SUMMARY MINUTES OF THE
SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT
FRIDAY, December 5, 2003

William A. Burke, Ed.D., Chairman
Speaker of the Assembly Appointee

Supervisor S. Roy Wilson, Ed.D., Vice Chairman
County of Riverside

Supervisor Michael D. Antonovich (arrived at 9:25 a.m.)
County of Los Angeles

Ms. Jane W. Carney
Senate Rules Committee Appointee

Councilmember William S. Craycraft
Cities of Orange County

Mayor Pro Tem Beatrice J. S. LaPisto-Kirtley
Cities of Los Angeles County - Eastern Region

Mayor Ronald O. Loveridge (left at 11:50 a.m.)
Cities of Riverside County

Councilmember Leonard Paulitz
Cities of San Bernardino County

Councilmember Jan Perry (arrived at 9:15 a.m.)
Cities of Los Angeles County – Western Region

Supervisor James W. Silva (arrived at 9:10 a.m.)
County of Orange

Ms. Cynthia Verdugo-Peralta
Governor’s Appointee

Members absent:

Supervisor Fred Aguiar
County of San Bernardino

CALL TO ORDER: The meeting was called to order by Chairman Burke at 9:08 a.m.

• Pledge of Allegiance: Led by Ms. Carney

• Opening Comments:

      Board Member Carney. Presented Certificates of Recognition to the members of the Local Government & Small Business Assistance Advisory Group.

      Barry R. Wallerstein, Noted that staff provided an errata sheet to the Board and the public related to Agenda Item No. 7, reducing the total funding allocation for the PM2.5 program from $745,998 to $735,308 and the reallocation of funds for the purchase of the PM2.5 samplers if the EPA grant is not obtained.

CONSENT CALENDAR

BOARD CALENDAR

ON MOTION BY MS. LaPISTO-KIRTLEY, SECONDED BY  DR. WILSON, AND UNANIMOUSLY CARRIED, (Absent: Aguiar), THE BOARD RECEIVED AND FILED THE REPORT, AS RECOMMENDED BY STAFF.

PUBLIC HEARINGS

Note:  The following is a summary of comments and discussion on Agenda Item No. 29.  A verbatim transcript was prepared and is available in the AQMD Library for public review.

Larry Bowen, Planning & Rules Manager, gave the staff report.  Staff recommended additional flexibility to Rule 1113 by adding new coating categories to the averaging compliance plan. Due to issues with some of the smaller manufacturers of waterproofing sealers they have been added to the small manufacturer's exemption to allow additional time to comply. 

The effective dates are proposed to allow additional time for manufacturers to reformulate additional coatings and transition them into the marketplace.

On the small container exemption, staff proposed two versions for the Board’s consideration:  Version One:  Small container exemptions for clear wood finishes expire when the new limit of 275 grams per liter for the clear wood finishes go into effect in the middle of 2006.  Version Two:  Included an industry proposal of additional time allowed to transition those coatings sold in those small containers for an additional two years to transition out of it and give some time to condition their customers to the use of the low solvent coatings.

As a result of requests by some of the manufacturers for time to continue to formulate lower VOC materials to be in compliance with the rule, compliance dates were established that run from 2005 through the middle of 2007.

Regarding comments on the proposed 100 gram per liter limit for concrete masonry sealers, staff has found 49 products from 15 manufacturers that specified materials are suitable for use for a bridge, parking, and other structures.

In addition there are products found that meet the 40 percent silane/siloxane content mandated by Caltrans.  The key to successfully using these sealers is surface preparation and with appropriate surface preparation lower VOC products will achieve the same performance characteristics as the higher VOC products.

In response to Ms. LaPisto-Kirtley’s questions to staff, Mr. Bowen noted that the 49 products include both the film forming and the penetrant, not all contain 40 percent silane/siloxane and Dr. Tisopulos noted there is no tally because most of the states do not require 40 percent content.  It is a Caltrans requirement.

Staff will work with the EPA and all other interested parties to resolve their concerns regarding the averaging compliance plan in the proposed rule.  Staff believes that low solvent technology exists. 

A reasonable time has been provided for those that have not completed their reformulation and there are safeguard measures extended within the rule that include the averaging compliance option.  In the middle of 2005, staff will do a technology assessment of all of the categories to reduce the limits and allow some adjustment.  The proposal satisfies our commitment to the SIP and for the federal compliance decree, and achieves a significant emission reduction.

Staff recommended that the Board certify the environmental assessment and adopt the proposed Rule 1113 with the amendment to the resolution:

BE IT FURTHER RESOLVED, the AQMD Governing Board directs staff to work with USEPA to resolve its concerns raised by letter (dated November 24, 2003) with the Averaging Compliance Option Proposed Amended   Rule 1113, as well as other miscellaneous concerns unrelated to the VOC limits; and

Ms. Verdugo-Peralta noted her and industry concerns with Option 2 to allow manufacture continuance of extending the two year period and noted her desire to offer the consumer a viable option by modifying Version One.

The public hearing was opened, and the Board heard testimony from the following individuals:

CURTIS COLEMAN, Sherwin Williams Company

Supports Version 2 and agreed with Ms. Verdugo-Peralta’s conditions, however, expressed concern with staff divulging information submitted in confidence because some of the information being requested is highly confidential or proprietary, and they want to make sure that there is an absolutely fail-safe mechanism available to protect that data from competitors and the public dissemination before it is provided.  (Submitted written comments)

Ms. Verdugo-Peralta noted that a discussion took place with Mr. Coleman, several other representatives and there was agreement and commitment to the reports.  Confidentiality was discussed and both staff and herself assured them that confidentiality would absolutely be maintained.

Mr. Coleman noted there was agreement with the concept but he was under the impression the small container exemption would continue and there would be a requirement as opposed to the small container exemption expiring.

Dr. Wallerstein indicated he would meet with Mr. Coleman to assure him that staff is protecting confidential information.  However, staff receives many kinds of confidential information from various types of sources in order for staff to do their job properly.

In response to Ms. Perry’s request for clarification, Mr. Coleman confirmed his support of Version 2 to provide the additional two years for the small container exemption conditionally.

PAUL BEEMER, Henry Company

Indicated there was no difference in both of the proposed versions and his greatest concern is with metal pigmented roof coatings.  The staff report does not have a list of coatings because there are no existing coatings that comply with the numbers that are being proposed.

Dr. Tisopulos noted that the penetration of the compliant roof coatings without the proposed limits is already more than 50 percent, six years prior to the proposed limits.  Listed in the appendix are some examples of the roof and aluminum compliant coatings with the proposed limits and a separate category for the aluminum roof coatings has been carved out to allow them to exist.

Mr. Beemer indicated he was speaking specifically of the metal pigmented coatings.  Regular roof coatings, particularly emulsions, clearly do exist at the new number.  The CARB report indicates there are zero metal pigmented coatings below 135 grams and the existence of an advertised product at the current number or below does not prove that the product actually exists in the market.

MARJORIE JESSUP, Jessup Services LLC

Noted that some of the products used by unfinished furniture dealers do not meet Rule 1113 approval but are all solvent-based with a urethane product and homeowners need products that they can easily use.

Dr. Wallerstein confirmed that the amendment before the Board does not apply to furniture coatings.

In response to Ms. Carney’s questions to staff, Dr. Wallerstein confirmed that if someone had a mantel, wood floors or cabinets, then the rule applies but if

the product is sold to wood furniture stores that have unfinished furniture and the  intent is for the people that buy the furniture to be able to finish the furniture it is not subject to Rule 1113.

PARKER PACE, Behr Process Corporation

Supported Ms. Verdugo-Peralta’s proposed amendment and requested that the information being submitted in these reports not be disseminated to the public because it is highly sensitive information that he does not like to see going out.   Believes the small container exemption is necessary and requested that the Board pursue the abuse rather than the exemption itself because we still have do-it-yourselfers who do not understand or know how to apply these lower limit products.

In response to Mr. Loveridge’s question, Mr. Pace indicated the potential abuse is for a contractor to use a product that is inappropriate and people looking for small projects, such as an exterior door, need the coating.

J.V. “VAN” CRARY, Chem Rex Division Degussa Construction Chemicals

Noted that their products and other silane-type products are approved, recommended and selected by Caltrans for various bridge decks.

Recommended the separation of the film former sealer market from the penetrating market business and believes that penetrating and film formers are significantly different in how they protect the environment.

In response to Ms. LaPisto-Kirtley’s question, Mr. Crary stated there are no other alternatives for deep penetration, about an eighth up to as much as an inch in depth into the concrete.

Dr. Tisopulos noted that Ms. Lockie in her presentation showed a picture of waterproofing sealer that was applied to a sound attenuation wall along Highway 73 seven years ago, and that product is still standing.  There are a number of products that are available out there that are being used.

Mr. Crary presented a sample that demonstrates that type of penetration on our 20 percent silane and indicated there's a difference between a masonry wall and dense concrete in density and porosity of that substrate in what it will do.  They manufacture film formers that are used to waterproof water repellent concrete, but what we're talking about is basically dense concrete where you need that depth of penetration to help maintain the passivity of that concrete to prevent corrosion.

In answer to Mr. Carney’s questions to staff, Dr. Tisopulos indicated that Caltrans has been an active participant in our amendment development, and they have been an active participant in the essential public services technology assessment, they did not formally submit any comments on this particular proposal. The industrial maintenance coatings are not covered by this amendment and there are a number of products available that currently meet the DOT test and the federal highway research standards that are being used in a number of different states.

Caltrans, as the VOC's change, will have to initiate another bidding process so that they can establish a new list of compliant products, acceptable products, that pass the test.  With the market research staff will identify those products that are available and are already being used.

Dr. Wallerstein indicated that the amendment is a 2006 limit with a 2005 feasibility study that will come back to the Board to review prior to the implementation; but based on existing products, we're setting a marker out there for the companies to continue to work with us and reformulate as might be necessary.

Mr. Crary indicated that silanes in and of themselves as resin will not meet anything less than 400 VOC's and when talking about an aqua seal with a silane/siloxane, it is about a product that will not penetrate into the concrete a depth that's going to provide the protection.

Dr. Tisopulos noted, as a correction, that staff had recent conversations with Caltrans and was informed that they had no objection to the proposal.

In response to Mr. Craycraft’s questions, Mr. Crary indicated they are two resin systems, they make a silane/siloxane that will fall pretty close to the 100, but the silane itself is used for dense concrete. The diluent is a water-based solvent and when it reacts with the alcohol that makes the VOC.  They are a $2 billion construction chemical company which is a significantly large percentage of the market, not only from them, but five or six other manufacturers that manufacture silanes that meet the NCHRP and the Alberta DOT tests.

JAMES L. CARTER, Hardware Floors by James Carter

Biggest concern is the stain colors for water-base finishes, he uses oil-based stains and there are no colors that can be used to stain a floor the size of this room.  Many of his residential customers use dark burgundies, blacks, greens, and they have a wide variety of colors that people want, but will not be able to put it down and put a water-base product over that.

Dr. Tisopulos noted that the proposed amendment does not address interior stains, therefore, there should not be problem getting the colors and variety.

In response to Mr. Carter’s comment that low VOC finishes that will go over the stains are not made, Dr. Tisopulos confirmed there are finishes available that will go over the stains and would be more than happy to put Mr. Carter in touch with some of those manufacturers.

            KEVIN WORRALL, Textured Coatings of America

Manufactures a product called XL 70, solvent-based waterproofing mastic, which has been developed for bridges, architects, and the DOT in different parts of the country have specified their product mainly because of certain test requirements that they need.

Their independent lab reports have found that architects also need the special performance data mainly to reinforce the concrete and form oils must be addressed.

Water blasting always leaves residues on the wall and if put on the surface will peel particularly when rebar is involved. 

When CO2, oxides of nitrogen, and acid rain get into the concrete it slowly neutralizes the alkalinity in the concrete and the alkalinity in the concrete is important to protect the rebars.  However, if the ph starts to slow down, then the rebars are going to be subject to corrosion and rusting, and the infrastructure is going to take a hit.   They have found a product that's been doing the job and has been performing on each project for at least 25 years which is a good warranty and feel that the VOC of a hundred grams per liter should be sustained.

TOM STEWART, Textured Coatings of America Inc.

Indicated there is variety of high density concrete surfaces that have a high ph and need coatings that can penetrate into the surface. Questioned if everything has been really looked at in terms of long term, how do they perform over more than a year, and suggested that more time be given to consider whether the industrial maintenance coatings should be proposed.

            ROBERT J. NELSON, National Paint & Coatings

Does not agree with the conclusions of the report, that compliant VOC coatings and products that meet both Phase II and III are available for all applications and situations.

Recommends that staff examine the impact of these new limits, the 2006 limits, both Phase I and Phase II, for the do-it-yourself market.  Would like to join staff in further testing and urged the Board to move forward with the testing.

            MIKE MURPHY, Rust-Oleum Corporation

Opposed the proposal to eliminate the small size exemption for clear wood coatings.   Sells quarts of water and oil based for interior and exterior use.  They do not sell for floor use and cannot use their product on the floor.  (Submitted written comments)

In response to Ms. Carney’s question to staff, Dr. Tisopulos confirmed that water-based products are in the market and as they become more prevalent in usage they will eventually overtake the solvent-based market.

Staff recommends that manufacturers start using the averaging provision.  They can continue using and selling those higher VOC products for touch-up purposes and in small volume.

            BOB LYONS, Zinsser

Recommended that a new product category be added for concrete masonry hydrostatic waterproof coatings.  Due to these coatings, there are millions of homes with dry basements and that the definition of specialty primer be changed to conform with CARB’s definition.

Dr. Tisopulos noted that there are not many basements in Southern California and rather than establishing a special category that can be easily abused, recommend that the averaging provision be used.

In response to Mr. Silva’s concern that many of the homes that have floors are built below grade level and often damage is created by water seeping into the room, Dr. Tisopulos noted there are products that will work below the grade level and which are included in Appendix A of the staff report.

JEFFREY MARGULIES, National Paint & Coatings Assoc., Calif. Paint Council

Indicated the importance for Industry and other interested parties to be given the opportunity to voice public comments on next year’s tech assessment. 

Requested that the Board consider pushing back all the compliance dates to 2008 and supported Ms. Verdugo-Peralta’s motion and concur with the comments made of the specialty coating areas, such as waterproofing concrete sealers.

            MADELYN HARDING, Sherwin Williams

Noted that averaging as a solution to problems of the small package exemption will not solve the problem of solvent-based products. 

            BENJAMIN McADOO, Benjamin Hardwood Floor

Presented two wood samples, one with a solvent-based finish and a waterborne BonaKemi.  Traffic, with the same type of wood stain, the only difference is the solvent finish.  His concerns are wearability and if they go to waterbornes there is a loss of clearness and distinction.

            DAVID TRIFARI, D&R Hardwood Flooring

Noted that water-base urethanes are not lasting anywhere near five years and must be coated every year, the finishes do not hold anywhere near what oil-base finishes hold and the consequences of lowering the VOC content will fold small businesses.

Concerned as to why interior stains are not being exempted or taken off the market and urged the Board to exempt interior urethanes from the amendment.

            JOEY HOMAN, Western Colloid

                        Supports the amendment to Rule 1113.

            JOHN BILLHEIMER, Enviro-Reality

Supports the amendment to Rule 1113 or the clean air target will not be met.

            DAVID BEEDIE, JFB Hart Coatings

Manufactures zero to low VOC two-component and single-component high performance coatings and sells zero to low VOC product with equal or better performance than solvent-based products.   

Their products have exceeded the customer’s expectations, are highly wearable and require either minimal or no training. The single-component products are beginning to achieve or exceed performance characteristics of the two-component products, and overall costs are oftentimes lower than the use of solvent-based products.  (Submitted written comments)

            TODD CAMPBELL, Coalition for Clean Air

In support of the adoption of proposed Rule 1113, Version 1, with a deadline for small container exemption to 2006 and is not in support of Ms. Verdugo-Peralta’s motion which would lead to 2008.

            ROBERT HENDERSON, Epmar Corporation

Expressed his concern of occupational exposure and the exposure of those sensitized with the VOCs.

            PATRICIA BYRD, American Lung Association of the Inland Counties

Urged the passage of the amended Rule 1113, Version 1, as proposed by staff, it will contribute to the reduction of asthma attacks and healthier air for residents to breathe.

            GERALD E. THOMPSON, BonaKemi USA Inc.

Supports the reduction of the VOC limits for the clear wood finish category and presented wood samples to demonstrate appearance and represent a neutral stain that is compliant, legal because of the quart exemption for the stain category for interior stains and shows that a water-base comparable appearance can be reached with a system with waterborne topcoats with long life.  (Submitted written comments)

            JOHN MEANS, Universal Studios

Urged the Board to pass the proposed amendment to Rule 1113 as it is written and noted that several manufacturers have stepped forward with low and zero VOC clear acrylics, urethanes, and some hybrid polymers which have shown better exterior resistance than the solvent-borne varnishes he has used. Products exist in all of the categories and most are in use on a daily basis at Universal Studios.

            ANASTACIO MEDINA, American Lung Association of Los Angeles

Strongly supports the proposed amendment which will significantly reduce the amount of volatile organic compounds or vapors in the air we breathe and will be of a great benefit to the public health of the District’s population.

CLAUDE FLORENT, Rainguard Products

Urged the Board to move forward with the proposed amendments and noted there are a lot of products that will perform and in some cases outperform at a cheaper cost than solvent-based or high VOC products.

            GAIL RUDERMAN FEUER, National Resources Defense Council (NRDC)

Supports staff’s recommendation, Version 1, and opposes Ms. Verdugo-Peralta’s motion which will allow additional pollution from the small containers going into the air for an additional two years.

Their architects and contractors have found doable and cost-effective products for every category with either zero or very low VOC and their buildings look beautiful.  (Submitted written comments)

(Written comments were submitted by Dunn-Edwards Corporation)

There being no further testimony, the public hearing was closed.

Dr. Wallerstein noted that the issue of applicability of the information to be submitted to the District came up during the testimony, whether it was all products or just those products for which the additional time was being sought. Therefore, staff recommends, if Ms. Verdugo-Peralta’s motion is pursued, that the word “individual” go before the words ”clear wood finishes” and at the end where it says “complies with the following” that the words “for that product” be inserted.

In response to questions raised by Board Members, Mr. Bowen and       Dr. Tisopulos made the following clarifications: 

• The category of metallic pigmented coatings applies to virtually all applications and staff did not intend that the category of metallic coatings apply to roof coatings.
   

• The definition section is very clear that for metallic pigmented coatings, it does not include those that are used on roofs; if it would exist, it would have to meet the proposed probably hundred gram per liter limit if it was aluminized and 50 if it was not.
   

• Several compliant products with the silane/siloxane have been identified to use on dense concrete that will wet out and penetrate.
   

• There are several products by different companies that will work both on porous concrete surfaces, very dense concrete surfaces and other systems.

Dr. Wallerstein recommended that as part of the technology assessment that's coming back to the Board in 2005, that a section of the report focus on the issue of resin systems.

In answer to Mr. Craycraft’s questions to staff, Dr. Tisopulos indicated that no modifications for interior stain limits are being proposed, there are already compliant products.  There are urethane-based products that are already below the proposed limits with adequate performance and a longer longevity than their higher solvent counterparts.

Mr. Craycraft noted that the technology and products are available and durable and did not see any reason to go beyond the 2006 deadline across the board.

Ms. Carney voiced her concern of adopting a rule that will cause a change for many of the small business owners and add another ton a day of VOC’s for another two years.

In response to Mr. Paultiz’ questions to staff, Dr. Tisopulos confirmed that the pictures that were shown with paint peeling off the concrete buildings is a result of poor surface preparation and unless adequate surface preparation is done all the products will fail.

Mr. Paulitz expressed his desire to adopt Version 1 and voiced his concern that Ms. Verdugo-Peralta’s effort to compromise will only generate a lot of reports without anyone coming up with a deadline which will leave the exemption open until 2008.

Ms. Verdugo-Peralta indicated that the purpose is to allow the additional two years to receive progress reports on the development of new products and existing processes that they want to bring to market.  There are existing products that can be utilized but her focus was not to give the two additional years to learn how to use them rather so that the users can have more products to select from and had staff not been supportive, she would have not gone forward with the motion.

Mr. Craycraft noted his appreciation to Ms. Verdugo-Peralta’s effort but    is concerned that the additional time to develop new products would allow         the marketplace anywhere from five, seven, to ten years to see if the new products developed in the next two years were durable and would work in the marketplace.

AYES:           Antonovich, Burke, Carney, Craycraft, LaPisto-Kirtley,   
                      Loveridge, Paultiz, Perry, Silva, Verdugo-Peralta, and     
                      Wilson. 

NOES:         None. 

ABSTAIN:    None. 

ABSENT:      Aguiar.  

Jill Whynot, Planning & Rules Manager, gave the staff report.

Staff recommended that the existing restrictions through the third quarter of the year be maintained and noted that the power plants can continue to sell their extra credits and that they have the mitigation fee program available for compliance year 2004.  It is appropriate to remove the trading restrictions from the power plants as of September 1, 2004, to enable staff time to evaluate the BARCT for the program as a whole.  Staff is committed to bringing an amendment to the rule well in advance of September 1^st and an analysis back within the June/July time frame to determine the appropriate adjustment to the RECLAIM program.  

Staff recommended that the Board adopt the proposal with the following replacements and additions to Rule 2007:  

Replace paragraph (c) (4) Rule 2007 with the following: 

Notwithstanding Rule 2004, a Facility Permit holder of a Power Producing Facility may not use NOx RTCs to reconcile emissions for any quarter starting on or after January 1, 2001 and ending August 31, 2004, unless such RTCs were: 

(A)   acquired prior to January 12, 2001 by the Facility Permit
        holder or any facility under common ownership, or 

(B)   generated under an approved emission reduction credit  
        program, other than RECLAIM allocations, or  

(C)   acquired pursuant to paragraph (c)(8) of this rule. 

Replace paragraph (c) (6) Rule 2207 with the following: 

The Facility Permit holder of a Power Producing Facility may sell NOx RTCs to the District at a price not to exceed the Participation Fee specified in Rule 2020 (h)(1).  Such sales shall not disqualify the facility from participating in the Mitigation Fee Program.

Replace paragraph (c) (7) Rule 2007 with the following:

A Facility Permit holder of a Power Producing Facility may only sell NOx RTCs above the facility’s original allocation issued by the District for each compliance year.  Transfer of such RTCs to any party prior to September 1, 2004 (other than the District or another facility under common ownership) shall disqualify the Facility Permit Holder from participating in the Mitigation Fee Program for the year or years for which the RTCs are transferred or sold.

Insert paragraphs (c) (8) and (c) (9) Rule 2007: 

(8)     On and after January 1, 2004, a Facility Permit holder of a Power Producing Facility may buy, sell, or transfer NOx RTCs  valid for Compliance Year 2004 to or from the Facility Permit holder of any other Power Producing Facility.

(9)   On and after September 1, 2004 a Facility Permit holder of a Power Producing Facility may buy, sell, or transfer NOx RTCs for Compliance Year 2004 or any future compliance year to or from any party.

Dr. Wallerstein noted that CARB was invited and elected not to attend both today’s and last month’s Board meeting and that staff believes their comments and interpretation of the statutory requirements are incorrect.   The modifications are to protect the facilities that are in this program and to maintain viability of the RECLAIM program in terms of not setting a bad precedent by doing what CARB originally asked.

The public hearing was opened, and the Board heard testimony from the following individuals:

ROBERT WYMAN, Latham & Watkins

Urged the Board to adopt staff’s proposal and indicated he would have liked to have asked that the power plants be brought back into the program and allowed to trade but given CARB’s position recognizes it would be difficult.

CURTIS COLEMAN, California Manufacturers and Technology Association Southern California Air Quality Alliance

Noted he would have preferred to urge the Board to bring the power plants back into RECLAIM now. CARB’s position is unsustainable and urges the Board to adopt staff’s recommendation.

TODD CAMPBELL, Coalition for Clean Air

Opposed staff’s recommendation to allow the power producers back into the market until there is actual shaving of the credits and recommended that staff provide the Board a full analysis before moving ahead.

In response to Ms. Verdugo-Peralta’s question to staff, Dr. Wallerstein confirmed that when the AQMP measure goes before the Board in June or July the plan is to shave the market.  The market should be viewed as a whole, the total number of credits in the entire market place needs to be known so that the maximum amount that can be appropriately shaved, leaving adequate credits for the market to function, including new business growth which was the original premise of the program.

BRUCE MOORE, Los Angeles Department of Water and Power

Recognized the Board’s need to restrict NOx trading by power producers in response to the recent energy crisis.  However, all power producers can now meet or exceed BARCT NOx emission levels and encouraged the Board to approve the proposed rule amendment including the proposed changes in the errata sheet.

BILL QUINN, CCEEB

Preferred the return of full trading privileges to power generators under RECLAIM, however, CARB’s comments make the proposal unlikely to gain full approval.  CARB’s comments were unwarranted.  He recommended that the staff prpoposal be approved and CARB work on a compromise to quickly expedite EPA approval.

ERIC KLINKNER, City of Pasadena Water and Power Department

Supports staff’s proposal and emphasized the importance to have the ability to move credits around at a minimum in between power producing facilities, in order to maintain compliance.  His facility may need to buy credits.

(Mr. Loveridge left at 11:50 a.m., during public testimony)

GAIL RUDERMAN FEUER, Natural Resources Defense Council

Opposes staff’s original proposal to bring the power producing facilities into the RECLAIM market and believes CARB’s concerns are valid.  Staff needs to look at the entire RECLAIM market to determine whether it is appropriate to shave a particular industry, figure out what the shave is for power producing facilities, and then come back with an overall package.   (Submitted written comments)

There being no further public testimony, the public hearing was closed.

Dr. Wallerstein confirmed that staff would look at all facilities in the RECLAIM Program to determine the maximum feasible shave. When the program was originally adopted industry indicated it would take a ceiling on its total allowable emissions for the flexibility of the credit trading.  The program has achieved its air quality goals and has done some wonderful things in terms of evolving some of the controls for power plants that wouldn’t be here today if it wasn’t for RECLAIM.  Staff continues to believe that the market must be looked at as a whole to do the analysis and make all the appropriate adjustments.

Ms. Verdugo-Peralta noted her support for staff’s proposal and requested that staff monitor: the existing reliability between now and when the credits are shaved; the percentage of spinning reserves and the maintenance schedules that contributed to the energy crisis.

Ms. Perry noted, for the record, that she would vote ‘no’ due to her concern for a greater need to focus on issues regarding environmental justice which is critical to her constituents, to further explore concerns raised by the Coalition for Clean Air and NRDC and to have an ongoing conversation with all the parties to see where there is an opportunity to reconcile these issues.

ON MOTION OF MS. VERDUGO-PERALTA, (Absent: Aguiar and Loveridge), THE BOARD ADOPTED RESOLUTION NO. 03-31 CERTIFYING THE ADDENDUM TO THE MAY 2001 FINAL ENVIRONMENTAL ASSESSMENT AND AMENDING RULES 2007, 2011, AND 2012, AS RECOMMENDED BY STAFF, WITH THE FOLLOWING MODIFICATIONS TO RULE 2007:
 

Replace paragraph (c) (4) Rule 2007 with the following:
 

Notwithstanding Rule 2004, a Facility Permit holder of a Power Producing Facility may not use NOx RTCs to reconcile emissions for any quarter starting on or after January 1, 2001 and ending August 31, 2004, unless such RTCs were
 

(A)  acquired prior to January 12, 2001 by the Facility Permit holder or any facility under common ownership, or
 

(B) generated under an approved emission reduction credit program, other than RECLAIM allocations, or
 

(C)  acquired pursuant to paragraph (c)(8) of this rule.
 

Replace paragraph (c) (6) Rule 2207 with the following

The Facility Permit holder of a Power Producing Facility may sell NOx RTCs to the District at a price not to exceed the Participation Fee specified in Rule 2020 (h)(1).  Such sales shall not disqualify the facility from participating in the Mitigation Fee Program.

Replace paragraph (c) (7) Rule 2007 with the following:
 

A Facility Permit holder of a Power Producing Facility may only sell NOx RTCs above the facility’s original allocation issued by the District for each compliance year.  Transfer of such RTCs to any party prior to September 1, 2004 (other than the District or another facility under common ownership) shall disqualify the Facility Permit Holder from participating in the Mitigation Fee Program for the year or years for which the RTCs are transferred or sold.

Insert paragraphs (c) (8) and (c) (9) Rule 2007: 

(8) On and after January 1, 2004, a Facility Permit

holder of a Power Producing Facility may buy,  

sell, or transfer NOx RTCs valid for Compliance  

Year 2004 to or from the Facility Permit holder of  

any other Power Producing Facility.

(9) On and after September 1, 2004 a Facility Permit

holder of a Power Producing Facility may buy, sell, or transfer NOx RTCs for Compliance Year 2004 or any future compliance year to or from any party.
 

OTHER BUSINESS

PUBLIC COMMENT PERIOD – (Public Comment on Non-Agenda Items, Pursuant to Government Code Section 54954.3)

WILLIAM FITZGERALD, Anaheim Homeowners Maintain Their Environment

Noted that the air pollution caused by the fireworks at Disneyland Park is eleven times greater as compared to ten years ago and requested that the residents and children who live near Disneyland be protected from the polluti