South Coast Air Quality Management District

1.

Minutes of October 19, 2001 Board Meeting

2.

Set Public Hearings December 21, 2001 and January 18, 2002 to Consider Amendments and/or Adoption to AQMD Rules and Regulations

Set Hearings December 21, 2001 to:

     (A). Adopt Proposed Rule 1178 – Further Reductions of VOC
            Emissions from Storage Tanks at Petroleum Facilities

     (B). Amend Rule 518.2 - Federal Alternative Operating Conditions

     (C). Amend Rule 444 - Open Burning and Rule 208 - Permit and
            Burn Authorization for Open Burning

Set Hearing January 18, 2002 to:

     (D). Amend Rule 2202 - On-Road Motor Vehicle Mitigation Options

3.

Execute Contracts for Development and Demonstration of Two
CNG-powered Midsize School Buses

4.

Execute Contract to Cosponsor Development of Low-NOx Heavy-Duty Natural Gas Engine and Vehicles

5.

Recognize and Appropriate Funds from CARB and Execute Contract to Demonstrate Integrated Technology for Control of Odors and VOCs from Metal Casting Operations

6.

Amend Contract to Install Heat Recovery Equipment at AQMD Headquarters

7.

Approve Transfer of Funds and Execute Contract to Purchase Analyzer to Determine Pipeline Natural Gas Composition

8.

This item was withdrawn by staff.

9.

Execute Contract for Data Cabling Infrastructure Upgrade

10.

Execute Contract for Investment Consultant Services

11.

Approve TCM and Clean Fuels Heavy-Duty Vehicle Projects and Reissue of One TCM RFP as Part of FY 2001-02 AB 2766 Discretionary Fund Work Program; Grant MSRC Authority to Adjust Project Costs Up to 5%; and Authorize Board Chairman to Execute Agreements

12.

Public Affairs Report

13.

Hearing Board Report

14.

Civil Filing and Civil Penalties Report

15.

Lead Agency Projects and Environmental Documents Received by the AQMD

16.

Rule and Control Measure Forecast

17.

Report on Rule 2009 and 2009.1 RECLAIM Compliance Plan Submittal

18.

Status Report on Major Projects for Information Management Scheduled to Start During First Six Months of FY 2001-02

19.

Potential Backstop Rule for Regulation XX - Regional Clean Air Incentives Market (RECLAIM)

20.

Status Report on Regulation XIII - New Source Review

Agenda Item No. 2(A) was withheld for discussion.

22.

Administrative Committee

23.

Investment Oversight Committee

24.

Mobile Source Committee

25.

Stationary Source Committee

26.

Technology Committee

ON MOTION OF MS. LaPISTO-KIRTLEY, SECONDED BY  MS. CARNEY, AND UNANIMOUSLY CARRIED (Absent: Bernson, Loveridge, and Wilson), THE BOARD APPROVED AGENDA ITEMS 1, 2(B), 2(C), 2(D), 3 THROUGH 7, 9 THROUGH 20, AND 22 THROUGH 26, AS RECOMMENDED.

21.

Items Deferred from Consent Calendar

2(A) Set Public Hearing December 21, 2001 to Adopt Proposed Rule
        1178 – Further Reductions of VOC Emissions from Storage Tanks
         at Petroleum Facilities

         Mr. Jeff Wilson addressed the board on behalf of Western States
         Petroleum Association. He commented that, despite working
         cooperatively with staff on the proposed rule and the progress that
         has been made between WSPA representatives and AQMD staff,
         WSPA still has unresolved issues on PR 1178. He hoped that
         further discussions with staff would result in changes to the rule
         language as currently proposed. (Submitted Written Comments)

ON MOTION OF MS. GLOVER, SECONDED BY
MR. PAULITZ, AND UNANIMOUSLY CARRIED (Absent: Bernson, Loveridge, and Wilson), THE BOARD APPROVED AGENDA ITEM NO. 2(A), SETTING A PUBLIC HEARING DECEMBER 21, 2001 TO CONSIDER ADOPTION OF
PR 1178.

27.

Mobile Source Air Pollution Reduction Review Committee

28.

California Fuel Cell Partnership Steering Team Meeting

29.

Report on Merits of Centralized Market for RECLAIM

Dr. Wallerstein commented that a concrete proposal for a centralized RECLAIM trading market was not put forth until recently, and staff needs additional time to circulate the proposal to members of the RECLAIM Trading Working Group and to conduct additional meetings of the working group. Therefore, staff withdrew Item No. 29 from the agenda, and noted that a report will be brought back to the Board in January or February of 2002.

30.

Report on Permit Streamlining and Application Inventory Reduction

At Ms. Carney’s request, Mr. Mohsen Nazemi, Assistant DEO of Engineering & Compliance, gave a brief staff report on this item.

ON MOTION OF MS. GLOVER, SECONDED BY CHAIRMAN BURKE AND CARRIED UNANIMOUSLY (Absent: Antonovich, Bernson, Loveridge, and Wilson), THE BOARD RECEIVED AND FILED AGENDA ITEMS 27, 28, AND 30, AS RECOMMENDED BY STAFF.

31.

Adopt Proposed Rule 1634 - Pilot Credit Generation Program for Truck Stops

Ms. Jill Whynot, Planning & Rules Manager, gave the staff report on
PR 1634, which had been continued from the October 19, 2001 Board meeting. Copies of an errata sheet prepared by staff were distributed to Board members and made available to the public. The errata sheet contained revisions to
PR 1634, primarily clarifications or new definitions, to resolve issues raised by EPA.

Ms. Carney inquired, if the proposed credit generation program were implemented to its maximum extent and all of the credits were converted into RTCs, what would the amount of credits be and what percentage of the RECLAIM market would it represent.

Ms. Whynot responded that staff estimated approximately 1.5 tons a day of NOx credits would be generated from the proposed rule. The allocations for the RECLAIM facilities are approximately 30 to 33 tons per day; therefore, the credits generated by PR 1634 would represent approximately 3 percent. In addition, the five credit generation rules adopted previously by the Board would generate approximately 4 tons per day, if implemented.

In response to Ms. Carney, Ms. Whynot stated that the estimated cost of NOx MSERCs convertible into RTCs under PR 1634 would be approximately $3400 per ton. The current trading price of NOx RTCs is approximately $20 per pound or $40,000 per ton. Proposed Rule 1634, therefore, is a cost effective measure and one of the mechanisms the AQMD will likely use to replenish the mitigation fee program and the AQIP for RECLAIM.

Ms. Carney indicated that while she believes PR 1634 is a good mechanism and will improve air quality, she was not comfortable with creating credits so cheaply that can be converted into RTCs. She emphasized that RECLAIM is a market, and expressed her belief that allowing cheap additional credits into the market could have an adverse impact on the planning that RECLAIM facilities might otherwise do in projecting market prices and credit availability, as well as discourage the installation of what would otherwise be cost effective emission controls. She suggested that the Board approve PR 1634, but not allow the conversion of these credits into RTCs until the AQMD can get advice from an expert as to how markets function.

Dr. Wallerstein noted that staff was citing the market prices for RECLAIM credits versus the cost to generate the credits. Companies that generate these credits will likely place them on the open RECLAIM market at a significantly different price than the trading price. Staff believes that the generation of NOx credits for use in RECLAIM will occur slowly and will be a small amount within the general market dynamics. However, to address Ms. Carney’s concern, he suggested that staff make periodic reports to the Stationary Source Committee and to the full Board so that the Board can monitor the market trend and be confident that the credit generation programs are not undermining AQMD’s efforts in regard to installation of controls on RECLAIM facilities. Dr. Wallerstein added that while the May 2001 amendments to RECLAIM have greatly reduced the price of RTCs, it is still too high compared to the normal cost effectiveness the AQMD uses for NOx controls, and the degree to which the MSERCs help to bring that price down would be a positive impact.

Ms. Verdugo-Peralta raised an issue with regard to the exclusion from the rule [Subparagraph (b)(1)(C)] of trucks or cab chassis equipped with auxiliary power units. She expressed her belief that if the auxiliary unit is powered by fuel cells it should be entitled to generate emission reduction credits because the emissions that would otherwise occur from the diesel engine would be eliminated.

Dr. Wallerstein responded that there is a methodology embedded in the rule for monitoring the amount of electricity being used and relating that back to the decrease in diesel emissions. Staff would need to work with EPA and CARB to determine what would be suitable from their viewpoint for ensuring that the trucks are utilizing fuel cell power instead of connecting to an electric power source at the truck stop.

Mr. Paulitz pointed out that the proposed rule states that it does not apply to "auxiliary power units," and auxiliary power unit is defined in the rule as "any device powered by a small diesel-fueled engine…". Therefore, it does not, by implication, include fuel cell-powered units and, he believed, the argument could be made that a fuel cell auxiliary power unit should be entitled to the emission reduction credit. He suggested that staff needed to either clarify the rule language or have a separate series of rules for fuel cell generation of credits at truck stops.
Dr. Wallerstein indicated that he believed it would be the latter case.

The public hearing was opened, and the Board heard testimony from the following individual.

BILL QUINN, California Counsel for Environmental & Economic Balance
1) Expressed support for the concept of reporting back to the Stationary Source Committee on a regular basis to address Ms. Carney’s concern, as well as others, to make sure that the credit generation programs are not having an adverse impact on installation of air pollution control equipment.
2) Recommended that the Board approve the proposal whereby this program generates credits that can be used as RTCs, as well as for the mitigation fund, in order to drive down the price of RTCs.

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

ON MOTION OF MS. GLOVER, SECONDED BY
MS. LaPISTO-KIRTLEY, THE BOARD:

1) ADOPTED RESOLUTION NO. 01-27, ADOPTING RULE 1634 AND CERTIFYING THE FINAL ENVIRONMENTAL ASSESSMENT, AS RECOMMENDED BY STAFF, BY THE FOLLOWING VOTE:

AYES: Antonovich, Burke, Glover, LaPisto-Kirtley, Mikels,
Paulitz, Silva, and Verdugo-Peralta.

NOES: Carney.

ABSENT: Bernson, Loveridge, and Wilson.

2) DIRECTED STAFF TO PURSUE DEVELOPMENT OF A METHODOLOGY FOR RULE 1634 THAT WOULD ALLOW FOR GENERATION OF EMISSION REDUCTION CREDITS AT TRUCK STOPS THROUGH THE USE OF FUEL CELL AUXILIARY POWER UNITS, AND REPORT BACK TO THE BOARD AT A LATER DATE.

32.

Amend Rule 1162 - Polyester Resin Operations

Dr. Laki Tisopulos, Assistant DEO of Planning, Rule Development & Area Sources, gave the staff report. The public hearing was opened, and the Board heard testimony from the following individual.

RITA LOOF, RadTech International
Commended AQMD staff for working with industry and visiting companies to learn more about ultraviolet and electron beam technology.

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

Written Comments Submitted by:
Robert Black, President, Plastics Research Corporation

ON MOTION OF MS. GLOVER, SECONDED BY
MR. PAULITZ, AND UNANIMOUSLY CARRIED (Absent: Antonovich, Bernson, Loveridge, Mikels, and Wilson.), THE BOARD ADOPTED RESOLUTION NO. 01-28, AMENDING RULE 1162 AND CERTIFYING THE FINAL ENVIRONMENTAL ASSESSMENT, AS RECOMMENDED BY STAFF.

33.

Amend Rule 1107 - Coating of Metal Parts and Products

Dr. Elaine Chang, DEO of Planning, Rule Development, and Area Sources, stated that the proposed amendment would include several test methods in the rule as requested by CARB. The public hearing was opened. There being no requests from the public to comment on this item, the public hearing was closed.

ON MOTION OF MS. GLOVER, SECONDED BY
MS. LaPISTO-KIRTLEY, AND UNANIMOUSLY CARRIED (Absent: Antonovich, Bernson, Loveridge, Mikels, and Wilson), THE BOARD ADOPTED RESOLUTION NO. 01-29, AMENDING RULE 1107 AND CERTIFYING THE EXEMPTION FROM CEQA REQUIREMENTS, AS RECOMMENDED BY STAFF.

34.

Amend Rule 401 - Visible Emissions

Dr. Chang indicated that the proposed amendment would extend the existing visible emission standard for underfired charbroilers an additional four years because viable control options have not yet been developed.

The public hearing was opened. There being no requests from the public to comment on this item, the public hearing was closed.

ON MOTION OF MS. LaPISTO-KIRTLEY, SECONDED BY MS. GLOVER, AND UNANIMOUSLY CARRIED (Absent: Antonovich, Bernson, Loveridge, Mikels, and Wilson), THE BOARD ADOPTED RESOLUTION NO. 01-30, AMENDING RULE 401 AND CERTIFYING THE PREVIOUSLY PREPARED FINAL ENVIRONMENTAL ASSESSMENT, AS RECOMMENDED BY STAFF.

35.

Amend Rule 1309.1 - Priority Reserve

Dr. Tisopulos gave a brief staff report on the item. The public hearing was opened. There being no requests from the public to comment on this item, the public hearing was closed.

ON MOTION OF MS. GLOVER, SECONDED BY
MS. LaPISTO-KIRTLEY, AND UNANIMOUSLY CARRIED (Absent: Antonovich, Bernson, Loveridge, and Wilson), THE BOARD ADOPTED RESOLUTION NO. 01-31, AMENDING RULE 1309.1 AND CERTIFYING THE FINAL ENVIRONMENTAL ASSESSMENT, AS RECOMMENDED BY STAFF.

36.

Closed Session

The Board did not recess to closed session.

There was no public comment on non-agenda items.