4 EXECUTIVE OFFICER WITHERSPOON: That's what I was 5 suggesting. Go ahead and make the finding in general. If 6 we need to refine it for the San Joaquin Valley, we'll 7 bring back the refinement on just that piece. Because 8 none of the other basic areas are non attainment for 9 federal law, I don't think.

10 SENIOR STAFF COUNSEL JENNE: Ms. D'Adamo, the way 11 the resolution is currently structured, the Board would be 12 making a finding today for enhanced areas and would 13 essentially be declining to make any finding right now 14 about the basic areas. So because the Board isn't making 15 a finding in the basic areas, the exception would into 16 effect. But the Board  we could certainly come back 17 later on about another finding for just the basic areas as 18 you suggested. And that wouldn't affect anything you 19 would do today, which would be just be making the finding 20 for the enhanced areas.

21 BOARD MEMBER HUGH FRIEDMAN: I just wanted to 22 clarify that too for Supervisor Patrick and anybody else I 23 might have misled. When I said  I indicated I 24 understood we had a limited role, it was to make findings 25 as referred by the legislation. And when I said I support PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 190 1 the proposal, it did not take action with respect to the 2 basic areas on our part, and I didn't mean to preclude any 3 further consideration with respect to magnifying pollution 4 problems or non attainment areas. So I certainly have no 5 problem with it coming back if there's some way that in 6 good faith a finding can be made with respect to that.

7 CHAIRPERSON LLOYD: Supervisor DeSaulnier.

8 SUPERVISOR DeSAULNIER: I'd be happy to make a 9 motion. And if you need you need an amendment to the 10 resolution, D. D., you can do that, or if the direction is 11 sufficient for you to come back. But I'll move 12 resolution

13 CHAIRPERSON LLOYD: Supervisor DeSaulnier, I 14 appreciate your anxiety, but we do have three witnesses 15 signed up to

16 SUPERVISOR DeSAULNIER: I thought we had

17 sorry, Charlie. I know you'll get back at me some way.

18 Sorry Charlie. What commercial did that come from?

19 CHAIRPERSON LLOYD: So indeed, if there are no 20 more question from the Board, we do have three witnesses 21 signed up. Charlie Peters, Larry Armstrong, and Chris 22 Ervine. And then we will be ready for the motion.

23 Charlie.

24 MR. PETERS: Mr. DeSaulnier, Mr. Chairman, and 25 Board. Very much appreciate Mr. DeSaulnier's attention,

PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 191 1 him being a small businessman in the Bay Area with 2 significant efforts against small businesses  restaurant 3 businesses throughout the state of California currently 4 with unfair business practice situations where some 5 regulator might come in to Dr. DeSaulnier's business, in 6 spite of the fact of how important and powerful he is, and 7 put some minor correctional issue against his business.

8 And what can happen there can get pretty interesting, even 9 in spite of his power.

10 What I'm here to talk to you about today is I 11 gave you a packet of information which includes  and I'm 12 interested in the policy issues  includes a small 13 businessman in Southern California. There was no 14 opportunity to make corrections. An employee of his did 15 something inappropriate, which he immediately let go 16 before he found out what had happened.

17 He goes to his association, which is the largest 18 in the state supporting these issues, and the attorney 19 says $ 20,000 to start and you lose. He said, " Well, gee,

20 I'm good guy." He goes before the regulator, and they 21 say, " You're out of business."

22 That's an interesting place to start. He's 23 currently today out of business. He's 40 years old, AAA 24 approved shop, CAP approved shop, passed every test, every 25 standard there is. Has never had a citation in his life.

PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 192 1 Has had a perfect record with AAA. State of California 2 has him out of business today.

3 We are trying to mitigate that. He now has an 4 attorney. He's now a petitioned this to the Supreme 5 Court. He's now petitioned this to the Department of 6 Consumers Affairs. We're hoping he gets back in business.

7 We hope he gets some additional consideration. We hope we 8 can mitigate this.

9 But what's right behind that is immediately after 10 that they can take him to the district attorney. The 11 attorney general's got him now. Then the district 12 attorney comes for him. And then immediately after 13 that  because there's been some action against him, we 14 can have an unfair business practice suit against him that 15 can extract another 20,000, $ 30,000 from this money.

16 Immediately as soon as that's done, the same attorney with 17 the same pseudo consumer can make another action, and 18 every attorney in the state of California can continue to 19 take action against this individual. And this guy never 20 did anything wrong.

21 What are we doing to small business in 22 California? What are we doing to the air, putting 23 somebody who's a professional that can fix the problem out 24 of business with no consideration. It's wrong. I want 25 your help. Say you have nothing to do with this. I've PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 193 1 had everybody tell me for 15 years it's ain't my problem.

2 Well, it's mine. I'm the problem and my lack of ability 3 to communicate  I'm working on trying to make it better.

4 I'm petitioning you. I'll get on my hands and knees if it 5 takes it to help support small business and better air 6 quality in California starting today and to create some 7 protection for Mr. DeSaulnier and his business in the Bay 8 Area.

9 Thank you.

10 CHAIRPERSON LLOYD: Thank you for your written 11 statement.

12 We have Larry Armstrong and then Chris Ervine.

13 MR. ARMSTRONG: Yes. My name is Larry Armstrong.

14 I operate some automotive tune up shops that participate 15 in the smog check program in both the Bay Area and one 16 left in the enhanced area.

17 I submitted a letter to the Chairman concerning 18 my concerns over the recommendation of the I& M Review 19 Committee. I'd like to make a couple quick comments. I 20 sat back on the other issue.

21 First, Mr. McKinnon, I would like you to consider 22 maybe an alternative theory on relinquishing a need to 23 have a smog check. And I would suggest to you there's a 24 very strong possibility that the reason these cars keep 25 getting better is because they were subjected to smog PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 194 1 check and they failed smog check and the manufacturers 2 went back and fixed those problems and made better cars.

3 So there's a reverse spin on this thing that I would wish 4 that you would consider.

5 I think that  I think that the smog check 6 program has caused vehicles to become a lot stronger and a 7 lot better in the things they do so that the manufacturers 8 could get out of the way of having their cars fail.

9 The issue of how many cars go to test only, I 10 have strongly objected to this. Regulators have never 11 willingly admitted to what they're doing, and I listened 12 to Mr. Cackette over here, and I listened to him carefully 13 as to what he said. He told you the truth. But what he 14 really did was spin you a little bit. And it bothers me 15 when that gets done to me, and it bothers me when it gets 16 down to you folks. When he tells you that 36 percent of 17 the vehicles in the fleet are being sent to test only, the 18 Senate Transportation Committee equated that one half of 19 all the directed vehicles. It's not 36 percent of the 20 vehicles being tested. Over 50 percent of the vehicles 21 are being directed to test only.

22 Somebody talked about investment and return on 23 that investment. I finally gave away a smog check station 24 that I've run since 1976 in Fresno. Virtually gave it 25 away to get away from the losses that I was continuously PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 195 1 incurring because of the laws that we put in place that 2 took my business away.

3 If that serves the public somehow, I guess that's 4 the way it goes. But I don't see how it serves the public 5 to take away the ability to find and repair cars in need 6 of emission repairs in favor of what? So I would ask you 7 to at least be thinking about that.

8 I have asked the Bureau of Automotive Repair for 9 the data that was given to you today as an example that 10 somehow vehicles that go to test only are somehow treated 11 definitely and better and whatever. And the fact of the 12 matter is that to my knowledge that evidence has never 13 been available. I've asked the Bureau of Automotive 14 Repair again a couple of weeks ago to provide me with that 15 evidence, and I've seen none of that evidence.

16 The 36 percent factor that you're dealing with 17 was developed by a company under the direction of a fellow 18 named Rob Clausmyer, and it was done based on an arbitrary 19 50 percent discount to test and repair. They then 20 calculated up to 36 percent of the vehicles would have to 21 go to test only to meet the requirements of this 22 50 percent discount. Well, there was no basis for the 23 50 percent discount so whole thing is bologna.

24 In a positive note, I would like to commend the 25 ARB staff for standing up to the subtle pressure from the PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 196 1 Legislature on and Governor an AB 2637 to cave in and 2 figure out a way to do that, even though they know there 3 are detrimental effects on emissions from doing that.

4 I was very much concerned with the presentation 5 to the I& M Review Committee which then prompted a letter 6 that came to you folks expressing a lot of concern about 7 the cost of taking those vehicles out. I have asked the 8 Chairman of the Air Resources Board to provide me with the 9 documentation so that I can figure out how that was done 10 because it doesn't seem logical to me. It shouldn't seem 11 logical to you if older cars  makes sense to fix and 12 repair and  find and repair the broken ones. If ten 13 percent of that group of cars of those newer vehicles are 14 broken, how does it become this astronomical cost to fix 15 those cars.

16 And I question whether  and I don't know 17 whether the effect of the remainder of new car warranty 18 might be available to those consumers. If it is, the 19 additional cost factor is, in fact, zero because the new 20 car manufacturers have an obligation the fix those cars.

21 And if that cost moves over to the consumer because it 22 didn't get a smog check at a later date, then who's 23 responsible for that? If we as a society just allow those 24 cars to go out beyond the warranty so that the consumer 25 can be obligated to pay for those repairs, that doesn't PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 197 1 make a lot of sense to me.

2 The other issue that I have with this, and it has 3 absolutely no effect on me except that as I sat back here 4 had little blue areas on the chart up on the wall, looked 5 like more geographical area to me than the enhanced areas.

6 And these were areas that we're going to say in the 7 enhanced area the removal of the five and six year cars 8 would cause this damage to our ability to maintain the 9 SIP, but in the blue areas we're  because of the way the 10 law was written, you folks as a group do not have the 11 ability to stand up and say wait a minute. If we're going 12 to leave these cars in the enhanced areas, we see 13 absolutely no sense in taking them out of the other areas.

14 So I would ask you to stand up and, if necessary,

15 ask the Legislature to correct that little loophole in 16 there. And as I say, it makes absolutely no difference to 17 me, except I think I drive through some of those basic 18 areas with my clean vehicle. And so I guess I'm subjected 19 to the air. So it does make a difference to me.

20 To me the  removing those cars just because is 21 irresponsible. And I would hope that you would take the 22 responsible action. And I would  again, in writing I 23 requested the information that produced those cost 24 factors. I'd like to have it in writing. I'd like to 25 have the data behind it. And I will tell you folks that PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 198 1 every single time since 1992 I've asked for information 2 that I was concerned about, when I got the information it 3 was fairly easy to see how the numbers were maneuvered so 4 they look like something they weren't.

5 CHAIRPERSON LLOYD: Thank you very much. I think 6 staff heard from request from Mr. Armstrong.

7 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: The 8 detailed data for this is publicly available now. The 9 report that backs up the staff report. So if you need 10 more than that we can get it.

11 CHAIRPERSON LLOYD: I think it would be 12 helpful  might available to send him the relevant 13 information so he doesn't have to work for it would be 14 great.

15 CHAIRPERSON LLOYD: And lastly, Chris Ervine.

16 MR. ERVINE: Exempting five year new vehicles, I 17 have an example. We handle two fleets of  they happen 18 to be Ford Ranger and Mazda pickups. These vehicles range 19 in age from 1999 to 2002. And I can guarantee you that by 20 the time these vehicles reach 70,000 miles, they have had 21 three emission failures. The sale thing on the 2002,

22 which is only a one year old vehicle. These are a typical 23 fleet vehicle. They're a low  well, I don't know 24 whether you want to call $ 10,000

25 CHAIRPERSON LLOYD: What were the two models?

PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 199 1 What was the latter model you mentioned?

2 MR. ERVINE: Ford Ranger and Mazda V2500.

3 CHAIRPERSON LLOYD: It's a good job Kelly came 4 back.

5 MR. ERVINE: In one fleet in particular by the 6 time they reach 80,000 miles, they've had valve failures 7 in them and cracked cylinder heads. In one particular 8 case I contacted BAR because we had one that had 47,000 9 miles on it, and it had three bad valves in it and was 10 sending a misfire  intermittent misfire code. And BAR's 11 repy was to test the vehicle and then send it to the 12 dealership to be repaired under warranty. The dealership 13 would not repair it under warranty and BAR would not back 14 us up and make the dealership fix it. The consumer ended 15 up repairing that engine on their own.

16 Ford will not admit to this problem or any of the 17 other emission failures concerned with these vehicles.

18 So there are vehicles out there that, yes, will 19 go 200,000 miles without an emission failure. There are 20 other vehicles that are on the low end of cost that are 21 typically not maintained well that are typically a fleet 22 vehicle that will fail. And in the cases of these fleet 23 vehicles here, the owner of this fleet was more than happy 24 to repair these vehicles any time there was anything wrong 25 with them. But his employees never told him that there PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 200 1 was anything wrong with these vehicles. And they 2 continued to drive them. And in some cases we found out 3 at a later date that it had been six months that this 4 thing had been on the road with a burned valve.

5 By extending it to six years, a lot of these 6 vehicles with emission failures are out of warranty. So 7 the consumer is being hurt in that they're not finding out 8 there's an emission problem with their vehicle until it's 9 out of warranty and then they're having to pay for the 10 emission repairs.

11 Consumers in San Joaquin Valley and Sacramento 12 Valley and other places are being penalized financially on 13 repairs  the cost of repairs. In these areas in the 14 enhanced area the cost of repairs has gone from a point 15 where we're dealing with spending this much money to 16 reduce this much emissions, to spending this much money to 17 get this much emission reduction. And by bringing in some 18 of the basic areas which are all up and down the central 19 valley on both sides and bringing in not the whole area as 20 an enhanced area but the high density population spots in 21 these basic areas into the enhanced area and bringing in 22 the change of ownership. I think the whole state should 23 be at least a biannual smog inspection.

24 The program is already in place. As far as 25 having people that have to travel further for their PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 201 1 inspections, it's not going to happen because the smog 2 machines are out there, even though they're basic machines 3 and they're not the enhanced machines. By just bringing 4 these outlying areas on as a biannual inspection is going 5 to reduce emissions tremendously. And bringing in high 6 density areas that are in the basic area into it, we're 7 going to also reduce emissions.

8 We all know that the enhanced loaded mode testing 9 finds a lot more emissions than just the two speed idle 10 test. And we also know that there's a huge percentage

11 as BAR showed, if there's no program what the emissions 12 were and by just having the basic program what the 13 emission reduction was, it was a big jump. And I think 14 that the name of this is not to reduce emissions just in 15 the high non attainment areas, but to reduce emissions 16 worldwide.

17 CHAIRPERSON LLOYD: Thank you very much. Any 18 questions from the Board? Thank you.

19 So with that, it's not a regulatory item. It's 20 not necessary to officially close the record. However, we 21 do have a resolution before us. Resolution number 03 6 22 containing staff recommendation. Do I have the motion 23 seconded?

24 Sorry, Supervisor DeSaulnier.

25 SUPERVISOR DeSAULNIER: Is now okay? Thanks for PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 202 1 all those comments, Charlie about all the power. I 2 certainly feel very powerful up here.

3 I move resolution 03 6. And D. D.

4 BOARD MEMBER D'ADAMO: Yes. Do we have 5 sufficient direction? The only thing I probably should 6 add, I think we're probably just talking about the Valley.

7 But I wouldn't want the valley to necessarily be singled 8 out. So maybe non attainment areas.

9 EXECUTIVE OFFICER WITHERSPOON: Federal 10 non attainment areas. That would be where there would be 11 a SIP requirement.

12 BOARD MEMBER D'ADAMO: Okay.

13 CHAIRPERSON LLOYD: You're going to speak to the 14 author about the limitations of the legislation?

15 BOARD MEMBER D'ADAMO: Absolutely. Actually,

16 since you brought it up, I mentioned what we were going to 17 be doing. He said he was comfortable with it. Apparently 18 this was an amendment that was sort of

19 CHAIRPERSON LLOYD: But I think to me it 20 highlighted a very good discussion because it highlighted 21 many of the issues which  some which we can't control.

22 But I think it was a very good discussion.

23 BOARD MEMBER D'ADAMO: In light of that then, I 24 second.

25 CHAIRPERSON LLOYD: All in favor say aye.

PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 203 1 ( Ayes)

2 CHAIRPERSON LLOYD: Anybody against?

3 Thank you very much.

4 With that, I think we're going to take a 5 ten minute break for the court reporter. I don't think we 6 can go to the next item without that ten minute break. So 7 thank you very much.

8 ( Thereupon a recess was taken.)

9 CHAIRPERSON LLOYD: I'd like to continue with 10 agenda 03 3 4, public meeting to consider federal source 11 of air pollution in California.

12 This item is a timely one as the San Joaquin and 13 South Coast Air Quality District are in the process of 14 preparing new air quality plans for federal one hour ozone 15 standard attainment. It's clear we can't meet our 16 attainment goals without federal action to complement both 17 the state and the local efforts.

18 The Federal Clean Air Act assigns U. S. EPA some 19 specific responsibilities for reducing emissions from 20 mobile sources and also preempts states from regulating 21 certain sources. There are also practical considerations 22 in the case of interstate trucks that make it necessary 23 for action at the national level. This shared regulatory 24 responsibility combined with the challenging emission 25 reduction targets we face makes it critical for continued PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 204 1 action at the federal level. This needs to occur on a 2 parallel track as ARB and local district continue to 3 pursue every feasible measures for sources under state and 4 local jurisdiction.

5 I am pleased that had Mr. Bob Larson from the 6 U. S. EPA's Office of Transportation and Air Quality has 7 traveled from Ann Arbor to join us today. Good to see 8 you, Bob. It's been a while. I know Bob has worked 9 closely with ARB staff in the development of our 10 respective mobile source strategies, and he will provide 11 comments following staff's presentation.

12 And I would like then to turn it over to 13 Ms. Witherspoon to introduce this item and begin the staff 14 presentation.

15 EXECUTIVE OFFICER WITHERSPOON: Thank you,

16 Chairman Lloyd, members of the Board.

17 California has made significant progress in 18 reducing emissions and improving air quality as a result 19 of actions at the local, state, and federal levels. But 20 we also have a long way to go to meet health based air 21 quality standards in all California communities.

22 Staff's presentation will highlight the relative 23 contribution of emission sources under federal 24 jurisdiction, key actions already taken, and further 25 opportunities we see to reduce emissions from these PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 205 1 sources.

2 We want to continue our path of progress with the 3 inter agency partnerships that have been successful in the 4 past, our technical and collaborative regulations have 5 resulted in the adoption of key measures from the 1994 6 ozone SIP and set the stage for future actions.

7 Over the past few years we have jointly tackled 8 issue such as excess NOx emissions from heavy duty trucks 9 with benefits being realized nationwide. For another 10 important group of sources, off road construction and farm 11 equipment, the U. S. EPA has just released a new regulatory 12 proposal. The emission reductions from this rule will 13 help reduce both ozone and particulate pollution from new 14 diesel engines. We want to build on these successes as we 15 move forward. One of the big challenges is to address 16 existing as well as new engines. This is critical since 17 federal sources include trucks, trains, ships, and other 18 equipment with long usable lives.

19 Mr. Larry Hunsaker will now make the staff 20 presentation.

21 MR. HUNSAKER: Thank you, Ms. Witherspoon. Good 22 afternoon, Chairman Lloyd, members of the Board.

23 Federal sources of air pollution are a 24 significant contributor to California's air quality 25 problem. This presentation is intended to provide a PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 206 1 background on why these sources are important to control 2 and highlight opportunities for further emission 3 reductions.

4 ( Thereupon an overhead presentation was 5 presented as follows.)

6 MR. HUNSAKER: Actions is to reduce emissions 7 from federal sources are essential to our efforts to meet 8 air quality standards. When we use the term federal 9 sources, we are referring to mobile sources that must be 10 addressed by the federal government for one of two 11 reasons. Either the federal Clean Air Act preempts our 12 regulatory authority or practical considerations make 13 national regulations necessary.

14 Under federal law only U. S. EPA can set emissions 15 standards for new locomotive engines and new construction 16 and farm equipment with less than 175 horsepower. In the 17 case of heavy duty trucks, ARB cannot set emission 18 standards for truck that are purchased and registered 19 outside of California. The interstate nature of the 20 trucking industry makes national standards the most 21 practical approach.

22 Lastly, engine standards for aircraft and 23 ocean going ships are set at the international level with 24 the federal government representing the US.

25  o0o

PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 207 1 MR. HUNSAKER: The primary pollutants of concern 2 from federal sources are NOx and diesel PM. State wide in 3 2010 emissions of reactive organic gasses are relatively 4 small at about 6 percent, whereas federal sources will 5 account for 28 percent of the NOx and 61 percent of the 6 diesel PM.

7 While we show state wide emissions here, there 8 are some regional difference. In the South Coast federal 9 sources contribute about 32 percent of the NOx and 65 10 percent of the diesel PM, slightly more than the 11 state wide percentage.

12 In the San Joaquin Valley there are no ship 13 emission. Federal sources contribute somewhat less than 14 the state wide percentage, about 22 percent of the NOx and 15 46 percent of the diesel PM. For diesel PM localized 16 impacts from sources are important. Facilities such as 17 ports and rail yards are good examples of where local,

18 state, and federal cooperation is necessary.

19  o0o

20 MR. HUNSAKER: This slide shows the state wide 21 breakdown of federal NOx sources into their major 22 components, ranging from 8 percent from construction 23 equipment to 3 percent for trains and aircraft. This 24 breakdown varies region in the state. For example, in the 25 San Joaquin Valley farm equipment contributes the most at PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 208 1 9 percent, while aircraft contribute the least at 1 2 percent. In the South Coast construction equipment is the 3 top category at 11 percent, while farm equipment is the 4 lowest at 1 percent.

5 Now let's look at the breakdown for diesel PM.

6  o0o

7 MR. HUNSAKER: Federal sources are a big 8 contributor to diesel PM emissions. From a public 9 exposure standpoint, the toxicity of diesel PM combined 10 with its contribution to overall particulate pollution 11 makes these emissions important both regionally and 12 locally. Statewide emissions range from 28 percent for 13 construction equipment to 4 percent for trains and 14 out of state trucks. If we include all interstate trucks,

15 those that are registered both in California and in other 16 states, the contribution from trucks would be about 17 double.

18 Again, there are regional differences and 19 relative emission contributions. For the San Joaquin 20 Valley, the largest category is farm equipment at 25 21 percent, while in the South Coast the largest category is 22 construction equipment at 34 percent.

23  o0o

24 MR. HUNSAKER: This slide shows the projected NOx 25 emissions for preempted farm and construction equipment,

PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 209 1 out of state trucks, and trains based on current 2 requirements.

3 The big drop in farm and construction equipment 4 emissions is due to fleet turn over and implementation of 5 progressively tighter engine standards phasing in between 6 1997 and 2008. Out of state truck emissions show a steady 7 decline at the 2002 and 2000 search emission standard kick 8 in. There is also a decline in train emissions reflecting 9 national standards that phase in between 2001 and 2005.

10 And the agreement with the industry to reduce fleet 11 emissions in South Coast by 2010.

12 Diesel PM emissions generally follow those same 13 trends. These trends demonstrate how the benefits of 14 federal actions taken to date accrue over time. However,

15 significant emissions remain, and we must talk about 16 further reduction opportunities in a moment.

17  o0o

18 MR. HUNSAKER: This trend slide shows two federal 19 source categories, ships and aircraft whose emissions are 20 projected to increase rather than decrease. This reflects 21 a relative lack of progress in tightening engine standards 22 compared to other categories combined with growth and 23 other activities. Obviously, for aircraft emissions the 24 current industry problems will effect near term emission 25 trends. But looking 15 or 20 years out, we do expect PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 210 1 continued growth. This long term perspective is important 2 for aircraft engines which remain in the service for 3 20 years or more.

4 The same problem applies to ships as growth 5 overtakes any benefit of current national and 6 international engine standards.

7  o0o

8 MR. HUNSAKER: The downward trends of emissions 9 shown in the previous slides are results of a joint effort 10 by U. S. EPA and ARB to adopt the controls called for in 11 the 1994 SIP. U. S. EPA and ARB adopted emission standards 12 for diesel trucks, off road diesel gasoline, and LTD 13 powered engines and marine pleasure aircraft, such as jet 14 skis.

15 U. S. EPA also adopted standards for locomotives 16 and marine harbor craft. These regulatory efforts have 17 been complemented with memoranda of understanding signed 18 with the railroads to reduce locomotive emissions and with 19 the airlines to reduce emissions from airport ground 20 support equipment in the South Coast.

21 Voluntary approaches ever also been taken, such 22 as the voluntary shipping speed limit now in place in the 23 vicinity of the ports of Los Angeles and Long Beach. This 24 speed reduction results in lower NOx emissions.

25  o0o

PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 211 1 MR. HUNSAKER: Now let's look at where we stand 2 with current engine standard for heavy duty diesel trucks.

3 This slide slows the progression of tighter emission 4 standards through the end of this decade. In 1997 U. S.

5 EPA adopted the two gram NOx for diesel trucks anticipated 6 in the 1994 SIP.

7 ARB adopted California standards in 1998 that 8 aligned with the national standards. These standards were 9 scheduled to take effect in 2004 but were accelerated to 10 2002 under the terms of the consent decree with the engine 11 manufacturers. In 2001 U. S. EPA adopted tighter diesel 12 truck standards which will be phased in between 2007 and 13 2010 and represent an overall reduction of 98 percent from 14 uncontrolled engine emissions.

15 Introduction of low sulfur diesel fuel in 2006 is 16 an integral part of the standards. ARB has adopted these 17 same engine standards for California.

18  o0o

19 MR. HUNSAKER: This is not the end of the story,

20 however. We are encouraging U. S. EPA to pursue strategies 21 to ensure that the benefits of tighter engine standards 22 are achieved in use. One strategy to ensure that 23 sophisticated emission controls perform adequately over 24 time is to require on board diagnostic systems on new 25 engines.

PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 212 1 Another strategy is to adopt a manufacturer 2 in use testing and recall program similar to the program 3 required for car manufacturers.

4 Also while diesel trucks will be much cleaner 5 starting in 2007, the long live of diesel engines slows 6 the introduction of cleaner vehicles into the fleet. This 7 makes it important to find ways to clean up the existing 8 fleet.

9 ARB is developing measures to implement our 10 diesel risk reduction plan. Last year ARB is scheduled to 11 consider a proposal to reduce diesel emissions from solid 12 waste collection vehicles. We are also working on 13 accelerated software up grade requirements to address the 14 excess NOx emissions resulting from the use of emission 15 control defeat devices in trucks engines during the 1990s.

16  o0o

17 MR. HUNSAKER: Over half the NOx and 75 percent 18 of the PM from off road diesel engines come from preempted 19 farm and construction sources. We have cooperated with 20 U. S. EPA to address these engines, and our standards for 21 the engines we can regulate are harmonized with the 22 national EPA standards.

23 This slide slows the progress of adopted emission 24 standards for one category of off road diesel engines,

25 those ranging from 100 to 175 horsepower. When the most PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 213 1 stringent standards are fully phased in by 2008, new 2 engines will be up to 75 percent cleaner than uncontrolled 3 engines.

4  o0o

5 MR. HUNSAKER: Based on the current level of 6 control and the remaining emissions from off road engines,

7 it's clear more needs to be done. Just last week U. S. EPA 8 proposed the anticipated next phase for federal off road 9 engine standards. This proposal would reduce emissions by 10 an additional 90 percent by transferring on road control 11 technology to off road engines. The extension of lower 12 sulfur diesel fuel requirements to off road engines 13 nationally is an integral part of the proposal.

14 We are very supportive of this proposal. And 15 following federal adoption, we will harmonize our standard 16 for that portion of the off road fleet under state 17 control.

18 In terms of existing engines, ARB is pursuing 19 diesel PM risk reduction measures and supporting incentive 20 programs to reduce NOx emissions from off road engines.

21  o0o

22 MR. HUNSAKER: In 1998 U. S. EPA set emission 23 standards for new and remanufactured locomotives and 24 locomotive engines beginning in 2001 and phasing in 25 through 2005.

PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 214 1 In recognition of the severity of the South Coast 2 air quality problem and the contribution of locomotive 3 engines in the region, ARB reached agreement with the 4 railroads to further reduce their emissions in the South 5 Coast. This memorandum of understanding ensures that the 6 cleanest locomotive engines, those meeting 2005 standards,

7 are brought to the region.

8 With these programs, we project that locomotive 9 emissions in California will be cut in half between 2000 10 and 2010. However, we believe that there are further 11 opportunities for emission reductions from locomotives.

12 As technology continues to advance, U. S. EPA should 13 consider further tightening the standards for locomotives.

14 Use of cleaner fuels can also reduce emissions 15 and allow for application of additional control technology 16 and retrofits. And we support you U. S. EPA's proposal to 17 limit the sulfur content of locomotive diesel fuel to 500 18 parts per million of its off road diesel proposed 19 announced last week.

20  o0o

21 MR. HUNSAKER: Commercial marine vessels include 22 both large ocean going vessels, such as cargo ships and 23 passenger cruise ships, as well as smaller harbor craft.

24 The larger ocean going ships travel internationally are 25 and predominantly foreign flag vessels.

PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 215 1 Harbor craft spends most of their time in 2 California coastal water. Standards for ocean going ships 3 are set internationally through the International Maritime 4 Organization, or IMO. For American flag vessels the U. S.

5 EPA adopted standards based on the IMO levels.

6 U. S. EPA has also set standards for harbor craft.

7 However, these stands will achieve relatively modest 8 emission reductions in California. And with continued 9 growth in shipping activity, emissions are projected to 10 increase overall. The emission levels from these engines 11 remain well above those from other off road or on road 12 engines.

13 ARB established the Maritime Air Quality 14 Technical Working Group to work on air quality strategies.

15 The group includes stakeholders, such as the ports,

16 commercial shipping companies and industrial associations,

17 U. S. EPA, local air districts, and community and 18 environmental groups. The efforts of the working group 19 are starting to translate into programs to reduce 20 emissions, such as the speed reduction program I mentioned 21 earlier, and another program set to begin later this year 22 to test the effectiveness of promising retrofit control 23 technologies on ships.

24  o0o

25 MR. HUNSAKER: There is a lot more that can and PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 216 1 should be done. In our draft state and federal element 2 for the upcoming California SIPS, we had laid out a number 3 of opportunities for emission reductions. We continue to 4 urge U. S. EPA to adopt more stringent new engine standards 5 for harbor craft and ocean going ships working through the 6 IMO process.

7 We are looking at options for reducing in use 8 emissions from marine vessels. We believe that close 9 coordination at the national, state, and local level is 10 essential in developing the most effective in use control 11 strategies to reduce emission from maritime and port 12 activities.

13 Use of cleaner fuels and retrofit technologies 14 would cut emissions. Economic incentive programs could 15 also be implemented to encourage vessel owners to reduce 16 their emissions. Operational controls can provide 17 emission reductions through a broad array of potential 18 measures including speed controls, idling time limits, and 19 other changes to vessel activities.

20 Dock site strategies include the use of 21 electricity to provide power for ships while they are in 22 port. Currently vessels typically run diesel generators 23 when at rest in port to generate power for lights and 24 equipment on board.

25  o0o

PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 217 1 MR. HUNSAKER: While we realize the near term 2 economic challenges facing the airline industry, a long 3 term strategy to reduce aircraft emissions is needed.

4 U. S. EPA works its standard setting process through the 5 International Civil Aviation Organization, or ICAO,

6 because of the international nature of the industry.

7 With the current emission standards in place,

8 aircraft emissions are project to grow in the longer term 9 as the previous emission trend slide showed.

10 Consequently, aircraft will become an increasing piece of 11 the emissions pie as other sources continue to reduce 12 their emissions.

13 Since 1998 U. S. EPA and the Federal Aviation 14 Administration have jointly sponsored a national 15 stakeholder groups whose goal is to define emission 16 reduction targets for air carriers that include a longer 17 term goal for reductions in jet aircraft emissions. One 18 objective of this process is for ICAO to develop more 19 stringent aircraft emission standards. We need U. S EPA to 20 work closely with the federal aviation administration to 21 advocate for tighter emission standards.

22  o0o

23 MR. HUNSAKER: Before concluding, I want to speak 24 briefly about the importance of funding from the federal 25 government for emission control programs. Federal funding PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 218 1 can provide for incentive based programs or fill 2 regulatory gaps in the control of federal sources. Over 3 the last  over the past several years, California has 4 funded programs to clean up existing sources under state 5 and local jurisdiction in order to supplement our 6 regulatory programs. U. S. EPA could do the same as part 7 of its effort to reduce emissions from federal sources.

8 In conclusion, we need the federal government to do 9 its part to achieve clean air in California. The 10 substantial emissions contribution of federal sources and 11 the challenging emission reduction targets we face make it 12 impossible for California to do it alone.

13 Opportunity exists for technically feasible 14 cost effective reductions from federal sources. And U. S.

15 EPA needs to pursue them, whether through regulation,

16 federal funding, or other incentives. In conjunction with 17 local air districts, ARB and U. S. EPA need to continue to 18 partner to find new ways to reduce emissions, meet our 19 federal air quality planning requirements, and make 20 progress towards our mutual public health goals.

21 Thank you. This concludes my presentation.

22 CHAIRPERSON LLOYD: Thank you very much.

23 Colleagues have any questions before we move to 24 Mr. Bob Larson from EPA?

25 BOARD MEMBER CALHOUN: I have one question. What PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 219 1 federal agency has responsibility for reducing emission on 2 federal property?

3 GENERAL COUNSEL WALSH: For federal properties 4 that are within the state of California, federal agencies 5 are responsible for meeting the applicable rules and 6 regulations that are set out in the California SIP. Under 7 the federal Clean Air Act, federal agencies are required 8 to comply with those rules and regulations to the same 9 extent as any private business or business.

10 BOARD MEMBER CALHOUN: So if I go out to the air 11 force base and LAX and see smoke incinerator or something 12 there, would I call the South Coast district if I wanted 13 to

14 GENERAL COUNSEL WALSH: That's correct.

15 BOARD MEMBER CALHOUN: What would they do about 16 it?

17 GENERAL COUNSEL WALSH: They would no doubt go 18 out and take a look at the situation. If there was a 19 violation of a district rule or a regulation, they would 20 follow up with appropriate enforcement action. And those 21 federal agencies are subject to those enforcement actions 22 as well as the rules and regulations themselves.

23 BOARD MEMBER CALHOUN: Is it generally true the 24 federal agencies are responsible for complying with the 25 local air quality standard?

PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 220 1 GENERAL COUNSEL WALSH: Well, it may be treated 2 differently under certain  different acts, federal laws.

3 The federal constitution provides supremacy to the federal 4 government, but that's supremacy can be waived. And,

5 indeed, in Section 118 of the federal Clean Air Act,

6 Congress has waived federal immunity from the application 7 of state law, rules and regulations, enforcement 8 activities and the like with respect to requirements that 9 relate to the control and abatement of air pollution. So 10 Congress has waived the federal immunity that would 11 otherwise apply under federal law.

12 BOARD MEMBER CALHOUN: What about the federal 13 vehicles that are used by the federal agencies in the 14 state? Do they meet California standard, or do they meet 15 federal standards?

16 GENERAL COUNSEL WALSH: They meet California 17 standards. There is a provision in Section 118 that 18 provides for exceptions if the president declares some 19 sort of national emergency related to the security of the 20 nation. That has never to my knowledge been implicated.

21 We have in some of our motor vehicle or non road engine 22 regulations included specific exemptions for tactical type 23 vehicles. But just vehicles that are generally used by 24 those federal agencies and on federal sites are subject to 25 our regulations.

PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 221 1 BOARD MEMBER CALHOUN: Okay.

2 CHAIRPERSON LLOYD: Mr. McKinnon.

3 BOARD MEMBER CALHOUN: I'm through.

4 BOARD MEMBER McKINNON: It's my understanding 5 that there are cleaner and cleaner jet engines being 6 produced. The problem is that nobody's going to be buying 7 them any time soon because there's not a need to buy new 8 airplanes. Is that sort of  what's the direction of 9 clean air jet engines? Is that the case or

10 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: I can 11 take a stab at that. I know a little bit about it, not 12 all about it.

13 Within the current selection of engines that you 14 can put on a current jet, there is some variation in 15 emissions. It's not real big. But there are cleaner ones 16 and slightly higher emitting ones. I don't what the 17 variation is. But we might be talking 10 percent or 18 something like that.

19 There are engines under development and some of 20 them still in the research stage like at NASA that would 21 have like 50 to 70 percent more NOx emissions than current 22 engines. The problem is is that there is kind of an 23 inherent conflict in that the engine manufacturers and the 24 aircraft operators or looking for engines with higher and 25 higher pressure ratios to reduce fuel burner or increase PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 222 1 the efficiencies of the engines. And that makes them 2 hotter, which makes NOx, which makes emissions goes up.

3 There's a trend in technology for higher NOx emissions,

4 and there is technology development to try to reduce that.

5 Those are sort of conflicting to some degree.

6 Without something pushing the aircraft 7 manufacturers to buy really clean engines, then I think as 8 the chart shows emissions go up from aircraft because 9 they're just getting higher pressure ratios for efficiency 10 and putting out more NOx as a result.

11 BOARD MEMBER McKINNON: My second question has to 12 do with rail engines. And my understanding is that at 13 least in California the railroads have purchased clean 14 engines more recently. Are they  is it the same?

15 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: In the 16 South Coast.

17 BOARD MEMBER McKINNON: What about here in the 18 Roseville yard and that kind of thing? That's sort of 19 where I heard.

20 EXECUTIVE OFFICER WITHERSPOON: I think you might 21 have heard news reports about yard haulers retrofitting 22 for shifting the engines around. That was a Cummins West 23 project I think that was funded by the local air district 24 with Carl Moyer money and with the expectation if it 25 proved out and was cost effective it would be replicated PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 223 1 around the state. So it wasn't the trains passing 2 through, but moving the cars around in the yards 3 themselves.

4 BOARD MEMBER McKINNON: Okay.

5 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: What's 6 important on  the federal government has stepped up and 7 required new locomotives to be much lower emissions. I 8 think probably roughly 50, 60, 70 percent reduction in 9 NOx. And they've also had a provision when these things 10 are rebuild  since they last forever  they be build 11 down to the tighter standards. That's a good provision.

12 But it has stopped at a level that is way higher per unit 13 of work than the trucks or even the off road equipment.

14 So there's a need for  we think the federal 15 government to drop the standard further now that the 16 technology is being developed for diesel trucks and 17 construction equipment. It could be applied. And we made 18 a comment in there about supporting  they have a 19 proposal or suggestion  they're asking for comments on 20 doing that in their new rule making for off road trip 21 equipment in general.

22 I think there was a comment made we support a 23 cleaner fuel at 500 PPM, but we probably would end up 24 supporting cleaner fuel at 15 PPM because that would be 25 the level of sulfur that would allow locomotives to PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 224 1 potential have particulate control which they don't have 2 right now. We'll have to figure out when we comment on 3 this rule whether that makes good sense or not. But it's 4 pretty clear we would definitely benefit from having much 5 cleaner locomotives as the new technology evolve.

6 BOARD MEMBER McKINNON: What's the life of a 7 locomotive of the engine considering that they're rebuilt.

8 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:

9 Probably 30 or 40 years at least.

10 BOARD MEMBER McKINNON: A long time. Okay.

11 BOARD MEMBER CALHOUN: One more question. All of 12 these standards are tied to getting the sulfur content in 13 fuel reduced. What's the status of that program?

14 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: When 15 you say all of the standards, you have bring it up by 16 category.

17 BOARD MEMBER CALHOUN: I shouldn't say all. I'm 18 thinking in terms of

19 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: On road 20 fuel for trucks will be down to a level of sulfur that 21 will allow the use of particulate filters in the summer of 22 ' 06 nation wide. For off road equipment the EPA proposal 23 is to have on that same fuel available and required 24 nation wide in the summer of 2010, I think it is. So four 25 years later. I'm think that's right. Bob can correct me PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 225 1 if I'm off by a year.

2 Then they're seeking comments on what the fuel 3 should be for locomotives 500 or 15 perhaps. And one 4 would tend to argue for the lower number because that 5 allows the use of particulate filters where the higher 6 number probably would not. And then on, you know, marine 7 vessels, they tend to use really high  ocean going type 8 really high sulfur type fuel. I'm not sure what's in jet 9 aircraft from a sulfur standpoint but

10 BOARD MEMBER CALHOUN: Thank you.

11 DEPUTY EXECUTIVE OFFICER SCHEIBLE: We're 12 scheduled to bring the Board in July a regulation change 13 for the diesel regulation for California that would align 14 for on road fuel and off road fuel with 15 PPM starting in 15 2006.

16 BOARD MEMBER CALHOUN: Is that the same as the 17 federal?

18 DEPUTY EXECUTIVE OFFICER SCHEIBLE: It's the same 19 sulfur level as the federal. But we would do the off road 20 earlier in California because there really isn't a 21 separate market for off road fuel. So once the on road 22 fuel goes down, the off road fuel could go with it in 23 tandem. It will not affect locomotives or ships.

24 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: And the 25 parallel to it not affecting locomotives and ships is we PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 226 1 do have a lot of interstate traffic. Even the heavy duty 2 equipment  construction equipment moves from state to 3 state. So you can get fuel  federal fuel being used in 4 California to some degree, especially on the trucks. So 5 we definitely get a benefit from having nation wide 6 consistent low sulfur fuel compared to doing just by 7 ourselves.

8 CHAIRPERSON LLOYD: We will be getting a 9 nation wide consistent diesel fuel? No need to answer 10 that.

11 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: For 12 sulfur  excuse me. That was a serious omission. For 13 sulfur.

14 CHAIRPERSON LLOYD: Any more questions?

15 BOARD MEMBER RIORDAN: Just a note. One of the 16 things that stood out  I always blamed a lot of other 17 sources for these diesel PM. But ships are significant,

18 are they not, in California. And many of those ships are 19 not flying American flags. So we have to rely on some 20 international source of  and how that's that working?

21 Is that successful?

22 EXECUTIVE OFFICER WITHERSPOON: Well, EPA can 23 address that when they come to the

24 BOARD MEMBER RIORDAN: Maybe I should leave that 25 for them.

PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 227 1 EXECUTIVE OFFICER WITHERSPOON: There are 2 international pressures to reduce the emissions from ships 3 because of protocol concerns which are probably 4 stimulating more activity than has been brought about in 5 the last ten years because we've been trying to do 6 something about ships for a very long time. So

7 BOARD MEMBER RIORDAN: So if I could ask the 8 speaker from EPA perhaps to just touch on that, I'd be 9 interested in that.

10 DEPUTY EXECUTIVE OFFICER TERRY: I just want to 11 add one thing. There was recently a national conference 12 on particulate pollution and a major new compilation of 13 the scientific evidence on particulate pollution was 14 displayed at NARSTO. It's Mexico, U. S., and Canada. And 15 Jeff Holmstead was there, and he's getting a lot pressure 16 both from Canada and Mexico, the entire west coast 17 corridor, to take a look at the shipping issue. And a 18 number of air districts in California have been pushing 19 hard. And I think you'll hear from Santa Barbara on this 20 point as well.

21 BOARD MEMBER RIORDAN: Good.

22 CHAIRPERSON LLOYD: Seeing no more questions, I'd 23 like to call on Mr. Bob Larson from EPA.

24 Bob, thank for coming out.

25 MR. LARSON: Thank you for the opportunity to PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 228 1 address you on behalf the Environmental Protection Agency.

2 ( Thereupon an overhead presentation was 3 presented as follows.)

4 MR. LARSON: At the outset I'd like to 5 acknowledge that we have had a very close and productive 6 working relationship with the ARB staff. We certainly 7 appreciated their professionalism. And we look forward to 8 continuing that cooperative effort into the future.

9 Much of what I have on my slides here  I have 10 just a few have already been touched on by previous 11 presentation. But  so this may not take too long. But 12 I have an opportunity to address a couple of points in 13 particular.

14 Certainly from my view I think the federal EPA 15 has been particularly aggressive, productive, and useful 16 from your perspective. Over the last few years we've 17 adopted national standards that are very stringent and 18 impact those fleets that you're not able to control 19 yourself, starting with the tier two standard for 20 light duty vehicles. Going on to the 2004 heavy duty 21 standards, there was some pull ahead for 2002 standards.

22 And then very significantly I think for your benefit is 23 the 2007 heavy duty standards where we do have combination 24 of very stringent reductions in emissions performance but 25 also then the necessary improvements in the fuel sulfur PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 229 1 level of the fuel.

2  o0o

3 MR. LARSON: As has already been mentioned, we 4 have put standards in place for large spark ignition 5 engines, recreational vehicles, recreational marine 6 engines, and on the last point the large marine engines,

7 C1 and C2, category 1 and category two engines which are 8 more typical harbor craft using locomotive size diesel 9 engine with medium at higher speed. And then the C3 10 engines which are more the ocean going ships. As 11 Ms. Riordan points out they are almost entirely flagged in 12 other nations so, therefore, not under our direct control.

13 Nevertheless, we have adopted standards that 14 are  have been put in place through the international 15 maritime organization so called Marpole Annex 6 standards,

16 and those will be going into effect in 2004 in the 17 United States. And we expect around that same time frame 18 internationally. So there will be some standards in 19 place. Unfortunately, those standards also are not the 20 most stringent. There's a large number of the newer 21 engines that basically are meeting those standards.

22 At the federal EPA we are interesting in trying 23 to improve the emission performance of ocean going ships.

24 The obvious problem, though, is they're not under our 25 control. So we are working very hard through our efforts PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 230 1 with the international maritime organization to encourage 2 that international body to pursue more stringent 3 standards. And we hope to convince them that the types of 4 technologies that we're investigating that we plan on 5 pursuing for regulation here within the United States are 6 also technologies that would work elsewhere in the world,

7 including engine and fuel and perhaps after treatment 8 types of technologies similar to what we've been very 9 successful on the land based side.

10 If we are successful, of course, those emission 11 reductions aren't going to be here in the next few years.

12 So we are talking about something that is a bit a longer 13 term.

14  o0o

15 MR. LARSON: It was mentioned that we have just 16 proposed a non road NPRM which has very significant 17 emission reductions again and adopts the low sulfur 18 standard of 500 PPM cap in the  I think it starts in 19 September of 2007 and then 15 PPM cap that goes into place 20 in 2010. There is a hearing in several areas of the 21 United States. One is being held in the Los Angeles area,

22 here on June 17th, and we appreciate your support.

23  o0o

24 MR. LARSON: As part of that proposal we did 25 acknowledge a commitment on our part to have these revised PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 231 1 locomotives and marine standards that will be two separate 2 rule makings. But I grouped them here because there are 3 fairly, for the most part a similar type of regulatory 4 path. We expect about a year from now to have an advance 5 notes of proposal rule making set out technical issues we 6 see that will help us frame the actual proposal which 7 would occur about a year later during the 2005 year.

8 Again, as I mentioned a moment ago, it will include both 9 fuel improvements both in sulfur and technology options 10 will be considered.

11 Implementation  well, it's not a real big

12 but it should be a big question mark there  noted that 13 perhaps 2012 that's my guess. That's no real prediction 14 of exactly when we'll be able to determine what is 15 technically feasible and what's the economic time for 16 phasing those things in. So, again, I would say certainly 17 that is not something that could be in place prior to 18 2010. But maybe in the early part of the following decade 19 we would hope to have these standards in place.

20  o0o

21 MR. LARSON: On the aircraft side there are two 22 activities that are going on. One is with the  on the 23 international side where we're working to try to get 24 international standards in place. The standards

25 investigating body there which we are a participant is PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 232 1 looking at NOx reductions that range from 5 to 30 percent 2 compared to the existing standard. And they're analyzing 3 two different implementation years. One of them 2008, and 4 one of them 2012. I don't think we should be too much 5 into that  those implementation dates and anticipate 6 they would actually have standards in place that would be 7 effective beginning 2008. I think we all recognize not 8 only the technical lead times associated with getting more 9 stringent standards in place, but the economic 10 difficulties that are for the airline industry.

11 The second activity was also mentioned a moment 12 ago in the earlier presentation. That is stakeholder 13 activity within the United States that we're co chairing 14 with the Federal Aviation Agency. And it's looking at a 15 range of options trying to improve emissions from 16 aircraft, airports in general.

17 A couple of them are mentioned here. One of them 18 is looking at options for improving the ground surface 19 equipment emissions and model that for the successful work 20 that was accomplished in the South Coast.

21 And the second one was to  even though there is 22 a small range of the emission performance of existing 23 engines, as Mr. Cackette mentioned, to look to encouraging 24 airlines to purchase those engines that are currently 25 available and are at the lower end of that range for what PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 233 1 benefit we can get from those kinds of emission.

2 We're hoping also to encourage them to retire the 3 various portions of their fleet, not bring back engines 4 that are currently partnering with us in the desert.

5 Those kinds of things.

6  o0o

7 MR. LARSON: And lastly, I think it's important 8 to mention that we're not only working on the regulatory 9 aspect  although it's an area where we've been 10 particularly successful. We also have launched a 11 nation wide voluntary program. We think there is a role 12 for voluntary emission reductions and we're pursuing them 13 quite rigorously. The first one is named " Best Workplace 14 for Commuters" basically to try to encourage employers to 15 provide maximum benefits to their employees to discourage 16 single occupancy vehicle trips to and from work.

17 Telecommuniting's an obvious one, ride sharing, transit 18 passes, those types of things.

19 Through this program we try to recognize those 20 workplaces who are particularly aggressive there in 21 offering those benefits and bring up the rest of the 22 employment community to those levels.

23 Smart way transport program is focused on efforts 24 to reduce emissions the freight industry. Right now the 25 biggest emphasis in this program is on the trucking PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 234 1 industry. And we're encouraged in looking towards things 2 such as reducing idling either through truck stops which 3 is one of the options that is being considered here in 4 California as well as auxiliary power units that would 5 Obviate the need for running big diesel engine to provide 6 heat and power the cooling to the cab.

7 The third voluntary program that we've been

8 recognized here is we just launched less than a month ago 9 our school bus initiative, again, looking at reducing 10 idling. And a key component there  but also replacing 11 the older school buses. As you can appreciate, a lot of 12 the school buses are pre ' 91 inversions of engines and are 13 quite dirty compared to what's available now.

14 Looking for financing to  we had some over the 15 $ 20 million available right now to help that work. And 16 we're looking for other innovative financing options to 17 improve the turn over of fleet school buses, retrofitting 18 the more recent vintage buses hopefully to have the entire 19 fleet of school buses across the nation turned over 20 basically to clean technologies by 2010.

21 CHAIRPERSON LLOYD: Thanks very much, Bob.

22 Questions from the colleagues of the Board?

23 Thanks very much for coming out. Any other comments from 24 the staff?

25 EXECUTIVE OFFICER WITHERSPOON: Just there's one PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 235 1 more witness signed up to speak. No more comments at this 2 time.

3 CHAIRPERSON LLOYD: We do have one witness signed 4 up for the public testimony. That's Kathy Patton from 5 Santa Barbara County.

6 Welcome.

7 MS. PATTON: Thank you very much.

8 I think I'm supposed to have a clicker. If the 9 technology works, I'll get through this quickly.

10 I'm Kathy Patton from Santa Barbara County Air 11 Pollution Control District.

12 ( Thereupon an overhead presentation was 13 presented as follows.)

14 MS. PATTON: I'm here to talk about just one 15 element of what your staff has presented today, that is 16 the impact of marine shipping. On a local area like ours,

17 I was saddened to hear the number of times that Mr. Larson 18 had to admit that the federal actions that are being taken 19 will be long term actions. And I think you'll see in my 20 slides we need help now, and all of California right now 21 needs help with this particular sector.

22  o0o

23 MS. PATTON: So you may wonder, if you know 24 anything about Santa Barbara at all, why we would be 25 concerned about marine shipping when we don't have a port.

PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 236 1 If our 2001 clean air plan, we went through an emission 2 inventory process that was really quite a surprising 3 process to us when we started looking at the relative 4 emission impact from marine shipping.

5 Marine shipping is the largest uncontrolled 6 source of NOx in our county, and we believe probably in 7 most coastal areas throughout the nation. We're concerned 8 that failure to control this source is going to need  or 9 require that coastal areas compensate for the emissions 10 that we're receiving from off shore.

11  o0o

12 MS. PATTON: Just to put our little county in 13 context, we are roughly halfway between San Francisco and 14 Los Angeles, closer to Los Angeles. We make up 130 miles 15 of the California coast line. Any ships traveling from 16 the ports of Long Beach or Los Angeles going to the north 17 or even to Asia will pass by our county and by most of the 18 California coast line. Just the way the great circle 19 route goes. The world is round. And they travel quite a 20 ways north before heading west.

21  o0o

22 MS. PATTON: In our county we have the Channel 23 Islands just off shore, which means most of these ships 24 are traveling within 10 to 15 miles of shore. These are 25 huge, huge ships. It's like having power plants traveling PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 237 1 right off shore your coast line.

2 In our emission inventory efforts, we worked very 3 closely with the marine exchange from the ports of 4 Los Angeles and Long Beach and found that we have about 5 1300 making roughly 7,000 transits per year through our 6 Channel Islands. Surprisingly, even though we don't have 7 a port, our emission inventory is roughly equivalent to 8 the inventory that South Coast has with those two ports.

9  o0o

10 MS. PATTON: Just to show you how marine shipping 11 stacks up with our emissions inventory, your staff just 12 showed you that federal sources were roughly a third of 13 the state wide inventory for NOx. Well, marine shipping 14 alone is roughly a third of our emissions inventory. It's 15 greater even than all of our on road mobile sources. When 16 you factor in the increase that we're told from this 17 industry is going to happen over the years, it gets even 18 more alarming and more concerning for us.

19  o0o

20 MS. PATTON: This slide shows the top of  is 21 that  would you call that purple? Purple area there at 22 the very top is marine shipping. And when you forecast 23 out into the future, the growth in marine shipping  it 24 goes from being a third of our inventory to being almost 25 two thirds of our inventory.

PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 238 1 All those other sources  all those other bars 2 that you see on this graphic are showing either reduction 3 or staying slightly the same. Those are those sources 4 that for the most part the state and local areas have 5 control other. This federal source where we do not have 6 control is projected to eat up all of the progress we 7 would have made in those other areas.

8 If any of our estimates going out into the future 9 are not accurate, then you can see that that bar we're 10 trying to stay under, which is the bar that we showed back 11 in our base year we could attain the federal standard 12 under  any of those sources not meeting these 13 reductions  and if marine shipping even goes up further,

14 we are in danger of not being able to maintain the federal 15 standard.

16 And although EPA has recently adopted standards 17 for U. S. flag ships, I would note those standards are 18 based on IMO, the International Maritime Organization,

19 levels which are already projected in the bars that you 20 see in front of you here. And also since EPA decided

21 and we believe it was a decision not a legal requirement.

22 Since they decided to only apply their regulations to U. S.

23 flagged ships, it will not provide very many reductions 24 for us at all.

25  o0o

PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 239 1 MS. PATTON: Again, in the inventory 90 percent 2 of the vessels that transit the California coast line

3 actually, it's over 90 percent  are foreign flagged,

4 and, therefore, not regulated by the recent EPA rule.

5 We also found  we call them our frequent 6 flyers. That roughly 10 percent of those 1300 vessels 7 mentioned make up about 50 percent of that NOx emission 8 bar that you say.

9 So if we could together with EPA just get at that 10 10 percent of our emissions and really focus on these 11 frequent flyers, we could cut in half that big purple bar 12 that you saw. And that's what we would like to do.

13 Also to put it just in a slightly different 14 perspective, you're all familiar with Title 5 permits.

15 Well, 40 of these ships alone for qualify under our 16 program of being 50 tons or more annually of NOx. They 17 would qualify for a Title 5 program if they were on shore.

18 Off shore, they're uncontrolled.

19  o0o

20 MS. PATTON: We are hopeful that the 21 International Maritime Organization will reopen the NOx 22 provisions. We understand that they are slated to do that 23 sometime in the near future. The NOx provision of that 24 Marpole agreement, the treaty you heard the previous 25 speaker talking about  if that happens we need EPA, we PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 240 1 need ARB, we need all of us at the table to say just how 2 important this source is to us.

3 However, those are long term goals. In the mean 4 time, we think we have some short term solutions. We've 5 been working with your staff in the maritime technical 6 working group. EPA has been at the table, has been a 7 valuable partner with us in that. As you heard from your 8 staff, ship owners are there. Technology providers,

9 engine manufacturers, the Maritime Administration, air 10 agency. We are all at the table discussing this. It's 11 time now for us to put our money where our mouth is and 12 start to fund some retrofitting demonstration programs.

13 Your staff has done a marvelous job of pulling 14 the parties together and finding out there is some 15 interest in launching some demonstrations on these large 16 vessels. Unfortunately, we've recently heard that while 17 EPA is supportive  you didn't see our name on the list 18 there at the end of the slide as a funding incentive 19 program. We want our name on that list. We need it now.

20 So while Santa Barbara may be one of the first 21 districts that have gone through the Clear Air Plan and 22 seen how these ship stack up, this shouldn't be a surprise 23 for other coastal areas. It's a large unregulated source.

24 We urge you to urge EPA to take a leadership role in the 25 international discussions, but also to take a local role PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 241 1 in helping to fund incentive programs for marine vessels.

2 Thank you.

3 CHAIRPERSON LLOYD: Thank you very much.

4 Professor Friedman.

5 BOARD MEMBER HUGH FRIEDMAN: I'm not sure I'm 6 addressing this question to you. Perhaps our 7 representative of EPA or staff. What is  first of all,

8 what kind of transport for prevailing westerly winds or 9 winds coming off of the ocean carry that pollution, the 10 NOx and any particulate matter, to shore? And from how 11 far away does it need to be before it might dissipate 12 significantly?

13 MS. PATTON: Do you want me  your staff will 14 have a more technical

15 BOARD MEMBER HUGH FRIEDMAN: I'll tell you what 16 I'm thinking. I'm sure this idea has occurred to you. I 17 don't have very many original ideas anymore. But it does 18 occur to me if you could move those ships to go around the 19 islands, at least for Santa Barbara. I'm not sure how far 20 off shore they'd have to be. And it seems to be the U. S.

21 has some say in that with respect to foreign ships. And,

22 again, I'm not sure, but I think those are  at some 23 point they become international waters.

24 But I think, you know  I remember the old tuna 25 fleet used to get captured many, many miles from shore off PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 242 1 Costa Rica. And some of these places are U. S. flagged 2 vessels. So with foreign vessels we get  maybe a 3 bargaining ship or something at the international level in 4 the organization or just U. S. Fiat or so disposed could 5 either clean these ships up on a time table or route 6 around. It will cost you more to go out, and that may 7 cost ultimately the consumer a little bit more business,

8 more  or both. But clean air is our goal. And I'm just 9 wondering if the staff or somebody can respond.

10 EXECUTIVE OFFICER WITHERSPOON: Well, Professor 11 Friedman, that exact strategy was contemplated by the 12 Santa Barbara Air District and others as well.

13 In the case of the Channel Islands, what's on the 14 other side is a military testing zone for ordinances. And 15 it was not thought to be desirable to have ships 16 traversing where military exercises were taking place 17 so

18 CHAIRPERSON LLOYD: That would be an effective 19 mitigation strategy.

20 BOARD MEMBER HUGH FRIEDMAN: I walked right into 21 that.

22 EXECUTIVE OFFICER WITHERSPOON: Which caused us 23 to pursue the speed reduction strategies instead that were 24 easier to implement. They had a dramatic effect on NOx.

25 With respect to your broader question, California PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 243 1 as a state is prevailing on shore breezes. It's why our 2 ozone problem is so severs. We do trace them well out 3 into the ocean. I think our modeling domains for the 4 South Coast and now even for the Central California ozone 5 study extend out by more than 20 miles. So we would trace 6 some contribution always. And nearby transit, of course,

7 is, you know, almost as good as having been on the shore.

8 MS. PATTON: And just if I could add one other 9 item. In early  actually late ' 80s when we were doing 10 modeling we did find that emissions out in our channels,

11 whether they be from off shore oil rigs or marine 12 shipping, they differently did have an impact on us and on 13 Ventura.

14 So the numbers that I presented today of our 15 current plan were based on an emission inventory basis,

16 not necessarily on a model impact basis.

17 DEPUTY EXECUTIVE OFFICER TERRY: Just as a follow 18 up, a couple of thoughts. The idea of leverage is a good 19 one. We do have some improved science we didn't have in 20 1994 when we did this initial measure in SIP. That came 21 later with the speed limit. I think with some using the 22 current models, we could reevaluate the impacts and 23 perhaps make it an even stronger case.

24 CHAIRPERSON LLOYD: As I recollect, if my memory 25 serves me, when they were looking at the Grand Canyon,

PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 244 1 there was some creative accounting that said some of the 2 SOX emissions from the shipping was actually getting into 3 the Grand Canyon. Whether that was real or whether it was 4 to fill in for some modeling deficiencies  but I think 5 there is some long term transport as well as.

6 Mr. McKinnon.

7 BOARD MEMBER McKINNON: There is an area for 8 leverage and I'll address this to the representative of 9 the U. S. EPA. A couple of years ago I had to do a lot of 10 work looking at this industry. And there is a Defense 11 Department subsidy very large dollar figures that is 12 distributed for having capacity available in the event 13 there's a war to be able to transport large amounts of 14 equipment and materials to a theater of war.

15 And there's a huge subsidy that goes to shipping 16 companies every year, year in and year out, irregardless 17 of whether or not there's a war. And there's a 18 requirement that they be American flagged companies. And 19 there is currently a move afoot to change that requirement 20 and to allow it to be an American subsidy of a 21 foreign owned company, something like that.

22 And it seems to me  and there's just some 23 really big bucks involved for really not doing anything 24 except being ready in case of a war. And it seems to me 25 that if the federal government wanted to exercise some PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 245 1 leverage, there are some huge shipping companies involved 2 in that discussion that would be subject to that leverage.

3 CHAIRPERSON LLOYD: Thank you.

4 Supervisor DeSaulnier.

5 SUPERVISOR DeSAULNIER: Just a couple comments,

6 Mr. Chairman. Perhaps the Bay Area has found the source 7 of our problems. I wish D. D. was still here in terms of 8 our transport issues. Can we start to work on smog check 9 for a peaceful legislation at a federal level for enhanced 10 smog check for President Kennedy here.

11 CHAIRPERSON LLOYD: Well, I think Charlie Peters 12 could be usefully employed in that deal as well.

13 SUPERVISOR DeSAULNIER: Would it be a one way 14 ticket?

15 In the Bay Area, some of you know, we spent a lot 16 of our money in the Carl Moyer on retrofitting tug boats.

17 And it was amazing to me how much bang for the buck we got 18 in that program. And it was one of the reasons why 19 hopefully in future years we'll get more money, both for 20 our sake and our downwind neighbors.

21 But for those few of us  Santa Barbara. Those 22 few of us who have been fortunate enough to ascend to the 23 region administrator for region 9' s beautiful office on 24 the upper floor overlooking the bay  I know I have. The 25 former regional administrator I can remember teasing one PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 246 1 as we looked out on to the freight just sitting in the 2 water waiting to go into the port of Oakland, wouldn't it 3 be nice if she could do something about that. I know the 4 current administrator has the same office so I know he has 5 the same view.

6 It would be really significant though, and I'm 7 appreciative that we've had this report. There's some 8 movement, but it would be tremendously significant, I 9 think, for the whole coastal region, not just to the Bay 10 Area, if we could be more proactive either with subsidies 11 or educational programs or looking  as Matt suggested,

12 other incentive in this age of globalism where perhaps 13 disincentive that collectively federal agencies  and I 14 assume you're doing some of that  can work with to 15 encourage, prod of some our trading partners.

16 And Matt was pointing out that Kennedy here used 17 to be American Shipping Lines, and it is now owned by a 18 Dutch company. Maybe there are things we can do to 19 convince them to could the right thing and help us with 20 some of our problems.

21 CHAIRPERSON LLOYD: Good point. Thank you. Any 22 other comments from staff? Board? No.

23 BOARD MEMBER HUGH FRIEDMAN: Well

24 CHAIRPERSON LLOYD: Yes.

25 BOARD MEMBER HUGH FRIEDMAN: We had  I think I PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 247 1 heard a request from the speaker that we urge the U. S.

2 EPA, who apparently has exclusive jurisdiction here  and 3 I think not only should our comments, but I think they 4 should be collated, assembled, aggregated with as much 5 honest and sincere force be made into a appropriate urging 6 and emphasize the importance of speed, the need to do 7 something. Not just talk about it.

8 EXECUTIVE OFFICER WITHERSPOON: We would be happy 9 to do that.

10 CHAIRPERSON LLOYD: I think the second part of 11 that request was an invitation to go down to look at the 12 shipping liens and to observe the close proximity to the 13 islands.

14 SUPERVISOR DeSAULNIER: Where they're testing 15 emission or

16 BOARD MEMBER RIORDAN: He's going to do the 17 inside of the Channel and send us to the outer area.

18 SUPERVISOR DeSAULNIER: He was thinking the 19 Biltmore. I was thinking the tug boat.

20 CHAIRPERSON LLOYD: Thank you very much for the 21 information on both those items indicating the challenges 22 we have.

23 And thank you, Bob, for coming up.

24 Thank you, Kathy, for coming up. It was very 25 helpful, very constructive.

PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 248 1 I guess we have nobody for the open comment 2 period. So it's my great pleasure if there's no other 3 business to bring  the April meeting of the Air 4 Resources Board will now adjourn and see you next month.

5 And thank you again staff, colleagues, thank you.

6 ( Thereupon the California Air Resources Board 7 adjourned at 4: 14 p. m.)

8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 249 1 CERTIFICATE OF REPORTER 2 I, TIFFANY C. KRAFT, a Certified Shorthand 3 Reporter of the State of California, and Registered 4 Professional Reporter, do hereby certify:

5 That I am a disinterested person herein; that the 6 foregoing hearing was reported in shorthand by me,

7 Tiffany C. Kraft, a Certified Shorthand Reporter of the 8 State of California, and thereafter transcribed into 9 typewriting.

10 I further certify that I am not of counsel or 11 attorney for any of the parties to said hearing nor in any 12 way interested in the outcome of said hearing.

13 IN WITNESS WHEREOF, I have hereunto set my hand 14 this 5th day of May, 2003.

15 16 17 18 19 20 21 22 23 TIFFANY C. KRAFT, CSR, RPR 24 Certified Shorthand Reporter 25 License No. 12277 PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345