

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

61 1 And I think that was a good step. And I 2 appreciate having the opportunity certainly. I think 3 there's been a lot of additional good work to be taken 4 back to the San Joaquin Valley. And I think it provided a 5 forum and I appreciate working with all the individuals
6 that were there. 7 CHAIRPERSON NICHOLS: Thank you. 8 All right. I think at this point, Mr. Goldstene, 9 we'll ask you to introduce the item. 10 EXECUTIVE OFFICER GOLDSTENE: Thank you, Chairman
11 Nichols. 12 At the September Board meeting, the Board 13 strengthened the mobile source portion of the San Joaquin 14 Valley ozone SIP. Since then, staff has taken one more 15 look at the stationary source portion of the Valley SIP. 16 The outcome of that analysis was completed last week and 17 discussed at the November 7th task force meeting. 18 In addition, staff has looked at how far the Page 59CARB Board mtg transcript 11-15-07

19 Board adopted SIP improvements -- at how far the 20 Board-adopted SIP improvements will take us towards
21 attainment. 22 Staff's presentation today will describe these 23 results, where we stand with respect to the San Joaquin 24 Valley SIP, and recommend a path forward. Staff's
25 recommendations reflect our continued focus on the

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

62 1 Valley's air quality and public health needs. 2 At this point I'll ask Kurt Karperos, the Chief 3 of the Air Quality and Transportation Planning Branch, to 4 report on staff's analysis and the public process. 5 Mr. Karperos, will you begin your presentation 6 please. 7 (Thereupon an overhead presentation was 8 Presented as follows.)
9 --o0o-- 10 AIR QUALITY AND TRANSPORTATION PLANNING BRANCH 11 CHIEF KARPEROS: Thank you, Mr. Goldstene. 12 Good morning, Chairman Nichols and members of the
13 Board. 14 This morning I will review the work that's been 15 done to speed Valley air quality progress since your June 16 14 hearing on the Valley ozone SIP. 17 Next slide please.
18 --o0o-- 19 AIR QUALITY AND TRANSPORTATION PLANNING BRANCH 20 CHIEF KARPEROS: A lot has happened since June: 21 You adopted a state strategy for mobile sources
Page 60CARB Board mtg transcript 11-15-07

22 in September that was strengthened over what was discussed 23 at the June meeting.
24 Staff and Board members have talked and consulted 25 extensively with Valley stakeholders.

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

63 1 Staff has revisited the San Joaquin Valley Air
2 District's rules and SIP commitments one more time to 3 ensure they meet stringency requirements. 4 And, finally, staff has developed a set of 5 recommended actions for air district, local government, 6 and ARB intended to keep the valley moving forward.
7 Next.
8 --o0o-- 9 AIR QUALITY AND TRANSPORTATION PLANNING BRANCH 10 CHIEF KARPEROS: The Board's September action will speed 11 Valley's progress towards full compliance with the federal 12 8-hour ozone standard. With the strengthened measures you 13 approved, staff projects the Valley will make 90 percent 14 progress towards attainment by 2018. 15 The Valley has 22 air monitors that measure 16 progress. This table shows the progress we expect at each 17 monitor between now and 2018. The monitors highlighted in 18 green will make it all the way to attainment, 100 percent 19 progress. Today, four monitors already meet the federal 20 ozone standard. By 2018, we project that will grow to 15 21 monitors located throughout the region. The monitors in 22 blue will not make it all the way to attainment, but will
23 still have much cleaner air. 24 Arvin, which currently sees the highest measured 25 ozone levels in the Valley, is expected to see a Page 61CARB Board mtg transcript 11-15-07

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

64 1 50 percent improvement. 2 When the improvement at all these sites is 3 averaged, the overall valley-wide improvement is about 90 4 percent. This assessment is based on SIP modeling runs 5 and the strengthened SIP commitment approved by the Board.
6 --o0o-- 7 AIR QUALITY AND TRANSPORTATION PLANNING BRANCH
8 CHIEF KARPEROS: ARB measures for mobile sources are the 9 primary reason behind this progress. The strengthened SIP 10 includes larger reductions from more aggressive measures 11 for diesel trucks and construction equipment, the latter 12 through the SOON program. Staff also added reductions 13 from mobile agricultural equipment, primarily tractors. 14 Together, these three strengthened measures will 15 provide about 50 percent more NOx reductions from mobile 16 sources in 2017 than previously planned. Together, with 17 the reductions from California's longstanding regulations 18 for cars and trucks plus District actions, the 19 strengthened SIP will reduce total Valley oh NOx emissions 20 by 70 percent between now and 2017. 21 The Valley's comprehensive ozone air quality
22 studies show that NOx reductions are essential to 23 accelerate attainment because they are much more effective 24 than reductions in reactive organic gases.
25 --o0o--

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

65
Page 62CARB Board mtg transcript 11-15-07

1 AIR QUALITY AND TRANSPORTATION PLANNING BRANCH 2 CHIEF KARPEROS: Before moving on to staff's technical 3 findings, let me describe the public process that's been 4 underway since the summer. 5 In August, staff convened a 14-member task force 6 of Valley industry representatives, environmental and 7 community advocates, and local government officials. The 8 task force has met five times, most recently on November 9 7th, when staff briefed the group on the report we're 10 presenting today.
11 The task force discussions have been detailed and 12 open. Staff from the International Sustainable Systems 13 Research Center, known as ISSRC, presented their ideas for 14 mobile and stationary sources reductions. ARB staff 15 briefed the group on its proposed mobile source strategy 16 prior to the September Board meeting. 17 Other discussion topics have included incentives, 18 air quality bonds, diesel retrofit technologies, emission 19 inventory, the private truck rule, and operational control 20 concepts - the term often used to describe limits on 21 polluting activities on days with high ozone. 22 We've held three community meetings: One in 23 Merced in the north part of the Valley, one in Parlier in 24 the central Valley, and one in Arvin on the very southern 25 boundary of the District. The Merced meeting was well

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

66 1 attended and we had a very positive discussion. The 2 Parlier meeting was lightly attended. And the Arvin 3 meeting was the largest, with the public very vocal about
4 their concerns. Page 63CARB Board mtg transcript 11-15-07

5 --o0o-- 6 AIR QUALITY AND TRANSPORTATION PLANNING BRANCH
7 CHIEF KARPEROS: This slide outlines the technical work 8 that staff has been doing; and in the case of the ISSRC 9 report, one of the resources staff has looked at to find 10 ways to accelerate progress. 11 Over the course of the summer, staff revisited 12 the proposed ARB SIP commitment with the goal to increase
13 mobile source NOx reductions to meet South Coast's PM2.5 14 reduction targets and to speed progress in the Valley. 15 As you know, your rulemaking on construction 16 equipment was underway in June. And you in July adopted 17 the construction equipment rule with the SOON program 18 proposed by staff and developed in consultation with the 19 South Coast and Valley air districts. 20 Staff has gone back and looked again at the 21 District's stationary source rules to determine if they do 22 in fact meet stringency requirements and if more
23 reductions can be had. 24 Since the inventory was finalized for the SIP in 25 late 2006, District and ARB staffs have continued to work

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

67 1 on inventory improvements. Staff reviewed this work to 2 understand its implications to attainment going forward. 3 And, finally, the ISSRC report presented ideas 4 for ways to reduce emissions from both mobile and 5 stationary sources. For mobile sources, the report 6 contained a range of emission estimates. The strengthened 7 mobile source strategy you adopted came in at about the
Page 64CARB Board mtg transcript 11-15-07

8 middle of the ISSRC range. 9 The primary difference between the ISSRC report 10 and the adopted mobile source strategy is the ISSRC 11 assumptions regarding retrofits. The report assumed that 12 additional reductions will be uniformly possible through 13 retrofits. The adopted SIP sets aggressive reduction 14 targets, but does not dictate either retrofits or 15 equipment replacement. Compliance would include retrofits 16 to the extent they are available and cost effective. 17 The ISSRC report took a similar approach to 18 stationary source controls, assuming the broad 19 applicability of additional retrofit technology on 20 existing industrial equipment. These assumptions pose 21 some real-world questions that I'll discuss in future
22 slides.
23 Next.
24 --o0o-- 25 AIR QUALITY AND TRANSPORTATION PLANNING BRANCH

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

68 1 CHIEF KARPEROS: Before discussing our latest review of 2 the District's plan, I'll highlight a series of recent 3 oversight actions ARB has taken. 4 In 2003, staff reviewed the District's proposed 5 measures for PM10 attainment in the Valley's PM10 SIP.
6 Particles formed in the air from chemical reactions with 7 NOx make up a large part of the valley's particulate 8 pollution, so NOx measures were an important part of the
9 PM10 SIP. Staff determined that the SIP met EPA 10 requirements for reasonably available control measures. 11 EPA concurred when it approved the District's PM10 SIP. Page 65CARB Board mtg transcript 11-15-07

12 Also in 2003, staff followed an inter-district 13 effort to compare rules among Sacramento, Bay Area, and 14 San Joaquin Valley air districts. South Coast rules were
15 also looked at. The air district-led effort was done to 16 ensure consistency among districts linked through 17 pollution transport. 18 In 2004, staff again reviewed the Valley rules 19 and SIP measures, this time for the 1-hour ozone SIP. 20 Also that year, staff was reviewing local 21 particulate matter rules, including the Valley's, as part 22 of the SB 656 effort. SB 656 required ARB to identify the 23 most readily available, feasible, and cost-effective 24 control measures that can be employed by air districts to 25 reduce particulate matter. Staff's review included NOx

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

69 1 rules because of NOx contribution to ambient particulate 2 levels. As a second step, in 2005, air districts were to 3 adopt implementation schedules for selected measures from
4 the ARB list. 5 In 2005, ARB staff conducted a broad review of 6 the District's program. ARB staff does these reviews 7 regularly of selected air districts. They're thorough and 8 in-depth efforts. The Valley 2005 review covered rules, 9 permitting, and enforcement. 10 Next, last year and into this year, staff 11 reviewed the Valley's local SIP measures in the 8-hour 12 ozone plan and determined they'd met state and federal 13 stringency requirements. And, finally, after the June 14 Board meeting, ARB staff revisited its analysis one more
Page 66CARB Board mtg transcript 11-15-07

15 time. 16 Given community interest in the stationary source 17 component of the SIP, staff believes this was a useful
18 exercise and has documented the results in our November 6 19 report. I'll now walk you through the results of the 20 technical analysis.
21 --o0o-- 22 AIR QUALITY AND TRANSPORTATION PLANNING BRANCH 23 CHIEF KARPEROS: In our review, we looked at the rules 24 that govern the emissions of over 90 percent of the 25 Valley's NOx emissions from stationary sources. These

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

70 1 rules are listed here. They cover boilers, gas turbines, 2 internal combustion engines, gas furnaces, glass furnaces, 3 dryers, dehydrators, ovens, and flares. 4 Boilers are ubiquitous. They're used in 5 manufacturing, food processing, power plants, oil and gas 6 production, space heating, and more. Turbines are used 7 primarily in power plants. Internal combustion engines 8 are used mostly in agriculture, but also in oil and gas 9 production and manufacturing. Dryers and dehydrators are 10 used in agricultural activities and other sources. Flares 11 are small sources, part of oil and gas production. 12 And while we focused on NOx, we also considered 13 two major ROG sources: Composting of green waste and 14 biosolids and dairies. These are large ROG source 15 categories and are of concern due to land use as well as 16 air and water pollution issues. Finally, we also looked 17 at open burning, which although it's really a particulate 18 source, has some NOx emissions. Page 67CARB Board mtg transcript 11-15-07

19 --o0o-- 20 AIR QUALITY AND TRANSPORTATION PLANNING BRANCH 21 CHIEF KARPEROS: Since early this decade, the District has 22 set aggressive rulemaking targets in its SIP for ozone and 23 particulate matter and has completed 16 significant 24 rulemakings to reduce NOx. These rules cover many of the 25 types of sources I mentioned a moment ago: Boilers,

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

71 1 dryers and dehydrators, internal combustion engines, glass 2 furnaces, and turbines. 3 In 2005, the District adopted a 4 first-in-the-state rule to mitigate emissions from new 5 development and the vehicles that development attracts. 6 The District's rule is now the focus of litigation. Other 7 air districts are interested in following the Valley's 8 lead and are watching closely. 9 Legislation in 2003 required ARB to develop a 10 regulation defining large dairies and livestock operations 11 that would then be regulated by air districts. ARB 12 adopted a regulation in 2005. The District adopted its 13 regulation requiring mitigation plans starting in June 14 2006. And the District is now lowering its existing 15 threshold, making it the most stringent in the state.
16 --o0o-- 17 AIR QUALITY AND TRANSPORTATION PLANNING BRANCH 18 CHIEF KARPEROS: As a result of this stepped-up effort, 19 the District's existing rules together with the measures 20 in the SIP are on par with other air districts' rules, 21 including the South Coast's.
Page 68CARB Board mtg transcript 11-15-07

22 We've identified small differences between the 23 Valley rules and rules from similar sources in other air 24 districts. These types of differences are typical, 25 reflecting the specific nature of local sources and the

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

72 1 combination of technological requirements for new and 2 existing sources as well as permitting requirements. 3 Staff was not able to identity additional 4 quantifiable emission reductions from potential small 5 incremental changes to the District's stationary source 6 rules. A source-by-source assessment might result in 7 small potential reductions or none that are cost effective 8 or feasible. To give the Board context for what such an 9 analysis might turn up, we're providing a potential range 10 of zero to two tons per day. 11 With the District's most stringent rules now on 12 the books or coming, the focuses really turns to 13 implementation over the next several years. And for the 14 next SIP cycle, there's an appropriate effort to look at 15 how the rules are working in the real world and if they 16 can be ratcheted further down and there's more technology 17 advancement opportunities. The next ozone planning cycle 18 is 2010, and that would be an appropriate place to do that
19 work.
20 --o0o-- 21 AIR QUALITY AND TRANSPORTATION PLANNING BRANCH 22 CHIEF KARPEROS: The feasibility of retrofit technologies 23 is central to answering the question, can near-term 24 stationary source reductions be increased? The task force 25 has considered the issue, and ARB and ISSRC staffs have Page 69CARB Board mtg transcript 11-15-07

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

73 1 also discussed it at length. 2 California industries already have a very high 3 level of control. Retrofit systems for most uses are not 4 off the shelf, requiring unique engineering. 5 Consequently, making broad assumptions about the technical 6 feasibility and cost effectiveness of retrofit technology 7 on existing industrial equipment is inappropriate. 8 To be realistic, quantification of any additional
9 incremental benefit from a retrofit needs a 10 source-by-source analysis of technical feasibility, cost, 11 and emission reduction potential. 12 First, can it be installed? What are the space
13 constraints that a retrofit must fit into? Boilers are 14 ubiquitous in the Valley. Each will have unique
15 freeboard. 16 Are the operating conditions the right one for 17 the technology? Are the exhaust temperatures high enough 18 for catalysts to work well? Is the duty cycle conducive 19 to effective operation of the retrofit? Will the exhaust 20 constituents limit system performance? 21 Is the retrofit compatible with existing controls 22 or do they need to be removed? For example, Selective 23 Catalytic Reduction, or SRC, can provide up to about 85 24 percent NOx reduction. But for it to work, it may be 25 necessary to remove an existing but less effective control

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

74
Page 70CARB Board mtg transcript 11-15-07

1 system that provides, say, 65 percent control.
2 CHAIRPERSON NICHOLS: Excuse me. 3 AIR QUALITY AND TRANSPORTATION PLANNING BRANCH
4 CHIEF KARPEROS: Sure. 5 CHAIRPERSON NICHOLS: Could I just clarify. 6 Where and how are these questions being 7 addressed? I understand they're valid questions. I just 8 don't understand what the process is for getting them 9 answered. Who's answering them, where, when? 10 AIR QUALITY AND TRANSPORTATION PLANNING BRANCH 11 CHIEF KARPEROS: These are the sort of questions that 12 District staff would take up when they're considering, 13 first, BACT analysis, best available control technology 14 analysis, for new sources coming into the region. 15 Answering these questions successfully with a "yes" is 16 best done when you're building a new source and you can 17 engineer the system in from the ground up. 18 You also need to look at these same questions 19 when you're considering the prohibitory rules. They're
20 retrofit rules that are contained in the District's SIP. 21 CHAIRPERSON NICHOLS: So are we directing them or 22 asking them to do this or are we saying they're already 23 doing it? I'm just trying to understand the posture that 24 we're in right now, because people are asking the question 25 of us. So what's happening here?

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

75 1 AIR QUALITY AND TRANSPORTATION PLANNING BRANCH 2 CHIEF KARPEROS: The District is already asking these 3 sorts of questions. They do it on a daily basis when they 4 consider the development of new rules when they permit Page 71CARB Board mtg transcript 11-15-07

5 sources. It's the answering of these types of questions
6 at that level of detail that would tell us are there 7 additional emission reductions that can be had, as opposed 8 to making broad assumptions about uniform application of a 9 retrofit technology. 10 CHAIRPERSON NICHOLS: Okay. So what you're 11 saying is we need to go through this process in order to
12 establish whether and how much additional control we can 13 get from these regulations? 14 AIR QUALITY AND TRANSPORTATION PLANNING BRANCH 15 CHIEF KARPEROS: Exactly. And staff's recommendations to
16 the District are intended to further revitalize the 17 District's process for doing this and bringing new 18 technology in as quickly as possible. 19 CHAIRPERSON NICHOLS: Okay. Thanks. 20 Sorry for the interruption. 21 AIR QUALITY AND TRANSPORTATION PLANNING BRANCH 22 CHIEF KARPEROS: Certainly.
23 --o0o-- 24 AIR QUALITY AND TRANSPORTATION PLANNING BRANCH 25 CHIEF KARPEROS: Resolving all these engineering and other

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

76 1 challenges factor into the cost effectiveness of a 2 retrofit system and its viability. For these reasons,
3 staff recommends that the district focus its efforts on 4 technology advancement, particularly for new sources.
5 --o0o-- 6 AIR QUALITY AND TRANSPORTATION PLANNING BRANCH 7 CHIEF KARPEROS: Let me shift now to the implication of
Page 72CARB Board mtg transcript 11-15-07

8 recent emission inventory work by both the District and
9 ARB staff. 10 The SIP inventory was finalized in November of 11 2006 in order to do the necessary air quality modeling. 12 Since then, inventory improvements have continued as it 13 always done. Even though the SIP inventory is set, there 14 are four important upcoming inventory changes that impact 15 overall progress toward attainment. 16 The first is a District emissions update for 17 devices that burn natural gas where permits are not 18 required for individual devices. This category has 19 historically been grossly overestimated by 35 to 40 tons 20 per day. The District has developed a new estimate that 21 is now in line with Energy Commission natural gas delivery 22 rate data. The analysis for this change is complete. 23 The second is another District update to better 24 account for reductions from District rules. We expect the 25 District will finish its analysis in time for ARB staff to

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

77 1 review the work early next year. We expect this change 2 will reduce future NOx estimates by perhaps five tons per 3 day. 4 The third is an ARB update to emissions from 5 diesel trucks. The work is underway now in support of the 6 private diesel truck fleet rule development. 7 Preliminary review of data collected over the 8 past year shows that the average age of trucks operating 9 in the Valley may be younger than previously estimated. 10 To the extent that trucks operating in the Valley are 11 newer than thought, a revised diesel truck inventory will Page 73CARB Board mtg transcript 11-15-07

12 be smaller. 13 Staff is still collecting data into the first 14 half of next year to complete the emerging picture of the 15 state's diesel truck fleets. Staff is targeting the end 16 of 2008 for a validated inventory. 17 And, lastly, a similar inventory improvement 18 effort is underway for emissions from agricultural 19 equipment, especially tractors, in support of upcoming 20 rule development for the cleanup of in-use agricultural 21 equipment. We do not expect to complete this work until
22 2009. 23 Because these changes influence any conclusions 24 about accelerated progress in the Valley, staff has 25 estimated, based on our best data to date, what the future

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

78 1 inventory could be. Staff will need to do more work over 2 the next year before we can validate any changes to the 3 current SIP inventory.
4 --o0o-- 5 AIR QUALITY AND TRANSPORTATION PLANNING BRANCH
6 CHIEF KARPEROS: This slide shows staff's best estimate 7 today of the combined impact of the strengthened SIP and 8 the potential future inventory changes.
9 The dashed white line across the bottom of the 10 chart is the NOx carrying capacity, the level of NOx 11 emissions that photochemical modeling shows is needed to
12 attain the 8-hour ozone standard. 13 The red line on the top is the total Valley NOx 14 emission inventory with the SIP measures presented at the
Page 74CARB Board mtg transcript 11-15-07

15 June hearing. In 2017, the red line is about 130 tons per 16 day above the white line. It's about 80 tons per day
17 above the white attainment line in 2023. 18 The yellow line is staff's best estimate today of 19 future NOx emissions. It reflects the greater reductions 20 in the strengthened SIP and it includes staff's estimate 21 of the potential inventory changes. 22 Both the red and yellow lines show that the SIP
23 reductions are front-loaded. Most all the reductions come
24 before 2017. 25 The yellow line, today's line, is about 49 tons

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

79 1 per day above the white attainment line in 2017. That is 2 less than one half of the shortfall we projected with the 3 SIP in June. The shortfall in 2023 is about 20 tons per 4 day. That's one-quarter of the June projected shortfall. 5 The strengthened SIP will speed air quality 6 progress and will take the Valley most of the way to 7 attainment by 2017.
8 --o0o-- 9 AIR QUALITY AND TRANSPORTATION PLANNING BRANCH 10 CHIEF KARPEROS: What will it take to close the 49 ton per 11 day emissions gap in 2017 and make the final 10 percent of 12 progress to full valley-wide attainment? We've listed 13 here the reductions from the three strengthened mobile 14 source measures from September. They give a sense of how 15 hard we need to push to close the remaining gap. 16 The construction equipment rule with the SOON 17 program will provide about ten tons per day reduction in
18 2017. The estimated reduction from tractors and other Page 75CARB Board mtg transcript 11-15-07

19 farm equipment are five to ten tons per day. And, 20 finally, the big measure, the reductions targeted by the 21 private diesel truck measure, is 62 tons per day. 22 As these measures show, all these measures show, 23 getting the final reductions for attainment is not easy.
24 --o0o-- 25 AIR QUALITY AND TRANSPORTATION PLANNING BRANCH

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

80
1 CHIEF KARPEROS: This slide lists a number of ideas 2 suggested by ISSRC that have already been addressed or on 3 which work is underway now. 4 The first is a good news story. The District 5 adopted a stronger turbine rule than targeted in the SIP. 6 If the District is able to meet its other targets, these
7 reductions will reduce the shortfall. 8 ISSRC suggested reflecting emission reductions
9 from secured incentives. These reductions have been 10 reflected in the SIP inventory since the start. And staff 11 expects that incentives will be an increasingly critical 12 part of measures already in the adopted SIP. 13 The District is working with other districts and 14 ARB to find resources to fund the SOON program in the 15 Valley. When multi-year funding availability is resolved,
16 this will reduce the shortfall. 17 The District has begun to develop a Clean Air Day 18 concept, starting with voluntary actions by people in 19 businesses to limit their polluting activities on high 20 ozone days. If successful, they intend to expand the 21 program. At that time it would be appropriate to consider
Page 76CARB Board mtg transcript 11-15-07

22 quantifying the benefits for SIP purposes. 23 ISSRC has suggested taking credit for the SB 705 24 phase-out of agricultural burning. Since burning is 25 primarily a direct particulate issue, a SIP inventory

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

81 1 adjustment or SIP measure will be considered as part of 2 the upcoming PM2.5 SIP and NOx co-benefits will be
3 considered at that time. 4 Finally, ISSRC has suggested a rule change for 5 agricultural IC engines and other IC engines. The 6 District already has a rule for engine cleanup and is 7 pursuing a multi-pronged strategy to clean up these 8 engines, primarily irrigation pumps. Incentives have been 9 used extensively already. Electrification is the ultimate 10 goal for most of these engines, and efforts are ongoing to 11 bring about the necessary action by the Public Utilities
12 Commission to facilitate conversion.
13 --o0o-- 14 AIR QUALITY AND TRANSPORTATION PLANNING BRANCH
15 CHIEF KARPEROS: ISSRC has recommended a number of 16 approaches for reducing emissions that lack adequate 17 technical foundation. While the fundamental technologies 18 have merit, the ISSRC report assumed the broad 19 applicability of additional retrofit technology on 20 existing industrial equipment. These assumptions pose the 21 real-world engineering questions I described earlier. 22 Without addressing these questions through a 23 source-by-source analysis, a broad assumption is 24 inappropriate. 25 At the November 7th task force meeting, ISSRC Page 77CARB Board mtg transcript 11-15-07

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

82 1 suggested further tightening of the already adopted 2 construction rule and proposed agricultural equipment 3 rule. Staff does not believe that suggestion has merit in 4 the present circumstances. In materials submitted to the 5 docket yesterday, that suggestion was not included, so 6 ISSRC may now have reached the same conclusion. 7 ISSRC has suggested using selective catalytic 8 reduction on all of the Valley's eight glass plants. One 9 plant is rebuilding now and will likely use SCR. The 10 remaining currently use what are so called oxy-fired 11 furnaces. ARB staff's research did not turn up any 12 examples of where SCR had been used in conjunction with 13 oxy-fired systems. Until the basic engineering analysis 14 has been done to determine if they can be used together, 15 it's inappropriate to assume SCR retrofits are technically
16 feasible. 17 In the meantime, the District's SIP targets 18 reflect the most stringent rule in the state. Staff will 19 follow the rule development process to encourage the 20 District to push aggressively. The District should also 21 consider SCR for the remaining plants during the next 22 rebuild cycle when the system can be engineered into the 23 plant most efficiently. 24 And, lastly, the ISSRC report suggests that the 25 district pursue the same emission limits for dryers and

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

83
Page 78CARB Board mtg transcript 11-15-07

1 dehydrators that the South Coast has in its SIP. In fact, 2 the situation is reversed. The Valley has the state's 3 most stringent limit in the current rule and the South 4 Coast is proposing to lower its limit to match the 5 Valley's.
6 --o0o-- 7 AIR QUALITY AND TRANSPORTATION PLANNING BRANCH 8 CHIEF KARPEROS: Composting and livestock operations emit 9 large amounts of ROG. And while NOx reductions are 10 essential to attainment, ROG reductions from these sources 11 can contribute to air quality progress and reduced 12 localized nuisance impacts. 13 Reducing methane emissions from livestock 14 operations has significant potential to help California 15 meet its 2020 greenhouse gas target. Potential greenhouse 16 gas reductions from these strategies could also produce 17 ozone co-benefits. The climate change scoping plan 18 required next year under AB 32 will serve as a mechanism 19 for moving forward on further dairy emission reduction 20 opportunities. 21 Controlling emissions from green waste and 22 biosolid composting will be critical as these industries 23 seek to expand in the Valley. The economic setting of the 24 composting industry in California often results in this 25 waste being transported into the Valley, as real estate

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

84 1 values and regulations in other regions make local 2 handling cost prohibitive. 3 The District is working to reducing emissions 4 through best management practices. In order to balance Page 79CARB Board mtg transcript 11-15-07

5 California's waste disposal and air quality needs, 6 handling green waste and biosolids should be addressed 7 through a multi-regional, multi-media approach.
8 --o0o-- 9 AIR QUALITY AND TRANSPORTATION PLANNING BRANCH 10 CHIEF KARPEROS: Now let me shift to the question of when 11 the Valley SIP must be submitted to EPA. The question has 12 come up repeatedly. And the practical deadline is driven 13 by the need to set transportation conformity budgets. 14 In June, we talked about the need for Valley COGs 15 to make conformity findings last October, ideally using 16 the new data in the SIP. After the June Board meeting, 17 staff consulted with EPA and Federal Highways
18 Administration and determined that COGs could do their 19 October conformity analysis using old emissions data. Two 20 COGs did that: San Joaquin and Kern counties. And the 21 Valley was able to work around the post-October SIP
22 submittal. 23 Using old data is no longer an option. Under 24 federal guidance, any conformity analyses started now must 25 use the latest, newest data. That is the data in the

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

85
1 current SIP. 2 Driving the timing of the COGs next conformity 3 analysis is the needed federal approval of the State's 4 Transportation Improvement Program in October 2008. The 5 federal transportation bill established new public process 6 requirements for transportation planning. To satisfy 7 these requirements, Caltrans has moved its schedule up
Page 80CARB Board mtg transcript 11-15-07

8 from October 1st to June 1st, 2008, for COGs to submit to 9 Caltrans locally-approved Transportation Improvement 10 Programs, or TIPs. This is critical.
11 --o0o-- 12 AIR QUALITY AND TRANSPORTATION PLANNING BRANCH 13 CHIEF KARPEROS: Backing up from a June 1st Caltrans 14 deadline means that COGs must adopt their Transportation 15 Improvement Programs by May.
16 So the COGs have to circulate their draft TIPs in 17 early 2008. And under federal public process 18 requirements, those TIPs must include conformity findings. 19 For that to be able to happen, EPA must have acted on the 20 budgets, finding them adequate for conformity. EPA has a 21 90-day process for reviewing budgets. They are aware of 22 the timing and are prepared to act. 23 If we submit the Valley SIP this month, we can 24 expect EPA's budget adequacy findings no later than mid to 25 late February, just in time for the COGs to move on their

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

86 1 Transportation Improvement Programs and get them to 2 Caltrans by the deadline. 3 As you can see, the timing is tight and we need 4 to forward the SIP to EPA as soon as possible.
5 --o0o-- 6 AIR QUALITY AND TRANSPORTATION PLANNING BRANCH 7 CHIEF KARPEROS: With the strengthened SIP, the Valley 8 will make good progress towards attainment. The remaining 9 challenge will require development and application of new 10 technologies, increased efficiency across all sectors of 11 the economy, and land use and transportation policies that Page 81CARB Board mtg transcript 11-15-07

12 foster sustainable growth. Success will require the 13 ongoing engagement of ARB, the District, local government, 14 and the public. 15 Staff has proposed in our November 6 report a 16 series of specific recommendations for District, local 17 government, and ARB action to support such efforts. I'll
18 summarize them here. 19 First, new technology. Staff recommendations are 20 designed to speed the rate that new technologies are 21 pumped into the Valley's air quality programs. Both the 22 District and ARB have a role to play here. 23 For the District, we're recommending that it 24 expand its current efforts to find cutting-edge 25 technologies and get them into use. The District should

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

87 1 look for opportunities to expand the use of the 2 technologies identified in the draft ISSRC report. 3 Technology assessments are typically done by 4 engineers sitting at their desks. We recommend that the 5 District open that process up by periodically reviewing in 6 a public setting the current state of technology and the 7 potential for future development. 8 And in the same vein, ARB staff is working with 9 EPA and the District on a technology forum to be held in 10 the San Joaquin Valley in 2008. The goal is to showcase 11 the new technologies that will provide many of the 12 near-term emission reductions in the Valley's ozone SIP as 13 well as potential longer-term technology advancements. 14 Second, growth. The region is growing, with all
Page 82CARB Board mtg transcript 11-15-07

15 the impacts that brings on the Valley's environmental 16 resources. The region must develop cohesive land use and 17 transportation policies that foster sustainable growth. 18 Local government action is key here. But the District 19 should take a leadership role and engage with the other 20 local agencies to bring air quality concerns more broadly 21 into regional decision making. The region's nascent 22 blueprint can set the stage. 23 The Valley currently receives about 40 million 24 annually in Congestion Mitigation and Air Quality, or 25 CMAQ, funds. Local governments should give CMAQ funding

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

88 1 priority to projects that provide real cost-effective
2 emissions reductions. 3 And, finally, continued community outreach, 4 education, and focuses on the Valley. 5 The District has a public local task force in place today. 6 That is a good venue for further work to assess ways to 7 speed progress. So far, it has focused mostly on mobile 8 sources. Expanding its purview to include industrial 9 sources is a good idea. 10 ARB staff will continue to explicitly consider 11 the emission reduction needs of the Valley in rulemaking 12 and hold community-oriented public workshops in the Valley 13 on rulemaking, bond funding, climate change, and other 14 issues as they come forward. 15 And ARB staff plans to hold a community-oriented 16 Valley forum in 2008 on the science underlying 17 California's effort to improve air quality in the San 18 Joaquin Valley. The forum is planned for UC Merced to Page 83CARB Board mtg transcript 11-15-07

19 facilitate academic participation and to support the 20 University as a locus for Valley scientific leadership on 21 air quality.
22 --o0o-- 23 AIR QUALITY AND TRANSPORTATION PLANNING BRANCH 24 CHIEF KARPEROS: Finally, the outlook for the Valley is 25 positive despite the enormity of the challenge.

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

89 1 The adopted strengthened SIP will provide 90 2 percent progress towards attainment of the federal ozone 3 standard by 2017. 4 Staff's recommended District, local government, 5 and ARB actions will maintain focus on new technologies 6 needed to get the last 10 percent of the way to
7 attainment. 8 And while the legal attainment deadline remains, 9 ARB, District, and public efforts have cut the remaining 10 emission reduction challenge by over one-half in 2017 and 11 to just one-quarter in 2023 of what we faced earlier this 12 year. 13 Thank you. That concludes staff's presentation. 14 CHAIRPERSON NICHOLS: Well, thank you very much. 15 And clearly there has been a lot of good work 16 done and progress made, and we're really appreciative of 17 that. Obviously we're still not all the way where we need 18 to go. And what we're going to be talking about now I 19 think is ideas for how to continue to make progress. 20 And again just to clarify, there's no regulatory 21 action in front of us today. We're here having a
Page 84CARB Board mtg transcript 11-15-07

22 discussion. In these kinds of situation I always wish 23 that we weren't sitting up at this high dais, you know, in 24 a very formal kind of a proceeding. It's intended to add 25 dignity to the process, but it may make people feel a

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

90 1 little bit less like we're actually, you know, in a 2 conversation. But I think at this point we really are 3 very much in conversation about what we can do. And 4 appreciate all of the people who have come today and are 5 hoping to give us good ideas. 6 Normally I would call next on the air pollution 7 control officer from the San Joaquin Valley. But I
8 understand that he's asked to comment last and to sort of 9 have an opportunity to respond to the other comments. And
10 I think that's fine. 11 So we will begin with David Lighthall from the 12 Central Valley Health Policy Institute at Cal State 13 University, Fresno, followed by Bonnie Holmes-Gen from the 14 American Lung Association and Brent Newell from the Center 15 on Race, Poverty & the Environment.
16 BOARD MEMBER ROBERTS: Madam Chairman?
17 CHAIRPERSON NICHOLS: Yes. 18 BOARD MEMBER ROBERTS: Before the first speaker 19 begins, could I correct -- 20 CHAIRPERSON NICHOLS: Oh, yes. I'm sorry.
21 Please do. 22 BOARD MEMBER ROBERTS: -- an oversight on the 23 last item, where I should have reported a telephone call 24 also with Devra Wang of the NRDC. And that's on the 25 proposed regs to the commercial harbor craft. Page 85CARB Board mtg transcript 11-15-07

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

91
1 CHAIRPERSON NICHOLS: The record will be 2 corrected. Thank you. 3 Okay. Good morning. 4 DR. LIGHTHALL: Thank you, Chairman Nichols. 5 It's good to be here. My name's Dr. David Lighthall. I'm
6 a senior scientist for Environmental Health at the Central 7 Valley Health Policy Institute at CSU Fresno. 8 Over the course of the past 12 months I've been 9 closely involved in the development of the San Joaquin 10 Valley Ozone Attainment Plan. I'm currently a member of 11 the Valley Air District's Fast Track Task Force as well as 12 the ARB Air Quality Task Force for the San Joaquin Valley. 13 Before providing my central observations here and 14 recommendations, I'd like to express my appreciation to 15 the leadership of Board members DeDe D'Adamo and Judy 16 Case. And I'd also like to thank ARB staff, including 17 Lynn Terry and Kurt Karperos. They've done a very good 18 job in helping us sort through a lot of very complex
19 issues. 20 So first point, there's a fundamental question I 21 think regarding the proposed San Joaquin Valley Ozone 22 Attainment Plan: Does the plan, which has adopted an 23 extreme 2024 attainment date, provide the most powerful 24 means of accelerating the path to ozone compliance. 25 Setting aside for the time being the significant

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

92
Page 86CARB Board mtg transcript 11-15-07

1 barriers to meeting the U.S. EPA's threshold criteria for 2 a severe attainment plan with a 2017 deadline, discussion 3 with air district and ARB staff and our Air Quality Task 4 Force meeting on November 7 indicated that many businesses
5 that would face emission reductions under an extreme 2024 6 plan will in fact not be regulated under a severe 2017 7 plan. 8 This reduced leverage on emission sources under a 9 severe plan raises the risk of a lower rate of yearly 10 reduction in NOx and ROG. In turn, this could mean that 11 we would be further from ozone attainment by 2017 under a 12 severe plan than if we were to adopt an extreme plan as 13 proposed that would have tougher emission controls. 14 As most observers would likely agree, there's a 15 very high probability that U.S. EPA will be lowering its 16 national ambient air quality standard for ozone in the 17 next several years. Achieving attainment by 2017 under 18 this new standard is even more problematic. In the 19 meantime, we need to put into place the strongest and most 20 inconclusive air quality regulations possible in order to 21 maximize the yearly rate of tonnage reductions in ozone 22 precursors. 23 Second point. As is apparent, environmental and 24 community groups will continue to place a great deal of 25 pressure on the San Joaquin Valley Air Pollution Control

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

93
1 District to maximize control measures on sources under its 2 jurisdiction. However, to the extent that ozone arises 3 from mobile source in consumer product emissions, Valley 4 ozone attainment will depend on the Air Resources Board Page 87CARB Board mtg transcript 11-15-07

5 making difficult decisions. The recent adoption of the
6 off-road mobile source rule's an excellent start. I know
7 that was a difficult decision. 8 Third. Given the low carrying capacity for air 9 pollution in the San Joaquin Valley, rapid development and 10 adoption of new technologies will be critical to the 11 earliest possible attainment of ozone standard. I am 12 pleased to see that ARB staff has proposed a leadership 13 role for the Agency in serving as a catalyst for 14 technological innovation in the Valley. 15 And fourth and final point. The other key 16 element for early attainment will be incentive funds for 17 accelerated emission reductions. As is painfully apparent 18 here in California, creating new funding sources to 19 achieve collective social benefits is increasingly 20 difficult. ARB is in an excellent position to serve as an 21 objective source of scientific justification for 22 cost-effective public investments in emission reductions 23 program. 24 As in the case of technological development, I 25 would strongly encourage ARB to play a leadership role in

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

94 1 evaluating fiscal options for emission reduction programs 2 and bringing these findings to the attention of California 3 decision makers and the public. 4 Thank you. 5 CHAIRPERSON NICHOLS: Thank you for your
6 comments. 7 Bonnie Holmes-Gen, followed by Brent Newell and
Page 88CARB Board mtg transcript 11-15-07

8 Tim Carmichael. 9 MS. HOLMES-GEN: Good morning, Chairman Nichols
10 and Board members. Bonnie Holmes-Gen with the American 11 Lung Association of California. 12 And we'd like to start off by thanking you for 13 adopting the strengthened state SIP strategy that you did 14 adopt, and we really appreciate the work that has gone
15 into that. 16 But we are here today to urge you to do 17 everything possible to achieve attainment in the Valley by 18 the 2017 deadline. And we recognize that even the current 19 federal standards are really not health protective enough. 20 I just wanted to reiterate that point that was just made, 21 that we are -- the American Lung Association is pushing 22 for more stringent federal ozone standards as part of this
23 federal ozone review -- federal review of the standards. 24 We are especially concerned about pushing hard 25 toward attainment in the Valley because of the serious

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

95 1 health conditions, the prevalence of asthma and 2 respiratory illnesses in the Valley, and that these -- the 3 conditions in the Valley are resulting in high levels of 4 hospital emergency room visits, missed school and work 5 days, and premature death. And I know, as you've heard 6 many times, that the asthma prevalence is a serious 7 concern, with one in five children in the Valley 8 experiencing asthma. And this results in billions of
9 dollars of course in health care costs. 10 We are very encouraged by the CARB's staff 11 estimate that the attainment gap has decreased and that Page 89CARB Board mtg transcript 11-15-07

12 you've gotten that gap down to 49 tons per day by 2017. 13 And We're glad that the shortfall has shrunk and we 14 appreciate the staff work and the work of the task force 15 that has gone into developing measures to reduce that gap. 16 And we appreciate and applaud that work.
17 But I think that what this shows is that with a 18 little more time and focused effort we can develop more 19 solutions to get that gap down even further and to achieve
20 that 2017 deadline. We don't want to see another 21 generation of children grow up in the Valley with dirty
22 air. We need to find solutions now. We are so close to 23 accomplishing the task. We believe that it's just 24 premature to give up now. 25 So we'd like to join with the other Valley

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

96 1 representatives that are here today and request the Board 2 to direct staff to continue to convene this task force, 3 with tremendous participation that you've had, and to 4 create that plan together to get the Valley to the 5 attainment date of 2017. And we also would join in the 6 request that the Board hold the public hearing on this 7 matter in the San Joaquin Valley, so that you can have 8 more of that spirit of dialogue with the community that I 9 know that you do want to have. 10 We think there's been a lot of good solutions put 11 on the table: The Clean Air Days, ag engines, SCR, low 12 NOx burners, a lot of good solutions. And we urge you to 13 do the engineering and other analyses that you are talking 14 about today to answer those questions, to take the next
Page 90CARB Board mtg transcript 11-15-07

15 steps, to evaluate those measures and develop them and
16 include them in the SIP. 17 We appreciate your Board's clear concern about 18 the plight of Valley residents and we appreciate that 19 progress has been made. And we're just asking you to 20 continue the dialogue and to not give up with this. 21 Thank you for the time. 22 CHAIRPERSON NICHOLS: Thank you. 23 Brent Newell, followed by Tim Carmichael and Nick
24 Robinson. 25 MR. NEWELL: Good morning, Madam Chair, members

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

97 1 of the Board. My name is Brent Newell and I'm with the 2 Center on Race, Poverty & the Environment. 3 I respectfully request that the Board take action 4 at a future hearing to amend the plan, using its authority 5 under California state law, and hold that hearing in the 6 Valley, and also in the evening so that working families 7 can attend and participate. 8 The Board resolution in June of this year
9 directed staff to include an evaluation of the Clean Air 10 Days operational control restrictions. This report that 11 you have before you today does not include an evaluation 12 of operational controls. There are two sentences in the 13 introduction that discuss how the district is going to 14 pursue voluntary controls. Mandatory operational controls 15 can get us much closer and close that 49-ton-per-day gap
16 that we have in 2017.
17 There are other recommendations that ISSRC has 18 made that have been discounted in this report. Those are Page 91CARB Board mtg transcript 11-15-07

19 viable pollution control reductions that a representative
20 from ISSRC will further discuss later. 21 Chairman Sawyer asked specifically from the dais 22 to evaluate operational controls. Staff hasn't done that. 23 We respectfully ask the Board to really dig into this very 24 important pollution control reduction concept that can 25 help Valley residents and children breathe air sooner.

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

98 1 You have the authority under state law, under the 2 Health and Safety Code, to amend the air district's plan. 3 In Health and Safety Code section 41652, the Board has the 4 authority to actually rewrite portions of the plan, insert 5 provisions, and then send it on to EPA. The Board can and 6 should do its duty under this provision. Since 1990, the 7 Board has never used that authority to amend an air 8 district plan or rule. Meanwhile, the Board has sent 9 rules and plans to EPA that EPA has disapproved for 10 violating the Clean Air Act. 11 At the June hearing I submitted a list into the
12 record that showed more than 100 air district rules from 13 California being disapproved by EPA for violating the 14 Clean Air Act. In 1997, the Board sent in the Valley PM10 15 Plan, that EPA could not approve because it exempted 16 agricultural sources. Instead, EPA stuck it in a drawer 17 for five years. 18 The Board needs to do its duty to protect the 19 public health, the health of children in the Valley. 20 Valley residents expected the Board to do the duty that 21 the Legislature told you to do. The Legislature drafted
Page 92CARB Board mtg transcript 11-15-07

22 and passed section 41652 and 41650. Please do your duty. 23 Don't put this off until 2024. We can and we should get 24 there by 2017. 25 (Applause.)

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

99 1 CHAIRPERSON NICHOLS: Thank you. Thanks for 2 meeting your three-minute deadline too. That was right on
3 the button. 4 Okay. Tim Carmichael, Nick Robinson, Daniela
5 Simunovic. 6 MR. CARMICHAEL: Good morning, Chairman Nichols,
7 members of the Board. Tim Carmichael with the Coalition
8 for Clean Air. 9 First of all, I want to recognize the hard work 10 that's gone into this effort. And we greatly appreciate
11 the staff time and Board members D'Adamo and Case's 12 participation throughout. 13 But with that, we also strongly oppose a 14 premature conclusion to this task force effort. You know, 15 the Fresno Bee today has an editorial on this topic, and 16 it's good, and you should read it if you haven't. But it 17 notes that last spring the District reported to everybody 18 that they turned over every stone and they were a hundred 19 tons short of attainment. ARB got quite engaged this 20 summer. The task force got quite engaged this late summer 21 and fall. And we cut that in half. And we are very 22 appreciative of that effort. But it leaves everybody with 23 this, you know, sense that, a little bit more time, more 24 is possible. 25 You may not be aware that most people did not Page 93CARB Board mtg transcript 11-15-07

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

100 1 receive the staff report until the afternoon before the 2 last task force meeting. That was not helpful for people 3 to have a very good conversation at the last task force 4 meeting. And I know that, you know, staff was doing their 5 best and they were under a lot of pressure with a lot of 6 information to juggle. But for us that, you know, is 7 another reason why it makes sense to continue this process 8 going a little bit longer. There were a lot of unanswered 9 questions at that task force meeting. In fact, when we 10 met with staff last week on multiple topics, but talked 11 about this, there were a lot of unanswered questions in
12 that discussion. 13 And we just believe that, you know, with so much 14 positive energy around this effort to date, it would be a 15 big mistake to end it prematurely. And, frankly, I think 16 it would leave a lot of people with a sour taste in their 17 mouth about the lost potential, the missed opportunity
18 here. 19 The last thought that I want to share is that the 20 staff reported to us that they did not do exactly as Ms. 21 D'Adamo highlighted as one of the goals for the task force 22 earlier today. She noted that one of the goals, I think 23 it was Goal 4, was to focus on to have a full discussion 24 of the opportunities to accelerate pollution reductions. 25 When we talked with the staff about that, they said what

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

101
Page 94CARB Board mtg transcript 11-15-07

1 they did in fact was they looked at the District measures 2 relative to other districts in the state and they did a 3 comparative analysis, which is valuable. And we 4 appreciate that they did that. But that's not the same as 5 what we all believed the task force was going to take on. 6 And that, you know, undone element is critical. 7 Thank you very much. 8 CHAIRPERSON NICHOLS: Thank you. 9 Nick Robinson, Daniela Simunovic, Carolina
10 Simunovic. 11 MR. ROBINSON: Good morning and thank you. My 12 name is Nick Robinson and I'm here today simply as a
13 Merced resident. I'm also here on behalf of numerous 14 other Merced residents who were unable to take the day off
15 of work and leave their families to drive to Sacramento to 16 be here today. 17 As you know, on November 7th over 70 Merced 18 residents attended ARB's community meeting in Merced. Our 19 overwhelming message was that Merced expects you to 20 deliver a SIP with a legally enforceable attainment date 21 of 2017. As north Valley residents, our air may be 22 virtually clean by 2017. But we're not willing to allow
23 the volumes of residents of Arvin and other cities in the 24 south Valley to continue to subsidize our pollution. 25 I'm not here to tell you the stories of the

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

102 1 devastating health impacts of delayed ozone attainment, 2 stories like those of 29-year-old Merced resident Natasha 3 Wade, a five months pregnant mother of two who died 4 suddenly from what her family believes was a severe asthma Page 95CARB Board mtg transcript 11-15-07

5 attack last Wednesday. We can only hope that you 6 understand the weight of your decision with this plan. 7 We also hope that you use your rulemaking 8 authority to make the task force recommendations and your 9 own land-use recommendations mandatory and legally 10 enforceable. One example of your own land-use handbook 11 rules is South Coast Rules 4101.1 and 4201.1, which make 12 land-use handbook recommendations about the siting of high 13 polluting industry into rules. 14 I also want to raise two process points. First 15 is the growing distrust between our community and air
16 district and ARB staff. One reason for this disconnect is 17 that we don't feel listened to. At our community meeting
18 we were assured that our comments would be recorded and 19 transcribed for you. Upon hearing this, another Merced 20 resident immediately began taking notes. To our 21 knowledge, the meeting wasn't recorded. I have those 22 notes for you today to look at. And I hope you read them 23 before making your decision. 24 Second is our hope that Valley residents most 25 affected by this plan are allowed adequate opportunity to

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

103 1 participate. Please hold another hearing in the Valley 2 before submitting this SIP to EPA. 3 So just to conclude, please listen to the 4 community. Listen to ISSRC and other experts who have 5 demonstrated that a 2017 plan is economically and 6 technically feasible. Our community has invested an 7 incredible amount of time and energy into this plan. Give
Page 96CARB Board mtg transcript 11-15-07

8 us the time to finish the job. 9 Thank you. 10 CHAIRPERSON NICHOLS: Thank you. 11 BOARD MEMBER D'ADAMO: Madam Chair, I have a 12 comment on the commitment to record the meeting. 13 CHAIRPERSON NICHOLS: Yes, thank you. 14 BOARD MEMBER D'ADAMO: I would just like to note 15 that I believe one of the stakeholder groups in 16 preparation for the meeting did ask us to record the 17 meeting and staff had committed to doing so. We learned 18 after the meeting was underway that there was an oversight 19 and in fact we were not recording the meeting. So I made 20 that announcement and I did see that someone attempted to 21 put a recording device on the table. But I really doubt 22 that we were able to fully capture the comments that were
23 made. 24 So I do apologize for that. We did not record 25 the other meetings or the task force meetings. It was a

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

104
1 commitment that was made because I felt that it was a 2 reasonable request. But then, you know, an oversight 3 resulted in us not actually recording it. 4 CHAIRPERSON NICHOLS: I do have a partial 5 transcript of a Merced meeting in my packet. And actually 6 I was going to -- 7 MS. DANIELA SIMUNOVIC: Those were community 8 residents that -- to get on -- to create notes to get to 9 you. And that was what was submitted. It was a community 10 leader who stood up and took notes. So initiative from 11 the community again. Page 97CARB Board mtg transcript 11-15-07

12 CHAIRPERSON NICHOLS: Thank you. 13 MS. DANIELA SIMUNOVIC: With that, I'm Daniela 14 Simunovic and I am with the Center on Race, Poverty & the 15 Environment in Delano, California, in the San Joaquin 16 Valley. 17 I'm here today -- and I'm happy that I'm here 18 today on one hand because in June when we stood before 19 your Board in Fresno providing testimony, we were told 20 that that was it, that it was such a tight timeline and 21 every stone had been unturned and there was no further
22 reductions. And thanks to some Board members -- one Board 23 member who was able to stand up against the 2024 and 24 others who at least gave us the chance of developing a
25 task force to further look at reductions that could be

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

105 1 achieved were here before you today. 2 We embarked as advocates and community residents 3 on this task force process cautiously optimistic. Our 4 hope was that we would be able to close the reduction gap. 5 And we have been. In the past coming months we've been 6 able to close the reduction gap both from additional 7 measures by ARB, that we are grateful for, and both by 8 adjustments to the inventory that were incorrect and that
9 were overstated. And we are now at a 49-ton shortfall of
10 NOx reductions needed. And we feel that to raise the 11 white flag right now and to say, "This is it. We have to 12 approve the plan, 49 is good enough" is condemning a 13 generation of children in particular in Arvin, the 14 community who has often throughout this entire process
Page 98CARB Board mtg transcript 11-15-07

15 been treated -- and as community residents attested to at 16 the meeting there -- unfortunately there is no official 17 record of that meeting -- but as residents have often 18 felt, they have been treated like the bad child in the 19 family who -- "Well, everybody else is going to attain" -- 20 "90 percent of the Valley is going to attain by 2017. But 21 it's that last 10 percent, it's just Arvin."
22 And those are statements from residents that 23 residents shared yesterday with officials from the EPA
24 that came to meet with them. And these are comments that 25 unfortunately they have to depend on me to bring to you

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

106 1 today because they cannot be here. 2 So on those points, I would like to ask of the 3 Board that you continue to convene meetings of the ARB
4 task force to continue to look at additional reductions as 5 recommended by ISSRC's report that show that we can close 6 that 49 ton gap and get a SIP-enforceable plan to EPA. 7 We also ask that you hold -- you postpone making 8 a decision on submittal to the EPA today until you can 9 hold a meeting at some later time in the San Joaquin 10 Valley. 11 And in regards to also continuing the ARB 12 process, we ask and we reiterate the importance of 13 continuing to have the ARB as the vehicle convening these 14 meetings, as the initial actual reason many Board members 15 cited as -- supporting the task force was the distrust 16 that community residents had stated with their local air 17 district. And we feel that the ARB is the legitimate 18 entity to continue in good faith with this process. Page 99CARB Board mtg transcript 11-15-07

19 And on behalf of many residents of the San 20 Joaquin Valley that were unable to be here today in 21 preparing for this meeting, you know, we believe in 22 incentives, and then school teachers provide positive 23 incentives and negative incentives for children. And in 24 the Valley we've been, you know -- we were positive, we 25 were very positive with the formation of the task force.

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

107
1 We think that there's a lot of work to be done. And we 2 are prepared -- we've prepared two types of awards. One 3 is the good -- first start award that we would award to 4 staff and ARB members in the case that you heed to -- that 5 you work with us in this last leg of the race, to not 6 raise the white flag, and to try to close this 49-ton
7 shortfall. 8 Unfortunately the other award that I really don't 9 want to give you because we respect you as folks, but 10 we -- as decision makers, we feel that you are accountable 11 to us and that we haven't really been heard, that over 39 12 percent of the Valley residents who in the latest field 13 polls said air pollution was the primary concern, and the 14 residents of Arvin who couldn't be here today, you are 15 accountable to us and we have to keep you with bad awards. 16 And we also have a jellyfish award that we would 17 like to not give you. And it basically says that, you 18 know, we would give you this in the sense that we felt 19 that you didn't have the guts to stand up for us. We know 20 that the California Health and Safety Code gives you those 21 guts. We're just asking you to use them, because we know
Page 100CARB Board mtg transcript 11-15-07

22 as advocates you -- unfortunately, we're not on the dais. 23 You're on the dais representing us. And overwhelmingly -- 24 over a hundred people turned out at the Arvin meeting, add 25 that to the 70 who turned out in Merced, add that to the

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

108 1 hundreds who provided testimony to both the air district 2 and the ARB, and overwhelmingly the message there 2024 is
3 condemnation to death. 4 So we ask you to take this into consideration. 5 And thank you for your time. 6 CHAIRPERSON NICHOLS: Thank you. 7 On behalf of lovers of jellyfish everywhere, I 8 want to protest your use of the jellyfish as your negative 9 incentive. But aside from that, appreciate your comments. 10 Okay. Carolina Simunovic, followed by Ron Silva
11 Kate Stevens. 12 MS. CAROLINA SIMUNOVIC: Thank you. My name is
13 Carolina Simunovic and I am Environmental Health Director 14 with Fresno Metro Ministry. And I'm also one of the moms 15 that feels guilty about living in the San Joaquin Valley 16 and worrying about how my daughter's health will be 17 affected by the pollution that we breathe.
18 I want to echo Kurt's comments. A lot has 19 happened since June and -- you know, and a lot of us, like 20 many stated before, were very hopeful in terms of the 21 beginnings of this task force process. We were eager to 22 see CARB very involved in what was going on in the Valley. 23 And as advocates who are growing in capacity but have for 24 the most part lacked the technical resources to give you 25 the right recommendations over the years, we welcomed the Page 101CARB Board mtg transcript 11-15-07

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

109 1 participation of ISSRC and again a cooperative ARB staff 2 to look at the information from a technical perspective 3 and give us feedback. It was wonderful having that team 4 around the table. And you saw the results earlier last 5 month when we were able to strengthen the SIP somewhat. 6 You know, from my viewpoint, ISSRC and Dr. Jim 7 Lents was able to see things outside of the box. It was 8 special too since he was one of the people that helped 9 build those boxes, having submitted his first SIP in the 10 '70s and then helping to draft the, you know, 1990 Clean 11 Air Act. His perspective I think and the Research Center 12 was very, very useful. And they've presented numerous 13 recommendations for ARB staff review, and some that 14 unfortunately have not been looked at. And there have 15 been documents submitted to you now recently outlining
16 those control measures. 17 Unfortunately, after the last meeting, many of us 18 felt that the tone changed. It was like the job was done. 19 We enhanced the mobile part to the SIP, and the Valley got 20 some reductions, the South Coast area got some reductions. 21 But since then, when we've had to take some time to look 22 at the stationary source side of things, it was different. 23 Like was mentioned earlier, the report that was received 24 at 4 o'clock the day before the meeting, after we'd been 25 hearing and expected having it be complete the week before

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

110
Page 102CARB Board mtg transcript 11-15-07

1 and having a chance to review it, you know, it leaves me 2 with a sense that things were missing. I would have loved 3 to have seen earlier drafts of the report to see what was
4 there. 5 I shared with you a Fresno Bee editorial, the one
6 that Tim alluded to. And I think the comments there 7 states many of the frustrations of Valley residents, 8 including my own. Throughout this process there was a lot 9 of uncertainty in terms of timeliness, in terms of, you 10 know, are the conformity budgets -- when are they needed,
11 for what? When did the sanction clock start? It was a 12 community trying to understand some of these things, and 13 in many ways getting inaccurate or misleading information
14 from several different sides. 15 And the one agency that could have helped to 16 clarify that, EPA, unfortunately was not at this 17 roundtable discussion. And that -- you know, hindsight is 18 20/20. They should have probably been there, been invited 19 to participate. And when we've asked them why they were 20 not, they said, you know, that they were not invited. 21 I just want to highlight one of the 22 recommendations in the report, which is for updating the
23 BACT thresholds. And that's a recommendations that ARB 24 has given the District now I think it's the third time.
25 It was in the audit before and it was in some documents

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

111 1 years earlier. And the District has not acted on that in 2 all of these years. So, you know, how many times do you 3 have to recommend something before it happens? When can 4 the oversight authority that ARB has come into play? When Page 103CARB Board mtg transcript 11-15-07

5 can we start, you know, getting down to some of the things 6 that can cause tension but that are necessary for clean
7 air? 8 We were hoping that we would, through this task 9 force and through your efforts, do everything that was 10 possible. I think the information before you today shows 11 that there is more that is possible that can be done. 12 And to finish with what the Fresno Bee says, you 13 know, the ARB owes the Valley every ounce of effort -- 14 every ounce of its effort. And I hope that we get that. 15 And I think that, given the time, we will. 16 So please do not submit the plan as is. Thank 17 you. 18 (Applause.) 19 CHAIRPERSON NICHOLS: We generally ask people, 20 you know, not to applaud or boo at Board meetings. If you 21 can avoid it, I'd appreciate it. 22 I want to note that I'm planning to break for 23 lunch at 11:50 today because of the Chair's briefing that 24 I mentioned that's going to be going on in the adjoining
25 room.

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

112 1 But I know that our court reporter, who's been on 2 duty here since 9 -- and I'm wondering if you need a
3 break. 4 You're willing to continue on until 11:50? 5 Okay. Then we'll just forge ahead. 6 Thank you. 7 MR. SILVA: Good morning, Chairman Nichols,
Page 104CARB Board mtg transcript 11-15-07

8 Board. My name's Ron Silva. I'm with Westar Transport. 9 I run a small trucking company, some call it medium, out 10 of the San Joaquin Valley. Been there for 27 years in 11 Selma, California. And these new truck rules that are in 12 the works has created the biggest fear I've had for my 13 family and my business ever since it ever started. 14 I could join the rest of the environmentalists
15 earlier because I breathe the same air as all of us. But 16 I am really concerned about the economic damage that some 17 of these regulations will have. 18 And while staff does a great job, and I can 19 appreciate the -- I wouldn't want their job. I always 20 thought mine was the toughest. I'm convinced now there's 21 is the toughest and yours is the toughest. 22 How do you get clean air for everybody in this 23 state without doing huge economic damage? That's going to 24 be the challenge. Roughly right now we're looking at -- 25 my particular company, my debt service if I try to meet

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

113 1 those regulations goes from about 50,000 a year to about a 2 million dollars a year. So I'm bankrupt before I even buy 3 them. I couldn't even get the money. That's what we're 4 facing. That's a reality. 5 So that's the first note that I really had. 6 The second note is, while we're spending a lot of 7 time and money in trying to craft regulations, we're going 8 through the entire process. What I don't think we're 9 doing as a state is looking at all our alternatives. And 10 the alternative I'm talking about, and a couple of the 11 Board members are aware of it, is short-sea shipping. Page 105CARB Board mtg transcript 11-15-07

12 It's a new mode of transportation. I looked at three 13 years now trying to develop the money just to do the 14 study -- three years. We're talking about a deadline of 15 2017 or 2024. We've wasted three years of something that 16 can take 40 tons of NOx out of the Valley, and we could 17 have almost built it by now. 18 So all I ask is that we use very open minds and 19 look at all the alternatives and put a foot forward and 20 say we need to go after every ton that we possibly can. 21 Now, it's not the silver bullet. But I do
22 believe this state is due for a new mode of 23 transportation, and I think we need to put our efforts 24 forward to make sure, if it can be done, we need to really 25 work to do it. And the only answer that we don't leave is

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

114 1 maybe wiping out the trucking industry. 2 Thank you. 3 CHAIRPERSON NICHOLS: Thank you. 4 Can I just ask you a question. I'm not sure what 5 your suggestion was. 6 MR. SILVA: Well, short-sea shipping is the new 7 mode of transportation, moving cargo by water -- 8 CHAIRPERSON NICHOLS: Oh, I see. 9 MR. SILVA: -- basically is the start-up. And I 10 would love to come and do a presentation for you,
11 Chairman. 12 CHAIRPERSON NICHOLS: Okay. Thank you very much. 13 I appreciate that. 14 Okay. Kate Stevens, followed by Alvin Valeriano
Page 106CARB Board mtg transcript 11-15-07

15 and Sarah Sharpe. 16 MS. STEVENS: Good morning. My name is Katy 17 Stevens and I'm the Government Affairs Representative of 18 the California Partnership for the San Joaquin Valley. I 19 also support Mark Keppler of the of the Maddy Institute in 20 his role as lead staff consultant for the Air Quality Work 21 Group. And I serve on the San Joaquin Valley Air District
22 Fast Track Task Force. 23 For more than a year the partnership Air Quality 24 Work Group labored to try to find a path to attainment 25 that would have avoided the need for a bump up to extreme.

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

115 1 I know of no one who wanted to go there. Environmental 2 advocacy groups didn't want to go there. Industry and 3 agricultural groups, particularly agricultural groups, 4 didn't want to go there because of the increased 5 permitting and Title 5 requirements. 6 But reality got in the way. As of April this 7 year when the air district 8-hour ozone plan was due, we 8 had identified no legally approvable path that would
9 enable us to avoid the black box. For the last 10 six months, through the ARB Dual Path Task Force and the 11 Air District Fast Track Task Force, we have continued to 12 search for a legally viable path without success. As 13 disappointing as that is, we have reconciled ourselves to 14 the need to proceed with a jump up in designation, not 15 only because that is what reality requires, but because 16 the increased permitting requirements that go with extreme 17 designation will help us get to attainment sooner. 18 The good news is that, as you have heard, the Page 107CARB Board mtg transcript 11-15-07

19 process led by Board Members D'Adamo and Case has led to a 20 significant reduction in the attainment gap. It has also 21 helped us identity a number of strategies that we believe 22 will enable us to accelerate attainment. They may not be 23 SIP creditable strategies today. But with hard work and 24 funding, it will enable us to make them SIP creditable in
25 the future.

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

116 1 And the ARB report indicating that the Air 2 District rules are as stringent as any in California gives 3 us confidence that we are on the right path. 4 I want to thank the Board, particularly Board Members 5 D'Adamo and Case, for partnering with the Valley in search
6 for these solutions. And I also want to thank the ARB
7 staff for their hard work. 8 Thank you. 9 CHAIRPERSON NICHOLS: Thank you. Appreciate
10 that.
11 And we'll hear now from Alvin Valeriano and then 12 Sarah Sharpe and Nidia Bautista.
13 MR. VALERIANO: I am a little nervous so I 14 brought my hero here with me. 15 CHAIRPERSON NICHOLS: Sorry we don't have an 16 easel for you. But you can put it on the chair, and maybe
17 we could all look at it. 18 MR. VALERIANO: Maybe over here. We'll park
19 Arnold down. 20 CHAIRPERSON NICHOLS: Thank you. 21 MR. VALERIANO: Madam Chair Nichols, members of
Page 108CARB Board mtg transcript 11-15-07

22 the Board. Thank you very much for this opportunity to 23 express my views on why attainment of the 8-hour ozone 24 standard can occur by 2017. 25 My name is Alvin Valeriano. I am a resident of

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

117
1 Fresno. I work with Dr. James Lents and Nicole Davis of 2 the International Sustainable Systems Research Center, 3 which provided invaluable technical analysis for earlier 4 attainment of the ozone standard in San Joaquin Valley. 5 Prior to this, I worked with the San Joaquin Valley Air 6 Pollution Control District for four and a half years in 7 rule and plan development. 8 When this Board was deliberating to approve the 9 San Joaquin Valley 2007 Ozone Plan, it appeared that there 10 was no other choice but to go to extreme status with a 11 2024 attainment, because it was not technically feasible
12 to have earlier attainment. 13 This morning it's great to hear ARB staff 14 actually express somewhat of a sea change. When you were 15 deliberating approving the 2007 ozone plan, you heard it 16 was not technically possible. Today, they are saying 17 that, well, the problem is that you have to look at it on 18 a case-by-case basis. Okay, so that's a big difference, 19 very, very big difference. 20 By the way, looking at it on a case-by-case basis 21 is not what the District and ARB do when they do plan 22 development. They try their best as possible to look at 23 the inventory at the existing rules, at the existing 24 limits, and then see what technologies are being used. 25 Okay. The logical thing to do is to look at what Page 109CARB Board mtg transcript 11-15-07

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

118 1 is the next step up as far as that technology. That's all 2 you can do. That's the best thing you can do in plan 3 development. When you want to go through rule 4 development, then you can look at those itty-bitty, tiny 5 differences that you find. But that's all you can do in 6 plan development. Otherwise you'll never finish a plan. 7 Okay. 8 So I believe that before you is a table which 9 says pollution sources, control technology, cost 10 effectiveness, and availability status. Let me go through 11 that real quickly. 12 Glassmaking, the best technology is SCR. There 13 will be one in the Valley. And it is common practice in 14 Europe and Japan to use SCR in glassmaking facilities. 15 IC engines. SCR is -- with no question can be 16 used for stationary engines. The Valley is electrifying a 17 lot of the motorists now in order to reduce NOx pollution. 18 That's great. 19 And there are numbers there that show you what 20 the cost effectiveness of these technologies are: 3,000 21 to 4,000 for SCR for glassmaking; 6,000 to 7,000 per ton 22 at 3,000 hours for using SCR technology. This is 23 Achieved-in-Practice BACT, which is what they will be 24 trying to determine in the future. It's achieved in 25 practice, no doubt.

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

119
Page 110CARB Board mtg transcript 11-15-07

1 CHAIRPERSON NICHOLS: You are running out of 2 time. I'd appreciate if you could summarize your -- 3 MR. VALERIANO: Yes, I will. Thank you very
4 much. 5 The point is that in this table you'll see Europe 6 and Japan there a lot. In Europe and Japan they are very 7 keen on using the most advanced technology. Why are we 8 not doing that? Do they know something better than we do. 9 I think that Americans -- as an immigrant here, I 10 admire American ingenuity. Let's not give up on this one.
11 We need a little bit more time to evaluate these new 12 technologies. 13 Thank you. 14 CHAIRPERSON NICHOLS: Thank you. 15 Okay. Sarah Sharpe, Nidia Bautista, Jim 16 Ganduglia. 17 MS. SHARPE: Good morning. My name is Sarah 18 Sharpe. I'm with the Coalition for Clean Air from the
19 Fresno office. 20 I'm going to begin my comments with a short quote 21 of Alvin's hero, our Governor Schwarzenegger. And this 22 was a quote that he stated in June of this year.
23 It's: "When one out of six residents in the San 24 Joaquin Valley has been diagnosed with asthma and one in 25 five children carry an inhaler to school, it is a call to

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

120 1 action." And I agree with that quote wholeheartedly. 2 The Governor has kept good on his word, so far as 3 we can tell, with his signature of SB 719, some 4 legislation that we were working on, and the appointment Page 111CARB Board mtg transcript 11-15-07

5 of our new Board Chair, Mary Nichols. And he is counting 6 on you to continue to do this for him. Not only is the 7 Governor counting on you, but thousands if not millions of 8 Valley residents are counting on you to exhaust all 9 options for cleaning the air before you throw in the towel 10 on the San Joaquin Valley SIP. 11 As you know, as my colleagues have mentioned, we 12 are concerned with a plan that can't legally prove we will 13 get to attainment until 2024. Through the task force 14 process that was created in June as a part of the 15 resolution to approve the SIP, we have found that there 16 were indeed many more stones left to be turned, meaning
17 more reductions to be found and included in the SIP. Some 18 of those stones have been included in your staff's report 19 today, but unfortunately many were not. 20 We are pleased to see that the gap for attainment 21 in 2017 has gone from 202 tons per day to 49 tons per day. 22 This gives us a real hope that with hard work, 23 determination, and strong leadership from your Board, we 24 can continue to find ways to achieve the final 49 tons per 25 day, both through emission reductions and adjustments to

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

121 1 the inventory. 2 For this reason we respectfully request that you 3 do not accept the CARB staff report as it is today, and 4 direct them to continue the task that they started in June 5 until it is complete. 6 In addition, we specifically request that you 7 direct the staff not to submit the San Joaquin Valley
Page 112CARB Board mtg transcript 11-15-07

8 portion of the plan to EPA yet until it has been 9 thoroughly determined whether or not we need to make 10 amendments to the plan. 11 And I want to thank Alvin and ISSRC for outlining 12 some of the questions that still remain to be answered.
13 We believe there are amendments that could be 14 made which would also make it possible to reclassify our 15 region to severe instead of extreme. 16 And, finally, I was not a member of the ARB task 17 force, although I did attend all the meetings. But I am a
18 member of the District's task force. And I heard the
19 staff's recommendation that we shift this work over to 20 that task force. And I don't believe shifting this effort 21 to a new group that has not already been involved in this 22 process -- there are some of the same members, but many 23 different members. And we also have our own long list of 24 tasks that we are working on. I don't think it would be 25 appropriate or effective. This task force needs to stay

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

122 1 in tact for a few more months. As it is, the ARB task 2 force with the leadership of your Board members, I know 3 that you may not have time. And also the staff. 4 And so I want to ask you to please consider these 5 missed opportunities in your deliberations today. 6 Thank you. 7 CHAIRPERSON NICHOLS: Thank you. 8 Nidia Bautista, Jim Ganduglia, and Mark Keppler. 9 MS. BAUTISTA: Thank you, Chair Nichols, members 10 of the Board, staff, and audience. Nidia Bautista with
11 the Coalition for Clean Air here in Sacramento offices. Page 113CARB Board mtg transcript 11-15-07

12 I'm here today to reiterate some of what our 13 colleagues have shared with you, which is -- you know, 14 through good faith we've been participating in the task 15 force process. I think the intent of the June hearing 16 back in Fresno was that we would be investigating all 17 feasible measures. We talked about, you know, turning 18 over all the stones. We talked about the piggy bank -- 19 and I have one for you and I have one for each of you --
20 that we wanted to collect all the coins. I think there 21 was an acknowledgement that we may not be able to find a 22 hundred dollars bill. But if we find a $50 bill combined 23 with a $20 combined with a 50 cents here, that that would 24 get us to our goal. 25 And I want to just say that we are so close in

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

123 1 the final stretch and we need ARB's leadership to get us
2 to that finish line. 3 And comments that you've heard earlier, I think 4 it was a real challenge for us to kind of look through the 5 ARB staff report just a few hours. We did sit through the 6 task force hearing to get to answer our questions. 7 Unfortunately a lot of them still remain unresolved. We 8 raised questions about the feasibility of some of the 9 measures. There wasn't a real clear response on some of 10 the ISSRC recommendations in the report. 11 We were also really looking for some 12 quantifiable, the potential from ARB staff. What are the 13 potentials for cleaning up the air if we tighten up these 14 measures? And I think we're not there yet. And I do
Page 114CARB Board mtg transcript 11-15-07

15 believe that with a couple more meetings we can get there. 16 And maybe it's just a matter of us getting a better 17 understanding. And so I'm open to hearing that. But as 18 of now we've not gotten those responses -- those answers. 19 On a couple of examples -- let me just share with 20 you something for you to be mindful of. Glass melting 21 furnaces, which has been raised, is definitely a measure 22 that I think ARB staff acknowledges can be strengthened. 23 But yet they're saying, "Well, the District's already 24 working on it." The District may be working on its rule. 25 But even in the previous -- in the couple years ago when

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

124 1 it did work on that rule, even though ARB recommended 2 something stronger, the District still adopted something 3 that it acknowledged in its own notes all of the existing 4 sources already comply with this rule. 5 So even though ARB asked them to apply a stronger 6 measure, and they could have, which would have been in 7 line with what the rest of the state was doing, the 8 District chose not to. And instead it chose to adopt 9 basically a paperwork regulation. 10 So to that end -- that's just one example. 11 Composting is another one. We think there's a lot of 12 opportunity there. And just saying that it's going to 13 require a multi-regional and multi-media approach is not 14 sufficient. Why is it that other districts have adopted 15 rules on composting? And why should the valley be any 16 different in that regard? 17 And also we should be comparing rules that are 18 all on the books regardless of how they're attacking the Page 115CARB Board mtg transcript 11-15-07

19 sources in terms of the Sacramento region has some tighter 20 rules that were not reflected in the ARB staff report. 21 And that did come to light in our effort to actually get 22 more information from ARB staff. And we do appreciate 23 that they made themselves available to us to try to do 24 that. But, again, on this shortened time frame it was a 25 real challenge. And I think also a challenge for them,

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

125 1 because I think that it was challenging for them to try to 2 put this all together in just the limited time that they 3 have, even though I know that your directive came in June. 4 The other measure is turbine rules. Though the 5 District did adopt a stronger rule on turbines recently 6 that actually went beyond their SIP commitment, they have 7 not actually put that new -- they have not reflected that 8 new adoption into their SIP. "And why does that matter?" 9 someone would say. "Well, you're going to get to clean 10 air. Look it, they're adopting great rules." Well, it 11 matters because in the end, if you do the math, basically 12 that will relax the pressure off any of the other 13 commitments. In other words they can say that they're 14 only going to get less than a ton on turbines, and then 15 they adopt a measure that actually gets you more than a 16 ton. Well, that means that they can take the pressure off 17 some of the other sources that they committed to in the 18 SIP. And that's the important piece and I think that 19 that's the value of the SIP, is that it's a plan, it's a 20 goal, it's what we're going to push ourselves to get. 21 We recognize that it may not be really easy, but
Page 116CARB Board mtg transcript 11-15-07

22 we do think it is possible. 23 And I just want to remind you, now going back to 24 our piggy bank, I think we're really there, we're really, 25 really close. And so we just need just a couple more

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

126 1 meetings to actually get us to fill it up so that we can 2 buy that clean air that we need. 3 Thank you. 4 CHAIRPERSON NICHOLS: Thank you. 5 Jim Ganduglia, Mark Keppler, Sean Edgar. 6 MR. GANDUGLIA: Thank you, Chairwoman Nichols. I 7 represent -- Jim Ganduglia. I represent the California 8 Trucking Association, but I'm going to talk from Jim 9 Ganduglia of Ganduglia Trucking. 10 We're going to talk about economic impact because 11 that hasn't been talked about very much today. And I'm 12 going to talk about 2010, December 31st of 2010, because 13 at that point in time 200,000 Class 4 through Class 8 14 diesel trucks are going to be taken off the highway by the 15 proposed Private Fleet Rule. Two hundred thousand trucks 16 are going to then need to be upgraded to 2007. It will 17 never happen. There's not enough money in the State of
18 California to do that. 19 Just that number -- 90,000 of those 200,000 20 trucks are Class 8. To upgrade 90,000 trucks to 2007 21 minimum would cost $20 billion. 22 In my fleet alone, come 2012, according to the 23 Private Fleet Rule, I'm going to have to replace 16 trucks 24 - $1.8 million. 25 The people that I haul for don't care really Page 117CARB Board mtg transcript 11-15-07

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

127 1 about air quality. Their job is to build things and to 2 ship them. They're competing all over the planet. 3 Anybody outside of the State of California could not care 4 less about the state of the air quality in California. 5 Everybody -- in 1980 we deregulated the industry. 6 Everybody since 1980 has been -- I can't think of the 7 word -- has benefited from the fact that freight rates are 8 low. I have a handout here that I would like to get to 9 you at some point that will clarify some of this stuff. 10 But now all of a sudden we're going to say, "Well, we just 11 want you to raise your freight rates by" -- it would cost 12 twice as much freight rates in order for me to buy new
13 trucks. 14 In 2012 -- our payments are usually in the 15 neighborhood of -- yearly truck payments are usually in 16 the neighborhood of about $250,000. Some years they're 17 up, some down, depending on what falls off and what we 18 buy. In 2012, my payments will be eight hundred plus 19 thousand dollars a year. Can't do that. My customers, 20 everybody in this room are not willing to pay that cost.
21 Bottom line.
22 We want clean air. I'm asthmatic. I know what 23 it is not to be able to breathe. And when you can't 24 breathe, nothing on this planet is of importance. But 25 when I saw the Private Fleet Rule -- the proposed Private

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

128
Page 118CARB Board mtg transcript 11-15-07

1 Fleet Rule, I started to get an anxiety attack over that. 2 So I would just like to say that the economic 3 impact of this is going to be huge and we need to pay 4 particular attention to it, because if we don't the 5 economy of the State of California will suffer severely. 6 Thank you. 7 CHAIRPERSON NICHOLS: Thank you. And please 8 don't have an anxiety attack. We'll get through this, I 9 promise you. 10 Mark Keppler. 11 MR. KEPPLER: Good morning. My name is Mark 12 Keppler. I'm the Executive Director of the Ken Maddy
13 Institute of Public Affairs at California State 14 University, Fresno, and the staff consultant for the Air 15 Quality Work Group of the California Partnership for the 16 San Joaquin Valley. 17 The Air Quality Work Group has had participation 18 from over 300 Valley stakeholders representing a broad 19 spectrum of Valley interests, including agriculture, 20 industry, environmental advocacy groups, and academia. 21 Since the partnership was officially launched in 22 September of 2005, we've been working hard to find the 23 fastest way possible to clean the air in the San Joaquin 24 Valley. The 8-hour ozone plan submitted by the San 25 Joaquin Valley Air District in April of this year

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

129 1 contained 29 recommendations by our work group. 2 We've been very pleased with the Air District's 3 receptiveness to our recommendations and especially 4 pleased that they've accepted our proposal to form a Page 119CARB Board mtg transcript 11-15-07

5 dual-path task force to pursue options to accelerate 6 attainment that are not currently SIP creditable. The 7 District put this task force in place and called it a fast 8 track task force. And I am pleased to be serving on that
9 task force. 10 We were also very pleased when the Air 11 District -- I'm sorry -- Air Resources Board took similar 12 action to put in place a dual-path task force. I want to 13 thank Board members DeDe D'Adamo and Judy Case and the ARB
14 staff for their dedicated efforts to work with the San 15 Joaquin Valley Air District and stakeholders from 16 throughout the Valley to see what we can do to accelerate
17 attainment. 18 The results of our work together over the last 19 six months have been most encouraging. The attainment gap 20 originally identified in the District's ozone plan has 21 been significantly reduced. The attainment gap of 127 22 tons per day in 2017 has been reduced to 49 tons. An 23 attainment gap of 99 tons in 2020 has been reduced to 33 24 tons. It is important to understand that this reduction 25 in the attainment gap stems primarily from better

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

130 1 estimation of emission inventories and of the impact of 2 existing rules on certain area sources rather than from 3 newly discovered sources of emission reductions, but is 4 nonetheless good news. 5 While the Air Quality Work Group has collectively 6 been unable to identity SIP creditable emission reductions 7 that would enable us to avoid the need for a black box,
Page 120CARB Board mtg transcript 11-15-07

8 the reduction in the attainment gap increases our
9 confidence that future reductions will enable us to shave 10 several years, perhaps five to seven years, off the 11 official attainment date of 2024. For this to happen, 12 however, it will require new technologies and a massive 13 infusion of funds for incentive programs, particularly to 14 accelerate conversion of our legacy fleet of trucks and 15 agricultural equipment. 16 You have the commitment of the Air Quality Work 17 Group that we will press on until we get the job done. In 18 turn, we ask the ARB for a commitment to continue to work 19 with the partnership in the Valley to identity and certify 20 new technologies and help us procure the incentive funding 21 we so badly need if we are to achieve our early attainment 22 goals. 23 Thank you. 24 CHAIRPERSON NICHOLS: Thank you. 25 We have five more witnesses to hear from, and

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

131 1 we're going to have some pretty extensive discussion. And 2 I think that this is probably a good time to take a break.
3 We will be back here at 1:00 to resume this item. 4 And looking forward to some further discussion, and hope 5 that people will be able to stay. 6 I invite anybody who wants to to come to Training 7 Room 2 and bring your lunch and we'll learn something 8 about the green innovations index.
9 Thanks. 10 (Thereupon a lunch break was taken.)
11 CHAIRPERSON NICHOLS: To continue where we left Page 121CARB Board mtg transcript 11-15-07

12 off, we're still hearing testimony on the staff report. 13 And our next witness was Sean Edgar, followed by
14 Peter Weber and Sara Jackson. 15 MR. EDGAR: Good afternoon, Madam Chair and Board 16 members. Sean Edgar, the Executive Director of the Clean 17 Fleets Coalition. Sorry I missed the green lunch. But I 18 hope it was salad and enjoyable. But I also want to talk 19 a little bit about green on two elements of this plan. 20 First off I'll credit your staff and Air District 21 staff and all the other stakeholders for participating in 22 what was a very meaningful process over the last several
23 months. 24 Our organization is comprised of transporters in 25 all eight counties of the Valley Air District. And there

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

132 1 are two aspects of the plan that I'll speak to. One is 2 stationary sources. The other is our favorite topic,
3 mobile source. 4 On the stationary source rule, to answer a 5 question that Ms. Bautista had before lunch, the issue of 6 composting is a critical piece in San Joaquin, and I look 7 forward to working with the Air District. Several of our 8 companies are also engaged in composting in the Valley. 9 And just as a reminder, as this Board moves 10 toward zero emissions, also in this very chamber your 11 sister board, the Integrated Waste Management Board, is 12 moving toward zero waste. And part of our zero waste is 13 to take that green waste and to take it into facilities 14 and compost it and turn it into something that's more
Page 122CARB Board mtg transcript 11-15-07

15 valuable than just putting it in a landfill. And part of 16 that integrated look at how we do that, there are 17 obviously some greenhouse gas implications with that. But 18 just as a prelude to getting involved with San Joaquin on 19 their rule, part of the reason you'll find a greater flow 20 of green waste from outside the Valley coming in to the 21 Valley is because AQMD in the period of 2002 to 2004 had 22 their own local rule dealing with composting and it was 23 pretty aggressive and it squeezed a lot of the tons that 24 would have been processed within the L.A. basin to come up 25 over the grapevine and they end up in the Valley.

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

133 1 So zero waste, integrated waste management are 2 part of our roles and we look forward to working with the 3 Air District on that particular stationary source role. 4 But moving to mobile sources, I'll just highlight 5 and repeat just a few sentences from my September 27th 6 testimony when I was able to appear before you in Diamond 7 Bar. And relative to mobile sources, I think that the 8 silver bullet for San Joaquin Valley really has to do 9 with -- I should say more of a platinum bullet because I 10 think a lot of it just comes back to great technology 11 that's emerging. But how to get people into that 12 technology is really going to be the key item. And so 13 what I'll speak to is specifically my recommendation on 14 September 27th. The Prop 1B bond allocation really needs 15 to be targeted and supersized, as the present 250 million 16 bond allocation is not nearly enough to subsidize the 17 accelerated schedule for the on-road segments that your 18 staff has indicated need a subsidy to become reality. Page 123CARB Board mtg transcript 11-15-07

19 And that the proposed schedule, by rapidly 20 compressing it, it's being so compressed that, if I 21 understand how this new overlay works, that the SIP that 22 you adopted on September 27th, what was a ten-year fleet 23 plan is now moving toward a seven-year fleet turnover 24 plan, with an opportunity to go to four years. And if as 25 a matter of policy you choose to do that, hopefully the

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

134 1 technology will evolve to make that truck turnover happen. 2 However, we know it's going to be extremely costly and we 3 know it's not going to happen just by pass-through on
4 rates alone. 5 So to conclude, industry does not always get off 6 on the cheap and industry can take a carrot and run with
7 it. And the members of the Board that have been on the 8 Board for some time probably are tired of hearing me talk 9 about the solid waste collection vehicle rule, but I'm 10 just going to mention a few factoids there. 11 The first factoid is, Executive Officer 12 Witherspoon reported to your Board last year that industry 13 exceeded your expectations. Why did we do that? Well, we 14 went from what was a 10 percent requirement and we made it 15 a 35 percent requirement. We doubled up on the use of 16 Level III systems. We bought more new engines than you 17 expected with additional NOx requirements that you didn't 18 put on the rule, but we were able to do that. 19 Strategically Moyer helped a very little, as 20 Moyer funds dry up as the mandate cut a little bit deeper.
21 But bottom line is the rates that we were able to
Page 124CARB Board mtg transcript 11-15-07

22 charge, in some cases we've been able to pass through some
23 of that cost but not all of the cost. 24 So going forward, I'll just make a pitch that as 25 we look toward translating what we know from 12,000 trash

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

135 1 trucks on to 500,000 plus Class 4 through 8 on-highway 2 vehicles, 78,000 of which apparently is the inventory 3 running up and down the Valley, as we do that we know 4 we're going to need to not only expand the knowledge base 5 within our own coalition from the industry side, but we 6 also know that the most costly program that's ever been 7 done in history is going to be coming along, and so we 8 want to certainly work with you through the process of a 9 goods movement emission reduction program to get the best 10 bang for the buck. But we know that the silver bullet 11 really needs to be a platinum bullet to get us where we
12 all want to be. 13 With that, I'll conclude my remarks. And I'll be 14 available for any questions you have. 15 CHAIRPERSON NICHOLS: Thank you very much. 16 Pete Weber, followed by Sara Jackson and Manuel 17 Cunya. 18 MR. WEBER: Good afternoon, Chair Nichols and
19 members of the Board. I'm Pete Weber. I serve on the 20 Board of the California Partnership for the San Joaquin 21 Valley, and I am the convener for the Air Quality Work 22 Group. 23 Being from the Valley, I'd like to use 24 agricultural analogies. And I'm going to paint a picture 25 where I think we are in the process of cleaning up our air Page 125CARB Board mtg transcript 11-15-07

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

136 1 by contrasting that to picking an orange tree. 2 The EPA of course requires that we pick the tree 3 clean. And where we are today is we've picked the tree 4 about halfway. We've picked the bottom half, the easy 5 half. We've got a very, very tough upper half to pick, 6 and we've been working very hard to try to achieve that 7 objective. 8 The dual path task force that your Board set up I 9 think has done a very able job under the leadership of 10 Board Members DeDe D'Adamo and Judy Case in leading an 11 effort to try to get us closer to attainment at the 12 earliest possible date. 13 I guess I have a somewhat different perspective 14 on the work of that group over the course of the last
15 six months. I think the work of the ARB staff has been 16 exemplary. I think it has been high integrity, very 17 comprehensive, and very thorough. And I want to express 18 my appreciation to Ms. Terry and Kurt Karperos and Jeff 19 and Robbie and the rest of the staff. I think you've done 20 a terrific job. 21 Unfortunately, one of the things that I certainly 22 have become persuaded of is that the last 10 percent of 23 the tree is going to be extraordinarily difficult to pick. 24 We have tried really, really hard to find ways of picking 25 that last 10 percent. And unfortunately, we haven't found

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

137
Page 126CARB Board mtg transcript 11-15-07

1 a way that is legally approvable to do that yet. And 2 that's why we have to go to, you know, the extreme 3 designation and to a 2024 attainment date. I don't know 4 if anybody was happy about that, but it's reality. I 5 think we need to move on. For one thing, we are pushing 6 the limits on -- time limits on transportation conformity 7 budgets. 8 And beyond that, as has already been pointed out 9 this morning, there are benefits to going to an extreme 10 designation. I mean for one thing, you know, Title 5 11 permitting requirements will increase significantly, which 12 means we'll have more businesses looking for permitting.
13 We'll have about 2500 more businesses that will have to be 14 using BACT than would otherwise be the case. 15 I want to tell you that I sit on the task force 16 at the district level, the fast track task force. And 17 nobody, nobody is throwing in the towel. I mean that's 18 just -- that's not happening, it's not going to happen. 19 As compared to the ARB task force that was set up with a 20 duration of I believe six months, the district task force 21 actually -- its sunset is when we achieve attainment. We 22 are there for the duration. And I want to assure you that 23 we are going to continue to pursue any and all ways to
24 accelerate attainment. 25 We will need significant help from you all, given

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

138 1 that 85 percent of the NOx emissions in the Valley -- more 2 than 85 percent come from mobile sources. You're aware of 3 the fact, I'm sure, that we have the most challenging 4 goods movement environment in California. Forty-five Page 127CARB Board mtg transcript 11-15-07

5 percent of all the NOx emissions in the four major trade 6 corridors come from -- are in the Valley. Forty-six 7 percent of the NOx and 43 percent of the PM2.5 associated 8 with goods movement occur in the Valley. So we need your 9 help. 10 Those numbers, by the way, are all significantly 11 higher than in other goods movement corridor in the State 12 of California, including the South Coast. 13 I have five specific recommendations to offer 14 you. First, we need ARB to speed up the certification of 15 technologies that will enable us to accelerate the
16 modernization of our mobile fleets. 17 Second -- and, by the way, I acknowledge that 18 Kurt Karperos in his presentation had the same
19 recommendation. 20 Second, we need ARB's help to secure major new 21 sources of incentive funding to convert our legacy fleet 22 of vehicles, particularly trucks, tractors, and gross 23 polluting automobiles. Financial incentives are the 24 ladders we need to pick the very top of the tree. And, 25 you know, we've been told to expect about $350 million

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

139 1 from Proposition 1B air quality mitigation funding. That 2 will help a great deal, but it is not nearly enough. And 3 so we need all the help we can get from you.
4 The third recommendation is -- because mobile 5 sources are such a dominant component of the problem in 6 the Valley, we need ARB representation on the Air District 7 Fast Track Task Force. And I would encourage you to
Page 128CARB Board mtg transcript 11-15-07

8 consider appointing somebody to represent the ARB staff at 9 those meetings. 10 Fourth, as a means of holding all of us 11 accountable for progress towards accelerated attainment, I 12 recommend that the ARB staff provide to your Board a 13 formal annual update of the work of the District Fast
14 Track Task Force. We want to reach accelerated 15 attainment. We believe that it is possible to do it in 16 2017. May not be SIP creditable today, but we think we 17 can get there. 18 And, finally, attainment is not enough. Given 19 the huge projected growth of the valley, sustained 20 attainment will be a major challenge. And we would 21 appreciate all the support that we can get from the Air 22 Resources Board to advance air-friendly land-use planning, 23 to look at alternative modes of transportation for both 24 people and goods. Earlier short-sea shipping was 25 mentioned. High-speed rail. Those are all huge issues

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

140 1 for the Valley. 2 And, finally, we also need to maximize the 3 development of clean fuel and clean energy alternatives. 4 Let me conclude by thanking the Board and 5 thanking the staff for their great work.
6 CHAIRPERSON NICHOLS: Thanks a lot. 7 Manuel Cunya and then Paul Martin. 8 I thought we had heard -- oh, I'm sorry. I 9 missed Sara. I apologize. 10 Excuse me. Sara was right after Pete. I 11 apologize. Page 129CARB Board mtg transcript 11-15-07

12 Thank you. 13 Something about that number 17 just -- okay. 14 MS. JACKSON: Good afternoon. My name is Sara
15 Jackson. I'm a research associate with Earth Justice in
16 Oakland. 17 And I want to quickly, before I say what I wanted 18 to say, is just to answer Mr. Weber's comments. And I 19 think somebody said earlier about NSR. I feel like maybe 20 too much is being made of how significant that will be, 21 because largely that is sort of a paperwork issue with all 22 these new permits coming on line. But in addition to 23 that, the way the rule is currently written, those new 24 thresholds that are going to suddenly take in so many more
25 sources won't ever come into effect unless and until EPA

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

141 1 approves a plan. And we know that the last plan still 2 haven't been approved. So we're not sure we'll see that
3 ever. 4 But moving on to my even more wonky testimony, is 5 that I'm concerned and I think a lot of people are 6 concerned that this plan continues to rely unnecessarily
7 on the black box in what amounts to an about-face for this 8 Board. While the black box does provide flexibility to 9 areas that can't identify what technology will get them to 10 attainment in the future, it doesn't provide a broad 11 excuse for putting off the adoption of available near-term 12 controls just because they're difficult or unpopular. 13 The California air Resources Board has always 14 been the leader when it comes to finding or creating
Page 130CARB Board mtg transcript 11-15-07

15 solutions to our pollution problems. Yet with the 16 adoption of this plan you will be abandoning that legacy. 17 Your decision on this plan is about promoting the 18 best policy for forcing technological solutions and 19 creating a market that will ensure development and 20 availability of those technologies. CARB has in the past 21 taken the lead in setting stringent standards with hard 22 and fast deadlines in order to push innovation and create 23 the right market signals for development. 24 The black box portion of this plan sends the 25 exact opposite message. It says, "No one needs to do

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

142 1 anything right now. We'll wait and see what happens
2 first." 3 In this disappointing change of course, this 4 usually bold agency seems now to be hiding behind the 5 black box provision in order to avoid commitments to
6 future achievement. 7 We heard earlier that the technology does exist 8 to get us there. These innovations need this Board's help 9 in order to encourage their widespread use and 10 availability. The barrier to early attainment in the San 11 Joaquin Valley is not a lack of feasible technological
12 controls but a lack of that former boldness we have come 13 to rely on from CARB. 14 We do not except the only way to achieve clean 15 air in the Valley is to pin our hopes on unenforceable 16 black-box promises that one day a solution may emerge. We 17 do not accept the Agency's legally untenable plan to put 18 these available technological solutions in this black box Page 131CARB Board mtg transcript 11-15-07

19 based on claims that development is needed to reduce the 20 cost of that technology. 21 Valley residents have worked tirelessly to help 22 the Board and the local air district to find a way to get 23 to clean air before 2024. They need this Board to do its 24 part and force technological development rather than rely 25 on the passive black box strategy used in this plan.

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

143 1 Please use your authority to amend the SIP to
2 eliminate that black box.
3 Thanks. 4 CHAIRPERSON NICHOLS: Thank you. 5 Now for Manuel Cunya and then Paul Martin. 6 MR. CUNYA: Thank you very much. 7 I was coming up here this morning and I kept 8 hearing rain. So when I was getting here, I was going to 9 have us all take a moment of silence and pray for the rain 10 to go south. But apparently you don't have the rain here 11 either, so we can't take a moment of silence to ship it to 12 the San Joaquin Valley. 13 But, again, thank you very much for allowing me 14 to be here today. 15 First is I'd like to acknowledge this Board along 16 with the San Joaquin Valley Board in their wisdom of 17 looking ahead by forming two fast track task force. The 18 San Joaquin Valley did its fast track task force back in 19 May, adopting its plan. And then ARB in its June, with 20 DeDe and with Judy Case as the Board members, along with 21 Lynn Terry, Kurt, and many other staff have diligently
Page 132CARB Board mtg transcript 11-15-07

22 worked very, very hard and many countless hours, and have 23 taken some -- I think in some cases some pretty verbal 24 abuses in some of the meetings. That is not I think 25 appropriate in any type of meeting. We can disagree, but

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

144 1 in some places it was pretty bad. 2 I would hope that the Board today moves forward 3 with the staff's recommendation. Our plan is like any 4 other plan. It will continually be changed throughout the 5 life of that plan with the life of the San Joaquin Valley, 6 just like any other air district. As EPA comes out with a 7 new health-based standard, that plan's going to change. 8 We do a 2.5 this coming year. That's going to change. 9 So the plan continually changes as San Joaquin 10 Valley Air Board works very hard and diligently with your 11 staff. Your staff reviews every rule that we do and has 12 input. And sometimes we really don't -- we disagree 13 tremendously, but at the end we have to move forward, and 14 that's what we're doing. 15 But I want to make a comment. Agriculture is 16 doing everything it can to clean up the air and be 17 responsible to our families, to our communities, to our 18 farm workers, for the consumers. We have the most safest 19 food in the world here in the San Joaquin Valley. We got 20 to make sure that we do not destroy businesses of any 21 type, including the transportation side, the stores, the 22 small family businesses in the rural communities, et 23 cetera; but continually working together and in trying to 24 achieve those, that's going to be the important part. 25 Technology in my industry called agriculture is Page 133CARB Board mtg transcript 11-15-07

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

145 1 not like a truck. Farm tractors you just don't go put an 2 SCR device on a tractor. There are many other things that 3 farm tractors are not designed like cars or trucks at all. 4 And farm tractors last a long time. I have a 90-year-old 5 farmer, Japanese American, out of Kingsburg, California, 6 with his wife -- 90 years old -- appeared in the Fresno 7 Bee back in August, also appeared in the Chicago and New 8 York Times still farming and driving his own tractor. 9 It's a 135 Fergy, a 1968 tractor. That tractor, I saw it, 10 it looks cleaner than most of probably your cars today 11 that people take care of, or their garages -- what 12 people's garages looks like. But he still farms with that 13 tractor, and it's 20 acres, him and his wife. He does 14 most of all the work except for harvest. 15 So when we get to that stage of the line, we need 16 to make sure we work with you, and we will work with you, 17 to deal with farm machinery that makes sense for this 18 Valley, for California agriculture, as well as for the 19 transportation side. 20 But, again, I want to thank you. The funding is
21 crucial across the entire sector for all businesses. We 22 have to work hard. And I'm hoping that we can work with 23 Senator Perata moving forward in 2008 to develop a 24 statewide DMV fee increase for all air districts to help 25 fund equipment of all types. And I believe Mr. Perata

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

146
Page 134CARB Board mtg transcript 11-15-07

1 will look forward in introducing that bill, I would hope, 2 in the coming months to deal with a statewide DMV fee to 3 deal with more trucks, in our vehicles, or whatever they 4 are. But we do need that other step of funding. Right 5 now I think in the San Joaquin Valley we're at $7 for DMV 6 fees. But we need to raise that tremendously across the 7 board for all people to participate. 8 Again, thank you very much, Madam Chair, the 9 Board and the staff. But, Lynn, thank you very much for 10 putting up with some of us at the meetings and for some of 11 us having to bite our fingernails. And we appreciate all 12 the work that you and the staff have done to deal with 13 this for six months. And we look forward to this going 14 forward and moving on to more important issues as well, as 15 this is very important. But we need to keep moving 16 forward and not keep fighting backwards. 17 Thank you very much. 18 CHAIRPERSON NICHOLS: Thank you. 19 Paul Martin, and then we'll hear from Seyed
20 Sadredin. 21 MR. MARTIN: Madam Chairman, members of the 22 Board. I'm Paul Martin, Director of Environmental 23 Services for Western United Dairymen. We're headquartered
24 in Modesto. 25 And I want to thank the Board for the opportunity

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

147 1 to participate in this task force process. It was a very 2 educational process for me and I think we covered a lot of 3 ground. 4 I did attend every one of the community meetings Page 135CARB Board mtg transcript 11-15-07

5 that was held. And I want to relate to you that Ms. 6 D'Adamo and Ms. Case should be strongly commended for the 7 job that they did in conducting those task force meetings. 8 Everyone was not only allowed to talk, but sincerely 9 encouraged to talk. And those that had a little bit of 10 apprehension about appearing before a microphone were 11 contacted by staff and by Board members so that they could 12 have a personal conversation. So you folks did a superb 13 job and it's appreciated by everyone. 14 I also want to mention that this really was a 15 significant and detailed process. And staff did an 16 outstanding job of listening to the ideas that were 17 presented and thoroughly researching them and evaluating 18 them and including them in the staff report where that was
19 indicated. And this work resulted in a substantial
20 reduction in the -- substantial accelerated reductions 21 that we need to reach attainment earlier in this process. 22 As we move forward from this point, I don't see 23 either ARB or the District throwing in the towel or waving 24 a white flag of surrender. I'm confident in my own mind 25 that work will continue using the existing authorities and

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

148 1 processes both of the Air Resources Board and the San 2 Joaquin Valley Air District. 3 So I suggest that the SIP be forwarded and that 4 we get on with the job. 5 Thanks very much. 6 CHAIRPERSON NICHOLS: Thank you. 7 Okay. The last word -- well, not really the last
Page 136CARB Board mtg transcript 11-15-07

8 word -- last speaker. 9 MR. SADREDIN: Thank you, Madam Chairman, members
10 of the Board. 11 First of all, I'd like to express our gratitude
12 to Board Members Case and D'Adamo for their hard work and 13 leadership on the task force and the great work that they
14 did for us. 15 We really in the Valley appreciate the 16 unprecedented level of attention that your Board is paying 17 to the district. And we're hoping that this is not the
18 end of it. We want this to continue. We welcome it. We 19 want you to be involved. We like you to participate in
20 our task force. 21 And your Board soon will be making a lot of 22 important decisions that will have major impacts on our 23 cleanup efforts. And we really want you to stay engaged 24 and really do what the Valley needs to do. 25 I'd be happy to answer any questions you have

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

149 1 regarding comments and questions that have been made. But 2 I want to limit my comments to future -- what's ahead of 3 us and how we can go about actually achieving accelerated 4 attainment in San Joaquin Valley. That is really what the 5 dual path is all about. You know, there is no white flag,
6 there is no surrender. 7 In the legal context, we have a plan that does 8 not have all the tools that are legally enforceable that 9 EPA would accept to show attainment sooner. But we are 10 committed to achieving attainment by 2017. I've promised 11 my friends in the environmental community that I will do Page 137CARB Board mtg transcript 11-15-07

12 everything possible to get it done, and I'm confident that
13 we can do it. But we need some time and we need to let a 14 lot of new initiatives to be really evolved into a 15 SIP-ready status. 16 And what I wanted to share with you is what our 17 hope and expectations are from your Board in the coming 18 months. And to set the stage for that I think it's 19 helpful to remind the Board of the very unique and 20 difficult challenges that the Valley faces that are 21 unprecedented and are unmatched by any other area in 22 California. And if I could, just give you a quick 23 comparison to keep in mind as we come before you in the 24 coming year with requests for funding, as your Board will 25 have total authority on disbursing those funds, it is

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

150 1 important to really take into account the Valley's unique
2 circumstances. 3 You heard your staff's report today. Excellent 4 job, by the way. And thank you, staff, for good work. It 5 shows basically that the San Joaquin Valley has one of the 6 strongest, if not the strongest, air quality management 7 programs in the state. Now, when you hear that, the 8 logical question would be, "Well, then why is it that the 9 Valley's air quality is so severe and we still have a lot 10 of work ahead of us?" The answer, as you know, lies in 11 the difficult geography, topography, and meteorology that 12 the Valley really has to deal with. We have a bowl with a 13 lid on top of it most of the time all year. And a lot 14 of -- a small amount of air pollution in the Valley can
Page 138CARB Board mtg transcript 11-15-07

15 cause a great deal of damage compared to other areas in 16 California. For instance, let me just give you a 17 comparison with Bay Area and Los Angeles. 18 If you look at pollution density, how much 19 pollution is released into the atmosphere per square 20 mile -- and that's really a standard or a parameter that 21 the air quality modelers use in, you know, deciding where 22 an area stands with respect to air quality needs and 23 progress. 24 I see my red light's coming up. I'll try to 25 speed it up.

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

151 1 CHAIRPERSON NICHOLS: Thank you. 2 MR. SADREDIN: If you look at pollution density 3 in Bay Area, it is six times higher than San Joaquin 4 Valley. The mobile sources and stationary sources in Bay 5 Area produce six times more pollution per square mile than 6 San Joaquin Valley does. But fortunately for them because 7 of the nice ocean breeze and the good mixing that they 8 have, their air is virtually clean when it comes to the
9 ozone standard. 10 If you on the other hand look at South Coast, 11 their pollution density is ten times higher than San 12 Joaquin Valley. But their air quality, as you know, is 13 only marginally worse than ours. You know, last year they 14 had 70-some days of exceeding the 8-hour standard. In the 15 Valley we had 63 or so. 16 So we want you to keep that in mind next year as 17 we come before you for the initial disbursal of the $250 18 million in Prop 1B funding and later on with the remainder Page 139CARB Board mtg transcript 11-15-07

19 of that $1 billion. Under AB 118 your Board has the 20 decision to make on disbursal for about $80 million a 21 year. You also have total control over the statewide 22 disbursal of the statewide Moyer funds. Without your 23 help, the SOON reductions that we talked about will not 24 happen in San Joaquin Valley. If your Board does not come 25 through with matching -- or efforts on the construction

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

152 1 piece, we will not get any reduction. 2 So we really want you to take that all into 3 account, knowing that no other region in the state faces 4 the level of difficulty that we face. And we hope and 5 expect from your Board to get our fair share when it comes
6 to those resources. 7 I'd be happy to answer any questions, or if you 8 have any advice or recommendations for me to definitely 9 follow up on. 10 CHAIRPERSON NICHOLS: I'd appreciate if you just 11 stand by in case we do. But I don't think at the moment 12 we have any questions. Thank you. 13 Did staff have any wrap-up remarks that you 14 wanted to make at this point or -- yes, you do. 15 DEPUTY EXECUTIVE OFFICER TERRY: Maybe just one 16 quick clarification, which has to do with the technology 17 issue. And I just wanted to be clear that our engineering 18 staff's review of the rules from the standpoint of the 19 cleanest technology available found that the district, 20 their rules recently adopted and their proposed rules will 21 apply to cleanest technology that meets technical
Page 140CARB Board mtg transcript 11-15-07

22 feasibility and cost effectiveness. And that was why we 23 did not find new quantifiable reductions and, hence, the 24 range of 0 to 2 as what might be found going forward over 25 time. But the technology standard has been met from the

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

153 1 standpoint of our engineering staff. 2 CHAIRPERSON NICHOLS: Thank you. 3 This is one of those times when I think it's very
4 fortunate that we have the mix of Board members that we 5 do, because we have a number of members who have 6 experience serving on district boards and bring some of 7 the experience and wisdom from their respective boards, as 8 well as those of us who are here because of some type of 9 technical background or area of expertise. And so I think 10 each of us probably brings a slightly different 11 perspective to the situation that we're in right now. 12 But I want to just take advantage of having the 13 Chair to make a couple of general remarks before we get 14 into a further discussion about where we're going from
15 here. 16 First of all, I have to say that I am really 17 heartened and delighted by the turnout and the amount of 18 pressure that we are getting from citizen groups of all 19 kinds in the Valley. It is such a change from what things 20 were like only a few years ago. And it represents I think 21 hope for the future that we will be able to get to where 22 we need to go. Because I believe the reality is that no 23 matter how competent the agencies, no matter how sincere 24 the leaders of the agencies are, it's only continued 25 public interest and pressure that actually guarantees the Page 141CARB Board mtg transcript 11-15-07

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

154 1 results in a democratic society. So I think it's 2 important to take note of that. 3 And to say that also from my perspective, you 4 know, if everything was perfect, I wouldn't have felt as 5 strongly as I did about the Governor's decision to support 6 the bill that passed this year to expand the Board of the 7 San Joaquin Valley District. Because I think it's clear 8 that in response to the kind of concerns that have been 9 shown and the reality of the overwhelming problem, having 10 a Board that has a broader representation from the health 11 community and from people who live in urban areas is an 12 important improvement. 13 And so part of my thinking about where we are 14 today is based on the fact that we do have that change in 15 the works and that that's something that we need to honor 16 and give some credence to and give some support to. 17 Secondly, I think it's important to remember -- 18 and, again, I wasn't here when the original discussion 19 about the SIP was held, though I did have a chance to 20 review the transcript of that as well -- that in the Clean 21 Air Act world, which has somewhat arbitrary 22 categorizations and deadlines in it that don't necessarily 23 reflect the reality of what it takes to actually achieve 24 clean air, you know, what actually happened was that the 25 Board made a decision to say that the air quality in the

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

155
Page 142CARB Board mtg transcript 11-15-07

1 San Joaquin Valley is extreme as opposed to severe. And 2 in terms of the level of pollution that they face and the 3 difficulty of the task, I don't think it's -- you really 4 can't argue very well with that finding. 5 The problem of course is that going along with 6 that change in categorization comes an extension of time 7 to meet the standards. And if that meant, you know, an 8 extension of effort or a, you know, dwindling out of the 9 effort, that would indeed be a big problem. But as I 10 understand it -- and others can speak more to what this 11 actually meant in the context of San Joaquin Valley -- 12 there are a number of rules that have more stringent 13 requirements in them and, you know, tighter triggers and 14 so forth as a result of this extension taking place than 15 would happen if we were to somehow go back and undue that.
16 So to me it's a little bit like the decision that we were 17 looking at earlier around the harbor craft where something 18 that looks like it's going to get you benefits in the 19 short run may actually turn out not to get you the 20 benefits that you need overall to get to goal. 21 I guess the other thing that I'd like to say just 22 in general, because there was a lot of comment about this, 23 you know, the Board's role in all of this, you know, our 24 isn't to either micromanage or to just give pats on the 25 back to air districts. We do have a separate and distinct

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

156 1 role. It's a unique kind of a partnership. There's 2 always going to be some level of tension involved in it 3 because, as you could hear in the dynamic today, everybody 4 wants us to do -- to be as aggressive as we can, you know, Page 143CARB Board mtg transcript 11-15-07

5 in the areas that the Air Resources Board has direct 6 control over. And sometimes -- you know, from the 7 industry's perspective it's easier to point fingers at the
8 mobile sources and vice versa. And the truth is of course 9 we'd need to get all of them cleaned up as far and as fast
10 as we can. 11 I think the ARB's history and tradition has been 12 one of trying to use its authority and its ability to push 13 technologies and to set high standards in ways that also
14 were realistic and reflected a consideration of economics 15 and not only of health. And I guess the classic example 16 actually came from my old friend Bob Sawyer back when we
17 both served on the Air Resources Board in the late '70s 18 when he pointed out that if we were only considering 19 public health and not looking at practicality, we would 20 have just banned the internal combustion engine right then 21 and just gotten on with it, you know. And from a 22 technical perspective that, you know, was feasible 23 actually even then. I mean there were ways you could have 24 gotten around it. But in reality we would have had a very 25 different state than we do today.

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

157 1 So I do think that there's always going to be 2 some weighing that the Board has to do of what actually 3 can be achieved with technology on what kind of a time
4 frame. 5 Having said all of that, however, I have felt all 6 along that many of the measures that were being proposed 7 by citizen groups to push technology further and faster
Page 144CARB Board mtg transcript 11-15-07

8 even than it's being pushed today were not unreasonable 9 requests for them to be making, that the idea of looking 10 at innovative kinds of technologies and new kinds of 11 controls that are more stringent even than have been 12 considered in the South Coast is not an unreasonable thing 13 to ask of this area, given the amount of growth and given 14 the severity of the air problem. 15 So I guess, you know, where I come down on all of 16 this is that I don't want to see us just washing our hands 17 of this situation; at the same time, I also don't really 18 see that, you know, a perpetual life in which ARB is 19 running a separate discussion group is really going to be 20 the way to get to where we need to go.
21 So I know that Board members D'Adamo and Case 22 have some thoughts about, you know, the process here and 23 what to do next. But, you know, I just want to say that 24 in terms of maybe setting some context for all of this 25 that, you know, I'm not satisfied with where we are today,

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

158 1 I'm not willing to say this is the best we can do. I'm 2 looking for a way in which we can send the message that we 3 are going to continue to push for the strongest possible 4 regulations and to review that; and where it is necessary 5 and useful, if we have to, you know, to take a stronger 6 hand. But at the same time I see progress that is being 7 made and a lot of hope there as well, and I don't want to 8 do anything to get in the way of it. 9 So I'm going to turn to the Board member who 10 chaired this committee and ask you if you'd like to 11 perhaps give us some wisdom and guidance at this point. Page 145CARB Board mtg transcript 11-15-07

12 BOARD MEMBER D'ADAMO: Well, thank you. And I 13 really appreciate your comments. I think that you really 14 described sort of the challenge ahead. And from my 15 perspective, we're sort of walking a fine line here. On 16 the one hand we made I think tremendous progress. And 17 in -- I don't want to just take the credit here with ARB. 18 Everyone came together and coalesced in these task force 19 meetings, and we were able to really roll up our sleeves 20 and get to work. So that sort of begs the question, why 21 not continue those conversations? Why not continue it for 22 another six months and may be we'd be able to close the 23 gap? 24 What I'd like to do is have staff pull up slide 25 14 from its presentation to just kind of put this in

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

159 1 context with the comments that I'll be making here. 2 The question is, how big is 49 tons per day? And 3 that's the gap that we're talking about. I would be more 4 than willing to step up the involvement of -- you know, 5 keep the task force going and meet not just five more 6 times but ten more times if I saw that there was a way 7 that we could close this gap. But if you look at the 8 comparison to other rules, 49 tons per day, that would be 9 almost like somehow finding another strengthened truck 10 measure. That's the amount that we're talking about here. 11 And I think Pete Weber's analogy of the last ten 12 percent way at the top of the tree is a good one. The 13 reason that we're relying on future technologies is 14 because we really and truly do need them. The reason that
Page 146CARB Board mtg transcript 11-15-07

15 we're relying on incentive dollars is because we 16 absolutely need to rely on them. But we don't get credit 17 for them in this process. 18 So it's an unfortunate situation. But I really 19 think that to be fair and honest about the situation, we 20 need to make the assessment that we cannot close this gap 21 if we give it another couple more months. So I think that 22 the most responsible thing to do is to say that the 23 legally enforceable plan is the one that we have, to
24 advance it. 25 But I agree with you, Madam Chair, that we need

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

160 1 to somehow keep the pressure on. And I think that the 2 best way for us to keep the pressure on is to participate 3 in the local, district task force meetings, at some point 4 to pull together again our task force, not with the idea 5 of micromanaging the district, but just as another 6 pressure point, another milestone in the process. And 7 then to bring this -- bring an update back to the Board in 8 a year or maybe twice a year, whatever -- I would defer to 9 staff on that issue. In other words, again, not to 10 micromanage but to keep the pressure on. And hopefully 11 we'll be able to find, as Nidia from the Coalition for 12 Clean Air indicated, more, you know, pennies -- pennies, 13 dimes, and quarters along the way. 14 I do think it's important also to note that 15 Senator Machado fought long and hard for the bill to add 16 additional representation to the local air district 17 governing board. And I think we need to respect that 18 process. I supported that bill as well. The Governor Page 147CARB Board mtg transcript 11-15-07

19 signed it. And I think we need to allow that process to
20 continue and to allow those new board members an 21 opportunity to engage and -- I'm hoping that maybe some of
22 them or even the current board members would like to 23 participate in a more involved way with the local district 24 task force. So, again, I think we need to respect that, 25 the role of the new board, and work together, as you say,

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

161 1 in a partnership. And that that hopefully will move us
2 forward and this won't be the last word. 3 CHAIRPERSON NICHOLS: Thank you. 4 Supervisor Hill. 5 SUPERVISOR HILL: Thank you, Madam Chair. 6 And I also want to offer my thanks to Judy and 7 Dede for the extraordinary work and the time commitment, 8 as well as staff's, in that. 9 You know, I'm looking at some of the information 10 that the community provided as suggestions to CARB Air 11 Quality Task Force for next steps. And in there are those 12 ISSRC recommendations. And I know in the presentation we 13 were looking at -- this is just to kind of clarify it in 14 my own mind -- and I guess for clarity, that we're looking 15 at -- you know, they've suggested a potential of 40 to 46 16 tons of reductions from these potential additional SIP 17 control measures. And the staff presentation talked about
18 zero to two tons is what the estimate would be. 19 Was that based on using -- I guess on Slide 11 20 when we were talking about the control technologies and 21 the quantification of additional incremental benefits --
Page 148CARB Board mtg transcript 11-15-07

22 those questions that I know the Chair asked as well: Can 23 it be installed, are the operating conditions the right 24 ones, and will it interfere with existing controls? -- was 25 that analysis done on these to determine that, or is it --

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

162 1 I guess there is no "is it". How did we -- is this part
2 of --
3 DEPUTY EXECUTIVE OFFICER TERRY: I can kick this 4 off, and then our Stationary Source staff are here as
5 well. 6 And Kurt walked through the list from the ISSRC 7 report and, as you recall -- most of those things are 8 underway in some form or fashion, although they're not 9 quantifiable. 10 SUPERVISOR HILL: Well, we did -- that was back 11 in June too, I know we went through a lot of --
12 DEPUTY EXECUTIVE OFFICER TERRY: Yeah. And so 13 what remained really, I think the big question is: Are 14 there technologies like SCR that can be more widely 15 applied? And I'll ask Bob Fletcher to respond to that 16 more directly.
17 But those are the decisions that are made in the 18 development of SIP measures and rules. And so sector by 19 sector there's an assessment, like our staff do for mobile 20 source measures: What is the technology that's most 21 aggressive, that's technically feasible, and cost
22 effectiveness? And that becomes the basis for the rule 23 proposal -- or the SIP measure. And that was the analysis 24 that our staff did to say -- take a second set of eyes to 25 say, "Are those SIP measures and rules meeting that Page 149CARB Board mtg transcript 11-15-07

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

163 1 highest level of technically feasible and cost effective 2 technology?" The answer is "yes' today. 3 But our commitment is to work through the new 4 technology forum, through our SIP. As the SIP measures 5 come through rulemaking at district level, ARB staff are 6 committed to following that closely to make sure that if 7 there's new information, something changes, that we'll be 8 out there making those comments that indeed there is a new 9 technology that's now available. 10 So there's an ongoing mechanism. And we also are 11 recommending that we report back to the Board at least 12 annually on the Valley's air quality status, the SIP 13 implementation, which includes both the district's piece 14 and our piece as well. 15 Now, this slide here talks about -- if you apply 16 these rules across the Board and then you went back and 17 said at a particular source, "Could there have been an 18 additional level of control for a particular source," that
19 would be an assessment that would have to be done after a 20 rule is implemented and you'd look at it and say, "Could 21 you put another technology, layer it on top," which was 22 what was implied in the ISSRC report. 23 CHAIRPERSON NICHOLS: But I think the point here 24 is that -- and, again, this is kind of this fine line 25 issue here -- is that, you know, there's a difference

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

164
Page 150CARB Board mtg transcript 11-15-07

1 between saying the District hasn't done its job because 2 they didn't require these things and therefore, in effect, 3 we should assume their powers and take over for them 4 versus saying, "There's more that could be done here or at 5 least we think there's more that could be done here, and 6 you ought to keep looking for it." And that's kind of 7 where I'm trying to make sure that we go. 8 SUPERVISOR HILL: And we get to the same point -- 9 yeah, because we get to the same point at doing that. 10 That's absolutely right. And I think that that's probably 11 the way that we should. 12 If we were to -- I guess at first when I came in 13 today I was kind of excited about continuing the task 14 force, seeing that there's some effort there that could be 15 put forth over the next six months or so, because 16 obviously the timing of the release of the report and that 17 the analysis could go forward on these and other things 18 and we could work with the District to try and include
19 that. 20 But I think, you know, after hearing the comments
21 that with the asserted effort of the District and with the 22 report back to the Board on a regular basis, you know, 23 every six months I think would be fine, because it -- you 24 know, the sad part is when I first started recognizing the 25 issues and the problems, there was a credibility problem.

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

165 1 And it was a credibility between the community and a
2 confidence in what the District can do and their 3 abilities. And I think that we've worked through that and 4 I think the District has worked through that, and the Page 151CARB Board mtg transcript 11-15-07

5 future should be able to indicate some very positive 6 results in that way. 7 So I think that moving forward this way is 8 probably the best way to get to that end result that we're 9 all looking for.
10 CHAIRPERSON NICHOLS: Thanks.
11 Other comments here? 12 BOARD MEMBER CASE: Madam Chair, again I think 13 the process that was followed was very valuable. And 14 having everybody sit around a table instead of a dais 15 upfront and seating down below and a sense that we're not 16 all in a discussion but in a one-way conversation, I think 17 that was really beneficial. I think a number of
18 additional items were found. 19 One thing I don't think we've talked a lot about 20 from the Board members is having the San Joaquin Valley
21 revisit the cost effectiveness threshold at the San 22 Joaquin Valley, and I would certainly support that. And I 23 believe that the air pollution control officer is planning 24 to put that on an agenda. 25 We also had the SOON program for construction,

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

166 1 looking for ways to accelerate the reduction in emissions 2 from construction equipment. 3 I think there's huge challenges, because in all 4 of this time we also are experiencing one of the fastest 5 growth areas as much as for any other reasons we have more 6 space. And that's not a good trend in terms of trying to 7 contain some of these others. I'd certainly lend my voice
Page 152CARB Board mtg transcript 11-15-07

8 to efforts to get C-MAC dollars to be more focused on some 9 public transportation issues, because I don't think that's 10 been done as well. But that's really not under the 11 authority of the Air Pollution Control District other than 12 in I believe an advocacy role, which I certainly would 13 like to pursue. 14 The District also, speaking as a San Joaquin 15 Valley District member, recognizes that there are several 16 areas that will not reach attainment as quickly as some 17 other areas. As our staff here at the ARB shared, 90 18 percent will be in attainment by 2018, but we also have a 19 couple of areas that aren't quite getting there based on 20 everything we can find. And I think we need to target 21 some of our mitigation specifically to those areas to try 22 and help them along first because they have the biggest 23 challenge. 24 And in everything I hear, we still need 25 mitigation dollars to help move us to that stage. We

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

167 1 heard from business and we put a personal story on the 2 cost of our new regulations, what it's going to do to some 3 companies. And we all need some help getting to that 4 point where we can insist our whole economic base to move 5 in a particular direction. I think part of that's 6 regulation, part of that is assisting to get to that point
7 also.
8 So I believe there is an element on time
9 constraints. We saw on Slide No. 18 and 19 dealt with the 10 conformity issue and how that window has been narrowed and 11 narrowed and narrowed, and it's getting to a point where Page 153CARB Board mtg transcript 11-15-07

12 it will become severe. 13 But I think we're still in a process. What I 14 would like to see, particularly since there's some 15 overlaps between what was the ARB task force and what was 16 the fast track task force, is to ask that we have an ARB 17 representative serve on the fast track task force that's 18 through the San Joaquin Valley. I think it's been really 19 beneficial having ARB engaged with the San Joaquin Valley 20 putting all those thoughts together in one location. And 21 I've been a member of the San Joaquin Board for a long 22 time, and I don't think it's just because I'm currently 23 sitting on this Board also, but in my past participation I 24 didn't see ARB staff with the exception of having Robbie 25 give a short update on what was happening. And I think

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

168 1 this additional oversight and working together is very
2 beneficial.
3 So I would like to see a member of ARB staff 4 participating with the fast track as a way to keep it on 5 track, and all the technological wizards to be there at 6 the same table, because I believe there's a lot of synergy
7 in that. 8 So, you know, as we move forward, I think there 9 are a couple of things that were asked of us; I'm in total 10 agreement with that: To speed certification of technology 11 and look for any way to do that; to assist with acquiring 12 incentives, because that's part of helping our businesses 13 get there; to have an ARB staff member at the fast track 14 task force meetings.
Page 154CARB Board mtg transcript 11-15-07

15 And instead of an annual update, I'd really like 16 to see a report come back more in the time frame of March 17 or April, so that we continue to really focus. I agree 18 with those in the environmental community keeping up the 19 pressure. And I think if we extend that line any longer 20 than that, the sense is we're walking away from it. We're 21 not walking away from it. It's still going to continue to 22 be a very high level issue for all of us until we make 23 attainment. And even if we have all the rules in place 24 moving towards that, I think until we're actually there 25 and the monitors show it, we need to all keep our eye on

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

169
1 the ball and move forward with that.
2 CHAIRPERSON NICHOLS: Other Board members want to
3 comment? 4 Anybody else? No? 5 All right. 6 BOARD MEMBER KENNARD: Thank you very much. 7 I was the dissenting vote in June, and I believed 8 then and I still agree that enough is not being done. But 9 if you look at this in perspective of generations of 10 neglect relative to air quality in the San Joaquin Valley, 11 I think that we certainly have a better foundation today 12 than we had in June. And I think DeDe and Judy for -- and 13 CARB staff certainly for, you know, hours of commitment to 14 this issue in the local community. 15 I think it demonstrates clearly that we are not 16 throwing in the towel, that there's a lot of work to be 17 done. I was heartened by comments of District staff that 18 they are committed to doing more. And I'm really Page 155CARB Board mtg transcript 11-15-07

19 comfortable that the new membership on the district level 20 will really push this. 21 But I do agree with other comments made by Board 22 members that the community in San Joaquin Valley needs to 23 keep the pressure on us and the District to go forward. 24 And I would hope that when the next report comes in, that 25 we actually do meet in the Valley so that it gives people

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

170 1 a better opportunity to be heard. 2 CHAIRPERSON NICHOLS: Thank you for that. 3 I don't want to just leave this in the form of a 4 discussion, because I think a number of specific 5 suggestions and recommendations have been made. And 6 although we don't have a formal resolution in front of us 7 and this wasn't agendized, you know, there's not an action 8 to be taken, but I do think it would be appropriate for us 9 to communicate in a formal way the nature of the 10 discussion that we've had here and not just rely on 11 people's anecdotal impressions of what they heard. And I 12 have a couple of things that I'd like to kind of outline 13 here -- and other Board members may wish to throw 14 something in -- but just to kind of sum of some of these 15 point. 16 First of all, I was struck by how many people 17 indicated that even though it might not be a legally 18 binding deadline, that they still wanted to strive towards 19 the goal of attainment by 2017. And I think we should 20 encourage them to do that, and add our weight to that; 21 that we should continue, even with a black box and some
Page 156CARB Board mtg transcript 11-15-07

22 technology breakthroughs that we don't know yet, to say 23 that 2017 is still our idea of an appropriate goal to be 24 reaching for even though we aren't sure that we know how 25 to get there.

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

171 1 Secondly, I think we should specifically endorse 2 and request that the Board consider the cost-effectiveness 3 threshold and the SOON requirement. Even though we know 4 they're doing it or they have indicated that they're doing 5 it, I don't see why it's inappropriate for us to support 6 that, and to take another look then at other kinds of 7 breakthrough technologies that might be out there. 8 I'd also like to mention that with respect to 9 land use and transportation funding, that -- well, let's 10 start with the land use first -- that, you know, in 11 addition to sending as many additional copies of the ARB 12 land-use guide book as anybody might like to have, that we 13 should urge the cities and the counties of the San Joaquin 14 Valley to go beyond where others have gone to 15 incorporating air quality considerations into their 16 planning decisions. And with respect to transportation 17 dollars, really to put everybody's money where our mouths 18 are. And not fund projects that are just okay or 19 mitigated, but actually insist on projects that have a net 20 air quality improvement to them. This isn't something 21 where we have any binding authority. But we're going to 22 be in the midst of this struggle with our colleagues at 23 the districts and we might as well, you know, send up a 24 flag now on that. 25 And then in terms of ARB committing to serve on Page 157CARB Board mtg transcript 11-15-07

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

172 1 the local district task force, assuming we're invited, I 2 think we definitely should do that formally; and then to 3 have a report back in a six-month time frame on how we're 4 doing, and to have that meeting somewhere in the Valley, 5 which I think we were planning to do at some point anyway. 6 BOARD MEMBER RIORDAN: Madam Chair, I just would 7 like to build on something though that Supervisor Case 8 mentioned, and maybe you could add to that list. And that 9 would be to encourage mitigation moneys to flow first to 10 those areas that are going to have the most difficulty 11 reaching air quality standards. And I think that -- 12 CHAIRPERSON NICHOLS: That's a very interesting 13 point. 14 BOARD MEMBER RIORDAN: -- that's a very fair 15 response. And I like that idea.
16 CHAIRPERSON NICHOLS: Let's add that to the list. 17 I see heads nodding in general. If nobody has 18 objections, if we could incorporate those into a 19 communication that we would send on behalf of the Board, I 20 would feel that we had done our duty as of today.
21 BOARD MEMBER CASE: Just two additional items.
22 One is that the ARB Board and staff continue to 23 advocate for additional mitigation monies. We heard how 24 oversubscribed the Carl Moyer program is. We really need 25 to be advocating for expanding that program for the many

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

173
Page 158CARB Board mtg transcript 11-15-07

1 needs that are out there. And maybe looking to staff in 2 terms of reporting back to us in participation with the 3 San Joaquin fast track timing of that. I wouldn't want to 4 wait a year. My consideration --
5 CHAIRPERSON NICHOLS: Six months was -- 6 BOARD MEMBER CASE: -- would be March or April 7 what would be appropriate in terms of getting back. 8 Certainly I wouldn't want to go beyond six months, and 9 maybe sooner's better. But I'm looking to you. You have 10 a lot of work on your plates.
11 DEPUTY EXECUTIVE OFFICER TERRY: That time frame 12 is fine with us, of course just whatever in terms of 13 scheduling Board meetings and locations. We would -- our 14 best guess is we will be in the Valley in June for the 15 PM2.5 SIP, or thereabouts. Now, if that schedule were to 16 accelerate, we might be able to combine them. Another 17 consideration. We should know in maybe a month or so. 18 CHAIRPERSON NICHOLS: Okay. Good. 19 Any further comments? 20 All right. If not, thank you for all of this 21 input. And we will be spending a lot more time and energy 22 on the San Joaquin Valley in months to come -- months and 23 years to come.
24 MS. DANIELA SIMUNOVIC: And I would like to take 25 this time just to hand out our jellyfish certificates to

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

174 1 our recipients, to our representatives on the Board from 2 the Valley, to Ms. D'Adamo and to Ms. Case for failing to 3 come to represent the people that you represent here at 4 this table today with your decision and with your Page 159CARB Board mtg transcript 11-15-07

5 comments. And I'll leave these with the clerk. 6 And also to staff Lynn Terry and Kurt for, as it 7 says here, "having no spine in ratifying the San Joaquin 8 Valley Air Pollution Control District's 2007 Ozone Plan. 9 You could have done so much more to protect the health of 10 the Valley citizens. We trusted you to do your job and 11 you failed." 12 So we'll leave these with you -- with the clerk 13 of the Board so you can take these home with you. 14 CHAIRPERSON NICHOLS: We could not disagree with 15 you more strongly. And I'm sorry that you really failed 16 to understand what was being said here today. But we will 17 continue the conversation. Thank you.
18 And we'll move on. 19 Okay. We now have another item where we do 20 actually have to take some action, which is the 21 Transportation Conformity Budgets for the South Coast Air 22 Basin. So we'll have a slight switch of personnel. 23 And let's give ourselves a five-minute break.
24 Thanks. 25 (Thereupon a recess was taken.)

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

175 1 CHAIRPERSON NICHOLS: Conformity is next up. 2 This is a modified emissions budget to be used 3 for transportation conformity in the South Coast Air Basin 4 and the Coachella Valley. South Coast District has asked 5 us to approve this. And it follows up on our approval of 6 the AQMP as well as the state strategy for the 2007 SIP. 7 I don't know that we need much of a presentation
Page 160CARB Board mtg transcript 11-15-07

8 on this item. Do we have witnesses who've signed up to 9 speak on this? 10 No. Then we should just do it, I think. 11 DEPUTY EXECUTIVE OFFICER TERRY: That's right. 12 The only thing that we're required to do is have a public 13 hearing. We don't need a staff presentation. 14 CHAIRPERSON NICHOLS: All right. I declare the 15 record open and closed at this time. I think we know the 16 issue, because we dealt with it in the context of the
17 measures. 18 BOARD MEMBER RIORDAN: Well, Madam Chairman, I'd 19 move the attached resolution for approval.
20 BOARD MEMBER ROBERTS: I'll second. 21 CHAIRPERSON NICHOLS: Very good. 22 All in favor say aye. 23 (Ayes.)
24 CHAIRPERSON NICHOLS: Well done. 25 Moving along. We have a state plan to increase

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

176 1 the use of alternative transportation fuels in California.
2 This one will take a little more time. This is a 3 joint report that we worked on under legislation that was 4 passed by Assemblywoman Pavley, AB 1007. 5 The plan was prepared by the California Energy 6 Commission staff. And I know it's been reviewed by their
7 Commission. And our staff have also been in consultation 8 with them, along with other agencies, industry, and many
9 other stakeholders.
10 And I will now ask Mr. Goldstene to introduce
11 this item. Page 161CARB Board mtg transcript 11-15-07

12 EXECUTIVE OFFICER GOLDSTENE: Thank you, Chairman
13 Nichols. 14 Assembly Bill 1007 directed the California Energy
15 Commission to work with the Air Resources Board and others 16 to develop a plan to increase the use of alternative 17 transportation fuels. AB 1007 specified the criteria the 18 staff must consider in developing the plan, including 19 environmental impacts based on a full fuel cycle 20 assessment, petroleum displaced, costs, and other impacts 21 or benefits to the state. The plan before you today was 22 developed consistent with the criteria specified in AB
23 1007. 24 After AB 1007 was passed, the Governor issued an 25 Executive Order requiring the Air Resources Board to

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

177
1 establish a low carbon fuel standard. The Executive Order 2 directed the California Energy Commission to include a 3 draft compliance schedule for the low carbon fuel standard
4 in the Alternative Fuels Plan. 5 As staff will discuss in their presentation, the 6 plan before you is consistent with the goals of 1007 and 7 the Governor's Executive Order. The plan sets goals to
8 increase the use of alternatives fuels in California and 9 it identifies specific actions that should be taken to 10 achieve these goals. 11 The California Energy Commission approved the 12 plan on October 31st. In today's meeting the staff is 13 asking that you also approve the plan. As staff will 14 discuss, we have several modifications that we are
Page 162CARB Board mtg transcript 11-15-07

15 proposing. We have discussed these modifications with the 16 Energy Commission staff and they support their inclusion 17 in the plan. In anticipation of the Board's action today, 18 the Energy Commission staff has indicated that they will 19 schedule the modifications to the plan that you approve 20 today for consideration at their next business meeting. 21 At this time, I'd like to acknowledge that Mr. 22 Tim Olson, Manager of the Emerging Fuels and Technology 23 Office of the Energy Commission, is seated with the staff. 24 Mr. Olson is the project manager for the 1007 plan. 25 And I'll now introduce Narcy Gonzalez of our

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

178 1 Stationary Source Division to begin the staff 2 presentation. 3 CHAIRPERSON NICHOLS: Very good. Thank you. 4 So this is a CEC / ARB side-by-side presentation. 5 Okay. Thank you. 6 (Thereupon an overhead presentation was 7 Presented as follows.)
8 --o0o--
9 STATIONARY SOURCE DIVISION AIR POLLUTION 10 SPECIALIST GONZALEZ: Thank you, Mr. Goldstene. Good 11 afternoon, Chairman Nichols and members of the Board. 12 Today we'll provide a summary of the State Alternative 13 Fuels Plan developed in response to Assembly Bill 1007.
14 --o0o--
15 STATIONARY SOURCE DIVISION AIR POLLUTION 16 SPECIALIST GONZALEZ: Assembly Bill 1007, sponsored by 17 Assemblywoman Pavley, required the Energy Commission, in 18 partnership with ARB, to develop a plan to increase the Page 163CARB Board mtg transcript 11-15-07

19 use of alternative transportation fuels in California. 20 Since 2005, ARB staff has worked with the Energy 21 Commission to complete the Plan. The Energy Commission 22 formally approved the Plan on October 31st.
23 --o0o--
24 STATIONARY SOURCE DIVISION AIR POLLUTION 25 SPECIALIST GONZALEZ: In developing the Plan, the

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

179 1 legislation directed the CEC to meet three requirements: 2 First, establish alternative fuel use goals for 3 2012, 2017, and 2022. The fuel use goals are intended to 4 meet several criteria, including optimizing environmental 5 and health benefits, maximizing the economic benefits to 6 the state, and minimizing the costs. 7 Second, evaluate the environmental impacts of 8 alternative fuels on a full fuel cycle basis. A full fuel 9 cycle analysis involves the evaluation of the 10 environmental and energy impacts during each step in 11 production and use of alternative fuels, including 12 assessing the emissions of criteria air pollutants, air 13 toxics, and greenhouse gases. 14 And, third, recommend policies and strategies 15 such as standards, incentives, and research and 16 development programs to achieve the fuel use goals.
17 --o0o--
18 STATIONARY SOURCE DIVISION AIR POLLUTION
19 SPECIALIST GONZALEZ: This slide shows the alternative 20 fuels evaluated in the analysis. In the analysis, the CEC 21 evaluated the environmental and energy impacts of over 50
Page 164CARB Board mtg transcript 11-15-07

22 fuel and feedstock combinations.
23 --o0o--
24 STATIONARY SOURCE DIVISION AIR POLLUTION 25 SPECIALIST GONZALEZ: In developing the Plan, the CEC

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

180 1 staff followed the approach generally outlined on this 2 slide. For each fuel, a full fuel cycle assessment was 3 conducted to determine the emissions of greenhouse gases, 4 criteria pollutants and air toxic, among other impacts. 5 In addition, staff considered the potential for market 6 penetration, potential for petroleum reductions, costs, 7 the status of the technology, and the development and 8 investments required to put the technology into the 9 market. In developing these so-called story lines, the 10 agencies held numerous meetings with stakeholders to help
11 refine the information. 12 In using this information, the CEC then developed 13 three scenarios that represent plausible outcomes for the 14 moderate growth of alternative fuels. These scenarios 15 were not intended to represent all possible outcomes, but 16 were presented just to illustrate possible options. The 17 agencies acknowledge that these scenarios do not represent 18 the full scope of possibilities or represent a policy 19 preference for any fuel or technology. However, this 20 analysis was useful in identifying the actions needed to 21 support each fuel and to set the overall goals. 22 The agencies also considered other state goals in 23 developing the Plan. Finally, the agencies extended the 24 analysis to 2030 and 2050, in recognition of other goals, 25 including the goal to reduce greenhouse gas emissions by Page 165CARB Board mtg transcript 11-15-07

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

181 1 80 percent below 1990 levels, which will likely require a 2 much more aggressive approach than that required to 3 achieve the 2012 to 2022 alternative fuel use goals.
4 --o0o--
5 STATIONARY SOURCE DIVISION AIR POLLUTION 6 SPECIALIST GONZALEZ: As mentioned, the agencies 7 considered other state policies and directives to develop 8 the plan, and these included: 9 The petroleum reduction goals of AB 2076 for the 10 years 2020 and 2030; 11 The state's goals to attain and maintain state 12 and federal ambient air quality standards; 13 The greenhouse gas reduction goals of AB 32 and 14 Executive Order S-03-05; and 15 The in-state biofuel production and use goals of 16 the Bioenergy Action Plan developed pursuant to Executive
17 Order S-06-06.
18 --o0o--
19 STATIONARY SOURCE DIVISION AIR POLLUTION 20 SPECIALIST GONZALEZ: After AB 1007 was passed, the 21 Governor signed Executive Order S-01-07 in January of
22 2007. This Executive Order established a low carbon fuel 23 standard. The goal of the low carbon fuel standard is to 24 reduce the carbon intensity of transportation fuels by 10 25 percent by 2020.

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

182
Page 166CARB Board mtg transcript 11-15-07

1 The Executive Order directly referenced the 2 Alternative Fuels Plan in two ways: 3 1) By directing the CEC to include a draft 4 compliance schedule for the low carbon fuel standard into 5 the plan; and 6 2) By directing the ARB to consider initiating 7 regulatory proceedings after the low carbon fuel
8 standard -- on the low carbon fuel standard after the CEC 9 submits the plan to the ARB.
10 --o0o--
11 STATIONARY SOURCE DIVISION AIR POLLUTION 12 SPECIALIST GONZALEZ: In support of the Governor's 13 Executive Order, the University of California jointly 14 developed two reports examining the low carbon fuel 15 standard for California. At the time, the CEC was in the 16 process of completing its own full fuel cycle analysis 17 report for the Alternative Fuels Plan. To coordinate the 18 reports, the CEC accelerated its effort to complete the 19 full fuel cycle analysis so that the University of
20 California researchers could use these results in their 21 reports. In June of 2007, the Commission adopted the full 22 fuel cycle analysis. And this analysis was a key basis 23 for both the University of California reports and the
24 Alternative Fuels Plan.
25 --o0o--

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

183
1 STATIONARY SOURCE DIVISION AIR POLLUTION 2 SPECIALIST GONZALEZ: The Plan finds that ambitious, but 3 plausible goals for displacing traditional gasoline and 4 diesel fuels are achievable. The goals listed in this Page 167CARB Board mtg transcript 11-15-07

5 slide, expressed as percent reductions and based on 6 gallons of gasoline equivalent, represent a moderate 7 growth case for all alternative fuels. 8 These goals can be achieved through a combination 9 of alternative fuels and vehicle technologies, and 10 technology innovation is critical. For example, advanced 11 biofuels that can be produced from biomass will require 12 the development of new conversion processes, but offer the 13 potential to substantially reduce greenhouse gas emissions 14 and petroleum consumption. The Plan also identifies that 15 mandates, incentives, and private investment is needed to 16 achieve the goals.
17 --o0o--
18 STATIONARY SOURCE DIVISION AIR POLLUTION 19 SPECIALIST GONZALEZ: To achieve the state's goals 20 particularly in the long term, a multi-part strategy is 21 necessary to maximize the use of alternative fuels, 22 advance vehicle technologies, improve vehicle fuel 23 efficiency, and reduce vehicle miles traveled. 24 Finally, the report finds that the low carbon 25 fuel standard will provide a durable framework for the

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

184 1 production and use of low carbon alternative fuels and
2 will stimulate innovation.
3 --o0o--
4 STATIONARY SOURCE DIVISION AIR POLLUTION 5 SPECIALIST GONZALEZ: As mentioned previously, the Plan 6 includes a top-down analysis of the types of changes that 7 would achieve an 80 percent reduction in greenhouse gas
Page 168CARB Board mtg transcript 11-15-07

8 emissions at least from the light-duty transportation 9 sector. Such changes would include using a broad mix of 10 fuels, including advanced biofuels, electricity, hydrogen, 11 and conventional fuels. In addition, achieving the goals 12 will require a dramatic shift in both vehicle efficiency 13 and fuel mix, as well as some significant changes in 14 travel habits. These would include a 20 percent reduction 15 in per capita VMT, a 70-miles-per-gallon real-world fuel 16 economy, and about a 60 percent reduction in the carbon
17 content of fuels. 18 The report acknowledges that the plan and the low 19 carbon fuel standard form important beginning steps to 20 achieving this longer-term goal.
21 --o0o--
22 STATIONARY SOURCE DIVISION AIR POLLUTION 23 SPECIALIST GONZALEZ: Based on the findings in the Plan, 24 the report contains several broad recommendations. The 25 Plan recommends that the state provide 100 to $200 million

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

185 1 per year in incentive funding to advance transportation 2 fuels. As you will hear later in your legislative update, 3 the recently enacted Assembly Bill 118 has the potential 4 to provide up to $120 million annually for alternative
5 fuels.
6 --o0o--
7 STATIONARY SOURCE DIVISION AIR POLLUTION 8 SPECIALIST GONZALEZ: The report also recommends that the 9 state maximize the use of California's biomass to produce 10 energy and fuels; use a combination of regulations, 11 incentives, and technology innovations to encourage Page 169CARB Board mtg transcript 11-15-07

12 substantial private sector investment; and implement the 13 Plan in a manner that considers the state's multiple 14 policy goals, including not only the need to reduce 15 greenhouse gases, but also to further reduce criteria and 16 toxic pollutants from the use of alternative fuels.
17 --o0o--
18 STATIONARY SOURCE DIVISION AIR POLLUTION 19 SPECIALIST GONZALEZ: In approving the state's Alternative 20 Fuel Plan, the Energy Commission established alternative 21 transportation fuel goals of 9 percent in 2012, 11 percent 22 in 2017, and 26 percent in 2022, and directed the Energy
23 Commission staff to: 24 Update the plan biannually as part of their 25 Integrated Energy Policy Report updates;

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

186 1 Work with the ARB and others to update the full 2 fuel cycle analysis, develop sustainability standards, and 3 continue to refine the methodology; and 4 Quickly implement AB 118 provisions to provide 5 incentives funding for technology improvement.
6 --o0o--
7 STATIONARY SOURCE DIVISION AIR POLLUTION 8 SPECIALIST GONZALEZ: In addition, the Energy Commission 9 requested that the ARB: 10 Develop the low carbon fuel standard in a manner 11 consistent with the goals of petroleum reduction, in-state 12 biofuel production, and increased use of alternative 13 fuels; 14 Consider the draft compliance schedule identified
Page 170CARB Board mtg transcript 11-15-07

15 by the University of California in developing the low 16 carbon fuel standard; and 17 Consider establishing specific greenhouse gas 18 reduction goals for the transportation sector as part of 19 the implementation of AB 32.
20 --o0o--
21 STATIONARY SOURCE DIVISION AIR POLLUTION 22 SPECIALIST GONZALEZ: The staff is proposing several 23 modifications to the report identified in Attachment 1 of 24 the proposed resolution. These changes were provided to 25 the CEC during the plan development, but were

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

187 1 inadvertently not included in the final document 2 considered by the Commission on the 31st.
3 The modifications cover two areas: 4 First, we are recommending changes to emphasize 5 that the Plan is designed to achieve further reductions in 6 criteria pollutants, air toxics, and greenhouse gases and 7 support efforts to attain and maintain ambient air quality
8 standards. 9 Second, we're recommending changes to clarify the 10 role hydrogen will play as an alternative fuel. 11 Upon Board request, the Energy Commission will 12 consider only these changes at a future hearing.
13 --o0o--
14 STATIONARY SOURCE DIVISION AIR POLLUTION 15 SPECIALIST GONZALEZ: In conclusion, the staff is 16 recommending that the Board approve the Plan as approved 17 by the Energy Commission on the 31st -- October 31st, 18 2007, and with the staff's proposed modifications set Page 171CARB Board mtg transcript 11-15-07

19 forth in Attachment 1. 20 We also recommend that you direct staff to 21 develop specific greenhouse gas goals for the 22 transportation sector as part of the scoping plan to be 23 prepared pursuant to AB 32 and continue working with the
24 CEC on: 25 Subsequent updates and refinements to the plan

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

188 1 and report substantive changes back to the Board; 2 Establishing the low carbon fuel standard, 3 including the appropriate compliance schedule; and 4 Ensuring that AB 118 funds provide the maximum 5 possible benefits in terms of air quality improvement and 6 greenhouse gas reduction. 7 Thank you. And that concludes our presentation. 8 CHAIRPERSON NICHOLS: Thank you very much. 9 Do we have any additional comments from our 10 Energy Commission colleagues or --
11 CEC EMERGING FUELS AND TECHNOLOGY OFFICE MANAGER 12 OLSON: Yeah, I'm Tim Olson with the California Energy 13 Commission. Thank you very much, Chairman Nichols and
14 Board members. 15 We accept these changes that you proposed here. 16 And apologize to everyone for the confusion on this. We 17 had three workshops in the last three weeks before our 18 adoption. And there were lots of things that -- these 19 were the few comments that were vetted and approved by our 20 commissioners that did not get in. And we apologize for 21 that. But do not see any problems with these changes.
Page 172CARB Board mtg transcript 11-15-07

22 And we have a commission board meeting scheduled on 23 December 5th to approve what you approved today to conform 24 with your adoption.
25 CHAIRPERSON NICHOLS: And then this can make its

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

189 1 way out.
2 CEC EMERGING FUELS AND TECHNOLOGY OFFICE MANAGER 3 OLSON: And it makes its way out. 4 CHAIRPERSON NICHOLS: Good. That would be good.
5 CEC EMERGING FUELS AND TECHNOLOGY OFFICE MANAGER 6 OLSON: And if there are other questions or anything on 7 the plan or as any of the comment today, I'm here to help 8 you answer questions. 9 CHAIRPERSON NICHOLS: Great. Well, we do have 10 several witnesses who've signed up to speak. 11 But are there any preliminary questions? 12 Yes, Supervisor Roberts.
13 BOARD MEMBER ROBERTS: If I could. 14 Do we have and have you completed -- and maybe 15 you have and I haven't seen it -- but is there an analysis 16 of the different fuels and, you know, a comparison from 17 one to another in terms of what it takes to produce 18 those -- the energy it takes to produce the efficiencies 19 of the fuels in comparison to the different types of
20 emissions that result from each of the fuels. 21 MEASURES ASSESSMENT BRANCH CHIEF FRY: Yes, there 22 was a separate full fuel cycle analysis that did just 23 that. And that was adopted by the Energy Commission in
24 June. 25 BOARD MEMBER ROBERTS: Is there a way that we can Page 173CARB Board mtg transcript 11-15-07

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

190 1 get copies of that?
2 MEASURES ASSESSMENT BRANCH CHIEF FRY: Sure. 3 CHAIRPERSON NICHOLS: Why don't you make those
4 available to all the Board members. I think that's a 5 great request. Because we all get questions about these 6 things. 7 BOARD MEMBER ROBERTS: Well, there's such a
8 dramatic difference between some of these. And we're 9 talking about alternative fuels like it's a monolithic 10 thing. And there are advantages and disadvantages. 11 CHAIRPERSON NICHOLS: Absolutely.
12 BOARD MEMBER ROBERTS: And it seems to me that we 13 need to get a little deeper below the surface. And I felt
14 sort of restricted with the information at least that I
15 had before me. 16 CHAIRPERSON NICHOLS: I think it's a very good 17 point.
18 CEC EMERGING FUELS AND TECHNOLOGY OFFICE MANAGER 19 OLSON: Let me make just one other point here. 20 In that full fuel cycle analysis we did 92 21 pathway analyses of various fuels. About a third of those 22 were biofuels. And our feeling was there were probably 23 another couple hundred pathways to evaluate. So we had to
24 make some choices. 25 But there is a pretty good body of information

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

191
Page 174CARB Board mtg transcript 11-15-07

1 there that's gleaned from a lot of other sources that this 2 agency here has conducted. The ZEV mandate is an example 3 of one. All the different work groups that you have here, 4 plus our own. 5 BOARD MEMBER ROBERTS: You know, I just -- it 6 seems to me that at some point we've got to start looking 7 at the individual options. And while I think we want 8 choices, if the choices aren't equal I think we need to
9 know that.
10 CHAIRPERSON NICHOLS: Yes. 11 BOARD MEMBER SPERLING: Yeah, let me just follow 12 up on that, not with a question but to reinforce, you 13 know, how important that is; and, in fact, it is 14 especially for this Board and for ARB because we are going 15 through a rulemaking process now. And we will be building 16 upon all of that work in the 1007. That's been absolutely 17 fundamentally so important and is the basis for what will 18 be done here. And the challenge is to take that 19 analytical work and convert it into a rule process and 20 compliance tools and so on. 21 So I think, you know, on the one hand, you know, 22 I think we should be very appreciative of that huge effort 23 and the quality of the effort. But part two is there's a 24 huge challenge still ahead to build upon that. 25 CHAIRPERSON NICHOLS: I think it's pretty clear

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

192 1 that this report is sort of a foundational piece that has 2 to be done just so we can move on. But in and of itself 3 it's already almost been superseded by these other 4 mandates and goals that we've set. But it's an important Page 175CARB Board mtg transcript 11-15-07

5 piece, so we want to get as good as we can. 6 All right. So we will hear from a number of
7 witnesses. We start with Paul Wuebben from the South 8 Coast AQMD, followed by Bill Magavern, Sierra Club of
9 California. 10 MR. WUEBBEN: Good afternoon, Madam Chairwoman,
11 members of the Board. I'm Paul Wuebben with the South 12 Coast Air Quality Management District. 13 We're very pleased to support the adoption of the 14 plan today. We've been very involved in the development 15 of it. And we're very encouraged that the staff have made 16 tremendous efforts to reflect air quality needs and goals 17 in the report. And the modifications that you see in 18 front of you today I think go in that direction as well. 19 So overall, we consider this plan to be a very crucial 20 foundation to dealing with the trio of issues that I think 21 all of our agencies are confronting: Energy depletion and 22 climate change and air quality. 23 As you know, the South Coast Air Basin has a 24 particularly acute need for alternative fuel and low 25 emission technologies. We represent 25 percent of the

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

193 1 nation's exposure to unhealthful PM2.5. We represent over 2 50 percent of the nation's exposure to ozone. And so
3 the -- and also I think that our board and efforts have 4 established crucial marketplace anchors really for 5 alternative fuel development. And you see that in the 6 natural gas area in particular. 7 One area I just did want to reinforce quickly is
Page 176CARB Board mtg transcript 11-15-07

8 that we're very pleased to see the plan place significant 9 emphasis on the role of electric drivetrain technologies 10 as a transitional and a core technology area. It offers 11 an opportunity for all of the fuels to achieve their 12 maximum fuel efficiency. You can see that in terms of 13 bringing forward the next generation lithium ion 14 batteries; ultimately fuel cells; certainly in the natural 15 gas arena -- or the natural gas, LNG and CNG; and then 16 even in the optimized FFE area with respect to biofuels. 17 We appreciate that this was a complex task.
18 There are different timelines for each of the fuels.
19 There are different set of barriers. The low carbon fuel 20 standard is certainly a very natural outgrowth of this 21 entire effort, so we'll be vigorously participating in
22 that. 23 But on balance we definitely want to congratulate 24 the Board and the staffs of both agencies for taking this 25 important milestone effort. We think this is really the

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

194 1 milestone in acknowledging that our future will have to 2 involve a large and growing portion of alternative fuels
3 in the entire mix. 4 So with that, we certainly support the adoption 5 and we're happy to be strong partners and cooperate with 6 you as you move to address or implement the objectives of 7 the plan. 8 So thank you. 9 CHAIRPERSON NICHOLS: Thank you. 10 Bill Magavern, followed by Todd Campbell. 11 MR. MAGAVERN: Good afternoon, Madam Chair, Board Page 177CARB Board mtg transcript 11-15-07

12 members. I'm Bill Magavern with Sierra Club of 13 California. And we support the broad conclusions of the 14 report, especially the recognition that we need a 15 multi-faceted approach, including the increased use of 16 alternative fuels, significant improvements in the energy 17 efficiency of the vehicle fleet, and reducing trips and 18 vehicle miles traveled through changes in travel habits 19 and land management policies. 20 We also think coordinating the multiple state 21 policies will help focus state efforts on alternative 22 fuels, and that extending the report to include a vision
23 for 2050 was wise. 24 As you go forward and implement both the low 25 carbon fuel standard and AB 118, both of which we support,

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

195 1 we have some concerns that we ask you to keep in mind. 2 First of all, I'm very glad to hear that you're 3 going to enhance the focus on air quality, because, you 4 know, obviously that should be a prominent concern. 5 Secondly, glad that the report does reflect some 6 recognition of the importance of sustainability. As we
7 learn more and more about some of the methods of biofuels 8 production, the sustainability concerns are really 9 becoming more and more important to us. 10 Also, we want to make sure that all fuels and 11 technologies are put on a level playing field. We think 12 that this plan does suffer from an overemphasis on 13 hydrogen fuel cell technology compared to some other more 14 viable technologies, and that it's important that you
Page 178CARB Board mtg transcript 11-15-07

15 utilize technological neutrality and equal treatment of 16 the different zero-emission-vehicle technologies. And in 17 particular we think there are a number of instances where 18 this report did not give due consideration to battery 19 electric technologies. 20 We're glad to see that it does have consideration 21 of plug-in hybrid electric vehicles. We're also bullish 22 on plug-ins. But, for example, where the report says that 23 if lithium ion batteries and plug-ins are successful, 24 there will be a natural progression to the plug-in 25 vehicles. We think there might also be a potential for

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

196 1 progression to all-electric battery vehicles. 2 There are other specific references along similar
3 lines that are in the written comments that we'd submitted 4 for the record. And just appreciate your taking these 5 concerns into your notice as you move forward with 6 implementation. 7 Thank you. 8 CHAIRPERSON NICHOLS: Thank you. 9 I think there's always an issue in these things 10 of balance. And, you know, the attention between being 11 neutral about technologies and not trying to pick winners 12 but at the same time being realistic about what we're 13 demanding in terms of air quality and greenhouse gases is 14 a tough one. And I'm sure we're going to be hearing from 15 other people who feel that one or another technology 16 wasn't given its due. And I think what we'd like to do is 17 to give everybody as much of their due as possible, but at 18 the same time, you know, keep our eye on the ball. Page 179CARB Board mtg transcript 11-15-07

19 So I appreciate your acknowledgement that that's
20 what's needed here.
21 Yes. 22 BOARD MEMBER D'ADAMO: I agree that we shouldn't 23 be picking winners and losers. But -- I guess I have to 24 confess that I have not thoroughly read the report. I've 25 quickly gone through the executive summary and just

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

197 1 listened to the staff presentation here. 2 Would you propose something in terms of future 3 analysis on BEVs? Did you feel that it wasn't adequately 4 analyzed?
5 MR. MAGAVERN: Yes.
6 BOARD MEMBER D'ADAMO: Or is it some other 7 concern that you have? 8 MR. MAGAVERN: Yes. Actually we think that some 9 of the scenarios did not give the comprehensive analysis 10 to the battery electrics that it did to other 11 technologies. 12 BOARD MEMBER D'ADAMO: Could staff respond to 13 that as far as perhaps the next -- it seems that this is a 14 work in progress. So for the next round could you 15 incorporate additional analyses regarding BEVs?
16 CEC EMERGING FUELS AND TECHNOLOGY OFFICE MANAGER 17 OLSON: Yes. In fact, that's a good point. This is a I 18 snapshot in time for us. We did include it in the full 19 fuel cycle analysis report. We have some more -- kind of 20 more in-depth treatment and discussion in the companion 21 documents that fed into this report.
Page 180CARB Board mtg transcript 11-15-07

22 Part of the issue on the report is it's going to 23 go to the Legislature. And there's a decision at some 24 point to make it an 80-page document, not a thousand-page 25 document. So there were lots of condensing efforts here.

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

198 1 Our view is that we're open to any additional
2 information that needs to be verifiable. And we need to 3 see some -- a whole range of different entities involved 4 in it: Automakers, various parts of the infrastructure,
5 utilities in this case. And so I think our overall 6 assessment, that this battery electric might be in the 7 range of three percent of just the electric drive area. 8 But we're open to any additional information, not only 9 affecting this report but also how we develop our 10 investment plan for AB 118, how we propose or influence 11 the low carbon fuel standard, how we influence AB 32 and 12 the scoping plan. So we're very open to that process. 13 CHAIRPERSON NICHOLS: I appreciate that comment. 14 And I think we need to give some thought to what the most 15 effective way for us to have input into that as well. 16 Thank you.
17 STATIONARY SOURCE DIVISION CHIEF FLETCHER: And I 18 would also just mention that one of the recommendations
19 that both the Commission directed at staff and we're 20 suggesting that you direct us to do too is to kind of 21 revisit this plan every couple of years, as we know the 22 technology is sort of developing sometimes at a rapid rate 23 in some areas, sometimes not so much in other areas. So 24 we fully intend to kind of continue to evaluate the
25 Alternative Fuels Plan in that context. Page 181CARB Board mtg transcript 11-15-07

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

199 1 And so, as Tim said, this was a snapshot in time. 2 I think both between this revisiting of the Alternative 3 Fuels Plan as part of the Integrated Energy Policy 4 Reports, which are required every two years, and also 5 consideration of the work that's going to go on in the 6 next year for the low carbon fuel standard, well, we'll 7 try to figure out a good way to incorporate electricity as
8 a fuel into that standard. I think both of those 9 mechanisms will provide for another opportunity to vet 10 information on not only electricity but other fuels as
11 well. 12 CHAIRPERSON NICHOLS: Professor Sperling. 13 BOARD MEMBER SPERLING: This is a very important 14 discussion because of the follow-up. You know, I would 15 note that I'm not -- I guess I wouldn't be so concerned 16 about what might appear to be biases in the report or not, 17 one, because we have the low carbon fuel standard which is 18 based upon using a carbon metric, a greenhouse gas metric. 19 And as long as the models and the analysis is done well, 20 you know, the biases fall away to some extent in terms of 21 using that as a metric. 22 Where I get -- and I think in that 118 report the 23 life cycle analysis was done well. You know, there has to 24 be some updating, but I think that was done very well, and 25 that's not the issue or the problem. The problem and the

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

200
Page 182CARB Board mtg transcript 11-15-07

1 issue is follow-up on that. One is the 118 both for the 2 Energy Commission and ARB is to make sure that we develop 3 a set of criteria that are responsive to whatever our 4 goals really are. And this idea of technology neutrality 5 is a complicated one and far too simple. For one thing, 6 you know, there's the short and the long term. You know, 7 we need to develop a strategy that makes changes and gets 8 technologies out there for the short term, but also lays 9 the foundation for innovations leading to the longer-term 10 options that are going to give us much greater reductions. 11 And so, you know, my thought -- the important 12 thought here is -- for the immediate near term is 118 is 13 how we develop those criteria to make sure that we are 14 being responsive to both near- and long-term 15 considerations as we design that and also responsive to 16 the R&D that's needed, the innovation that's needed, as 17 well as actual displacements and reductions that are
18 desired. 19 And the third -- so the third part is that -- and 20 it's less relevant to immediate discussions -- and, that 21 is, there are other policies and laws and incentive 22 programs that are going to be developed. And that's where 23 I think we have to be especially careful about going back 24 to this plan or not and thinking through what these 25 other -- you know, what these policies and laws and

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

201 1 incentive might be. 2 CHAIRPERSON NICHOLS: I agree. This is not the 3 last word on the subject, by any means. It's kind of a 4 foundation piece. But I think the recommendation that we Page 183CARB Board mtg transcript 11-15-07

5 set a -- or direct the staff to recommend to us through 6 the AB 32 process a limit for the transportation sector is 7 one way of making it very clear what the requirements are 8 going to be. 9 SUPERVISOR HILL: Madam Chair if I could just --
10 CHAIRPERSON NICHOLS: Yes. 11 SUPERVISOR HILL: And I think Professor Sperling 12 mentioned it, and obviously the biases that may be 13 indicative of the report, and Mr. Magavern talked about in 14 the letters a number of issues. And I want to especially 15 relate it to the BEVs and the comparison to the hydrogen
16 vehicles and the cost differential involved in the 17 preference for hydrogen even though the cost is 18 substantially greater than the BEV. 19 So these things will be worked out, I guess, is 20 what I was hearing in the process. So it's nothing to be 21 concerned with today is what I'm hearing. So that's very 22 good. 23 Thank you.
24 CHAIRPERSON NICHOLS: I think this discussion is 25 useful, because these are reservations or concerns that

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

202 1 have been expressed during the course of this report being 2 prepared. And I think having the Board members express 3 these views is helpful in terms of having the message be
4 heard. 5 Okay. Todd Campbell and then Mike Eaves. 6 MR. CAMPBELL: Good afternoon, Madam Chair and 7 members of the Board. Todd Campbell, Director of Public
Page 184CARB Board mtg transcript 11-15-07

8 Policy for Clean Energy. 9 Couple things. One, we want to say that we are 10 very appreciative of the Air Resources Board's as well as 11 the Energy Commission's work on this report. I think 12 staff has worked very hard pulling this very comprehensive 13 plan together in a very short time period. And because 14 there was a legislative time period, I think that, you 15 know, it's inevitable that it won't be perfect. And it's 16 very encouraging to know that this will be a continued 17 work in progress of sorts. 18 We were also very encouraged that air quality 19 changes were put in here and that the Air Resources Board 20 is aware and trying to make improvements on ensuring the 21 air quality is intact as well. 22 I guess where we get concerned -- and this is 23 where the difficulty of fuel neutrality is -- is that 24 where we come out neutral on this, Clean Energy does, and 25 the industry will also speak afterwards, it's because we

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

203 1 think that we were fairly under-represented in the 2 light-duty market. 3 And in a couple of places, in fact in the changes 4 here, some concerns that are being presented to you are 5 trying to educate on electric and hydrogen but not on 6 natural gas vehicles. We think that you need to educate
7 consumers about all vehicles. 8 In fact, if we're going to meet the very goals 9 that Clean Energy has supported, AB 32, certainly worked 10 on AB -- the Speaker's bill that just passed, as well as 11 being very supportive of this agency moving forward in Page 185CARB Board mtg transcript 11-15-07

12 greenhouse gas reductions, you need to educate and support 13 all vehicles moving forward. But also in some of the 14 provisions it's trying to ensure that natural gas stations 15 are also compatible with hydrogen. And we're certainly 16 very well supportive of that. 17 But the problem also is that for whatever reason 18 the suggestion to facilitate automotive production of 19 dedicated passenger fuel-cell vehicles is concerning 20 especially if you're going to ask a business to invest in 21 building that infrastructure. We really think that the 22 Air Resources Board should be pushing all manufacturer -- 23 or the manufacturer of all vehicles, including natural gas 24 vehicles, for a number of reasons. 25 The second point I'd like to raise is Clean

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

204 1 Energy's extremely supportive of what the Air Resources 2 Board is trying to do, not just in greenhouse gases but 3 for air quality. You look at the ports, for example, the 4 Clean Air Action Plan where they're suggesting a potential 5 5300 LNG drayage trucks servicing that area. We put up 6 over $60 million to put in a plant in boron to fuel those
7 trucks. We've done additional commitments close to the 8 California border with Arizona for another 50,000 gallons. 9 So certainly Clean Energy is very much in support 10 of trying to clean up the air, not just in the South Coast 11 Air Basin, but we hope that we could continue to do that
12 in other areas. 13 One of the things that we came up against in this 14 report was staff was concerned about the light-duty
Page 186CARB Board mtg transcript 11-15-07

15 vehicle market growing: One, for vehicles cost; second, 16 for lack of OEMs; and, third, because of cleanliness of 17 diesel was catching up to natural gas vehicles. 18 One, I would like to say that historically 19 natural gas vehicles has driven this market and, in fact, 20 giving credibility to the heavy-duty market by producing 21 by EPA at the certification of a 2010 engine. And from 22 what I understand, the Air Resources Board is just about 23 to certify the heavy-duty engine for Westport for natural 24 gas to, you know, back up and provide credibility for that
25 vehicle.

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

205 1 Second, if you look around the world, we went
2 from four million to five million vehicles in 2004 to -- 3 or 2005 to 2006 with natural gas vehicles. In fact, if 4 you look at all the data, you actually find that there are 5 several vehicles - Citroen, Fiat, Ford, Mercedes Benz, 6 Opel, Peugot, Volkswagen, Audi, Renault, Chrysler, Volvo - 7 all these manufacturers make natural gas vehicles. And we
8 feel that those hurdles are minor. When we look at the
9 hurdles --
10 CHAIRPERSON NICHOLS: You're out of time. 11 MR. CAMPBELL: I understand that, Madam Chair. 12 If I can make just a couple more points, and I'll be very
13 brief. 14 When we read about, for example, biofuels, even 15 in the low carbon fuel standard first report that Board 16 Member Sperling put together, where it's very clearly 17 stated in this report that the values are in certain terms 18 of fuel production, that the facilities to actually Page 187CARB Board mtg transcript 11-15-07

19 produce these fuels don't exist, that the feedstocks are 20 not commercially grown, or that the conversion processes 21 are not commercially viable, it concerns us and we feel 22 like we're not being fairly treated when we know that 23 actually the technology exists, it's being put -- the 24 vehicles actually exist throughout the world. We have
25 small volume manufacturers in the United States for the

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

206 1 light-duty vehicle market. 2 And, in fact, just on economics alone, which are 3 not -- you know, are clearly demonstrated in the report 4 but not being shown and reflected in the projections of 5 the light-duty vehicle market, we just simply do not agree 6 that fuel cells will replace natural gas vehicles in the 7 light-duty vehicle market in 2020. 8 And as an advocate that stood up for the zero 9 emission bus program or within the transit bus rule, I 10 would have loved to have seen the 15 percent purchase of 11 fuel cell transit buses next year. Unfortunately cost and 12 economic didn't pan out for that. But, however, the 13 transit side that pursued natural gas not only has a very 14 significant cost savings but is building the bridge. 15 Hopefully the hydrogen and some of these changes that are 16 being presented before you today with biomethane 17 demonstrate that there is a bridge, a very clear bridge 18 between natural gas and hydrogen vehicles. So we think 19 we're going to build that. 20 CHAIRPERSON NICHOLS: You've made your point, Mr. 21 Campbell. Thank you.
Page 188CARB Board mtg transcript 11-15-07

22 MR. CAMPBELL: Thank you very much. 23 CHAIRPERSON NICHOLS: I appreciate it. And I 24 know you've participated in the workshops and expect 25 you'll continue to be involved and keep raising the points

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

207 1 in every forum where it's appropriate. 2 MR. CAMPBELL: Absolutely.
3 BOARD MEMBER D'ADAMO: Madam Chair?
4 CHAIRPERSON NICHOLS: Yes. 5 BOARD MEMBER D'ADAMO: Mr. Campbell and I spoke 6 earlier today before I actually had an opportunity to go 7 through this resolution, and I did commit to him that I 8 would encourage staff through a resolution -- a change in 9 the resolution to look at updated light-duty market 10 penetration projections. But I actually think, and just 11 wanted to say this on the record, that the resolution in 12 paragraph seven I think adequately addresses your 13 concerns, and just want to get a commitment from staff to 14 continue, not just on natural gas, but as we discussed 15 earlier to look at progress in all areas. And the 16 relative paragraph just reads, "The Plan should be viewed 17 as part of a continuum that requires periodic update and 18 refinement," et cetera. 19 CHAIRPERSON NICHOLS: Okay. Thank you. 20 Mike Eaves, followed by Mark Sweeney. 21 MR. EAVES: Thank you, Madam Chair and Board 22 members. Todd didn't eat into my time, did he? 23 (Laughter.) 24 MR. EAVES: I think the light-duty market is 25 important. You know, we worked with Energy Commission and Page 189CARB Board mtg transcript 11-15-07

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

208 1 CARB for well over a year on this report. And we're very 2 pleased with where it stands on changing the status quo on 3 natural gas from where it was one year ago to what it is
4 now. 5 The light-duty market though is very significant 6 for us. And we have been entertaining discussions with 7 staff trying to get on board, to not wait for the two-year 8 cycle for revision but to actually start addressing some 9 issues that we have with light duty now and see if we can 10 become in sync with one another on what market projections 11 could be for light-duty natural gas vehicles, simply 12 because there's a great opportunity to go out and bring 13 U.S. OEMs back into the picture given the situation in 14 California where the goals and objectives are for 15 petroleum reduction, greenhouse gas reduction, air 16 quality, economics. There are multi-faceted issues now 17 that we didn't have even five years ago with natural gas
18 vehicle manufacturers. 19 So I think it's important that those discussions 20 take place and not wait for a two-year update. 21 A couple things -- I don't know. Do you have the 22 report in front of you or not? I'm not sure if you do. 23 I'd like to go through some things that you might not be
24 aware of. 25 In this forecast there are projections that

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

209
Page 190CARB Board mtg transcript 11-15-07

1 natural gas can be a 2.5 to 5 billion market in 2 California, substitution for petroleum, by 2050. And the 3 cost savings outweigh the first -- the cost savings in 4 fuel outweigh the first costs. 5 If you take a look at Table 1 -- at page 68, 6 Figure 16, you'll see natural gas is the fastest payback 7 of any fuel technology. 8 If you look at Table 12 on page 73, you're going 9 to see that the natural gas is the best cost effectiveness 10 in petroleum reduction. 11 If you look at Table 13 on page 73, you're going 12 to see that natural gas has the best cost effectiveness in 13 greenhouse gas reduction. 14 This is not too bad in a market today where 15 natural gas vehicle owners are saving a dollar to a dollar 16 seventy a gallon today on long-term fuel price contracts, 17 where you can achieve 23 to 30 percent greenhouse gas 18 reductions just if you take the same vehicles on the road 19 and convert those into natural gas. 20 So we think that this report is a good start. 21 We'd like to work with staff to beef up the projections on 22 the light-duty market so that we can have an opportunity 23 to go to Detroit and get U.S. manufacturers reengaged in
24 the market. 25 And thank you very much.

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

210 1 CHAIRPERSON NICHOLS: Okay. Thank you. 2 Mark Sweeney, followed by Randal Friedman. 3 MR. SWEENEY: Madam Chair, Board members. I 4 appreciate the opportunity to share our comments with you Page 191CARB Board mtg transcript 11-15-07

5 today. My name is Mark Sweeney. I'm an economist. I'm 6 representing NGV America, which is the national NGV
7 Association. 8 And what I want to do is focus on the disparity 9 between the underlying economic analyses that were done in 10 preparing the report and the conclusions that are actually 11 in the report. 12 We spent a lot of time and energy, as did Mike 13 Eaves and representatives of the California Coalition, in 14 working with the staff to get the economics of NGV right 15 in this report. And we appreciate the cooperation of Tim 16 Olson and his staff. They were willing to listen to what 17 we had to say. And basically we think that the economic 18 analysis for NGVs is pretty close to being right on in the 19 report. And Mike cited some of that information. 20 Now, what we didn't expect -- we assumed that if 21 we could get the economics right, which was in the case 22 two years ago for the 2076 report. The economics on 23 natural gas were completely missed in that, and that's why 24 we focused on trying to get that right this time around. 25 But what we didn't expect was that there'd be a complete

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

211 1 disconnect between the economic analysis and the 2 conclusions that are shown in the report. 3 And what I'd like to ask you to do is look at 4 page 38, Figure 5, in the report for those of you who have 5 it in front of you. And looking down the left column 6 under "Technology," down to "Gaseous Technologies," and 7 then the next subheading is "NGVs". And if you look at
Page 192CARB Board mtg transcript 11-15-07

8 this flow chart, basically what it concludes is that the 9 light-duty NGV market is going to be entirely displaced by 10 hydrogen fuel cells in the 2020 time frame. And when I 11 looked at this, I thought that that's interesting, because 12 it's completely inconsistent with our expectations and 13 also the results of the economic analysis that had been 14 done by the staff.
15 So then I went back to look at the economic 16 analysis. It in theory ought to support this conclusion. 17 And there was a document dated October 14th that was put 18 out which provided the underlying economic analysis that 19 was done for the report. And I want to look at a couple
20 different numbers for 2020. 21 Based on the underlying economic analysis, the 22 incremental cost of hydrogen fuel cells in 2020 is 23 estimated to be between 64 and $142,000 per vehicle above 24 and beyond the cost of a conventional vehicle. You know, 25 the staff made absolutely heroic economic assumptions

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

212 1 about how quickly the substantial obstacles standing in 2 the way of fuel cells would be overcome. For example, 3 they assumed that hydrogen would be priced at 3 to $4 a 4 gallon in 2007 dollars. Well, if you can get hydrogen 5 today, it's going to cost you 10 to $12 a gallon. So they 6 assume in 2007 it's 3 to $4 a gallon. In the real 7 marketplace it's like 10 to 12 if you can get it. So -- 8 CHAIRPERSON NICHOLS: Mr. Sweeney, your time has 9 expired. 10 MR. SWEENEY: Okay. Let me just wind up. 11 Basically the conclusion that light-duty NGV Page 193CARB Board mtg transcript 11-15-07

12 market will be displaced by hydrogen fuel cells is 13 entirely inconsistent and unsupported by the economic 14 analysis that was done for the report. 15 The Commission has talked time and again about 16 not picking winners and losers. But I would ask you to 17 look at page 38 in the report. And what's happening there 18 is that light-duty NGVs are clearly identified as losers 19 and hydrogen fuel cells the winner. And we're concerned 20 about the signal that that sends to the people we're 21 working with to convince to make new product available to 22 the marketplace. 23 Thank you very much. 24 CHAIRPERSON NICHOLS: Thank you. 25 Randal Friedman, followed by Marc Geller.

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

213 1 MR. FRIEDMAN: Madam Chair, Board members. 2 Randal Friedman on behalf of the United States Navy. 3 Through a combination of federal executive orders 4 and Congressional actions, the military is a very 5 aggressive promoter and user of alternative fuels. We're 6 involved in geothermal and wind and solar, hydrogen. In 7 fact, Camp Pendleton is soon to be opening a publicly 8 accessible hydrogen fueling station. 9 But our bread and butter is biodiesel. By Navy 10 directive, all nontactical vehicles in California have to 11 be operated on a 20 percent biodiesel formulation. 12 There's many installations in California where the only
13 diesel fuel available is the B-20 biodiesel. 14 Why is this especially significant for you to
Page 194CARB Board mtg transcript 11-15-07

15 consider? We still have concerns about the long-term 16 ability for us to be in regulatory compliance with your 17 upcoming diesel retrofit rules and still use B-20. Up 18 through the end of this year Senator Ashburn had done 19 legislation that provided regulatory assurance. That 20 legislation sunsets after this year. So as of next 21 January we're back in kind of this regulatory void of 22 whether or not it is legal for our thousands of vehicles 23 in California -- and this isn't just us. There's a lot of 24 municipal fleets, there's a lot of universities that our 25 B-20 biodiesel really has become a standard for fleet

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

214 1 operators.
2 It's a fuel that's available now. It runs in 3 diesel engines without any modifications. It's 4 domestically produced. It's something where the money 5 that's spent on it stays in this country and doesn't go 6 overseas. It's got a lot going for it. I know there's 7 issues out there. We have found it necessary to do our 8 own fuel spec for our purchase. And as I pointed out at 9 the workshops, we certainly see a role for ARB to use your 10 regulatory powers to make sure that biodiesel is the best 11 formulation used in California. But what's lacking I 12 think in this fuel plan is recognition that, unlike some 13 of these other alternative fuels that might be more 14 considered pie in the sky, biodiesel is here now. It's 15 proven effective. It's used, not just by us, by a number
16 of other fleets. It can be a solution now. 17 But your agency does have regulatory issues. And 18 as of now there -- I mean I know that -- I've heard your Page 195CARB Board mtg transcript 11-15-07

19 staff talk about the things that are going on. But the 20 simple fact is there still is no written policy of this 21 agency that says it is legal to use biodiesel -- B-20
22 biodiesel with all the diesel retrofit rules. There's 23 been a draft policy that's been floated for at least a 24 year. It still is draft. 25 Our concern is if you're trying in the long run

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

215 1 through a planned framework to establish -- and, you know, 2 excuse the pun -- but grow an industry, you need to 3 provide regulatory certainty that that fuel can be used in
4 the vehicles that it's intended to be used in. And that 5 simply doesn't exist for biodiesel. 6 So I would -- you know, we would ask that you 7 take this opportunity to make sure that biodiesel, and 8 B-20 in particular, has a place in California, that your 9 agency ensures that it can continue to be used within your 10 regulations. And I would encourage you to use your 11 agency's powers as well to even make it a better fuel and 12 to resolve some of the issues. And certainly go with our 13 experience that we've had us being the primary user of
14 biodiesel in the state. 15 Thank you. 16 CHAIRPERSON NICHOLS: Thank you.
17 Marc Geller and then Tim Carmichael. 18 MR. GELLER: Hello, members of the Board. I'm 19 Marc Geller from Plug in America. 20 And Plug in America supports the immediate 21 actions outlined in the section on electric transportation
Page 196CARB Board mtg transcript 11-15-07

22 technology. 23 Moving the transportation sector as much as 24 possible from liquid and gaseous fuels to grid electricity 25 will provide the greatest possible benefit in our efforts

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

216 1 to reduce greenhouse gases and petroleum dependence with
2 minimal infrastructure cost. 3 The plan emphasizes the benefits of accelerating 4 plug-in hybrids, and we heartily endorse this effort. We 5 believe this will yield tremendous benefit, especially in 6 terms of reducing battery cost. This in turn will result 7 in a scenario not outlined in the plan, and which ought to 8 be taken into account. Significant market penetration of 9 plug-in hybrid electric vehicles will make full battery 10 electric vehicles, as Mr. Magavern mentioned, a more 11 practicable and lower cost option than envisioned. The 12 benefits will be much greater than the plan's alternative 13 scenarios. This is especially true, as we know that the 14 electric grid itself is getting cleaner and more renewable
15 over time. 16 So please take this additional scenario into 17 consideration when you're revising the ZEV program, as you 18 will be doing early next year. 19 And I think it's not irrelevant to point out that 20 I drove here today from San Francisco on one charge on a
21 vehicle that exists because of the achievements of the ARB 22 in the last decade, a Toyota RAV 4 EV that's still going, 23 has 53,000 miles on it. When I go back to the garage it 24 will be fully charged and I will drive home again on one 25 charge. And I think it's just -- there are many more Page 197CARB Board mtg transcript 11-15-07

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

217 1 people who would like to be doing this. 2 Thank you. 3 CHAIRPERSON NICHOLS: Thank you. I agree. 4 Tim Carmichael, followed by Bonnie Holmes-Gen.
5 MR. CARMICHAEL: Members of the Board. Tim 6 Carmichael, Coalition for Clean Air. 7 I refer you to page three of the resolution that 8 your staff prepared for you guys today. And just say that 9 I first want to support everything that the staff is 10 recommending for changes to the report and Board action 11 today. So for the record, we're supporting what your 12 staff's recommending. 13 And then the second point is, I want to share a 14 perspective. If you look at the first "Whereas the Board 15 finds that" the plan establishes targets. This is, you 16 know, the alternative fuel target. Where is this plan 17 going to take us? And I think we all know from our 18 discussions about the SIP that adopting a plan is not 19 enough. What are you going to do to actually achieve the 20 plan goals or the plan targets? 21 So 26 percent alternative fuels by 2022. 22 And I'd ask you just to make a little cheat note 23 to yourself. 24 Today, light duty, roughly 75 percent of the fuel 25 used in the state; heavy duty, roughly 25 percent of the

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

218
Page 198CARB Board mtg transcript 11-15-07

1 fuel. 2 Today, alternative fuels, depending on how you 3 count. If you count ethanol in the light-duty mix, maybe 4 6, maybe 7 percent of the light-duty mix is alternative
5 fuels. 6 If you count all the alternative fuels in the 7 heavy-duty sector, 1 percent, may be a little bit more 8 than 1 percent. 9 So going from those numbers to 26 percent by 2022 10 is not going to happen without pushing from the 11 government. You know, I think there's going to be a great 12 force in the rising price of gasoline. But this agency 13 has so much potential to really push this, not only for 14 California but for the world. And let me, you know, 15 highlight for you those opportunities that you have just 16 in the next 12 months. And every one of those I encourage 17 you, and I'll try my best to remind you, what is the 18 alternative fuel push in this regulation? 19 In December you've got the Port Trucks Rule. 20 In February you're considering changes to the 21 Zero Emission Vehicle Program and potentially a broader 22 change to how we treat light-duty vehicles. 23 Next September it's the Private Truck Fleet Rule. 24 In every one of those cases you're going to have 25 the opportunity to, either through regulation by requiring

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

219 1 it or through effective incentive mechanisms, push the
2 increased use of alternative fuels. 3 Somebody made a reference to technology 4 neutrality and somebody made a reference to fuel Page 199CARB Board mtg transcript 11-15-07

5 neutrality. Historically we've really struggled with that 6 and felt like that policy held this agency back to 7 accommodate dirty diesel in some cases, that we weren't 8 prepared to push further than diesel could go. And one of 9 the ways we look at this plan and what it does for this 10 agency going forward is it removes your handcuffs. 11 Frankly you are no longer a technology neutral or a fuel 12 neutral agency, because petroleum is not the same as 13 everything else as far as the State of California is 14 concerned going forward. 15 So you need to be looking at alternative fuels as 16 more important, better than petroleum. Because if we 17 don't have that perspective, if you don't have that, you 18 know, push for alternative fuels, we will not achieve 26 19 percent by 2022, we will not achieve our climate goals, we 20 will not achieve our SIP goals. 21 CHAIRPERSON NICHOLS: Thank you. Thank you for
22 that overview.
23 Our final witness is Bonnie Holmes-Gen. 24 MS. HOLMES-GEN: Good afternoon, Board members. 25 Bonnie Holmes-Gen with the American Lung Association of

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

220
1 California. 2 And the American Lung Association is committed to 3 pursuing dramatic reductions in petroleum fuels and 4 diversity in fuels, because we do believe that this is a 5 very important goal to meet our air quality and our 6 greenhouse gas reduction goals. And we do agree that the 7 1007 report that's before you is an important foundation
Page 200CARB Board mtg transcript 11-15-07

8 in that it lays out the pathway to achieve those goals. 9 And there's certainly some areas for improvement that have
10 been discussed earlier. 11 But it also -- I'd just like to reiterate, as Tim 12 Carmichael said, it also places the ARB now squarely in an 13 important role in the development of alternative fuels 14 policies and the rollout of key funding in this state to 15 develop and deploy alternative fuel vehicles and 16 technologies. You're now in a very key role. 17 And we want to emphasize that -- I don't want to 18 forget this comment. We want to emphasize that as you're 19 moving forward in overseeing the rollout of these 20 important funds in AB 118, this is over 125 plus million 21 dollars per year, that we're relying on you to make sure 22 that we're getting it right from an air quality 23 perspective. And we want to see lots of alternative 24 fuels. We want to get rid of our reliance. We want to 25 kick the habit of petroleum, definitely, certainly. But

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

221 1 we don't want to move to fuels that are going to cause us 2 to backtrack on our air quality commitments. And I know 3 you understand that. But I just want to remind you that 4 we're relying on you to make sure that we get it right. 5 We don't think that we should be moving forward
6 as a state to incentivize fuels under a low carbon fuel 7 standard or otherwise promote alternative fuel blends 8 until we have good information that these fuels are not 9 increasing our criteria or toxic pollutant emissions or 10 that we know that there are mitigation strategies readily 11 available that can be employed and will be employed to Page 201CARB Board mtg transcript 11-15-07

12 address those emission reductions. 13 And, in fact, AB 118 actually gives you specific 14 responsibility in the statute to develop air quality
15 criteria for fuels and to make sure that we are not 16 backsliding on those air quality commitments. So we hope 17 that you will move forward very quickly to start that 18 process and develop that criteria, because the Energy 19 Commission needs to have that as they're starting to look 20 at how to form this AB 118 program. 21 And, in fact, you know, I was thinking that you 22 might want to calendar for Board discussion some more 23 briefings on some of the various alternative fuel options 24 and the air quality and greenhouse gas reduction benefits 25 and challenges that are being faced, just to give you a

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

222 1 stronger basis. 2 I know that this will come out to some degree in 3 the discussion of the low carbon fuel standard regulation. 4 I mean that's obviously a big item on your agenda. But I 5 think that you might want to spend some more time really 6 digging into these issues and understanding the status of 7 some of these air quality issues, because there certainly 8 are fuels that are relied on heavily in the 1007 scenarios
9 such as some biofuel blends that still have some 10 uncertainties in terms of the air quality impacts that 11 need to be resolved. And I know you know that and you're 12 doing some research. But I think that needs to be 13 carefully reevaluated. 14 And I also just wanted to thank you for your
Page 202CARB Board mtg transcript 11-15-07

15 emphasis in developing comments on the 1007 report that 16 the air quality focus needed to be beefed up. And I 17 wanted just to make sure that you are sure that those 18 additions are going to be incorporated into the final 19 report and not just attached as an addendum or -- you 20 know, I want to make sure that you know for sure that 21 those are going to be incorporated in the final document 22 that's released to the public. So I want to make sure you 23 get that certain, because we think that's very important 24 to make sure those air quality criteria in the State 25 Implementation Plan goals and criteria in that -- that

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

223 1 you've inserted into the 1007 report are included in the
2 final. 3 Thank you. 4 CHAIRPERSON NICHOLS: Thank you. 5 That concludes the public testimony. 6 Staff have any additional wrap-up comments that 7 you would like to make in response to what you've heard?
8 CEC EMERGING FUELS AND TECHNOLOGY OFFICE MANAGER 9 OLSON: Yes. Tim Olson, Energy Commission. 10 I'd like to make just a couple comments. Again, 11 repeat that this was a snapshot in time. There was a 12 reference that we were going to do this -- kind of revisit 13 this every two years. My understanding is our 14 commissioners are asking to do this every year, not every 15 two years. 16 CHAIRPERSON NICHOLS: Oh, good.
17 CEC EMERGING FUELS AND TECHNOLOGY OFFICE MANAGER 18 OLSON: So that's one step. Page 203CARB Board mtg transcript 11-15-07

19 And that in the course of this, you know, I 20 appreciate the different kind of stakeholder groups that 21 came to the meetings and participated in this. It 22 stimulated better verification of data for us. And we got
23 into these situations where we had to do freezes in time 24 just to complete the report. And we're hoping that that 25 process will continue, that engagement, and that we can

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

224 1 bring in some of the other players like automakers and 2 other people, who did not spend the same amount of time, 3 and help us get this kind of verification that we need in 4 a public transparent way. 5 And in response to Bonnie's comment, yes, we will 6 include all the changes that are adopted here in our 7 report, not as an addendum but as a change. 8 CHAIRPERSON NICHOLS: Very good. Thank you. 9 Supervisor Roberts, you want to help the Navy out
10 here? 11 BOARD MEMBER ROBERTS: No, I'm not going to speak
12 to that. 13 CHAIRPERSON NICHOLS: That was a stereotype. I'm 14 sorry. 15 BOARD MEMBER ROBERTS: I'm glad to see them here,
16 and I understand their issue. 17 But I -- I don't know, I'm sitting here and I'm 18 very uncomfortable. And I guess it's because of some of 19 the thing that I'm aware of that have developed more 20 recently with respect to one of our utility companies and 21 in the importation of natural gas. And I'm learning as
Page 204CARB Board mtg transcript 11-15-07

22 we're dealing with an issue in southern California that we 23 may be substituting imported natural gas for imported 24 petroleum. And I'm not so sure that there's any great 25 wisdom in that. But somebody who thinks that only

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

225 1 petroleum is a problem, it seems to me, may get a great
2 deal of comfort out of that. 3 But there are some major issues that at least -- 4 that have come to my attention with respect to natural gas 5 that have me very concerned. There are some major issues 6 that I'm aware of with respect to some of our bio-products 7 where it takes just as much energy to produce as you're 8 going to get energy out of them. So, you know, you may be 9 helping more full employment, but you're not necessarily 10 achieving anything. 11 And I'm very concerned about some of the 12 implications of not only the air quality standards, but in 13 some of these things the performance standards. And we've 14 invested heavily in a fleet of natural gas buses now. And 15 I'm being told that we're going to have now a new kind of 16 natural gas with a different methane rating, and a whole 17 series of operational questions come to mind. 18 We really need I think by our staff -- I think we 19 need to go back a step. And I don't care about being 20 neutral, because I think we need to learn about what's 21 going on here. And we're going to have everybody in the 22 world trying to sell their product. And to say we're 23 going to sit here and we're going to be neutral and let 24 everybody go out and sell, that causes me some great deal
25 of concern. Page 205CARB Board mtg transcript 11-15-07

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

226 1 And we're going to have elected officials who 2 have already bought into certain products tell us those 3 are the only solutions. And I'm concerned about that. 4 And I think we've got to back up a step and do the best 5 analysis we can, and then on a regular basis have a 6 systematic way that we can look to see what's developed, 7 and understand both the short term, medium term -- I guess 8 all three. And that's what Professor Sperling was saying.
9 I'm convinced we need to do that. We need to look at both
10 the intermediate and what are reserves and where are we 11 going to get this product in the future, or what is the -- 12 how are you going to make it? What are you going to make 13 the hydrogen from and where are you going to get that. 14 I think these are things that I don't feel 15 particularly qualified right now. And, you know, I would 16 have liked to I guess seen, before we got into even 17 adopting this thing that's before us, that we got a little 18 bit better educated with respect to the options, because 19 they're not all created equal. You know, all of them will 20 have advocates projecting a bright future for all of them. 21 But that's not necessarily the case. And I guess to the 22 extent that we're -- you know, we're expecting some 23 miracle to happen and prices are going to come down or 24 prices are going to go up, I'd like to know what those 25 assumptions are. But I feel like if we could maybe

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

227
Page 206CARB Board mtg transcript 11-15-07

1 schedule something and we have that information and we get 2 more in depth into that. 3 I don't have a problem with adopting this today. 4 But I think that we've got some -- at least I will say 5 this for myself. I've got a -- there's a lot going on 6 here and I don't feel particularly qualified to be making 7 decisions. And I don't think to dismiss it as being 8 neutral is necessarily the way to go. We have to start 9 spending money on research and other things. I want to 10 have a better position and a better understanding of, how 11 do we spend that in the best possible way? What are the 12 things we should be spending on? What is our 13 expectations -- our educated expectations on where the 14 future might lie? What are the environmental outcomes? 15 Because these are changing. And, you know, as I -- I 16 thought natural gas was natural gas. And I find out all 17 of a sudden it's not. And we're going to all of a sudden 18 have a lot of product that doesn't have the same methane 19 number and we've been assuming that -- and we don't even 20 know what the minimum is going to be. And we're being 21 told, "Well, just go out and run your buses. Don't worry
22 about it." And the world doesn't work like that. 23 So I guess I would like to use this Board, not 24 just to educate me personally, but to educate me so I can 25 make the decisions. And if I'm going to be asked to

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

228 1 direct where spending is going to take place, you know, 2 I'd like to do that because I have a better understanding 3 of more than just the politics or the various sales 4 pitches that we're going to be given. Page 207CARB Board mtg transcript 11-15-07

5 CHAIRPERSON NICHOLS: Well, I think your points 6 are extremely well taken. And I would just like to
7 comment a little bit. 8 I mean I think in a way the world has passed this 9 report by. And we need to do it because it was 10 legislatively required that we do it and we need to get it
11 over with. But it is not the -- it doesn't answer the 12 questions that you are raising, which are very legitimate 13 questions. 14 The thing that gives me comfort is that the Air 15 Resources Board does have the requirement now, the duty to
16 deal with this issue because of AB 32 and because of the
17 low carbon fuel standard mandate. And so we will be 18 required to educate ourselves and to delve into the issues 19 about the alternative fuels and what they can accomplish. 20 We don't have total authority -- we don't have unique 21 authority in this area, I guess I should say. And the 22 Energy Commission definitely has an important role both in 23 terms of assuring that there's adequate supplies of fuels 24 to allow for the state to keep on generating electricity 25 and keep on moving; it also has responsibilities now in

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

229 1 the R&D area and funding because of 118. And I think we 2 do want to have input to that process. 3 I think -- I'm not sure if I was the only person 4 who used this term. But I have used the term "neutrality" 5 before, and I'd like to defend it a little bit in the 6 sense that when I've used that term in the past, it's been 7 neutrality in the sense of having a goal or a target that
Page 208CARB Board mtg transcript 11-15-07

8 was like an emission standard or, you know, something that 9 was a measurable performance standard. And then you could 10 be neutral about how people -- you know, which fuel or 11 which technology people chose to meet that standard. 12 If the goal is just to sort of equally spend 13 money on all possible alternatives or equally push all 14 possible alternatives, I would agree with you. I don't 15 think that's the right way to go at all. I think our job 16 is to try to project what our needs are going to be in
17 terms of the amount of reductions that we have to see in 18 petroleum use and in carbon in order to meet our air 19 quality and global warming requirements, and then look at 20 what's out there and try to, yes, invest in or otherwise 21 create whatever incentives we can, you know, for the best
22 ones to win. 23 And I'm looking at Professor Sperling, because 24 this is his real area of involvement, at the moment to see 25 if -- I'm getting a head nod. But maybe you'd like to add

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

230 1 something to that as well. 2 BOARD MEMBER SPERLING: Yeah, let me add first a 3 little reassurance that, you know, with the low carbon 4 fuel standard, this is an amazingly robust, powerful 5 instrument if we, you know, adopt it as it's planned to be 6 adopted, as it's been proposed, because it provides the 7 metric of reducing life cycle greenhouse gas emissions. 8 And to the extent that that's one of the most important -- 9 you know, the two most important -- well, I guess the 10 three people think about are oil security, greenhouse 11 gases, and air pollution. But to the extent that fuels Page 209CARB Board mtg transcript 11-15-07

12 meet the greenhouse gas metric, they -- in most cases they 13 also meet the energy security and the air quality goals as 14 well, that they really march up pretty well in almost all
15 cases. 16 So, you know, partly -- a little reassurance, 17 that we really have a policy instrument that really -- for 18 the first time in history really provides a framework, a 19 durable framework, as the language was used here, to 20 accomplish exactly what everyone's concerned about. And 21 it does take away this concern about technology 22 neutrality. Now, that's the first part. 23 The second part is though we do need to think 24 about what more needs to be done. You need to, you 25 know -- but it's more fixing it up around the edges. You

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

231 1 know, are there things that need some extra help? But we 2 do have -- I mean as we follow through the low carbon fuel 3 standard, we've got the most fundamental part of what we 4 need here to move forward. And that should be reassuring
5 to all of us.
6 CHAIRPERSON NICHOLS: It should be.
7 BOARD MEMBER RIORDAN: Madam Chair?
8 CHAIRPERSON NICHOLS: Mrs. Riordan? 9 BOARD MEMBER RIORDAN: I normally don't do this. 10 But I really would like to be able to vote on this. And
11 I'd --
12 CHAIRPERSON NICHOLS: You'd like to call it to a
13 halt? 14 BOARD MEMBER RIORDAN: Yeah. Well, I'd like to
Page 210CARB Board mtg transcript 11-15-07

15 move the resolution that's before us, which is 07-50.
16 SUPERVISOR HILL: Second the motion. 17 CHAIRPERSON NICHOLS: Fair enough.
18 I think we could continue this conversation all 19 day, those of us who are fuel junkies. 20 BOARD MEMBER RIORDAN: Sorry. 21 CHAIRPERSON NICHOLS: That's okay. 22 (Laughter.) 23 CHAIRPERSON NICHOLS: I do want to say though 24 that I would like to actually duly note Randal Friedman's 25 comment, and even though it's not germane exactly to this

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

232 1 report, I hope we are going to be able to get them an
2 answer on their issue in some reasonable time frame. I'm 3 looking in a generic way back at the staff here. 4 But is there something that you all are -- 5 STATIONARY SOURCE DIVISION CHIEF FLETCHER: Yeah,
6 I can address that comment. 7 CHAIRPERSON NICHOLS: Thank you.
8 STATIONARY SOURCE DIVISION CHIEF FLETCHER: Mr. 9 Friedman is right. We have had a policy out there for how 10 B-20 is to play. And it is a legal fuel. There is no 11 restriction against its use. 12 The difficulty is is that retrofit manufacturers 13 have not historically warranteed the use of B-20 for 14 after-treatment devices. And we have been working with 15 those manufacturers. And that was part of the policy that 16 we had floated, was to say, you know, it is something that 17 we want to get concurrence on B-20 use on that. 18 And we made some progress. All new Page 211CARB Board mtg transcript 11-15-07

19 certifications are issued pursuant to warrantying on B-20. 20 We also have a lot of research going on right now 21 on biodiesel from both the emissions perspective as well 22 as looking at different feedstocks for biodiesel. So it's 23 something that we recognize that we'll probably need to do 24 specifications to ensure that there's a high quality 25 biodiesel available. And we need to continue working with

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

233
1 the vehicle -- the retrofit manufacturers to ensure that 2 they will warranty B-20. 3 CHAIRPERSON NICHOLS: Thank you. 4 Okay. Well, I'll expect you to continue to have
5 conversations then.
6 And we have a motion and a second. 7 All in favor say aye. 8 (Ayes.) 9 CHAIRPERSON NICHOLS: Any opposed? 10 None. Carries unanimously. 11 Thank you very much for keeping us on track. And 12 thanks for being with us.
13 BOARD MEMBER SPERLING: Just to be clear. We 14 adopted the two -- that included the modifications? 15 CHAIRPERSON NICHOLS: With the modifications, 16 yes, we did. 17 We're not yet completely done. 18 We have a legislative update, finally. Mr. 19 Oglesby is waiting patiently. 20 CHIEF COUNSEL JENNINGS: Chairman Nichols, this 21 is Tom Jennings. I'd like to mention one thing.
Page 212CARB Board mtg transcript 11-15-07

22 It may not have been clear during the disclosures 23 of ex parte communications on the harbor craft matter
24 whether those included communications that occurred before 25 the October Board meeting as well as between the October

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

234 1 Board meeting and now. I'm going to send something to the 2 Board members to just get clarification if there are 3 additional disclosures. And I'm mentioning it now so that 4 if you have anything written down, save that so that you 5 could use it in a response. 6 CHAIRPERSON NICHOLS: Okay. Thank you. I don't 7 believe any of us did. But -- 8 SUPERVISOR HILL: At the last meeting we did not
9 disclose --
10 CHIEF COUNSEL JENNINGS: That's correct. 11 CHAIRPERSON NICHOLS: Okay. Thank you. 12 Well, we'll certainly make sure that people are 13 aware that they need to go back beyond this most recent 14 period. Thank you. 15 Okay. Thanks for waiting. And we're eager to 16 hear what the Legislature did or didn't do.
17 LEGISLATIVE DIRECTOR OGLESBY: I'll be mindful of 18 your time. I know it's been a long day and I appreciate 19 your patience as we go through our annual legislative
20 review. 21 (Thereupon an overhead presentation was 22 Presented as follows.)
23 --o0o-- 24 LEGISLATIVE DIRECTOR OGLESBY: I'm Rob Oglesby, 25 your Legislative Director. And I'd like to say that, Page 213CARB Board mtg transcript 11-15-07

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

235 1 Madam Chairman and members of the Board and Mr. Goldstene, 2 thank you for the opportunity to be here today. 3 The purpose of this briefing is twofold: 4 First, to give the Board a preview of recently 5 enacted bills that create new programs or add new tasks 6 that will come before you for policy decisions and 7 implementations. 8 And, second, to provide the public with a brief 9 review of the significant air quality legislation of 2007.
10 --o0o-- 11 LEGISLATIVE DIRECTOR OGLESBY: As you well know, 12 the need to improve air quality and reduce global warming 13 emissions has never been more important. And the level of 14 public interest and concern translates into more action in 15 the Legislature. 16 Overall, there is great interest in moving 17 forward on legislation to reduce traditional smog forming 18 and toxic air pollutants, and now there is growing 19 momentum to reduce emissions that contribute to global 20 warming. 21 This adds a new dimension to the scope of work 22 that the Legislative Office handles. For example, we now 23 have an interest in water supply and delivery, building 24 standards and forests, all because these issues have a 25 direct bearing on global warming emissions.

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

236
Page 214CARB Board mtg transcript 11-15-07

1 --o0o--
2 LEGISLATIVE DIRECTOR OGLESBY: In addition to 3 action on specific bills, the Legislature held 19 special 4 hearings related to air pollution issues. The topics were 5 diverse, but particular attention was devoted to 6 transportation, infrastructure, and global warming.
7 --o0o--
8 LEGISLATIVE DIRECTOR OGLESBY: All of the air 9 quality bills, along with veto and signing messages, and a 10 listing of the special hearings are presented in our 11 annual report. 12 You should have this report before you, and 13 copies are available here for members of the public. And 14 the report can also be accessed online at ARB's website.
15 --o0o-- 16 LEGISLATIVE DIRECTOR OGLESBY: Now I'll highlight 17 specific bills, budget actions and legislative issues 18 beginning with some of the highlights of the state budget. 19 The state budget and its trailer bills include 20 many conditions that will guide the actions you must take 21 to reduce global warming, administer Proposition 1B funds, 22 and clean up the state's highest polluting school buses. 23 First, I'll address budget actions related to 24 climate change.
25 --o0o--

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

237 1 LEGISLATIVE DIRECTOR OGLESBY: The budget 2 fulfills ARB's immediate need to staff up to meet the 3 challenges imposed by AB 32 during the current fiscal 4 year. Page 215CARB Board mtg transcript 11-15-07

5 ARB received 125 new positions to augment efforts 6 that were already underway. Last year's budget gave us an 7 initial 15 positions dedicated to climate change
8 activities. 9 AR 32 authorizes fees to cover program costs. 10 But until the program is up and running, our activities 11 are supported by appropriations from existing funds. 12 However, one of the Legislature's budget actions 13 is a requirement that the '08-'09 Governor's budget 14 include a long-term funding strategy for the program. 15 Staff is currently looking at options for different 16 funding strategies. 17 The budget also allocated funds to support two 18 positions to staff the AB 32 Technology and Environmental 19 Justice committees, and specifies that those committees 20 are subject to state public notice and open meeting laws. 21 This is consistent with current practice. 22 Not incidentally, the budget also provided $1 23 million to cover litigation expenses related to the 24 state's defense of ARB's landmark regulations establishing 25 greenhouse gas emission limits for passenger vehicles.

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

238
1 --o0o--
2 LEGISLATIVE DIRECTOR OGLESBY: In connection with 3 the appropriation for AB 32 implementation, the 4 Legislature imposed restrictions on market-related 5 activities that may be undertaken by Board staff. 6 Most of this was provoked by the ongoing 7 discussion about the role of regulations versus market
Page 216CARB Board mtg transcript 11-15-07

8 mechanisms to achieve reductions in global warming
9 emissions. 10 And so the Legislature included language in a 11 budget trailer bill, SB 85, that limits staff work to 12 assessment and evaluation of potential market-based 13 compliance mechanisms, and precludes adoption or 14 implementation of those mechanisms, at least until the ARB 15 has developed and approved a scoping plan and related 16 requirements in AB 32.
17 --o0o--
18 LEGISLATIVE DIRECTOR OGLESBY: SB 85 also added 19 duties for the Secretary of Cal/EPA in her role as the 20 coordinator of greenhouse gas reduction activities by 21 state agencies. 22 Beginning this January, state agencies are 23 directed to annually report to the Secretary on actions 24 they have taken to meet greenhouse gas emission reduction 25 targets. The agencies must report the actual greenhouse

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

239 1 gas emissions reduced as a result of their actions. And 2 the report must also include a list and timetable for 3 adoption of any additional measures needed to meet 4 greenhouse gas emission reduction targets. 5 Cal/EPA will post that information on the 6 agency's Internet website in the form of a state agency 7 greenhouse gas emission reduction report card. 8 While this bill creates a new greenhouse gas 9 reporting mandate for state agencies, it essentially 10 codifies and provides deadlines for activities practiced 11 already by the Secretary and the Climate Action Team. The Page 217CARB Board mtg transcript 11-15-07

12 provisions in SB 85 are consistent with the goals of the 13 Governor, and go a step beyond by requiring the creation 14 and publication of the report card.
15 --o0o-- 16 LEGISLATIVE DIRECTOR OGLESBY: Finally, SB 85 17 also includes provisions related to water and climate 18 change. 19 California uses a lot of energy to move water. 20 In fact, about 20 percent of the electrical energy 21 consumed in the state is used to transport water. That 22 provides a real opportunity for greenhouse gas reductions 23 through improvements in energy efficiency and
24 conservation. 25 SB 85 requires the Department of Water Resources

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

240 1 to use reasonable, feasible, and cost-effective efforts to 2 improve energy efficiency and to increase the use of 3 renewable energy related to water operations. And the 4 Department must provide annual progress reports on the 5 status of any contracts for fossil-fuel-generated 6 electricity, efforts to reduce dependency on fossil fuels, 7 and changes to the portfolio of existing energy contracts. 8 Let me now shift to budget bills related to goods
9 movement.
10 --o0o-- 11 LEGISLATIVE DIRECTOR OGLESBY: Proposition 1B 12 provides a total of $1 billion for goods movement emission 13 reduction projects subject to appropriation by the 14 Legislature.
Page 218CARB Board mtg transcript 11-15-07

15 This year the Legislature appropriated $250 16 million to reduce pollution related to goods movement 17 along California's trade corridors. Budget trailer bill 18 SB 88 establishes a framework for the program. The 19 specific details of the types of project and the project 20 selection process will be spelled out in ARB guidelines 21 that you will consider this January. So I'll just provide 22 a brief overview of the bill and a progress report on the
23 staff's activities to date. 24 The budget trailer bill requires ARB to establish 25 program guidelines and an annual allocation of funds to

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

241 1 local agencies like air districts and ports. Key elements 2 of the guidelines are to include a funding application 3 process, competitive project selection criteria, cost 4 effectiveness considerations, and accountability 5 requirements. Local agencies are responsible for 6 proposing and implementing the projects. 7 The legislation directs ARB to maximize the
8 emission reduction benefits and achieve the earliest 9 possible health risk reduction in heavily impacted
10 communities.
11 --o0o-- 12 LEGISLATIVE DIRECTOR OGLESBY: Projects must 13 achieve emission reductions not required by law or 14 regulation, and be allocated in the four major trade
15 corridors. 16 Projects eligible for funding include: Diesel 17 trucks, locomotives, harbor craft, cargo handling 18 equipment, shore-based electrical power for ships, and Page 219CARB Board mtg transcript 11-15-07

19 electric infrastructure for truck stops and other
20 locations. 21 The Board must consider availability of matching 22 funds from federal, local, and private sources.
23 --o0o--
24 LEGISLATIVE DIRECTOR OGLESBY: Staff released a 25 draft implementation concept paper in mid-September. Five

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

242 1 public workshops were held the first two weeks of October. 2 And additional consultation meetings and public workshops 3 will be held beginning late November, with the final 4 guidelines being brought to you in January. 5 For this current fiscal year only, ARB can 6 execute grant agreements directly with ports, railroads, 7 or local air districts to fund up to 25 million in 8 projects. This provision is intended to expedite a 9 portion of the first year's funding and achieve early 10 emission reductions. Staff has been working with local 11 air districts to identity projects best suited for 12 expenditure of that money. Projects recommended for 13 funding will be brought to the Board for approval by June
14 '08. 15 Going forward, ARB is required to approve 16 projects annually. 17 Now let me move on to another budget trailer bill
18 issue that shares a link with the infrastructure bond -
19 school buses.
20 --o0o-- 21 LEGISLATIVE DIRECTOR OGLESBY: The budget
Page 220CARB Board mtg transcript 11-15-07

22 includes $193 million in Proposition 1B bond funds for the 23 replacement and retrofit of school buses. This builds on 24 over $100 million in state funds that have been 25 appropriated since 2000 for school bus replacement and

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

243 1 retrofits. And like goods movement, SB 88 defines the 2 basic fund allocation process. ARB staff plans to present 3 proposed program updates and funding allocations to the 4 Board in early 2008, and have funding available to the 5 implementing agencies in the spring. 6 Proposition 1B funds will replace all pre-1977 7 school buses and provide funds to either replace or
8 retrofit diesel school buses built since 1977. This will 9 allow the 75 oldest diesel buses to be replaced with
10 either a new clean diesel school bus or a clean
11 alternative fuel bus. Then ARB must allocate the 12 remaining funds to the districts based on the number of 13 1977 to '86 school buses they have in their possession. 14 Districts have the discretion to apply their allocations, 15 based on that formula, for replacement or retrofit of 16 buses. And all replaced school buses must be scrapped.
17 --o0o-- 18 LEGISLATIVE DIRECTOR OGLESBY: This year's budget 19 also included an appropriation that will continue progress 20 on the hydrogen highway. 21 The last two budget cycles provided $6.5 million 22 each year for state-sponsored hydrogen fueling stations 23 and hydrogen vehicle demonstration projects. This year's 24 budget added a $6 million installment to the cause. Of 25 this, $5 million will be used to support the addition of Page 221CARB Board mtg transcript 11-15-07

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

244 1 new stations, while the remainder will fund ARB staff 2 positions.
3 --o0o-- 4 LEGISLATIVE DIRECTOR OGLESBY: The Legislature 5 also put forth some big air quality bills that were 6 approved by the Governor in September.
7 --o0o-- 8 LEGISLATIVE DIRECTOR OGLESBY: AB 118, which 9 we've talked about much today, by Assembly Speaker Nunez, 10 provides over $80 million a year for two air quality 11 improvement programs administered by the ARB, and over 12 $120 million a year for an alternative fuels and advanced 13 technology program administered by the Energy Commission. 14 The revenues are generated from increases in 15 motor vehicle and other fees and from energy-related fund 16 transfers. These revenues will be subject to 17 appropriation by the Legislature.
18 --o0o--
19 LEGISLATIVE DIRECTOR OGLESBY: AB 118 includes 20 overarching guidelines for the ARB and the Energy 21 Commission to ensure that projects do not adversely impact 22 natural resources, result in emission reductions that can 23 be measured and quantified, and fund projects that are not 24 otherwise required by state or federal law. 25 Additionally, ARB is required to develop

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

245
Page 222CARB Board mtg transcript 11-15-07

1 guidelines for both the ARB and the Energy Commission 2 programs to ensure projects do not allow emissions 3 backsliding.
4 --o0o-- 5 LEGISLATIVE DIRECTOR OGLESBY: Of the $80 million 6 administered by the ARB, about 50 million a year is 7 dedicated to an expansive list of air quality programs.
8 --o0o--
9 LEGISLATIVE DIRECTOR OGLESBY: This slide shows a 10 partial list of eligible projects. So you have quite a
11 menu to choose from.
12 --o0o--
13 LEGISLATIVE DIRECTOR OGLESBY: The second air 14 quality program created by the bill provides about $30 15 million for a vehicle scrap program to be developed by the 16 ARB in consultation with the Bureau of Automotive Repair. 17 The goal of this program is to accelerate the 18 turnover of the state's fleet of aging vehicles. This 19 program would allow vehicle owners to be compensated to 20 scrap high polluting passenger vehicles or light-duty
21 trucks. 22 The program is an important piece of the State 23 Implementation Plan, or SIP. And ARB's recently approved 24 SIP has highlighted the need for retiring an additional 25 60,000 vehicles in the South Coast and San Joaquin air

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

246 1 basins annually, which would result in the reduction of 2 6.4 tons per day of smog-forming emissions. To meet this 3 goal, ARB projects that the program would need about $90 4 million annually. Page 223CARB Board mtg transcript 11-15-07

5 And AB 118 is a good down payment and provides 30 6 million per year, which will result in the reduction of 7 about two tons per day of emissions.
8 --o0o-- 9 LEGISLATIVE DIRECTOR OGLESBY: The third, and 10 largest, program created by the bill is the $120 million 11 provided for an alternative and renewable fuel and vehicle 12 technology program administered by the Energy Commission. 13 Eligible projects include research, technology, 14 and other market-based programs in the area of advanced 15 vehicle energy efficiency, alternative fuels, lower 16 carbon, and renewable fuels.
17 --o0o--
18 LEGISLATIVE DIRECTOR OGLESBY: Let me mention
19 three additional bills that will make a dent in the 20 emissions from passenger vehicles and diesel trucks.
21 --o0o-- 22 LEGISLATIVE DIRECTOR OGLESBY: AB 1488 by 23 Assembly Member Mendoza adds light- and medium-duty diesel 24 vehicles to the smog check program and fulfills a
25 commitment in the SIP.

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

247 1 Adding diesel passenger vehicles to the smog 2 check program will reduce NOx by a modest .7 tons per day; 3 but, most importantly, the bill establishes an air quality 4 safeguard as automakers introduce increasing numbers of 5 new diesel passenger vehicles in the years ahead.
6 --o0o-- 7 LEGISLATIVE DIRECTOR OGLESBY: Senator Cogdill's
Page 224CARB Board mtg transcript 11-15-07

8 SB 23 requires the San Joaquin Valley Air District to 9 develop a pilot program to replace high-polluting vehicles 10 that fail a smog check with denoted low-emission motor 11 vehicles within the San Joaquin Valley. This bill creates 12 a limited pilot program for 200 vehicle exchanges and 13 requires a report from the district afterwards.
14 --o0o-- 15 LEGISLATIVE DIRECTOR OGLESBY: Another bill, AB 16 233, by Assembly Member Jones, addresses diesel emissions 17 from heavy-duty diesel trucks. ARB must develop an 18 enforcement plan for existing and planned diesel risk 19 reduction regulations.
20 The bill also raises the minimum fine for 21 violation of ARB's commercial vehicle idling regulations 22 from $100 to $300, and requires DMV to prohibit 23 registration of diesel vehicles which have an outstanding 24 air pollution violation. ARB is currently developing an 25 enforcement plan that you'll hear more about over the next

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

248 1 year.
2 --o0o--
3 LEGISLATIVE DIRECTOR OGLESBY: I'll now turn to a 4 few bills that directly relate to the governance of some
5 local air districts.
6 --o0o--
7 LEGISLATIVE DIRECTOR OGLESBY: Senator Machado's 8 SB 719 increases the size of the San Joaquin Valley 9 Unified Air Pollution Control District Governing Board 10 from 11 to 15 members by adding a physician and an expert 11 in public health. Both will be appointed by the Governor. Page 225CARB Board mtg transcript 11-15-07

12 And the bill limits the terms of the Governor's appointees 13 to four years. 14 The bill also adds two city representatives to 15 the Board, and limits the new city representative terms to 16 three years. All current members of the Board remain
17 without term limits. 18 Given the Board's current composition, two new 19 city council members will have to be selected. One member 20 will have to come from a city with a population of under 21 100,000 from the District's central area. And this 22 includes a city within the Madera, Fresno, or Kings 23 counties. The other member must be selected from a city 24 within the northern or southern regions of the District 25 with a population of over 100,000. The only eligible

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

249 1 cities that meet this requirement are Stockton, Modesto, 2 Bakersfield, and Visalia.
3 --o0o--
4 LEGISLATIVE DIRECTOR OGLESBY: There are two more 5 bills that deal with local air district governing boards. 6 SB 886, by Senator Negrete McLeod, adds one seat 7 to the South Coast District Board by creating a seat 8 specific to the City of Los Angeles. That bill also 9 removed term limit provisions for the governing board 10 chairs serving in the South Coast, Sacramento, and Mojave
11 Desert districts. 12 SB 144, by the Senate Local Government Committee, 13 allows Sacramento local governments to nominate alternates 14 for governing board members in the event of their absence
Page 226CARB Board mtg transcript 11-15-07

15 from district proceedings.
16 --o0o-- 17 LEGISLATIVE DIRECTOR OGLESBY: Looking ahead, 18 I'll mention a few high priority air quality issues that 19 we'll be working on during the second year of the session.
20 --o0o-- 21 LEGISLATIVE DIRECTOR OGLESBY: First, land use 22 planning plays a key role in climate change mitigation, 23 and interested stakeholders are working hard to develop 24 new guidelines and best practices for local planning 25 efforts. The principle vehicle in this debate is SB 375

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

250 1 by Senator Steinberg.
2 Goods movement will also continue to be an area 3 of focus for the Legislature. The Governor committed to 4 working with Senator Lowenthal to develop a significant 5 source of revenue to mitigate air pollution for goods 6 movement at the ports. SB 974 will likely remain the key 7 legislative vehicle for these actions, or at least
8 discussions. 9 While we gained resources for scrap and authority 10 to add diesel passenger vehicles to the smog check 11 program, another bill that would implement a smog check 12 SIP measure remains pending. That bill, AB 616, by 13 Assembly Member Jones, was held in the Senate 14 Appropriations Committee during the last weeks of the 15 session, but may be advanced this year. 16 This bill requires an annual smog check for 17 vehicles that are 15 model years old or older. Vehicles 18 older than the 1976 model year remain exempt from smog Page 227CARB Board mtg transcript 11-15-07

19 check, as are vehicles that are likely to pass a smog
20 check. 21 In addition, AB 616 raises the low income 22 eligibility criteria for consumers interested in 23 participating in BAR's Repair Assistance Program. 24 If passed in 2008, this bill fulfills the largest 25 smog check component of the SIP. The failure rates for

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

251 1 cars older than 15 years are 30 percent, over twice the 2 fleet average failure rate. Testing older vehicles that 3 would most likely fail a smog check before the end of 4 their biennial cycle could cost-effectively result in an 5 estimated emissions benefit of 20.6 tons per day of 6 smog-forming emissions by 2014. 7 And also -- another bill -- implementation of the 8 Speaker's air quality and alternative fuels bill, AB 118, 9 requires additional action to appropriate funds to the 10 program during the next budget cycle. Like proposition 11 1B, implementation of this is likely to include specific 12 direction on how the program should operate. 13 And, finally, Congress has been working to 14 develop climate change legislation and energy policy. The 15 ARB, Cal/EPA, and the Governor's Office are taking an 16 active role to help shape federal legislation in these 17 areas. It is clear that California now has a unique 18 opportunity to influence policy at this critical juncture.
19 --o0o-- 20 LEGISLATIVE DIRECTOR OGLESBY: This concludes my 21 presentation. I want to thank you for your attention.
Page 228CARB Board mtg transcript 11-15-07

22 And on behalf of the entire Legislative Office, I want to 23 thank the Chairman, Mr. Goldstene, the Executive Office 24 and Program staff for their steadfast support and guidance 25 throughout the year.

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

252 1 And if you will indulge me for about ten seconds 2 more, I'd like the members of the Legislative Office staff
3 that are in the room -- 4 CHAIRPERSON NICHOLS: Thank you. I was just 5 about to say I think they're right there. So you can have 6 them be introduced, please. 7 LEGISLATIVE DIRECTOR OGLESBY: -- to stand up so 8 I can introduce them. There are some changes at staff and
9 some new Board members that haven't met them. 10 And here we have Lisa Macumber, Bruce Oulray, 11 Greg Vlasek, and Justin Paddock. And upstairs working 12 tirelessly is one of the most important people of our 13 office, Ollie Awolowo, who helps drive the engine of the 14 office. And in San Francisco today at a special hearing 15 representing the Air Board is Sheila Marsee, the most 16 senior member of our office, testifying at a committee 17 related to toxic air pollutants in an indoor environment. 18 CHAIRPERSON NICHOLS: Thank you very much. 19 Thanks. And congratulations on a really terrific year. I
20 read a number of stories that said this wasn't such an 21 exciting legislative year. From the Air Resources point 22 of view, there were quite a number of bills that we were 23 tracking. I'm not sure the total number, but it was a
24 lot.
25 LEGISLATIVE DIRECTOR OGLESBY: It was over 200. Page 229CARB Board mtg transcript 11-15-07

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

253 1 CHAIRPERSON NICHOLS: And a lot to be analyzed. 2 And not only did the staff do the usual job of, you know, 3 trying to make sure that bad bills didn't go forward and 4 that good bills did, but there were some really pretty 5 tricky ones. 6 So I think we've got a number of issues coming up 7 in the coming year, including taking a higher profile on 8 federal actions relating to climate, which I think 9 inevitably, given the work that the state is doing, we're 10 going to have to be vigilant to protect ourselves and to 11 make sure that bills that do move forward are compatible 12 with what we're designing here under AB 32. We get asked 13 all the time for help and input on that. And so that's 14 going to be a larger area of activity as well. 15 But I have been really gratified since I got to
16 the Air Resources Board that -- I've had a lot of feedback 17 about our legislative operation from members and their 18 staffs, who are not shy about complaining, and the 19 feedback is really very positive. 20 So I just want to congratulate you all and thank 21 you for a good year's work. 22 LEGISLATIVE DIRECTOR OGLESBY: Thank you very
23 much. 24 CHAIRPERSON NICHOLS: Thank you. 25 Okay. This is not a public comment item and

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

254
Page 230CARB Board mtg transcript 11-15-07

1 nobody put in cards. 2 We do have a general public comment session 3 though. And I know Tim Carmichael wanted to address the
4 Board. 5 So, Tim, you're the only thing standing between 6 us and adjournment. 7 (Laughter.) 8 CHAIRPERSON NICHOLS: No pressure.
9 MR. CARMICHAEL. And I wouldn't do this if it 10 wasn't a very important issue.
11 CHAIRPERSON NICHOLS: I know. 12 MR. CARMICHAEL: I'm commenting on the fact that 13 for the second Board meeting in a row your closed session
14 list of items does not include a critical issue to the 15 environmental community. 16 We submitted a year ago, December 2006, a Public 17 Records Act request regarding the Zero Emission Vehicle 18 Program to this agency. And the fact is over the last 19 decade we are almost always in sync with your Legal 20 Department and in many cases in court on the same side as 21 your Legal Department. But we got documents in the spring 22 that were more likely to come from Vice President Cheney's
23 office in the amount that was redacted from them than 24 we've ever seen from a document coming from this agency. 25 We've had several exchanges, positive, over the

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

255 1 spring and summer. In the late summer the First Amendment 2 Project took over or engaged on this because they think 3 this case is so important. It's a matter of principle. 4 It relates to sharing information to verify the automakers Page 231CARB Board mtg transcript 11-15-07

5 are complying with the ZEV program. And their excuse or 6 explanation is it's protected information. We 7 fundamentally disagree with it. 8 But it's important for you to know it's not just 9 about ZEV credits. It's a principle matter for anybody 10 that this agency is going to regulate today or in the 11 future. If they have the ability to not share information 12 to show that they are in compliance with the program, that 13 is not okay. 14 And we've been waiting since August for the staff 15 to respond. And that's my main beef today, is we've been 16 waiting, waiting, waiting. And basically I'm here today 17 to ask you to tell your staff that they need to respond to 18 this latest round of communication, which I'm pretty sure 19 was at the end of August 20 CHAIRPERSON NICHOLS: Have you been advised that 21 there was some policy overriding that you couldn't -- that 22 the information would not be released, or are you just not 23 getting a response at all?
24 MR. CARMICHAEL: The last communication we had 25 with your staff was either in -- I think it was early

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

256 1 October, led us to believe that this Board would have a 2 closed session briefing at the October meeting or at the 3 November meeting. And it hasn't happened. 4 CHAIRPERSON NICHOLS: Well, I was completely 5 unaware of the request. And I'm sorry about that. It has 6 not come to my attention that this issue even existed.
7 I don't know if the staff wants to comment or if
Page 232CARB Board mtg transcript 11-15-07

8 we should just direct them to put it before us at the next 9 meeting.
10 CHIEF COUNSEL JENNINGS: I can shed a little 11 light on that. 12 We had been working on this request. It has a 13 lot of complicated issues. We expect to provide a full 14 response prior to the December hearing. So I know it's 15 been a long time, but it won't be much longer.
16 SUPERVISOR HILL: Can I make a -- Madam Chair? 17 CHAIRPERSON NICHOLS: Yes, please. 18 SUPERVISOR HILL: So your response will then be 19 to the request and not a response -- perhaps it should be 20 shared with the Board in closed session at some point 21 before the response is given to the -- 22 CHAIRPERSON NICHOLS: If the response is not to 23 fully disclose the information that's being asked for, in
24 which case the Coalition would be satisfied -- if the 25 Coalition is not going to be satisfied with the results,

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

257
1 then I think we need to be briefed on that in closed
2 session.
3 CHIEF COUNSEL JENNINGS: Yeah. I am not the 4 person directly working on this. But we can get back to 5 you and let you know exactly what's going on and what the
6 status is. 7 CHAIRPERSON NICHOLS: Well, I think you have a 8 direction as to how to handle it, which is either give 9 them what they're asking for or plan on having a meeting 10 with us in December, one or the other. 11 MR. CARMICHAEL: Okay. We understand loud and Page 233CARB Board mtg transcript 11-15-07

12 clear. 13 CHAIRPERSON NICHOLS: Thank you.
14 BOARD MEMBER SPERLING: Can I chime in on this
15 one.
16 CHAIRPERSON NICHOLS: Yes.
17 BOARD MEMBER SPERLING: I know a little about
18 this. 19 And, you know, I agree -- I mean I know there's a 20 concern that there's some legal principles at stake. But 21 I do think that it is important to make the information 22 available in some form, you know, maybe in a more 23 aggregate form that will, you know, meet some legal 24 concerns to the extent that they, you know, are upheld. 25 But this is really important to understand -- for

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

258 1 anyone on the outside to be able to interpret the ZEV 2 rules and what they really mean and, you know -- and the 3 design of it. 4 CHAIRPERSON NICHOLS: Absolutely.
5 BOARD MEMBER SPERLING: So I do feel that this is 6 an important issue. 7 CHAIRPERSON NICHOLS: Well, I'm aware that we do
8 receive confidential information and that we have 9 procedures for protecting that information. But there's 10 also some very stringent state laws about what can be kept
11 confidential. 12 And I appreciate the staff is taking their time 13 and reviewing it thoroughly. But I think we need to give 14 you some sense of direction here.
Page 234CARB Board mtg transcript 11-15-07

15 BOARD MEMBER D'ADAMO: I would just chime in 16 also. I think this is on the issue of accounting and 17 credits, which is very different from technology and costs 18 and that information. So I have felt all along that -- 19 well, I would lean on the side of disclosure.
20 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: I think 21 at the May Board meeting we got that message very, very 22 clearly from the Board. But the problem is is that it is 23 this very complicated issue of credits and ownership, and 24 it's kind of -- I guess the analog is, you know, having to 25 disclosure your bank account to everybody, that kind of

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

259 1 thing. So that's what I think is -- it's new and 2 different and that's what's making it a tough issue. 3 CHAIRPERSON NICHOLS: Well, and, frankly, what we 4 may learn from this is that there are problems with the 5 system as it currently exists. And if we know that, 6 that's an important thing to consider moving forward. 7 So I really appreciate the fact that the staff 8 has -- I've never known there to be an instance of, you 9 know, deliberately trying to not disclose data here. I 10 don't think that's a problem. But we just have to find a 11 way that we can get a decision made.
12 MR. CARMICHAEL: And I want to make sure. I was 13 not suggesting that was the case. But we are very 14 frustrated by the long time without a response. 15 So I appreciate the Board's responses very much. 16 Thank you. 17 CHAIRPERSON NICHOLS: Thank you. 18 I don't see any more commenters in the audience. Page 235CARB Board mtg transcript 11-15-07

19 And therefore I think I hear a unanimous vote for 20 adjournment. Thanks. 21 Thank you, everybody. 22 (Thereupon the California Air Resources Board 23 adjourned at 4:08 p.m.)
24
25

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345

260
1 CERTIFICATE OF REPORTER 2 I, TIFFANY C. KRAFT, a Certified Shorthand 3 Reporter of the State of California, and Registered 4 Professional Reporter, do hereby certify: 5 That I am a disinterested person herein; that the 6 foregoing hearing was reported in shorthand by me, 7 Tiffany C. Kraft, a Certified Shorthand Reporter of the 8 State of California, and thereafter transcribed into 9 typewriting. 10 I further certify that I am not of counsel or 11 attorney for any of the parties to said hearing nor in any 12 way interested in the outcome of said hearing. 13 IN WITNESS WHEREOF, I have hereunto set my hand 14 this 29th day of November, 2007.
15
16
17
18
19
20
21
Page 236CARB Board mtg transcript 11-15-07

22 23 TIFFANY C. KRAFT, CSR, RPR 24 Certified Shorthand Reporter
25 License No. 12277

PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 

Page 237