7           CHAIRPERSON NICHOLS:  Thanks.

 8           T.L. Garrett and then Nicole Shahenian.

 9           MR. GARRETT:  Madam Chair, honorable Board

10  members, my name is T.L. Garrett representing the Pacific

11  Merchant Shipping Association.  We represent ocean

12  carriers and terminal operators on the west coast of the

13  United States that move approximately 90 percent of the

14  containerized cargo in and out of the United States.

15           We have a number of concerns remaining on this

16  regulation.  I want to command staff as well.  They've

17  been great to work with.  They've sat down and listened to

18  our concerns.  They scheduled special meetings with our

19  members to address the concerns.  But there are still a

20  number of them outstanding.

21           Just the highlight some of them, our biggest

22  concern has to do with the terminal operator being

23  responsible for the plant.  We believe that is

24  inappropriate.  We think since we have no land use

25  authority, no ability to do CEQA or issue permits to

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 1  ourselves, that it would be more appropriate on a port

 2  wide basis to assign that responsibility to the port

 3  authorities, have them do the planning documents, do the

 4  appropriate approvals, and also through their leasing

 5  authority amortize the cost again the broad number of

 6  terminal operators to take out some of the variability

 7  that's reflected in the cost effectiveness numbers here.

 8           We also think that this is an instance where the

 9  industry is far ahead of the public sector.  We have more

10  vessels out there today that are capable of being plugged

11  in then there are plugs for the vessels.

12           The staff report acknowledges the large number of

13  companies that have proactively taken measures, not just

14  for cold ironing, but for other technologies to address

15  these issues at the berth for the public health of the

16  citizens in California.  We are very proud of that.  And

17  if you look at the Clean Air Action Plan, those efforts,

18  your regulation essentially becomes a backstop measure for

19  the Clean Air Action Plan.  So there's no real analysis --

20  today is the first time I've seen an attempt by staff to

21  quantify the additional benefits of this regulation beyond

22  the Clean Air Action Plan.  We think more work needs to be

23  done on that.

24           We think that staff is going to move forward and

25  place that responsibility on the terminal operators.  At

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 1  the very least, staff should be committed to coming up

 2  with detailed criteria so that as we are preparing these

 3  plans and talking about the number of terminals that you

 4  saw earlier, if we're preparing these plans, we know what

 5  it's going to take to get these plans approved when

 6  they're actually submitted.

 7           On another fairness issue, if a power utility

 8  cannot provide power to the ships through no fault of the

 9  ship operator, they shouldn't be penalized for the failure

10  by the power utility.  That should not be counted in their

11  overall compliance.

12           Finally, on the 15-day changes, we have one

13  significant concern.  And it has to do with the language

14  that ships must use shore power if available.  Some of the

15  terminals have gone ahead and provided for shore power.

16  Are we now to assume that because of their proactivity all

17  vessels now calling at those terminals are going to be

18  required to plug in?  It's a question to staff we haven't

19  had the opportunity to ask.  But we think it's a key

20  question, because I don't think you want to penalize early

21  compliance behavior.  I think the intent was actually to

22  provide a mechanism to develop credits.

23           Bottom line, we think the voluntary efforts that

24  have been demonstrated by the industry should speak for

25  themselves.  The Clean Air Action Plan adopted by the

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 1  ports should be allowed to proceed in a timely manner and

 2  that voluntary efforts will largely take care of this

 3  effort, and we ask you to step back from this regulation.

 4  Thank you.

 5           CHAIRPERSON NICHOLS:  Thank you, Mr. Garrett.

 6           STATIONARY SOURCE DIVISION CHIEF FLETCHER:  If I

 7  might just make a clarification.  The requirement for

 8  hooking up to shore power if it's available is not a

 9  15-day requirement.  That has been part of the regulation

10  throughout.  So all we're saying is if you have the

11  capability to hook up and the berth has the capability to

12  hook up, then you need to hook up.

13           CHAIRPERSON NICHOLS:  Then do it.  Okay.

14           MR. GARRETT:  May I ask, does that apply to both

15  the vessel's ability as well as the berth's ability.

16           STATIONARY SOURCE DIVISION CHIEF FLETCHER:  Yes.

17           BOARD MEMBER SPERLING:  Could I ask one question?

18  You said most large number of ships are already outfitted

19  capable to hook up to shore power?

20           MR. GARRETT:  There is a large number of

21  proactive companies that have gone down this technology

22  pathway.

23           BOARD MEMBER SPERLING:  Why is it?  Is it because

24  other ports in other parts of the world?  Why have they

25  done this?

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 1           MR. GARRETT:  I think they looked at it as a way

 2  to demonstrate their good citizenship, their corporate

 3  responsibility as a means of addressing what is perceived

 4  by all as a very real public health concern by the

 5  citizens of California.

 6           CHAIRPERSON NICHOLS:  Yes, Nicole Shahenian,

 7  followed by Kevin Norton.

 8           MS. SHAHENIAN:  Chairwoman Nichols, members of

 9  the Board, my name is Nicole Shahenian.  Thank you for

10  allowing me to speak today on behalf of Breathe

11  California.

12           Breathe California is comprised of five statewide

13  affiliate organizations throughout the state, including

14  offices in Sacramento, San Francisco, the Silicon Valley,

15  the Central Coast, and Los Angeles.  Since 1904, Breathe

16  California's five local agencies have worked to reduce the

17  impact of lung disease through prevention, education,

18  advocacy, and patient services.

19           Breathe California is in strong support of the

20  proposed regulation to reduce emissions from diesel

21  auxiliary engines on the ongoing vessels while at berth.

22  Marine emissions account for 30 percent of all diesel

23  particulate matter in California.  CARB's diesel

24  particulate matter exposure assessment for the ports of

25  L.A. and Long Beach found that emissions from ongoing

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 1  vessels with the top cause of elevated cancer risk from on

 2  port sources.

 3           As trade volume increases, ships are expected to

 4  contribute roughly three-fourths of the diesel PM from

 5  freight transportation sources by 2020.  Communities

 6  living in close proximity to the ports experience higher

 7  levels of high health risk from the associated air

 8  pollution.

 9           This regulation will reduce the number of

10  premature deaths, prevalence of cancer, and impacts to

11  lung and cardiovascular health caused by exposure to dirty

12  diesel exhaust from ships.

13           We ask that the regulation be strengthened to

14  tighten loopholes and phase in early compliance rather

15  than defer all compliance until 2014.

16           In particular, we also ask that you close the

17  passenger ship loophole.  This regulation in its current

18  form exempts container fleets that visit a port less than

19  25 times per year and passenger ships that visit less than

20  five times per year.  This could result in a significant

21  loophole because polluting ships may not be required to

22  comply.  This requirement should apply to each vessel

23  rather than to fleets so that cruise lines and shippers

24  cannot create subsidiaries to evade public health

25  compliance.

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 1           Passenger vessels can remain in ports for

 2  extended periods of time, operating with hundreds of

 3  people on board and nearby communities breathing in

 4  significant amounts of harmful disease pollution.

 5           The rule should require all cruise vessels

 6  visiting California to use shore power while at berth.

 7           We also ask that you continue to reduce

 8  greenhouse gas reduction from -- greenhouse gas reductions

 9  from this regulation can be significant in achieving early

10  reductions in keeping with the spirit of AB 32, the Global

11  Warming Solutions Act.  Compliance should be held to the

12  GHG standards set for distributed generation or a higher

13  standard to ensure the maximum potential reductions

14  through this rule.

15           Breathe California encourages the Board not to

16  wait until 2014 for public health.  CARB's diesel risk

17  reduction plan commits to reducing the health risks from

18  diesel PM by 75 percent in 2010.  California may not be on

19  track to meet this target unless regulations such as this

20  one accelerate compliance.

21           CARB can send a clear signal to ports, terminal

22  operators, and shipping lines to ship incrementally

23  towards shore power by incorporating 2010 emission

24  reduction requirements and adding an interim deadline of

25  2012.

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 1           We support the Coalition for Clean Air's

 2  recommendation to achieve this goal articulated in the

 3  GMERP, twenty percent of all ship visits to California

 4  ports using shore power by 2010.  We urge CARB to phase in

 5  compliance so that by 2012 40 percent of ship visits be

 6  required to use shore power and 60 percent of ships would

 7  be required by 2014 and 80 percent by 2016.

 8           CHAIRPERSON NICHOLS:  Your time is up.

 9           MS. SHAHENIAN:  Thank you.

10           CHAIRPERSON NICHOLS:  Thank you.

11           Kevin Norton and Seiichi Tsurumi, Rupal Patel.

12           MR. NORTON:  Good afternoon, Madam Chair and

13  Board members.  My name is Kevin Norton.  I represent IBW

14  Local 11 and our 8,000 members who work in Los Angeles.  I

15  also represent the IBW statewide and our 110,000 members

16  who work in all aspects of the electrical power industry.

17           Our members built and operate the shore power

18  system in the port of Los Angeles currently in place.  We

19  support the use of cold ironing shore power.  We believe

20  it's high time to promote relief for everyone who lives

21  and works in the port areas.

22           Secondly, we know that the largest industry in

23  Los Angeles County is logistics.  The port of Los Angeles,

24  port of Long Beach are the backbone of this industry and

25  provide middle class jobs to thousands of people.  The

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 1  only way to grow the ports and create more good jobs is by

 2  decreasing the impact of the ports on the surrounding

 3  communities.

 4           I'd like to address the availability of power for

 5  this initiative.  There's ample power available for shore

 6  power, and there's 12 power plants currently being planned

 7  that were initially approved by the AQMD this summer.  One

 8  plant, the Vernon power plant, would provide 914 megawatts

 9  of power.  There are also several solar power plants being

10  approved in the Inland Empire as we speak.

11           We also support other proven technologies as a

12  supplement to shore power.  Finally, the goals are

13  achievable if the will is there to implement the plan.

14  The highly skilled men and women of the IBW and our union

15  contractors are willing to get to work on this critical

16  project as soon as you approve it.  Thank you.

17           CHAIRPERSON NICHOLS:  Thank you, Mr. Norton.  Do

18  you represent the workers at one of the utilities here or

19  just in general?

20           MR. NORTON:  IBW represents Edison workers, DWP,

21  Burbank power workers.

22           CHAIRPERSON NICHOLS:  You're speaking on behalf

23  of all of them?

24           MR. NORTON:  I'm speak on behalf of the IBW.

25           BOARD MEMBER BERG:  Madam Chair, I'd like to make

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 1  a comment.  I appreciate the speaker bringing up the fact

 2  that we do have power plants on the drawing board.

 3  However, the Vernon power plant is currently being taken

 4  to court.  And those types of things are just very

 5  problematic between the communities that live around

 6  Vernon and the environmental groups and the environmental

 7  justice issues.  And so it is not always as clear as it

 8  could be.  So we are hopeful that down the road we'll be

 9  able to see some of these come to fruition because they

10  are cleaner.  They should be cleaner.  But it isn't easy.

11           CHAIRPERSON NICHOLS:  Okay.  Thank you.

12           Mr. Tsurumi followed by Mr. Patel.

13           MR. TSURUMI:  Madam Chair, members of the Board,

14  my name is Seiichi Tsurumi.  I represent Sound Energy

15  Solutions.  Sound Energy Solutions is working to develop

16  an liquefied natural gas import terminal in the port of

17  Long Beach.  SCS has long been an advocate for increasing

18  the use of cleaner burning liquid natural gas in the

19  transportation industry.

20           We have funded and managed the development of the

21  world's first LNG terminal tractors.  These units, which

22  are the cleanest yard tractors available at the time of

23  their use, were demonstrated at berth Yusen terminals,

24  Inc. in the port of Los Angeles and the Long Beach

25  container terminal in the port of Long Beach.  Yusen

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 1  Terminals, Inc., is still using these LNG powered units.

 2           SES also helped to develop LNG yard tractors for

 3  use in the BNSF intermodal facilities and have recently

 4  agreed to help international transportation service in the

 5  port of Long Beach develop a new LNG yard hustler

 6  demonstration project.

 7           We are therefore very pleased to see the efforts

 8  of those who are working to reduce emissions from hoteling

 9  oceangoing vessels through the use of LNG fueled on-dock

10  power generation.  SES is excited about this technology.

11  LNG fueled on-dock powered generation is a technology that

12  is available today to provide power to berthed ships at

13  emissions rates comparable to the state's electrical grid.

14           Having been a part of Long Beach community for

15  over five years, SES understands the severe impacts that

16  pollution from port operations has on local communities,

17  particularly those who are already disproportionately

18  impacted by hazardous air quality at their homes and work

19  places.

20           SES is dedicated to being a part of the solution

21  for these communities by working towards the development

22  of cleaner alternatives to conventional transportation

23  technology.  We firmly believe that liquefied natural gas

24  offers the ability to dramatically reduce diesel emissions

25  in the entire port area and believe the clean air maritime

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 1  marine powered technology is another great example of

 2  this.

 3           Lastly, SES urges the Board to accelerate the

 4  requirements for shore power so that local communities can

 5  enjoy the benefits of reduced emissions from diesel fueled

 6  auxiliary power units sooner rather than later.

 7           Thank you very much.

 8           CHAIRPERSON NICHOLS:  Thank you.

 9           I'm assuming this is a solution that would

10  qualify for treatment as an alternative to meet the

11  deadline.

12           STATIONARY SOURCE DIVISION CHIEF FLETCHER:  I

13  think what it is is SES has the LNG and some of the

14  distributive generation use LNG so it's a compatible

15  solution.

16           CHAIRPERSON NICHOLS:  And it's Ms. Patel.  I said

17  Mr. before.

18           MS. PATEL:  Good afternoon.  My name is Rupal

19  Patel, and I represent Communities for Clean Ports, a

20  nonprofit public education campaign based in Los Angeles.

21           Particulate matter emissions from international

22  shipping vessels cause 60,000 annual deaths worldwide.

23  And we echo many of the statistics that were related today

24  on the cancer risk around the ports and the elevated lung

25  health issues that also exist.

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 1           So early and aggressive and significant emission

 2  reductions from ships docked at California ports are

 3  critical to the environmental and public health of our

 4  state.

 5           We support ARB's latest revisions to the

 6  regulation which move toward a uniform time line and a

 7  compliance requirement for short power regardless of which

 8  technology is used.  However, we are also disappointed

 9  that the time line has been slowed down and relaxed.

10  ARB's March 2006 study on cold ironing at California ports

11  concludes that 20 percent of ship calls utilizing cold

12  ironing by 2010 is both technologically feasible and cost

13  effective.  The current proposal now requires cold ironing

14  only if available or ten percent reduction of emissions by

15  2010.

16           Significant emissions are possible now with

17  alternative technologies which have shown to deliver

18  comparable and immediate reduction benefits to grid-based

19  shore power.  Those technologies will result in air

20  quality relief today, not seven years from today, as AQMD

21  outlined in their presentation.

22           So again we support uniform time line for

23  compliance, but ask that the regulation's pace be set by

24  the most aggressive technology that is available now.

25           We urge the ARB Board to adopt regulation which

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 1  will require, regardless of technology, that 20 percent of

 2  all ship visits to California ports use shore power by

 3  2010.  And further, ARB should include an additional

 4  interim goal by 2012 that 40 percent of all ship visits be

 5  required, 60 percent by 2014, and 80 percent by 2016.

 6           These compliance deadlines will assure early and

 7  aggressive emission reductions necessary to address the

 8  public health and environmental crisis that ships so

 9  grossly contribute to.  We will also assure that federal

10  air quality standards will be met in a timely manner.

11           We urge you to adopt these regulations today and

12  thank you for your leadership on this critical issue.

13           CHAIRPERSON NICHOLS:  Thank you.

14           We have Bob Hoffman, Joseph Lyons, and Wendy

15  Mitchell have been added to the list.  Bob Hoffman

16  followed by Joseph Lyons and Wendy Mitchell.

17           MR. HOFFMAN:  Good afternoon.  And thank you for

18  giving me the opportunity to speak on this.

19           I'm Bob Hoffman with Dock Watts, LLC, and we've

20  been watching shore power development since 2004.  And I

21  was one of the 170 people that participated with Mike

22  Waugh early on several informal meetings just sharing our

23  knowledge.

24           We are going to be involved in the implementation

25  of shore power, so we support this process.  Originally,

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 1  we were hoping for a market-based solution that actually

 2  could come up with emission reduction credits or other

 3  ways to achieve that.  But I see this is the right way to

 4  go and we support it.

 5           One thing that wasn't clearly mentioned in a lot

 6  of the reporting and in the rule now is that shore power

 7  provides a measurable means of measuring emission

 8  reductions.  The electric meter, every megawatt hour or

 9  kilowatt hour actually measures so many pounds or tons of

10  emission reduction.  So I would encourage part of the

11  implementation which may be a later phase to actually show

12  that the results of this good work that the metered

13  delivery, whether it's from distributed generation or from

14  to grid itself, that would be able to measure the tons

15  reduced of NOx, PM, and CO2.

16           As far as the grid, the reason I got up to speak

17  is when I heard early on about the grid interruption and

18  what that will mean, and that caused me to think about two

19  topics.  One is that I believe as Mr. Garrett said earlier

20  that there should be a variance or some exemption if the

21  grid is actually interrupted or not able to provide the

22  power.  Utilities themselves are power generators and

23  that's call a force de jour and on some contractual

24  commitments they're giving a pass until force de jour can

25  be cured.  Typically a grid reduction would last for just

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 1  hours or no more than a day or so.

 2           Utilities interrupt our homes and other

 3  refrigerators.  So I think if there is interruption caused

 4  by something outside of the ship or terminal operators'

 5  control, they should be given a pass.

 6           The other thing -- and this is something we at

 7  Dock Watts have been thinking about, because I come out of

 8  the utilities industry.  And there are parallel efforts

 9  going with greenhouse gas, with CARB, with the PUC and

10  that deals with the electric market, not only how we can

11  collectively reduce greenhouse gas emissions, but how we

12  can improve reliability of the grid.  And maybe there

13  should be consideration that if on occasion there's a grid

14  emergency or a stage one or two alert where it was facing

15  rolling blackouts that the suppliers of grid power be

16  allowed to interrupt that supply and allow the ships to

17  power up for a brief few hours.  Maybe a few hours per

18  year.  That would help improve resource adequacy as well

19  as part of the utilities response measure.  So that's

20  something that maybe should be considered down the road as

21  something that the California ISO would very much welcome.

22           And finally, even though searching as Mr.

23  Flanagan said, even though grid power is being talked,

24  there are other alternative.  Let the industry, let the

25  stakeholders decide what to do as long as they achieve the

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 1  desired emission reduction.  So in searching for the last

 2  remaining market solution, there is no greenhouse gas

 3  attributes and who owns those.

 4           I can tell you in the utility industry there is a

 5  lot of debate on the generation when a utility procures

 6  that power who owns the greenhouse gas attribute that may

 7  be a tradable asset down the road.  I would propose those

 8  greenhouse attributed be owned by the entity implementing

 9  shore power.

10           Those are my comments.  I'm right on the button.

11  Thank you very much.

12           CHAIRPERSON NICHOLS:  Thank you.  Well done.

13           So Joseph Lyons and then Wendy Mitchell.

14           MR. LYONS:  Thank you, Madam Chair.  Joe Lyons

15  with the California Manufacturers and Technology

16  Association, and also here on behalf of the AB 32

17  implementation group, which is a broad coalition of over

18  140 businesses statewide that are constructively engaged

19  in the AB 32 implementation process.  And working to

20  ensure that the California's climate policies are

21  implemented in such a way that is both cost effective and

22  technologically feasible, which of course are the twin

23  requirements of the bill.

24           I have just a few comments.  The gentleman said

25  earlier about the several ocean carriers or have been

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 1  taking proactive steps with regard to shore power, and we

 2  certainly agree with that and hope that's reflected in the

 3  regulations that the Board approves.  Keep that in mind

 4  and sort of try to provide while achieving the goals and

 5  requirements that you're setting out to do, but to do it

 6  in such a way that allows a certain amount of flexibility

 7  for the businesses to comply in their compliance, I should

 8  say.

 9           We also just as general themes, and this

10  certainly applies to this, want to work to ensure that the

11  costs are fairly allocated.  The costs of compliance are

12  fairly allocated and also that with regard to what was

13  mention with market mechanisms.  And that to the extent

14  that it's -- that any chance we can get to achieve these

15  goals and requirements at the same time to lower the cost

16  of compliance as much as possible.  To have the least cost

17  compliance.

18           And I would finally just note one of the

19  gentlemen earlier spoke about -- mentioned jurisdictional

20  issues and port.  And we certainly agree that with regard

21  to this issue it's appropriate for the ARB to have the

22  jurisdiction or service jurisdiction.

23           And he also mentioned the CEQA, and I would say

24  on that as well, you know, certainly the AB 32 clearly

25  places full responsibility on jurisdictions with regard to

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 1  implementation to climate policies.  And on CEQA, we

 2  believe strongly that it makes more sense.  It would be

 3  better for our climate policies and our state in general

 4  if we have ARB overseeing instead of having this piecemeal

 5  approach we're now saying with the CEQA debate and things

 6  that are going on.  So thank you.

 7           CHAIRPERSON NICHOLS:  Wendy Michel and then Don

 8  Anair, and that will be our last witness.

 9           MS. MICHELL:  Chairman Nichols and members, my

10  name is Wendy Mitchell.  I'm here on behalf of PG&E to

11  support the regulation and the proposed amendments.

12           I just honestly am here to thank the staff for

13  all their hard work to address our concerns.  We think the

14  proposed amendments achieve our goals of cleaning up the

15  ports.  And thank you very much for all your time and

16  effort.

17           CHAIRPERSON NICHOLS:  Great.  Well done.  Thank

18  you.

19           Mr. Anair.

20           I think you get credits that are bankable on that

21  one.

22           MR. ANAIR:  Good afternoon, Madam Chair, members

23  of the Board.  I'm Don Anair with the Union of Concerned

24  Scientists.

25           I want to just mention our strong support for

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 1  this regulation.  We think this is a groundbraking

 2  regulation which will have national and international

 3  impact, as the ships that are outfitted to comply with

 4  this regulation will plug into systems elsewhere as they

 5  go into place.

 6           But most importantly, it is the local impacts

 7  that we are here today to talk about, and implementing

 8  this will reduce emissions from the largest source of

 9  diesel pollution at the ports.  So we strongly urge you to

10  move forward and adopt the regulation today.

11           I also want to thank staff for responding to some

12  of our concerns that we raised over the past few months,

13  both simplifying the time lines as well as putting the

14  interim targets for 2012 and 2017 to ensure that we're

15  making progress towards these goals.

16           Again, as others have mentioned, we encourage you

17  to look at accelerating that time frame to try to get

18  additional emission reductions from the source because it

19  is so important.

20           Two issues I just wanted to touch on again, one

21  regarding the exemptions and then the technology neutral

22  standards.  In terms of the exemptions, we agree generally

23  with staff that the way the exemptions are written now

24  there would be a small percentage of emission losses from

25  the loss of emissions through that exemption.

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 1           We do think that this is sort of based on

 2  assumptions that things are not going to change over time

 3  in terms of the makeup of the shipping fleets, the size of

 4  the shipping fleets.  And so we feel this could be

 5  tightened up a little bit to ensure that we have

 6  protections to make sure these ships are plugging in when

 7  they should be.

 8           For instance, that the current exemption for

 9  container vessels less than 25 visits per year, that

10  applies on a port by port basis.  So a shipping line that

11  has ships coming into port in Oakland and ones that are

12  coming into Long Beach, it's not the combined visits.

13  It's just visits at one port, less than 25 visits at

14  another less than 25.  We think that could be less than 25

15  for all of California ports.  I think that would tighten

16  that up.

17           And as Ms. D'Adamo mentioned earlier, this

18  doesn't have to occur immediately.  It could occur further

19  down the line as the regulation goes into place.

20           And the same could go for the cruise vessels as

21  well.  That's on a per port basis right now.  Limiting

22  that to the total of all port visits in California would

23  also ensure that that's tightened up a little bit.

24           USC supports technology neutral standards, and we

25  are supportive of the standards that are in place in this

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 1  regulation.  My belief is that the staff proposal does

 2  include standards for NOx and PM emissions.  However, I

 3  don't believe that greenhouse gas emissions have been

 4  treated equally in this regulation.

 5           And I just want to point out this is the first

 6  ARB regulation under AB 32 early action measures that the

 7  Board have adopted.  And we would like to see some

 8  protections in this regulation for greenhouse gas emission

 9  backsliding at a minimum to ensure that we move forward

10  and get the emission reductions we all desire.

11           Thank you very much.  And urge you to vote today

12  to move forward with this regulation.

13           CHAIRPERSON NICHOLS:  Thank you very much.

14  Thanks for those comments.  Okay.

15           That is the last witness.  And we can draw the

16  public hearing to a close.

17           Do you, Mr. Goldstene or the staff, have any

18  additional comments that you wish to make at this time?

19           EXECUTIVE OFFICER GOLDSTENE:  Yeah.  Mr. Scheible

20  does.

21           DEPUTY EXECUTIVE OFFICER SCHEIBLE:  I don't know

22  how the Board wants to proceed with the discussion.  I

23  kept track of the various points raised --

24           CHAIRPERSON NICHOLS:  Good.  I was making notes

25  also.

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 1           DEPUTY EXECUTIVE OFFICER SCHEIBLE:  --by the

 2  witnesses in the testimony had a little scorecard here.

 3  We can go over them.

 4           CHAIRPERSON NICHOLS:  Why don't you do that

 5  first, and then see what else needs to be asked.

 6           DEPUTY EXECUTIVE OFFICER SCHEIBLE:  I'm use the

 7  proven method of Lynn Terry of taking the easier ones

 8  first.  And then when I get in trouble, staff will have to

 9  save me.  But they've been doing all the work anyway.

10           So there's some easier ones.  I heard one we were

11  urged to ensure the rule will be enforced.  I can promise

12  you we will do that.  And it's sometime before this rule

13  gets going, so we have time to plan the resources and

14  other things.

15           Second, there was a question about what happens

16  for a base line for new fleets.  I think that's fairly

17  easy, because you bring in the new fleet, it's an

18  intensity requirement.  So the new fleet doesn't need a

19  baseline.  It simply needs to show it's reduced its

20  emissions the same as any other operating fleet.  Now, if

21  there's a brand new terminal and new fleet coming in, they

22  might have to have some planning time to make sure the

23  ships can hook up to the existing shore power.  But I

24  think that's not a barrier to entry like it is for a new

25  source.

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 1           There was a remark made that ample power is

 2  available, therefore it's not a power problem.  We didn't

 3  see a problem with the power being able to be produced on

 4  the grid.  The problem we saw was that for Long Beach or

 5  San Diego the wires from the power plants and the

 6  sub-stations to the port needed to be put in line.  And

 7  that's a process you have to work through the utility.

 8  You have to go through neighborhoods potentially.  You do

 9  have to do CEQA.  That's part of a long planning period

10  for places like Long Beach and San Diego.  But we agree

11  the power's available.

12           Then we get into the issue of the number of ships

13  in the fleet.  The industry trend has been to consolidate.

14  So unless they change dramatically, you're going to have,

15  you know, the same large fleets operating in the future as

16  now.  And staff is looking into making sure that

17  regulation can't be gamed through ownership or some other

18  method.  That if it looks like a ship coming from XYZ

19  container company, that it is counted in our reg as a ship

20  from that company, regardless of the ownership, which

21  could be very -- as we found out from this ship that hit

22  the bridge in the bay area, quite difficult to figure out.

23           So we're going to put together a regulation that

24  deals with that.  And if it isn't working, we'll come back

25  to you and say here's what it takes to work.  I think we

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 1  have -- a question do you want to lower it by number from

 2  25 to 12 in the future or fewer visits by cruise ships I

 3  think is a policy call.  But we can probably re visit that

 4  later as we see how it's working out.

 5           There's a real policy issue on global warming

 6  gases.  We put this regulation together, and we included

 7  it as AB 32 because it gets real benefits.  We're sure

 8  it's going to get real benefits.  And we want to claim

 9  those.  And it's legitimate to do so.

10           You notice we didn't give you cost and give you a

11  technology assessment because they are co-benefits.  And a

12  question comes down to there are some potential options of

13  technologies that wouldn't get those benefits.  We don't

14  think they would subtract substantially from the

15  regulations effectiveness.  But do we want to rule them

16  out as part of the regulation?  Or do we want to say, no,

17  we think that since this is being done primarily for NOx

18  and PM control, we are going to allow someone to use those

19  options, even though they won't deliver the benefits.

20           This is no different than, for example, the

21  example I used is if someone develops a technology that

22  you can pull alongside the ship and collect the emissions

23  and put it through an SCR and a particulate collection

24  system, it will be -- it could be very effective in

25  controlling NOx and PM.  It could be the cost effective

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 1  option.  It will not get the greenhouse gas benefits.

 2           CHAIRPERSON NICHOLS:  I have a view on this, but

 3  let's table that for a minute.

 4           DEPUTY EXECUTIVE OFFICER SCHEIBLE:  I think it's

 5  a policy call and the Board needs to discuss.

 6           CHAIRPERSON NICHOLS:  What about the question of

 7  whether we should be regulating the terminals versus the

 8  ports as a whole?  Obviously, the South Coast wants us to

 9  regulate the whole port and so does PMSA.

10           DEPUTY EXECUTIVE OFFICER SCHEIBLE:  We debated

11  this intensely as we went around.  We couldn't figure out

12  how to regulate the port.  And we decided that we needed

13  to regulate the ships and the ship operators.  Many times

14  they and the terminals are either the same or so closely

15  related it doesn't make any difference.

16           But in reality, unless the port and the terminals

17  and the ship operators work together to make this work,

18  and we think we at the local districts have to do it, too,

19  we think we have the right mix here.  And we do agree with

20  the witness's suggestion that we need to commit to make it

21  clear what the terminal operator has to do in order to

22  fulfill their commitment and that we need to work to

23  expedite that process.  But we think we have the

24  regulation in the best possible place.

25           I don't know if legal wants to opine on that or

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 1  not.

 2           CHAIRPERSON NICHOLS:  Probably not.  I'm looking

 3  at them, and they don't seem eager to jump in.

 4           DEPUTY EXECUTIVE OFFICER SCHEIBLE:  Okay.  I'm

 5  getting to the fundamental last, which is the accelerated

 6  schedule.

 7           Also we were asked to deliver the rule for the

 8  remaining ships as quickly as we can.  And hopefully next

 9  year, we'll do that.  It may not be this easy because the

10  cost effectiveness for those ships for cold ironing is

11  going to be far worse than for these.  And we decided to

12  bring you this group of vessels first, because it was the

13  most attractive case.  But we'll do the analysis and try

14  to figure out how to maximize the emission reductions.

15           I'm down to a couple now.  One is another policy

16  call, which is the South Coast and others are urging us to

17  require better control in the early years from sources

18  that would use distributive generation.  The Bay Area

19  district didn't raise it, but actually the Bay Area folks

20  were saying you know this is a big improvement over the

21  diesel engine.  You don't need to push it that hard.

22  Allow some flexibility in the early years and our judgment

23  was to sit again a floor saying you got to do at least

24  this well and then by the time 2014 comes you have to

25  clearly put on BACT and if a local district wants to be

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 1  more stringent than that I think that's their prerogative.

 2  But we chose not to make the call.

 3           CHAIRPERSON NICHOLS:  And again that's sort of in

 4  the interest of trying to level the playing field here

 5  between the shore power and the alternative.

 6           DEPUTY EXECUTIVE OFFICER SCHEIBLE:  And allow the

 7  alternative a chance to demonstrate they work and they're

 8  financially viable and they can go ahead.  And in the

 9  interim you're still getting emission reductions that you

10  otherwise might not get.  And there's a big benefit.  So

11  there's always that trouble.  Do you settle for something

12  that gets you 85 percent of the NOx that you want that

13  gets you virtually all of the PM benefits that you want?

14           But again, it's a call of where do we -- what do

15  we set as a floor and how much discretion do we want to

16  allow the district?  That's a policy call.

17           I think we're at the issue now which is the

18  accelerated compliance schedule.  We've always looked at

19  this as the most likely compliance route for most of the

20  terminals and most of the ports have been to go to

21  grid-based power.  We have not in any way diminished or

22  lightened up on the compliance schedule for that.

23           Our most recent proposal actually strengthens it

24  in a number of ways.  It requires that the ships get

25  50 percent of visits and 50 percent of load switched over.

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 1  We added an interim date in 2015.  So we accelerated that.

 2  We do not think that it's sustainable to have a rule that

 3  went to 20 percent -- everybody has to get a 20 percent

 4  emission reduction and 2010 or a 40 percent in 2012.  Our

 5  quick analysis is that less than a quarter of the

 6  terminals have a shot at the 2010 date, and probably only

 7  a third or so to a half have a shot at the 2012 date,

 8  given the likely time -- if they're to use grid power.

 9  They have to use some sort of hybrid, and that didn't pass

10  any of our cost analysis.  We think that would be a very

11  difficult route.

12           We do believe we should go in and work with each

13  party to say how do we get you there as fast as we can.

14  We have some bond money that might help you do that and

15  make it attractive for you.  It could be used under either

16  option that they take.  And we think that actually in L.A.

17  and Long Beach, most of those reductions work for whether

18  we have a rule or not.  But if we think that if we put it

19  in the rule and said each and every terminal has to do it,

20  we wouldn't be successful.  It wouldn't be successful if

21  we said each and every port had to do it.  The port of

22  Long Beach we do not think can meet the 2010 goal.

23           So that's our assessment on that one.  We think

24  we're getting it done as fast as we can, and we are

25  willing to use other mechanisms to accelerate the emission

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 1  reduction.

 2           CHAIRPERSON NICHOLS:  So just talk more about how

 3  you intend to work with these ports and the terminal

 4  operators to get these emission reductions actually

 5  underway.

 6           DEPUTY EXECUTIVE OFFICER SCHEIBLE:  Bob, how are

 7  you going to do that?

 8           STATIONARY SOURCE DIVISION CHIEF FLETCHER:  I'm

 9  going to punt to Mike Waugh.

10           CHAIRPERSON NICHOLS:  They have pictures of all

11  of you guys up on the walls at these places.  I know the

12  pin-up favorites.

13           STATIONARY SOURCE DIVISION CHIEF FLETCHER:  I

14  think the key is the compliance plans that are required in

15  2009.  And that is something that we're going to have to

16  work very closely with the terminal operators, the ports,

17  and utilities and the other stakeholders to get them in

18  and sit them down.  We've done this a few times in the

19  course of this rulemaking.

20           But it's really obvious -- and I think Mr.

21  Jelenic said that as well.  It's really critical for the

22  ports to look at the entire infrastructure so they know

23  that they have to play a role here.  They know that

24  they're scheduling because there's down time that has to

25  be managed.  And I think bringing all that in and us

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 1  working with them and to see how that comes will not only

 2  ensure that we meet the 2014, but it will also ensure that

 3  we actually get an accelerated implementation of it to the

 4  maximum extent feasible.

 5           And CEQA is not going to be easy, you know.  It's

 6  just not going to be an easy process when you're running

 7  lines through the middle of the city, for example, to get

 8  the infrastructure into the port.

 9           DEPUTY EXECUTIVE OFFICER SCHEIBLE:  We also need

10  to work with the PUC and the regulated utilities to bring

11  some speed to that process to make it clear that it's not

12  a bargaining situation between the captive utility

13  customer and the utility, to speed it up as much as we

14  can.  But this is a big measure.  We need it to work.

15  It's a critical part of our plan.

16           BOARD MEMBER CASE:  Just a further question on

17  that, because I hear clearly an interest in accelerating

18  the compliance.  And I also hear real definitively that

19  some ports will look at grid power.  Understanding the

20  CEQA process, they're looking probably at a minimum of one

21  to two years to get through that process to properly

22  publicly notice, to properly hold hearings, to do all of

23  that outreach that has to happen.  And we do a lot of CEQA

24  review as local elected officials, and it just doesn't

25  move quickly.  Even if some groups are wholeheartedly in

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 1  support, there's always one or two that want to look at it

 2  and adjust and it figure that out.

 3           But is there an opportunity anywhere for those

 4  that have capacity to move quicker, finding some ways to

 5  reward that or incentivize that?  Because even, you know,

 6  maybe some areas aren't going to move as fast as others

 7  depending on their circumstance and what else is out

 8  there.  But I'm thinking in terms of the number of people

 9  who live by any of these ports and how their health is

10  truly impacted.  It's such a huge amount of pollution

11  nearby to where they live and their children live.  Is

12  there any opportunity there?  That's the one remaining

13  question for me.

14           DEPUTY EXECUTIVE OFFICER SCHEIBLE:  Two things.

15  There's clearly an opportunity in terms of incentive

16  funding to say, the sooner you get it done, the more

17  likely you are to qualify for funds where the state can

18  pay a portion of the infrastructure cost on the pier.

19           And on the second issue on health, I just want to

20  say, remember this source is being regulated twice right

21  now.  The difference is we're getting about a 75 percent

22  risk reduction from the rule that we are currently

23  applying and will apply greater through 2010 on the fuel

24  side.  And we're getting the next 75 percent from this.

25  So the early years we're talking -- it's not like we're

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 1  losing a third of the benefit in early years of the net

 2  program.  We're losing a few percent.

 3           So that's why we think it's not good that it's

 4  going to take more time, but still the community is

 5  getting great benefits from the combination.

 6           CHAIRPERSON NICHOLS:  It's important to remember

 7  these are coming on top of recently adopted and going into

 8  effect rules.  And I think we don't always make that

 9  clear, because we do these things one rule at a time.

10  Yeah.

11           DEPUTY EXECUTIVE OFFICER SCHEIBLE:  And tomorrow

12  you'll get the chance to do even more for the community

13  with the port trucking rule that we propose to implement

14  almost fully for PM by 2010.

15           CHAIRPERSON NICHOLS:  It might be useful for all

16  of us and the stakeholders to put together some kind of a

17  fact sheet just to kind of give people a sense of the

18  total picture of the new programs that are out there

19  relating to the ports.  I see nodding from the

20  communications director.  So that's good.

21           DEPUTY EXECUTIVE OFFICER SCHEIBLE:  As you know,

22  we don't have unlimited staff with unlimited energy.

23  We're trying to bring you another rule that's going to

24  have even larger benefits, which is the fuel rule for the

25  main engines.  So we're delivering --

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 1           CHAIRPERSON NICHOLS:  So what are you guys

 2  wasting time on this for?

 3           DEPUTY EXECUTIVE OFFICER SCHEIBLE:  There's

 4  always the weekend unfortunately.

 5           CHAIRPERSON NICHOLS:  Thank you for that.

 6           DEPUTY EXECUTIVE OFFICER SCHEIBLE:  That

 7  covers -- the only other issue I heard was should we have

 8  something when you arrive at the dock and you need to hook

 9  up, you have to do it as soon as possible.  I think we

10  could put a provision in like that.  The ship operators

11  have a big incentive to hook in, because they only get

12  credit for the hours they're hooked up.  And our

13  reluctance to include is it's not very enforceable.  It's

14  enforceable when you have a known window and you exceed

15  the time or meet the time.  But when it's did you make the

16  best efforts if it's there, I don't know if that makes a

17  whole lot of difference.

18           CHAIRPERSON NICHOLS:  No, but it could cause

19  mischief at some point.  I can understand the reluctance

20  to see the language actually put into the rule.

21           CHAIRPERSON NICHOLS:  All right.  Additional --

22  yes, Supervisor Hill.

23           SUPERVISOR HILL:  I do.  Thank you, Madam Chair.

24           And thank you, Mike, for answering most of the

25  questions.

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 1           I just want some clarification on a couple.  The

 2  greenhouse gas backsliding, you indicated there may not be

 3  the benefit derived from some of this different technology

 4  that could be used, but that doesn't mean it would be

 5  backsliding I guess is what I -- unless I'm missing

 6  something.

 7           DEPUTY EXECUTIVE OFFICER SCHEIBLE:  Well, what I

 8  call backsliding.  If you put add-on controls, you haven't

 9  reduced the emissions from the source.  And the add-on

10  controls are going to use some energy in order the reduce

11  the NOx and the PM.  So you've increased fuel use, but

12  you've gained a big criteria pollutant improvement.

13           And I think our view is, you know, when you do

14  that, that's great.  We need the local health benefits.

15  And we've lost a small amount of greenhouse gas benefit in

16  that particular instance.  We just have to make that up

17  elsewhere.

18           And the question here when you have a technique

19  and you say allow the choice for that when the source

20  operator decides that's most cost effective to get -- the

21  primary thing this rule is designed to do or should we

22  say, no, you know, we're going to only allow you to use

23  your choices of things that are either neutral or net

24  benefit for greenhouse gases.

25           CHAIRPERSON NICHOLS:  I think we could have a

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 1  discussion at this point actually if people don't mind

 2  about the CO2 issue.

 3           Maersk testified that they wanted to use some

 4  sort of an on-ship control throughout their fleet.  And

 5  I'm assuming that that would automatically mean if it was

 6  something they're doing to the ship that that is going to

 7  cause them to burn more fuel; right?  It's not going to

 8  make it more efficient.

 9           DEPUTY EXECUTIVE OFFICER SCHEIBLE:  Yes.  But

10  that also has a side benefit of not only operating at dock

11  but when the ship is underway and getting ready to do so,

12  there's even potential for even greater benefit.  So

13  different --

14           CHAIRPERSON NICHOLS:  That's a life cycle kind of

15  issue, isn't it?

16           DEPUTY EXECUTIVE OFFICER SCHEIBLE:  Right.

17           CHAIRPERSON NICHOLS:  Okay.  I was worried about

18  that.

19           SUPERVISOR HILL:  Another question when we're

20  talking about the number of visits that a ship makes or a

21  fleet makes.  If a ship came into a port a few times only,

22  but did it regularly, but didn't meet the threshold, it

23  would not be included in this; is that true?  I mean, I

24  would think if it's a regular visit, it falls under that

25  we should --

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 1           DEPUTY EXECUTIVE OFFICER SCHEIBLE:  The ship

 2  visit regardless of whether it's once or ten times, it's

 3  in a fleet, is included in the fleet.

 4           SUPERVISOR HILL:  I was thinking more of

 5  passenger -- the issue of cruise ships that may come in a

 6  few times or fall under the threshold within a fleet --

 7  you know, that particular fleet, but doesn't do it.  Are

 8  there examples of that or cases where that could happen?

 9           PROGRAM ASSISTANCE SECTION MANAGER WAUGH:  Yeah.

10  I think with regard to the cruise ships, there are an

11  occasional fleet.  For example, there's a Japan line that

12  showed up in California one time, and that would be a

13  fleet that would --

14           SUPERVISOR HILL:  I didn't mean one time.  I mean

15  one time every six months or you know they're taking a

16  trip every year going around -- I guess I'm just looking

17  for that regular visit that probably is not --

18           PROGRAM ASSISTANCE SECTION MANAGER WAUGH:  I

19  think still from a cost effective standpoint that even if

20  it comes regularly but not regularly enough to come five

21  times, then say it shows up once a year, twice a year,

22  three times a year, it's still at the point where it's not

23  cost effective to use shore power.

24           One of the things that we're finding in the

25  cruise industry and one of the provisions we have in our

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 1  proposal here goes back to the fact that if you have the

 2  ability to plug in both from the ship side and the berth

 3  side, you will.

 4           So what we're finding is sometimes you may be

 5  required to do that because you're part of a fleet that

 6  shows up in San Francisco, and then when you come down to

 7  San Diego for that occasional visit, because you have the

 8  ability, you will plug in.  And we think we're going to

 9  capture -- especially in the cruise industry as these

10  ships are redeployed, they're all capable of plugging in,

11  we are going capture a lot of those ones and twosies that

12  visit for that reason.

13           SUPERVISOR HILL:  One for just a clarification,

14  Mike.  You talked about the fleets -- this specifically

15  applies to the port of Oakland where the new shipping line

16  comes in at 2012 or 2014 and in terms of Calculating the

17  reduction target and how that would work for future

18  emissions.  You feel that's not going to be a problem.

19           DEPUTY EXECUTIVE OFFICER SCHEIBLE:  Well, it

20  would have the same calculation method as an existing

21  fleet.  So if they made 100 visits, they have to plug

22  in -- in 2014, they'd have to plug in 50 of those -- at

23  least 50 of those visits and have to make sure those 50

24  accounted for at least 50 percent of the load.  So the

25  only problem comes down to if the business came so quickly

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 1  that they could not somehow retrofit the ships and they'd

 2  have to come on to some sort of compliance schedule.

 3           CHAIRPERSON NICHOLS:  Presumably the port of

 4  Oakland is out soliciting clean vessels.

 5           DEPUTY EXECUTIVE OFFICER SCHEIBLE:  They're going

 6  to know what the obligation is.  They would incorporate

 7  that into their decision to come.

 8           We're not trying to put up a new barrier for

 9  fleet composition to change or whatever.  We're trying to

10  make for every fleet that's there, whether an existing

11  one, an expanding one or new one meets the same basic

12  requirement.

13           SUPERVISOR HILL:  Thank you.

14           CHAIRPERSON NICHOLS:  Ms. D'Adamo followed by

15  Supervisor Roberts.

16           BOARD MEMBER D'ADAMO:  Just following up on the

17  25 visits.  First of all, I want to make sure I understand

18  this.  Is it 25 total visits to California, all ports in

19  California, or 25 per port?

20           PROGRAM ASSISTANCE SECTION MANAGER WAUGH:  It is

21  25 per port.

22           BOARD MEMBER D'ADAMO:  Then I'm even more

23  uncomfortable than I was earlier on this.  I think we

24  should -- and I hate to be the one throwing out there

25  exactly what it ought to be -- but reduce it so that it's

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 1  25 total for California.  Perhaps even in a combination

 2  with a phase down or phase out in the out years.  Because

 3  I think we're assuming that this regulation is going to

 4  take off in other areas of the world.  And by 2020,

 5  hopefully it wouldn't be such a burden.

 6           So I'd welcome comments from staff or other Board

 7  members as to what that actual number and date ought to

 8  be.  But I'm uncomfortable with that high of a --

 9           CHAIRPERSON NICHOLS:  Do you want to comment on

10  the feasibility?

11           PROGRAM ASSISTANCE SECTION MANAGER WAUGH:

12  Currently, the way that the vessel fleets are operating

13  even with the current proposal we would get 94 percent, 95

14  percent have all vessel visits.

15           I think the concern comes from whether or not you

16  get smaller fleets because of splintering.  Like Mike

17  said, there's more of the direction of consolidation.

18           So what we have again based on the data, even

19  when getting roughly half the fleets in these three ship

20  categories, we're still getting 95 percent of the vessel

21  visits.

22           BOARD MEMBER D'ADAMO:  I understand.  But as far

23  as community impact, a visit is a visit.  I hear what

24  you're saying.  In most instances, it's an occasional

25  visit of one or two.  If that's the case, it shouldn't

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 1  matter if we reduce the amount.  I just don't know what

 2  the threshold ought to be in total.

 3           CHAIRPERSON NICHOLS:  What would be the harm be

 4  of redefining it from 25 per port to 25 in California?

 5  That's the question.

 6           SUPERVISOR HILL:  How many more would you

 7  capture?

 8           DEPUTY EXECUTIVE OFFICER SCHEIBLE:  Probably

 9  would capture very few more.

10           CHAIRPERSON NICHOLS:  It could capture a few

11  more.  And the negative impact would be?

12           DEPUTY EXECUTIVE OFFICER SCHEIBLE:  The few more

13  it would capture, they would have a very high end cost

14  effectiveness.

15           CHAIRPERSON NICHOLS:  For those small --

16           DEPUTY EXECUTIVE OFFICER SCHEIBLE:  For that

17  particular fleet, because the emission reductions produced

18  per fleet versus their capital costs.

19           Now in all likelihood a container ship or cruise

20  ship is already going to have the capital facility put in

21  at the terminal.  It's going to be the ship side cost.  So

22  if the Board wants to go with a smaller number, we can put

23  that out in the 15-day notice and see the comments on it.

24           CHAIRPERSON NICHOLS:  Okay.  Let's hold that

25  thought.

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 1           Supervisor Roberts.

 2           BOARD MEMBER ROBERTS:  Thank you, Madam Chairman.

 3           First of all, I want to thank the staff for

 4  making some of the changes that I was particularly

 5  concerned about that had to do with the unequal timing of

 6  the different tracks that we were going to be available.

 7  I think this is clearer and tighter and I think makes a

 8  lot more sense.

 9           I was concerned also with the 25/5.  The five

10  being the cruise ships and the 25 being the cargo ships

11  with the total visits.  And I felt it should be statewide

12  rather than just the individual ports.  Especially 25 to

13  each port sounds like a huge -- it could be a huge number

14  and could become part of the schedule in the way these are

15  handled.  I would feel far more comfortable if we were to

16  look at those even though it theoretically only affects a

17  small number.  I think that adjustment should be made.  I

18  would heartily support that.

19           CHAIRPERSON NICHOLS:  Okay.  Additional questions

20  or comments from Board members.  Ms. Berg.

21           BOARD MEMBER BERG:  I just had one on my list

22  remaining and that was the grid emergency issue again

23  dealing with the fact that if the vessel was there willing

24  to plug in but electricity is not available, the fairness

25  and having them make it up.  And if it isn't a big issue,

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 1  it's not a problem.  But we've lived through times where

 2  it has been a big issue.

 3           DEPUTY EXECUTIVE OFFICER SCHEIBLE:  We don't

 4  think it's going to be much of an issue because it occurs

 5  so infrequently.  But on the other hand, if the Board

 6  wants to say, you know, on a fairness if the vessel is

 7  equipped to plug in, they would have plugged in, they

 8  can't plug in because the grid was turned off, we want to

 9  simply say that doesn't count for them or against them.

10  That would not change the regulation to say you were

11  forced off.  We are not going to count the emissions

12  during that forced outage again your compliance.  But if

13  you didn't have that option to plug in, then those

14  emissions counted.

15           If you want us to do a 15-day change like that,

16  that's your call obviously.

17           BOARD MEMBER ROBERTS:  If I could just weigh in

18  for a minute.  We just went through one of these

19  situations.  And in fact, all of the Navy vessels that are

20  all equipped, all had to unplug so that we would have the

21  power during the recent fire storms.  So these things do

22  occur.  And surely if we would have had other ships

23  visiting, we would have done the same thing for them.

24           CHAIRPERSON NICHOLS:  I think that's a very valid

25  point.

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 1           I didn't actually formally say that I had closed

 2  the record, but I guess I should do that; right?  The

 3  record is closed at this point on this item.  And that it

 4  will be reopened again when the 15-day notice is issued.

 5  So any comments that were to come in from now to the time

 6  of the notice would not be considered.  But once the

 7  record is reopened, the public can comment on any of the

 8  proposed changes that may come forward at this point.  And

 9  that will be included as part of the Statement of Reasons

10  for the regulation.

11           I think before we take action on amendments and

12  motions that we should do the ex parte statements.  So

13  I'll start down at your end, Mr. Roberts.  I usually go

14  the other way.

15           BOARD MEMBER ROBERTS:  I have one meeting.  On

16  November 29th, I had a meeting with Scott Sadler from

17  Oakland Port Authority and Dana Markle who's with Clean

18  Air Logix.  And we discussed the scheduling and the use of

19  alternative technologies.

20           CHAIRPERSON NICHOLS:  Great.

21           BOARD MEMBER SPERLING:  Yes.  I had a telephone

22  call with Bonnie Holmes-Gen; Diane Bailey, NRDC; John

23  Kaltenstein, Friends of the Environment; and Rupal Patel,

24  Communities for Clean; Irvin David, Tim Carmichael, Don

25  Anair from various organizations about some of this.  It

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 1  was a fairly brief call, but it reflects the conversations

 2  that had been had here.

 3           I don't have it recorded here, but I had another

 4  conversation with a group of people.  And I guess I should

 5  have written it down.  I can provide it later from the

 6  ports, from the Whitmer -- the company doing the Whitmer

 7  technology and PG&E.  But the discussion just a few days

 8  ago.  But the discussion was before the revisions were

 9  made.  And I think they've reflected a different

10  discussion then what is going on here because of the

11  changes.

12           CHAIRPERSON NICHOLS:  Okay.  Thank you.

13           Supervisor Case.

14           BOARD MEMBER CASE:  On November 28th, I had a

15  conference call with Bonnie Holmes-Gen with the American

16  Lung Association; Devra Wang with NRDC; John Kaltenstein,

17  Friends of the Environment; Rupal Patel, Communities for

18  Clean; and Don Anair of the Union of Concerned Scientists.

19           On November 28th, I met in my office in Fresno

20  with Rick Lehman and Scott Sadler in regards to

21  representing the Oakland Port Authority.

22           And on December 3rd, I had a telephone call with

23  Bob Riding with PG&E.  And the testimony in those meetings

24  were reflective of today's testimony.

25           CHAIRPERSON NICHOLS:  Ms. Riordan.

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 1           BOARD MEMBER RIORDAN:  Yes.  I had two telephone

 2  conference calls.  First, on November 28th, with Candice

 3  Kim from Coalition of Clean Air; John Kaltenstein from

 4  Friends of the Earth; and Rupal Patel from Communities for

 5  Clean Ports.  That conversation mirrored the testimony

 6  provided today.

 7           As well as yesterday I spoke to the port of Long

 8  Beach, Robert Kanter and his staff.  And within the letter

 9  that we have received, the conversation mirrored that.

10           CHAIRPERSON NICHOLS:  Okay.  I have four items to

11  report.  On November 20 was a busy day for the

12  environmental groups.  And I met with large number of them

13  also.  Bonnie Holmes-Gen, Dennis Hall, Bill McGavern,

14  Diane Bailey, Devra Wang, Camille Kustin, Kathryn

15  Phillips, Raphael Aguilera, Rafael Pizarro, Candice Kim,

16  Wendy James, and Don Anair.  And their as a group

17  reflected the same points they've made here today.

18           On December 4th, I spoke with T.L. Garrett and

19  Mike Jacob, Shaudi Falamaki, Chuck Cole, PMSA and

20  Kahl-Pownall Advocation.

21           On December 5th, I participated in a conference

22  call with Scott Sadler from Lehman Kelly English and

23  Sadler; Matt Davis, Howard Berman, Chris Ferrera and Wendy

24  Mitchell, all concerning the changes that had been made

25  with the rule and they expressed their support for changes

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 1  that had been made, which was great.

 2           And then this morning I met here before the Board

 3  meeting with representatives of Maersk.  And they

 4  explained in more detail than they did in their testimony

 5  but the same basic point.  They're concerned that the

 6  timing for those who are going to go with the alternative

 7  to shore power is too strict for them.  They're worried

 8  about whether they're going to be able to make it.  They

 9  said they would comply no matter what.  But they were

10  concerned they would be pushed harder than they were

11  comfortable with on being able to demonstrate that the

12  technology they're working on is really going to work.  So

13  that was it.

14           SUPERVISOR HILL:  I have on November 26th a call

15  with Diane Bailey and Devra Wang of NRDC; Bonnie

16  Holmes-Gen of American Lung; Irvin David, Sierra Club; and

17  John Kaltenstein from Friends of the Earth.

18           December 3rd, a call with Pacific Merchant

19  Shipping Association; T.L. Garrett, PMSA; Mike Jacob,

20  PMSA, Shaudi Falamaki, Kahl-Pownall; and Chuck Cole from

21  Advocation.

22           And then there was a meeting I had -- I don't

23  have the date -- with Matt Davis and others from the port

24  of Oakland to discuss the issues that they raised today

25  and had been raising before.  So those are mine.

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 1           BOARD MEMBER D'ADAMO:  On November 27, I

 2  participated in a conference call with the NRDC

 3  representatives Diane Bailey and Devra Wang; and John

 4  Kaltenstein, Friends of the Earth.

 5           On December 5th, I participated in a conference

 6  call with Pacific Merchant Shipping Association; T.L.

 7  Garrett, PMSA; Mike Jacobs, PMSA; Shaudi Falamaki,

 8  Kahl-Pownall; and Chuck Cole from Advocation.  And the

 9  comments that they provided on the phone were similar to

10  the testimony they provided today.

11           BOARD MEMBER BERG:  On November 17th, I met with

12  Candice Kim, Coalition for Clean Air at Ellis Paint

13  Company.

14           On December 3rd, I had a phone call with Pacific

15  Merchant Shipping Association.  On that phone call was

16  T.L. Garrett, Mike Jacobs, and Shaudi Falamaki make with

17  K-P Public Affairs.

18           On December 4th, I had a phone call with the port

19  of Long Beach with Robert Kanter, Director of

20  Environmental Affairs and Planning and his staff; Thomas

21  Jelenic and Ari Steinberg and Dominica Davis.

22           CHAIRPERSON NICHOLS:  Okay.  Thank you.  Do the

23  Board members want additional time to review the

24  resolution, or are you ready to proceed with any proposed

25  amendments?

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 1           STATIONARY SOURCE DIVISION CHIEF FLETCHER:  We

 2  have one proposed resolution be it further resolved that

 3  we would like to add to the proposed resolution.

 4           CHAIRPERSON NICHOLS:  All right.

 5           STATIONARY SOURCE DIVISION CHIEF FLETCHER:  Be it

 6  further resolved that the Board direct the staff to work

 7  with terminal operators, ports, local utilities, and other

 8  stakeholders to accelerate the implementation of this

 9  regulation through coordinated planning, effective use of

10  incentive funds, and expedited environmental planning

11  processes.

12           CHAIRPERSON NICHOLS:  Without objection, I think

13  that will be accepted.  All right.

14           BOARD MEMBER D'ADAMO:  Madam Chair, perhaps we

15  should just put a motion for the resolution on the table.

16  And so I propose adoption of Resolution 07-5-7.

17           BOARD MEMBER ROBERTS:  I'll second.

18           CHAIRPERSON NICHOLS:  It has been seconded.

19           BOARD MEMBER D'ADAMO:  And then I know there are

20  a number of things discussed.  But I would propose that we

21  limit the exemption of 25 carriers and five cruise ships

22  to total visits in California.

23           BOARD MEMBER ROBERTS:  I would second that.

24           CHAIRPERSON NICHOLS:  I see a second to that.

25  Can I see a show of hands --

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 1           CHIEF COUNSEL JENNINGS:  One clarification on

 2  that.  This probably goes without saying, but it would be

 3  to ports subject to the regulation in California.

 4           BOARD MEMBER D'ADAMO:  Okay.

 5           STATIONARY SOURCE DIVISION CHIEF FLETCHER:  If I

 6  can add or just request a clarification that I would like

 7  to have the flexibility to tailor that requirement in a

 8  way that makes sense and that we don't end up with a

 9  single berth and a single ship coming that ends up somehow

10  getting electrified.  So I think their intent is to make

11  sure that it deals with the regular visit of ships to

12  California ports.

13           BOARD MEMBER D'ADAMO:  That's fine.

14           CHAIRPERSON NICHOL:  Do I see enough nodding to

15  indicate that's going to be accepted?

16           BOARD MEMBER KENNARD:  I actually have a

17  question.  I would like to see kind of the economic cost

18  benefit analysis on such an expansion of this regulation

19  before we go forward with -- this could be a significant

20  change.  And I heard a lot of the public comments saying

21  what about two versus 25.  And I don't know that I

22  personally feel I have enough information to say it should

23  be one visit versus 25 or five.  I just don't know that we

24  have enough information and the analysis hasn't been done.

25  And Mr. Scheible had indicated that we're just really

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 1  touching are the margins here in any event.

 2           DEPUTY EXECUTIVE OFFICER SCHEIBLE:  Yes.  And we

 3  can do that as part of the 15-day process.

 4           CHAIRPERSON NICHOLS:  Because you can extend the

 5  work you've already done.

 6           DEPUTY EXECUTIVE OFFICER SCHEIBLE:  It's going to

 7  be on the ship side of things mostly, because the

 8  terminal -- the passenger terminals are going to have the

 9  ability to plug the ship in.  It's the matter of the ship

10  cost.

11           CHAIRPERSON NICHOLS:  So you could recommend that

12  if the Board goes ahead with that amendment that you would

13  do the analysis as part of the 15-day process and it would

14  include it at that point.  Okay.

15           BOARD MEMBER RIORDAN:  Madam Chair, there was an

16  item that Member Berg brought up, and I think that ought

17  to be included.  Whereby a ship not be penalized or a

18  vessel not be penalized when power is not available for

19  some unusual reason, you know, emergencies, whatever we

20  want to call it.

21           CHAIRPERSON NICHOLS:  That was -- the suggestion

22  on that I think has to do with how long that availability

23  might be.  Because I think we indicated that if it was a

24  matter of a few hours, it wouldn't matter in terms of the

25  overall compliance scheme.

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 1           DEPUTY EXECUTIVE OFFICER SCHEIBLE:  Well, if it's

 2  a short time, it wouldn't matter.  If it's a long time, we

 3  have bigger problems how this rule got complied with that

 4  quarter.

 5           So I what I think we can -- again, using the

 6  15-day process, and I would suggest is it would count as a

 7  visit if the ship was willing and would have done it

 8  except for the emergency.  The emissions that occur

 9  because it had to operate its engines won't count against

10  it.  It won't benefit in an emissions sense, but it won't

11  be hurt.  And it won't be hurt on the number of visits.

12  So it should be able to comply right.  It's neutral.

13           CHAIRPERSON NICHOLS:  We have a lot of heads

14  nodding on that.

15           Are there other amendments people wanted to

16  specifically --

17           BOARD MEMBER BERG:  Just a point of

18  clarification.

19           The resolution that staff proposed in working

20  with the ports, that would also lay out the criteria so I

21  could cross that one off my list?  Where we said ARB would

22  assist in establishing plan criteria for the operators.

23  That would be covered in the resolution that staff just

24  read?

25           STATIONARY SOURCE DIVISION CHIEF FLETCHER:

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 1  Actually, we are proposing a 15-day modification that

 2  would provide additional criteria for that planning

 3  process already.

 4           BOARD MEMBER BERG:  Thank you very much.

 5           SENIOR STAFF COUNSEL VERGARA:  That language is

 6  in the resolution before you.

 7           BOARD MEMBER BERG:  I just wanted that point of

 8  clarification.  I'm good.

 9           CHAIRPERSON NICHOLS:  Does anybody feel they need

10  of a voice vote, or can we just proceed -- I mean a roll

11  call vote?  Can we proceed on a voice vote?  Okay.

12           All in favor of adopting Resolution 07-5-7 please

13  say aye.

14           (Ayes)

15           CHAIRPERSON NICHOLS:  Opposed?

16           Very good.  Thank you all for a great piece of

17  work.  Really great to have this done.

18           And we have one more item today.  But I think

19  there is a desire for the break.  How much about giving us

20  until five o'clock even, 5:05.

21           (Thereupon a recess was taken.)

22           CHAIRPERSON NICHOLS:  I think we're ready to go.

23           This is an item that we placed on the agenda in

24  order to consider the options for responding to a Public

25  Records Act request for information regarding our zero

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 1  emission vehicle, or ZEV program.  And the information

 2  that's being sought is the ZEV credit data, and it's being

 3  sought for every manufacturer that's subject to the rule.

 4           At our November meeting three weeks ago, Tim

 5  Carmichael of the Coalition for Clean Air expressed

 6  concern that the information still had not been provided,

 7  so we asked to put the matter on the agenda for today's

 8  meeting.

 9           And I'm going to ask you to introduce this item,

10  Mr. Goldstene.

11           EXECUTIVE OFFICER GOLDSTENE:  Thank you, Chairman

12  Nichols.

13           Exactly a year ago, the ZEV Alliance, a coalition

14  of environmental groups, submitted a Public Records Act

15  request that ARB provide the ZEV credit data we have for

16  each auto maker.  This is the information about how many

17  and what kinds of credits a manufacturer has generated or

18  acquired to be used for compliance with the annual ZEV

19  obligation that started in the 2005 model year.

20           All of the ZEV credit information ARB has for

21  individual auto makers has been derived from submittals by

22  the manufacturers, in most cases under a claim of trade

23  secret.

24           Our legal staff asked each auto maker claiming

25  confidentiality to provide detailed demonstration why the

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 1  company believed that the data are exempt from disclosure

 2  under the Public Records Act.  After reviewing these

 3  submittals, the legal staff concluded that the

 4  manufacturers had adequately demonstrated that the ZEV

 5  credit data were trade secrets that were exempt from

 6  disclosure.  The ZEV Alliance was notified of this in

 7  January and February of this year, and only redacted

 8  materials were provided.

 9           At the May 2007 Board meeting, you heard the

10  report of the ZEV expert review panel and staff's status

11  update on the ZEV regulation.  Members of the ZEV Alliance

12  expressed concern that the manufacturers' ZEV credit

13  information was being withheld.  They believe that ARB's

14  failure to release the data precluded their fully informed

15  participation in the ZEV rulemaking process.  This was

16  because the vehicle mix and individual auto makers who

17  actually produce to comply with the existing provision or

18  potential amendments depended on the auto maker's ZEV

19  credit status.

20           The resolution you adopted at that Board meeting

21  directed the staff to take a broad legal view regarding

22  the disclosure of credits issue in order to achieve a

23  transparent public process.

24           As a result, our legal staff invited the ZEV

25  alliance and the manufacturers to provide additional

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 1  analysis in support of their respective positions.  Our

 2  lawyers considered the issues carefully and released a

 3  report this past Monday.

 4           Today, you will hear the recommendations of Tom

 5  Jennings, our Chief Counsel.  I think you'll see this

 6  suggest presents some difficult and challenging issues,

 7  some of which are strictly legal and some of which have

 8  important policy components.

 9           Although you're be hearing the advice of our

10  Chief Counsel on a matter that may very well lead to

11  litigation, we believe it is appropriate for the Board to

12  conduct the discussion in open session.  This will ensure

13  that the public has the opportunity to provide input and

14  to observe any deliberation the Board engages in.

15           CHAIRPERSON NICHOLS:  Thank you very much.

16           Mr. Jennings, I bet you weren't expecting such

17  excitement at your last Board meeting.

18           (Thereupon an overhead presentation was

19           presented as follows.)

20           CHIEF COUNSEL JENNINGS:  Maybe I retired a month

21  too late.

22           Next slide please.

23                            --o0o--

24           CHIEF COUNSEL JENNINGS:  This slide just outlines

25  the role of ZEV credits in the ZEV regulation.  As you

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 1  know, there are three levels of vehicles:  Gold, silver

 2  and bronze, which generate credits.  The amount of credit

 3  depends on the category, characteristics, and model year

 4  of the vehicle and then those credits can be banked and

 5  traded.

 6           Then for each model year starting with 2005,

 7  manufacturers use credits to meet their obligation --

 8  their ZEV obligation.  And in many instances there's only

 9  certain kinds of credits that can be used to meet certain

10  elements of the ZEV requirements.

11           And the regulation also provides choice between

12  base compliance path and alternative path.  And whether a

13  manufacturer chooses the alternative path depends to some

14  extent on how many gold ZEV credits the manufacturer has.

15           Next slide.

16                            --o0o--

17           CHIEF COUNSEL JENNINGS:  This slide just lays out

18  what Mr. Goldstene went over on how we address the issue

19  after we received the request from the ZEV Alliance.

20           And we can skip to the next slide.

21                            --o0o--

22           CHIEF COUNSEL JENNINGS:  Which lays out the

23  language in the resolution from last May in which the

24  Board asked us to take another look at this issue.

25           Next slide, please.

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 1                            --o0o--

 2           CHIEF COUNSEL JENNINGS:  Back in June, the legal

 3  staff wrote to both the manufacturers and the ZEV Alliance

 4  asking for additional analysis, if they choose to do so.

 5  We got a letter from the First Amendment Project on behalf

 6  of the ZEV Alliance, a letter from the Pillsbury Firm on

 7  behalf of the large volume manufacturers and from three or

 8  four individual manufacturers.

 9           Next slide, please.

10                            --o0o--

11           CHIEF COUNSEL JENNINGS:  This lays out the

12  principles of the California Public Records Act.  That is

13  a quote from the first section of it.  There's a provision

14  in the Constitution of California that emphasizes the

15  importance of the disclosure of public records.  At the

16  same time, the Public Records Act identifies some specific

17  exemptions to disclosure that State agencies need to

18  follow.

19           Next slide, please.

20                            --o0o--

21           CHIEF COUNSEL JENNINGS:  The main section of the

22  Public Records Act that the manufacturers are relying on

23  is Section 6254.7 of the Government Code.  So the next

24  several slides are going to go over that.

25           And that section has six subsections as you can

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 1  see here.  The first three identity three categories of

 2  information that are declared to be public records by the

 3  statute.

 4           The next section states that with two exceptions

 5  trade secrets are not public records under this section.

 6           E talks about emission data being public even if

 7  it is trade secret.

 8           And F has a provision having to do the use of

 9  data used to calculate emission credits for permit

10  programs.

11           Next slide, please.

12                            --o0o--

13           CHIEF COUNSEL JENNINGS:  We've identified three

14  legal issues in terms of the applicability of this

15  section.

16           And the first one is whether the information is

17  trade secret.  There's a definition in the statute I'm

18  going to go over.

19           The second question is if the data are trade

20  secrets, is the data always exempt from disclosure or does

21  it have to fall into one of the three categories

22  identified in Subsections A, B, and C.  And I'm going

23  discuss that as the second issue.

24           And then the third issue, if this answer on the

25  second one is it does have to fall within those sections,

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 1  to analyze whether in fact it does.

 2           Next slide.

 3                            --o0o--

 4           CHIEF COUNSEL JENNINGS:  Oh, and I want to

 5  mention -- and this is very important.  A couple things I

 6  had meant to mention.

 7           First, under Section 6254.7, if it's exempt from

 8  disclosure, that exemptions is absolute.  And the decision

 9  maker doesn't then do any balancing of public interests.

10           I'm going to talk later on where there's another

11  statute that's pertinent where the Board would be doing a

12  balancing of public interests.

13           And the other thing that I forgot to mention is

14  that in implementing the Public Records Act, the Air

15  Resources Board has adopted regulations.  And one

16  provision of those regulations is that where an entity has

17  submitted information based on a claim of confidentiality

18  and the ARB decides that it isn't exempt from disclosure

19  that we first have to give 21 days' notice to the entity

20  submitting the material to us before we release that data

21  so that they have a chance to seek a judicial remedy if

22  they want to.

23           So now I'm going to talk about whether these data

24  are trade secret.  In the definition of trade secret, you

25  can break it up into five elements.  And these are the

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 1  first three.

 2           On the first one, we believe the ZEV credit

 3  information clearly is a compilation of information.  So

 4  it falls within that first category.

 5           The data clearly are not patented, so they fall

 6  within the second category as well.

 7           And then the third category I think is one of the

 8  two somewhat challenging categories, and that is which is

 9  known only to certain individuals within a commercial

10  concern.

11           The manufacturers all submitted information in

12  more or less detail on their efforts to keep the ZEV

13  credit information confidential within their companies.

14  And I don't think there's much question about that.

15           The First Amendment Project asserted that all of

16  these data are available publicly, and therefore the data

17  are not just known to certain individuals within the

18  commercial concern.  And when we certify motor vehicles

19  gold, silver, or bronze motor vehicles, we always identify

20  now in the certification order what credits they're

21  generating.

22           And then the First Amendment Project asserts that

23  one could go to DMV and obtain a lot of information about

24  registration of vehicles.  And combining that information

25  and maybe executive orders that we've issued on

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 1  transportation credits and things like that, one could

 2  figure out pretty well what the ZEV credit status of a

 3  company is.

 4           In some ways, the bottom line is that the efforts

 5  of the auto companies are so strong to try to avoid

 6  releasing this data under the Public Records Act and the

 7  efforts of the ZEV Alliance are so strong in trying to get

 8  the data that I think that's pretty good evidence that the

 9  data is not generally available without resort to this

10  Public Records Act request.

11           So now the next slide is on the last two

12  criteria.

13                            --o0o--

14           CHIEF COUNSEL JENNINGS:  The next one is that the

15  information is being used to manufacture a product.  The

16  vehicle manufacturers make passenger cars for sale in

17  California that have to meet the ZEV regulation.  They

18  need to know their ZEV credit status to make vehicles that

19  comply with the regulation, and I think that that's pretty

20  straight forward.

21           And the last one is knowledge of the trade secret

22  that gives the user an opportunity to obtain a business

23  advantage over competitors who do not know or use it.  And

24  the main point that the manufacturers have made is that

25  their ZEV credit status shows what their upcoming business

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 1  plan is likely to be, about the kinds of vehicles they'll

 2  be certifying and selling, if they are interested in

 3  engaging in a trade with another manufacturer over gold,

 4  silver, or bronze credits.  If the person they're doing

 5  the transaction with knows what their credit status is,

 6  their bargaining position may be different than if they

 7  don't know what their ZEV credit position is.  Do they

 8  have to get these credits to comply with the regulation or

 9  will it just give them a cushion?

10           And next slide, please.

11                            --o0o--

12           CHIEF COUNSEL JENNINGS:  Our conclusion on

13  whether it's a trade secret is pretty clearly that we

14  believe these data do qualify as trade secret, which gets

15  us to the second issue under Section 6254.7.

16           And -- just a second.  Under the second issue,

17  the question is whether all trade secrets are exempt or

18  only those trade secrets that fall within Subsections A,

19  B, or C.

20           And when the section was originally enacted in

21  1971, there were three subsections.  And the first two

22  were the same subsections that are there now identifying

23  two categories of air pollution records as public records.

24  And then Subsection C, which is now D, said trade secrets

25  are not public records under this section.

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 1           And it seems pretty clear from that that it is

 2  only an exception from the kinds of information that are

 3  declared to be public under A and B.  As originally

 4  enacted, it was not intended to be a blanket exemption for

 5  trade secrets, even if they had nothing to do with air

 6  pollution or water pollution or anything like that.

 7           And I have to say that this is an issue that we,

 8  the legal office, never really looked at that vigorously

 9  before, but it was raised by the First Amendment Project.

10  And as we looked at it more, we became more convinced it's

11  a very real issue.

12           The section has been amended six times.  Five of

13  the amendments are wholly consistent in our view with the

14  principle that when the Subsection D refers to are not

15  public records under this section, they're only referring

16  to the kinds of documents that are declared under the

17  section to be public records.

18           Next slide.

19                            --o0o--

20           CHIEF COUNSEL JENNINGS:  There is one amendment

21  that's very problematical.  And that is in 1981 the

22  Legislature added this language to what's in Subsection D.

23  And it said it added the second exception, and the

24  exception had to do with data regarding the results -- the

25  answers to standardized tests.  And clearly that doesn't

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 1  have to do with any of the documents declared to be public

 2  records in any other subsection there.  So it raises a

 3  question if Subsection D only refers to trade secrets that

 4  are identified as public under A, B, and C, there would

 5  have been no reason for the Legislature to put that

 6  underlined language in there.

 7           But on the other hand, when you think about it,

 8  is the Legislature's putting that language in there in

 9  1981, does that really reflect an intent to convert what

10  the whole section meant compared to what it meant before

11  that amendment was put in.  That sort of also calls into

12  question what did the Legislature mean by are not public

13  records under this section if things in other sections are

14  relevant as well.

15           So next slide.

16                            --o0o--

17           CHIEF COUNSEL JENNINGS:  When we look at the

18  question overall, we have concluded that we think that

19  trade secrets -- the trade secret exemption only applies

20  to information that's identified in A, B, and C.

21           And just to digress for one moment.  You'll

22  recall in the mandatory reporting rulemaking that we did

23  earlier there was a good deal of information about or

24  testimony about trade secret stuff and emission data.  All

25  of that data clearly does fall within Subsection A.  So

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 1  there is a lot of meaning to Subsection A.  The question

 2  is for us whether the ZEV credit data falls under

 3  Subsection A.

 4           So this slide shows what the first half of

 5  Subsection A and I think the pertinent part.  And it

 6  refers to all information, analyses, plans, or

 7  specifications that disclose the nature, extent, quantity,

 8  or degree of air contaminants where other pollution which

 9  any article, machine, equipment -- don't you love how laws

10  are written -- or other contrivances will produce.  And

11  then after another clause, it says are public records.

12           So I think that it's clear that when it refers to

13  emissions from other contrivances, that would include

14  motor vehicles.  But it's talking about the actual

15  emissions that come out of contrivances and equipment and

16  stuff like that.  And then again when you look back at the

17  mandatory reporting rulemaking, it was all about what are

18  the actual emissions of these facilities.

19           And with the ZEV credits, the ZEV credit is not

20  based on the actual emissions of the particular vehicle

21  model that got certified.  It's based on the certification

22  standard that the vehicle was certified to.  So that all

23  PZEVs, regardless of what the actual emissions of the

24  tested vehicle were, are treated the same.  And all AT

25  PZEVs are treated the same in terms or they're all

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 1  assigned the same emissions level, which is the

 2  certification level.

 3           And next slide, please.

 4                            --o0o--

 5           CHIEF COUNSEL JENNINGS:  Because of that, we have

 6  concluded that although the ZEV credit information does

 7  qualify as trade secret under 6254.7D, it is not covered

 8  by the whole section because that provision doesn't cover

 9  this kind of information.  And that is not however the end

10  of the story.

11           Next slide.

12                            --o0o--

13           CHIEF COUNSEL JENNINGS:  But we are halfway

14  there.  Only half of the story is left.

15           There's another provision in the Public Records

16  Act 6254k, that says that anything that's privileged under

17  the Evidence Code is exempt from disclosure under the

18  Public Records Act.  And there is a provision of the

19  Evidence Code that exempts certain trade secret

20  information.  And it basically exempts the trade secrets

21  if the allowance of the privilege will not tend to conceal

22  a fraud of otherwise work injustice.

23           Next slide.

24                            --o0o--

25           CHIEF COUNSEL JENNINGS:  It's pretty obvious to

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 1  us that there's a special definition under the Evidence

 2  Code about what trade secret means.  But if it's trade

 3  secret under the other provision, we think it's trade

 4  secret under this one.

 5           So we get to the second clause there, and the

 6  question becomes would disclosure conceal fraud or

 7  otherwise work injustice?  There's one California case --

 8  reported case that interprets this in the context of the

 9  Public Records Act.

10           Could we go back one?

11                            --o0o--

12           CHIEF COUNSEL JENNINGS:  And that case is Uribe

13  versus Howie.  It was a 1971 case in which the farm worker

14  sought to gets the records that had been filed by

15  pesticide applicators of the monthly pesticide spray

16  reports they submitted to the County Ag Commissioner.  In

17  construing what conceal a fraud or otherwise work

18  injustice meant, that court basically applied a balancing

19  test.  They said that the trade secret might be protected

20  only if interests of justice are best served.  And after

21  couple pages of analysis and balancing the interest, that

22  court declared that the data was not exempt from

23  disclosure, because the interest in disclosure outweighed

24  the interest in nondisclosure.  And there's an analysis in

25  the report we did that goes into this in more detail.

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 1           Next slide, please.

 2                            --o0o--

 3           CHIEF COUNSEL JENNINGS:  So I think the most

 4  important thing here and the thing we need to do is

 5  compare the public interests.  And I'll jump ahead for a

 6  second.

 7           Just leave the slide as it is.

 8           We feel that there are powerful interests both in

 9  favor of disclosure and in favor of nondisclosure.  And

10  that because those present to a large extent policy

11  considerations and because the Board is the ultimate

12  policy maker for our agency that we're going suggest that

13  the Board is best suited in deciding how those different

14  public interests should be balanced.

15           So I'm going to go over now the public interest

16  in disclosure and then the public interest in

17  nondisclosure.

18           First the public interest in disclosure.  The ZEV

19  Alliance generally identified two reasons why they thought

20  that the data should be released.  And the first is they

21  believe there's a need of the public to monitor compliance

22  and to make sure that the regulation is being adequately

23  enforced.

24           I just learned today I think that issue may have

25  not just disclosure whether people are in compliance or

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 1  not, but perhaps elements of how certain credits were

 2  assigned to vehicles back when and whether those vehicles

 3  should have qualified for those credits.  But they make

 4  this argument that the public needs to see the credit data

 5  to see if the regulations' being adequately enforced.

 6           When I thought about this, it struck me that the

 7  same considerations come up with income tax returns.  We

 8  don't really know that the Internal Revenue Service is

 9  adequately enforcing the tax laws with respect to a

10  particular person unless you see those tax returns and see

11  if they're doing it right.  And obviously there's a strong

12  interest in not releasing individual tax returns and that

13  doesn't happen in our country.  So there are

14  countervailing interests there.

15           We think that it is important to publicly release

16  the information that all manufacturers have positive

17  credit balances for model years 2005 and 2006.  And we

18  could provide more information to report something like

19  that.  But you'll have to evaluate how important this

20  consideration is.

21                            --o0o--

22           CHIEF COUNSEL JENNINGS:  The next slide talks

23  about the other public interest in disclosure.  And that

24  is -- and I think it's the more important one.  As we come

25  to the Board's consideration of the upcoming ZEV

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 1  rulemaking, there is a concern among members of the ZEV

 2  Alliance that they won't really know what the impact of

 3  various amendments are unless they know what the ZEV

 4  credit status of the various companies are.  Because they

 5  don't know whether a company will have enough banked

 6  credits that they'll be able to move to a different

 7  compliance path, et cetera.

 8           And to give one example -- there aren't all that

 9  many examples, but there are certainly some good examples.

10  That the amount of an outstanding gold credit balance that

11  a company has may determine whether that manufacturer

12  would leave the alternative path and move to the base path

13  if the alternative path provisions were tightened so much

14  that they really didn't want to deal with those provisions

15  anymore.

16           When you move to the base path, you have to meet

17  all your gold obligation with gold vehicles.  So your

18  ability to move to that path depends on how many credits

19  you've banked for those pure ZEVs that you've produced in

20  the past.

21           I do want to mention one thing.  And I think this

22  is important.  That under the open meeting law, we believe

23  that the Board could conduct a closed session during the

24  rulemaking and the Board could receive all of the ZEV

25  credit data and review the material and discuss it -- the

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 1  Board members could discuss that data among themselves

 2  consistent with nondisclosure under the Public Records

 3  Act.  I think that would inform your decisions.  But the

 4  big issue is would that be satisfactory to members of the

 5  public, because members of the public are concerned with

 6  what will be the real impacts.

 7           CHAIRPERSON NICHOLS:  I just want to ask a

 8  question, which I think I know the answer to.  But just to

 9  be clear.  If this information were trade secret -- and if

10  it is trade secret and it were subject to complete

11  nondisclosure, even members of this Board would not have

12  access to it.  Only those individuals designated by the

13  requirements of the ARB would have it?  In other words, if

14  we hadn't made your balancing suggestion, if you hadn't

15  come to the balancing conclusion --

16           CHIEF COUNSEL JENNINGS:  Technically, the Board

17  members could see it at as parts of ARB without

18  disclosure.

19           But the key issue is to the extent it's relevant

20  to the rulemaking normally if you were going to discuss it

21  with other members, you would have to do that in the open

22  session.  And there is actually a provision in the open

23  meeting law that allows the Air Resources Board

24  specifically to have a closed session to consider

25  production data from manufacturers.  And we think that

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 1  this is close enough to be production data.

 2           Now you would still be under an obligation not to

 3  disclose it, because you could be State officers who've

 4  received this information.  But it would be satisfactory

 5  for your needs, but obviously there's a major question

 6  whether the public would find that adequate.

 7           So now to move to the next slide and talk about

 8  the last question --

 9                            --o0o--

10           CHIEF COUNSEL JENNINGS:  -- which is the public

11  interests in nondisclosure.  There are two public

12  interests we've identified.  The first one is the basic

13  interest that the companies have in not having their

14  information provided to potential competitors.

15           As I described before, it could tip off

16  competitors to their compliance plans.  It would affect

17  their bargaining positions and credit transactions.

18           There is a question that we haven't explored very

19  much, but it is possible that if everybody's data was

20  disclosed, that could in some ways level the playing

21  field.  Because although companies would know your data,

22  you could know their data.  But obviously some companies

23  who were sort of more on the edge would be more affected

24  than other companies.

25           Next slide, please.

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 1                            --o0o--

 2           CHIEF COUNSEL JENNINGS:  Which moves us to the

 3  last public interest that we've identified for

 4  nondisclosure.  And I think it's a very important one.

 5  And that is that the staff very much relies on

 6  confidential data that the manufacturers provide us in

 7  both developing regulations and implementing regulations.

 8  And there's a good deal of exchange there, and receiving

 9  that information is very important.

10           And there are even situations where we receive

11  confidential information that goes to the same kind of

12  issue that the ZEV credit data go to, because it goes to

13  whether companies can comply with the regulation or not.

14  There have been instances where individual manufacturers

15  have told us that they can comply with the proposed

16  regulation, even though the trade association is raising

17  lots of questions.  But they say, you can't tell.  You

18  can't publicly disclose that.

19           Question whether a member of the public would say

20  you need to disclose that information because that's

21  relevant to my ability to comment on whether the

22  regulation is technologically feasible or not.  I don't

23  want to minimize the importance of the trade secret

24  information that staff does receive on an ongoing basis

25  from the manufacturers and the potential impacts that

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 1  disclosure in this case could have on the ongoing supply

 2  of that data.

 3           CHAIRPERSON NICHOLS:  Tom, I'm sure everybody has

 4  comments and want to jump into this, but I just have to

 5  ask you one question about that, because this isn't --

 6  well, maybe I'm not understanding how the ZEV program

 7  works.  So maybe that's what I need more clarification on.

 8  Because it would seem to me that the information about how

 9  many banked credit a manufacturer has would be information

10  that we would have.  In other words, they may be

11  collecting it themselves, but they have to file that

12  information with us.

13           CHIEF COUNSEL JENNINGS:  That's correct.

14           CHAIRPERSON NICHOLS:  In terms of their sales

15  data.

16           CHIEF COUNSEL JENNINGS:  The information that we

17  have is all either directly submitted by the manufacturers

18  to us under these forms that they're required to submit or

19  is information that we've derived from the manufacturers'

20  submittals.

21           If we had information that wasn't -- that we had

22  identified independently, then there's no doubt that that

23  can be released, because we didn't receive it under a

24  claim of confidentiality.  And we have thought in ZEV

25  rulemaking about whether we could try to create data

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 1  ourselves to provide information to you.  And it seemed

 2  like it was going to be a real challenge to do that.  So

 3  we haven't done that yet.

 4           CHAIRPERSON NICHOLS:  But I guess where I was

 5  headed with the question is that I understand the nature

 6  of the kinds of conversations that staff are able to have

 7  with representatives of manufacturers that enable them to

 8  make better judgments about where to go on rule makings.

 9  But those could be sort of informal conversations.  They

10  would be data collected.

11           CHIEF COUNSEL JENNINGS:  I was talking to Tom

12  Cackette and Bob Cross about that.  And I point out the

13  Public Records Act only applies to records, documents,

14  things like that.  If we're told something and there's no

15  writing involved, then it's not subject to the Public

16  Records Act.

17           Bob Cross pointed out that -- he's the guy who

18  runs these meetings with manufacturers about their product

19  plans, et cetera.  That there's a lot of technical

20  diagrams and things like that that are provided.  And it's

21  hard to just all keep it in our head without having any

22  records.

23           CHAIRPERSON NICHOLS:  Okay.

24           CHIEF COUNSEL JENNINGS:  So we're just about at

25  the end, and I'll go -- I think there are only two more

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 1  slides.  We'll go to the next slide.

 2                            --o0o--

 3           CHIEF COUNSEL JENNINGS:  Which just talks about

 4  why we think it's appropriate for the Board to engage in

 5  this balancing test.

 6           And then the last slide is the summary.

 7                            --o0o--

 8           CHIEF COUNSEL JENNINGS:  We do believe that the

 9  ZEV credit information is trade secret.  But we don't

10  believe it's absolutely exempt from disclosure.  I do want

11  to emphasize that we have never looked at the precise

12  issue before about whether it has to fall within the

13  Subsection A, B, and C.  And we released our analysis only

14  on Monday, so I think you're going to hear from some

15  people that they haven't had enough time to analyze our

16  opinion.

17           And under the Evidence Code, you disclose whether

18  the withholding -- unless withholding the information

19  would not work an injustice, there's strong public

20  interest both ways.  And I think it's worth discussing

21  these issues now.

22           CHAIRPERSON NICHOLS:  And just to clarify the

23  process, if the Board were to decide that the interest in

24  disclosure outweighed the interest in nondisclosure, what

25  would happen?

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 1           CHIEF COUNSEL JENNINGS:  What would happen is the

 2  staff would send a letter to each of the manufacturers who

 3  submitted the data saying that we have decided that the

 4  data is not exempt from disclosure under the Public

 5  Records Act and that we plan to release the data after

 6  they receive 21 days' notice.  So we would identify the

 7  date the 22nd day -- it would be receipt, not delivery.

 8  So we have to figure that out.  But there would have to be

 9  a pause of at least three weeks before we release that

10  data.  And I think there's not an insignificant chance

11  they would go to court and try to get a restraining order

12  again us.

13           CHAIRPERSON NICHOLS:  They have time to do that

14  before the data goes out.

15           Okay.  Well, would anyone like to start the

16  discussion?  Yes.  I'm sorry.  We do have witnesses.  We

17  have to hear from them first.  Fair enough.  I forgot.

18           Don Anair from Union of Concerned Scientists,

19  followed by Sarah Flanagan with AIAM, I assume, and Linda

20  Nicholes.

21           MR. ANAIR:  Good evening.  I think I've gone

22  through all good morning, good afternoon, good evening.

23  But now I get to speak on behalf of my colleague, Mr.

24  Kwong, who couldn't be here and who is tracking this

25  issue.  So I just wanted to read his comments to you.

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 1           The Union of Concerned Scientists cannot speak to

 2  the legal aspects of the request to disclose zero emission

 3  vehicle credit data.  However, from a scientific

 4  standpoint, without the gold level credit data, it is

 5  impossible to analyze the effectiveness of the ZEV

 6  program.

 7           For example, much discussion on the ZEV mandate

 8  has centered on the 25,000 pure ZEV vehicle credits

 9  during -- requirements during 2012 through 2014.  If the

10  number of credits that each car company has accumulated is

11  unknown, it is impossible to tell if the gold requirements

12  in Phase 3 should be reduced or if an auto company can

13  meet its requirement using the banked credits, thereby not

14  producing any ZEV vehicles for three years.  How can the

15  public provide accurate comments on the proposed changes

16  to the ZEV program without knowing this information?

17           In contrast to the gold level vehicles, the

18  number of silver and bronze vehicles sold at dealerships

19  in California is publicly available for purchase from at

20  least two different companies.  That is, I can pay a

21  company to tell me how many ATP ZEV Priuses or PZEV Ford

22  Focuses or Foci, whatever you prefer, were sold in

23  California in 2006.  Because the data is available to the

24  public for a price, UCS wonders how much of a trade

25  secrets are these silver and bronze credits.

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 1           UCS strongly encourages the Board to release all

 2  record requested by the ZEV Alliance.  This will allow the

 3  public the opportunity to properly judge the effectiveness

 4  of the ZEV program.  Furthermore, if data on the ZEV

 5  program remains hidden it prevents proper scientific

 6  analysis of other ARB programs, such as the Global Warming

 7  Solutions Act.  Thank you.

 8           CHAIRPERSON NICHOLS:  Thank you.

 9           Sarah Flanagan.

10           MS. FLANAGAN:  Good evening, Chair Nichols and

11  members of the Board and staff.  I'm Sarah Flanagan,

12  Pillsbury Winthrop Shaw Pittman.  I make this statement on

13  behalf of six of the manufacturers:  General Motors, Ford,

14  Chrysler, Toyota, Nissan, and Honda.  I have two issues:

15  Process and merits.

16           The process issue is this is a very, very

17  significant decision you're being asked to make.  It has

18  ramifications beyond these records and beyond this agency

19  in terms of the interpretation of the absolute protection.

20           This is a radical departure from prior practice.

21  And Chief Counsel Jennings said that the Board hasn't

22  considered this issue before.  It has not been something

23  that has been the Board's position in the past.

24           We only learned about this new interpretation

25  late on Tuesday.  We scrambled to get a brief statement in

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 1  front of you, but it is not the analysis that we want to

 2  be able to do.  So we asked that this decision be put off,

 3  that we be -- this is not a punt.  We need time to provide

 4  a good, thorough analysis.  Because it's not just the Air

 5  Board.  There are other agencies that use this section.

 6  So that's kind of number one.

 7           Number two on the merits.  Even though I know

 8  it's a special occasion and it's his retirement and all

 9  and there was that beautiful resolution read, I think he's

10  got it wrong on this one.  The absolute protection should

11  apply.  You can't just read out an amendment because it

12  doesn't fit within the interpretation you want to put on

13  it.  And not only have we relied on it and other agencies

14  relied on it, but the Board itself has relied on it.  So

15  you shouldn't change the interpretation overnight without

16  giving people a chance to really analyze and address it.

17           But on the merits, if you did get to the

18  balancing test, which I don't think you should because I

19  think the absolute protection applies.  If you get to the

20  balancing test, what could be more unjust than for a

21  government agency to tell the manufacturers that they will

22  be submitting the data with the absolute protection --

23  absolute protection for trade secrets.  And then after we

24  give you to data then you say, you know, we haven't looked

25  at this before, but now that we have, we don't think the

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 1  absolute protections should apply.  What can be more

 2  injustice than that?

 3           Because our clients would have given you only the

 4  minimum required had they known that.  They would not have

 5  provided the additional data that the staff finds helpful.

 6  I mean, that is unjust.  It's almost a rulemaking that

 7  we're having here where you're changing the rules of the

 8  game.

 9           I attached to my letter, which is under Mr. Bars'

10  name, the advisory that went out to the manufacturers with

11  respect to this very data.  And the section that talks

12  about confidentiality only talks about the absolute

13  protection.  If it's trade secret, it falls under the

14  absolute protection.  There's none of this A, B, and C

15  stuff.  And as -- well, we need more time.  Okay.  I'm not

16  going to get it now, but we need more time.  This is a

17  very significant matter.

18           CHAIRPERSON NICHOLS:  Thank you.  And I know

19  we'll be here so we can call you back for questions.

20  Appreciate that.  Would you point us to the page in the

21  letter or our document rather that deals with

22  confidentiality?  I'm not finding it.

23           MS. FLANAGAN:  Sure.  It's on page 6 of your --

24  the first attachment to our letter.

25           CHAIRPERSON NICHOLS:  Okay.  Thank you very much.

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 1           Ms. Nicholes, followed by Danielle Fugere and

 2  Bonnie Holmes-Gen.

 3           MS. NICHOLES:  Good evening, Chair Nichols and

 4  Board.  I'm Linda Nichols from Plug In America.

 5           Plug In America believes that the zero emission

 6  vehicle credit system should be fully transparent to all.

 7  Auto makers should not be allowed to continue to hide

 8  their current credit status of compliance from the public.

 9           ZEV credit data should be disclosed.  In the

10  past, the auto makers have used the ZEV credit block wall

11  to hide this important information from the public.  I'm a

12  member of the public.  This information is important to

13  me.  Disclosure allows the public to understand whether

14  plug-in cars are actually going to be put on the road and

15  what our expectations in the future might be.

16           ZEV credit disclosure is in the public's best

17  interest and does not hurt the auto maker's interest.  It

18  is truly up to the Board to decide.  Please do what is in

19  the public's interest.  Zero emission vehicle credit

20  disclosure should be treated as a public record and

21  certainly not a confidential trade secret.  The era of

22  hiding the current auto maker status of credit compliance

23  should be relegated to history.  Thank you.

24           CHAIRPERSON NICHOLS:  Thank you.

25           Danielle Fugere, Bonnie Holmes-Gen, and then

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 1  Daniel Emmett.

 2           MS. FUGERE:  Good evening, Madam Chair and

 3  members of the Board.  My name is Danielle Fugere, and I

 4  represent the Blue Water Network, Friends of the Earth,

 5  which is a ZEV Alliance member.

 6           It's been over a year since we submitted our

 7  Public Report Act request.  So I appreciate your hearing

 8  this today.  And I hope that you make a decision on this

 9  issue today.

10           With your decision, you can either bring the

11  light of day to the ZEV credit system or can you put it

12  into a black box, hidden from the public, without access

13  or review.  If you find that the credits are secret and

14  the public must simply trust auto makers and regulators,

15  public confidence in the system will be gone.

16           Equally important, your decision today will set a

17  precedent for any market-based trading system set up under

18  AB 32.  The public trust in that system could be

19  undermined before it is even set up if all trading and

20  credit information is retained as secret from the public.

21           Contrary to staff's conclusions and auto makers'

22  assertions, the information we requested is not trade

23  secret.  In questions one and six, we requested a record

24  of the cars sold into the market by each auto maker.

25           Once a car is sold, that information becomes

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 1  publicly available.  It's not easy available, but it's

 2  publicly available.  DMV records are available and

 3  companies like JD Powers sell the information.  They sell

 4  it for money, though.

 5           And because this information becomes publicly

 6  available, it can no longer form the basis of a trade

 7  secret claim.  It's no longer secret.

 8           The second type of information we requested.  We

 9  asked for information about ZEV credit allocations.  ZEV

10  credits are enforcement records.  CARB reviews auto

11  makers' sales data and makes a decision about compliance

12  status by issuing credit.  Those records of government

13  decision making are not trade secret.  Only the

14  information from the auto makers on which the government

15  relied for its decision can be the basis of a trade

16  secret, and that information is publicly available.  The

17  decision makers' issuance of credit is not an auto maker

18  secret.

19           And note that we have not asked for plans or

20  schematics or strategies.  We have not asked for any truly

21  trade secret information.  So we ask that you rule on this