South Coast Air Quality Management District

  1.

Minutes of April 20, 2001 Board Meeting

  2.

Set Public Hearings June 15, 2001 to Consider Amendments and/or Adoption to AQMD Rules and Regulations

1. Amend Rule 461 - Gasoline Transfer and Dispensing
   
   

2. Amend Rule 1401 - New Source Review of Toxic Air Contaminants, and Report on Impacts Relative to Sources Subject to Rule 1402 - Control of Toxic Air Contaminants from Existing Sources

  3.

Execute Contract to Cosponsor Development and Demonstration of Grid-Rechargeable Hybrid-Electric Utility Service Truck and Mobile Electric Power Supply

  4.

Execute Contract to Cosponsor Development and Demonstration of Automated En-route Charging System for Heavy Duty Transit Electric Vehicles

  5.

Execute Contract to Cosponsor Educational Outreach Program of Sunline Transit Agency

  6.

Execute Contract to Renew AQMD’s Participation in California Fuel Cell Partnership for Calendar Year 2001

Execute Contract to Cosponsor Development and Demonstration of Fuel Cell Bus with Major Bus Manufacturer

  8.

Execute Memorandum of Agreement Establishing the Port of Los Angeles Carl Moyer Air Quality Standards Attainment Assistance Program, and Recognize and Appropriate Funds for Use on Qualifying Projects within Port Jurisdictional Boundaries

  9.

Execute Grant Agreement with Jurupa Unified School District to Replace its Existing School Bus Fleet with Lower Emitting Buses and Required Infrastructure

10.

Issue RFP for Development and Demonstration of Alternative Fuel or Hybrid-Electric Midsize School Bus

11.

Execute Contract to Cosponsor Study of Children’s Pollutant Exposures During School Bus Commutes

12.

Execute Contract to Purchase Business Computer Hardware Upgrade

13.

Authorize Purchase of Eight Vehicles for AQMD Field Staff

14.

Approve Salary and Benefits Adjustment for Noncontract Management, Confidential, and Attorney Employees

15.

Approve Agreement with California Pollution Control Financing Authority to Participate in California Capital Access Program, and Approve Standard Operating Procedures for Participation in CalCAP

16.

Audit Report of AB 2766 Fee Revenue Recipients for FYs Ending
June 30, 1998 and 1999, and Set Public Hearing July 20, 2001 Regarding Final Resolution of Unresolved Audit Findings and Recommendations

17.

Execute Memorandum of Understanding with Southern California Association of Governments for Preparation and Implementation of Revisions to South Coast Air Quality Management Plan

18.

Confirm Clarifying Language Added to Rule 1309.1 - Priority Reserve to Reflect Board's Direction Adopted at April 20, 2001 Public Hearing

19.

Approve Selection Methodology to Award Funding for Replacement Buses under Lower-Emission School Bus Program

20.

Public Affairs Report

21.

Hearing Board Variances and Appeals

22.

Civil Filing and Civil Penalties Report

23.

Lead Agency Projects and Environmental Documents Received by the AQMD

24.

Rule and Control Measure Forecast

25.

Status Report on Major Projects for Information Management Scheduled to Start During Last Six Months of FY 2000-01

ON A MOTION DULY MADE AND SECONDED, THE BOARD APPROVED AGENDA ITEMS 1 THROUGH 8 AND 10 THROUGH 25 AND ADOPTED RESOLUTION NO. 01-14, AMENDING AQMD’S SALARY RESOLUTION, AS RECOMMENDED BY STAFF, BY THE FOLLOWING VOTE:

AYES: Burke, Carney, Glover, LaPisto-Kirtley, Loveridge
Mikels, Paulitz, Silva, Verdugo-Peralta (except Item
No. 3), and Wilson.

NOES: None.

ABSTAIN: Verdugo-Peralta (Item No. 3 only).

ABSENT: Antonovich and Bernson.

26.

Items Deferred from Consent Calendar

  9.

Execute Grant Agreement with Jurupa Unified School District to Replace its Existing School Bus Fleet with Lower Emitting Buses and Required Infrastructure

Ms. Mary Burns and Mr. Rollin Edmunds of Jurupa Unified School District addressed the Board to express their support for the item, and their gratitude for the opportunity to move toward converting their school buses to cleaner fuels and thereby benefit the children and citizens in their community.

ON MOTION OF DR. WILSON, SECONDED BY
MS. GLOVER, AND CARRIED UNANIMOUSLY (Absent: Antonovich), THE BOARD APPROVED AGENDA ITEM NO. 9 AS RECOMMENDED BY STAFF.

27.

Administrative Committee

Mobile Source Committee

29.

Stationary Source Committee

30.

Technology Committee

31.

Mobile Source Air Pollution Reduction Review Committee

32.

Air Resources Board Monthly Report

ON MOTION OF MS. CARNEY, SECONDED BY
MS. LaPISTO-KIRTLEY, AND CARRIED UNANIMOUSLY (Absent: Antonovich), THE BOARD RECEIVED AND FILED AGENDA ITEMS 27 THROUGH 32 AS RECOMMENDED.

33.

Amend Regulation III - Fees

34.

Adopt Executive Officer's FY 2001-02 AQMD Budget and Work Program

Planning & Rules Manager Laki Tisopulos and Chief Financial Officer Rick Pearce gave the staff reports on Items 33 and 34, respectively. Staff distributed to Board members, and made available to the public, copies of an Addendum to Agenda Item No. 34 that noted revisions to pages 21, 23, 24, 25, 30, 31, 35, 173, and 178 of the FY 2001-02 Draft Budget and Work Program. The revisions to the budget and work program reflect the addition of two staff positions to support work related to clean fuels programs, as well as modifications to the proposed amendments to Regulation III – Fees, based on public input.

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

JOHN BILLHEIMER, Environmental Reality
1) Suggested an increase in the number of small business representatives on the AQMD’s advisory groups. 2) Commented that there is no guarantee that the proposed $75/year annual small source emission fee will be used to alleviate the permit processing backlog, as indicated by staff. (Submitted Written Comments)

Ms. Verdugo-Peralta commented that Board members endeavor to include small business representatives in the advisory group process; however, it is difficult to locate small business owners/operators who are able devote the time away from their businesses to participate in the advisory groups.

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

DR. WILSON MOVED APPROVAL OF THE STAFF RECOMMENDATIONS ON AGENDA ITEMS 33 & 34:

1. ADOPTING RESOLUTION NO. 01-15, AMENDING REGULATION III (INCLUDING RULES 301, 303, 304, 304.1, 306, 307, 307.1, 308, 309, AND 311) AND CERTIFYING THE NOTICE OF EXEMPTION FROM CEQA REQUIREMENTS;
   
   
2. REMOVING FROM RESERVES AND DESIGNATIONS ALL AMOUNTS ASSOCIATED WITH THE FY 2000-01 BUDGET;
   
   
3. APPROVING TOTAL APPROPRIATIONS OF $95,911,530;
   
   
4. APPROVING AN UNDESIGNATED FUND BALANCE OF $11,902,755 AND TOTAL RESERVES AND DESIGNATIONS OF $30,984,455; AND
   
   
5. RECOGNIZING ESTIMATED REVENUES OF $95,911,530.

DR. WILSON AMENDED THE MOTION TO INCLUDE THE FOLLOWING LANGUAGE IN THE RESOLUTION FOR AMENDED REGULATION III:

"BE IT FURTHER RESOLVED, that the AQMD Governing Board directs AQMD staff, for the next three fiscal years, not to propose any increase beyond CPI for the proposed $75 flat annual emission fee applicable to all permitted facilities pursuant to Proposed Amended Rule 301(e)(4)."

THE MOTION WAS SECONDED BY MS. LaPISTO-KIRTLEY.

MS. GLOVER MOVED TO AMEND THE MOTION BY
DR. WILSON, TO INCLUDE IN THE FY 2001-02 AQMD BUDGET THAT THE $30,000 ALLOCATED FOR BOARD MEMBER ASSISTANT FOR CARB ACTIVITIES BE INCREASED TO $60,000 FOR THE GOVERNING BOARD MEMBER WHO SERVES AS THE AQMD BOARD’S REPRESENTATIVE ON THE AIR RESOURCES BOARD. FURTHER, THE TOTAL MAXIMUM AMOUNT FOR CARB AND AQMD ACTIVITIES FOR DR. BURKE WILL REMAIN AT NO MORE THAN $90,000. THE MOTION WAS SECONDED BY MS. CARNEY, AND CARRIED UNANIMOUSLY (Absent: Antonovich).

THE MOTION BY DR. WILSON TO APPROVE AGENDA ITEMS 33 & 34 AS RECOMMENDED BY STAFF, WITH THE MODIFICATION TO THE RESOLUTION FOR PROPOSED AMENDED REGULATION III STATED ABOVE, AND AS AMENDED BY THE BOARD TO INCLUDE IN THE FY 2001-02 BUDGET THAT THE $30,000 FOR BOARD MEMBER ASSISTANT BE INCREASED TO $60,000 FOR THE GOVERNING BOARD MEMBER WHO SERVES AS THE AQMD BOARD’S REPRESENTATIVE ON THE AIR RESOURCES BOARD, CARRIED UNANIMOUSLY (Absent: Antonovich).

35.

Adopt Proposed Changes to RECLAIM

36.

Adopt Proposed Rules 1631 – Pilot Credit Generation Program for Marine Vessels, 1632 – Pilot Credit Generation Program for Hotelling Operations, 1633 – Pilot Credit Generation Program for Truck/Trailer Refrigeration Units, and 2507 – Pilot Credit Generation Program for Agricultural Pumps

Dr. Elaine Chang, DEO of Planning, Rule Development & Area Sources, and Planning & Rules Manager Jill Whynot gave the staff reports on Items 35 and 36, respectively. Staff distributed to Board members, and made available to the public, copies of Addenda to Agenda Items 35 and 36, containing the following revisions:

"BE IT FURTHER RESOLVED, that the Governing Board directs staff to report to the Board, prior to July 2003, on as to whether the implications of reentry of Ppower Pproducing Ffacilities into RECLAIM. Staff is directed to evaluate and report on the potential impacts of both options of reentry into RECLAIM and continued bifurcation of power producing facilities, on the would result in any negative impact on remainder of the RECLAIM facilities, and or on California’s energy security needs. Further staff is directed to report on the status of the RECLAIM allocation accounts of whether power producing facilities for compliance years 2001-2005, including allocations, past and projected exceedances, participation in the Mitigation Fee Program, replenishment of allocation accounts from the emission reductions achieved, and outstanding future year deductions. If power producing facilities are not will be able to comply with their allocations, and if not, then staff should consider extending the mitigation fee program, and also to evaluate and report on whether any threat to California energy security needs which would occur due to inability to comply without substantial power curtailments outweighs any negative impact on the remainder of RECLAIM, and prepare amendments as appropriate; and"

"BE IT FURTHER RESOLVED, that the Governing Board directs staff that Rules 2009 – Compliance Plans for Power Producing Facilities and 2009.1 – Compliance Plans and Forecast Reports for Non-Power Producing Facilities, should not be submitted as a part of the amendment to the State Implementation Plan."

"BE IT FURTHER RESOLVED, that the Governing Board directs staff, in consultation with economists and interested parties, to evaluate the merits of a centralized RECLAIM trading market and report back to the Board on findings at the earliest practical date."

"BE IT FURTHER RESOLVED, that the AQMD Governing Board directs staff to track each of the source categories applicable to the proposed rules separately in the AQMD, and to closely monitor credit generation and use. , to evaluate the potential for localized impacts from the use of such credits, and to recommend to the Governing Board mechanisms to address such localized impacts, if any; and"

"BE IT FURTHER RESOLVED, that the AQMD Governing Board directs staff to report to the Mobile Source Committee on a monthly basis regarding the amount of NOx emission reductions generated through pilot credit generation rules, such as Rule 1612.1, and Proposed Rules 1631, 1632, 1633, and 2507; and"

"BE IT FURTHER RESOLVED, that the Governing Board directs staff to continue working with EPA, ARB, and other interested parties to evaluate the feasibility of amending Proposed Rule 1631 – Pilot Credit Generation Program for Marine Vessels to include marine vessels that are not used exclusively within district waters and repowering of diesel marine auxiliary engines; and"

"BE IT FURTHER RESOLVED, that during the development of the 2001 AQMP revision that the AQMD Governing Board directs staff to work with EPA, ARB, and other interested parties to evaluate if emission reductions generated from Proposed Rule 1631 are surplus after June 30, 2005 and to evaluate the feasibility of amending Proposed Rule 1631 to continue issuing surplus emission reductions, if any; and"

ON MOTION OF MS. LaPISTO-KIRTLEY, SECONDED BY
MR. PAULITZ, AND CARRIED UNANIMOUSLY (Absent: Antonovich, Bernson, and Verdugo-Peralta), THE BOARD DETERMINED THAT THERE WAS A NEED TO TAKE IMMEDIATE ACTION TO AUTHORIZE THE PURCHASE AND INSTALLATION OF ADDITIONAL MIOCROTURBINE EQUIPMENT FROM THE AES SETTLEMENT FUND, THAT THE NEED TO TAKE ACTION CAME TO THE ATTENTION OF THE AGENCY SUBSEQUENT TO THE AGENDA BEING POSTED, AND THAT SUCH ACTION WAS NEEDED PRIOR TO THE NEXT REGULARLY-SCHEDULED MEETING.

41.

Authorize Purchase and Installation of Additional MicroTurbine Equipment from AES Settlement Fund

ON MOTION OF DR. WILSON, SECONDED BY
MS. LaPISTO-KIRTLEY, AND CARRIED UNANIMOUSLY (Absent: Antonovich, Bernson, and Verdugo-Peralta), THE BOARD:

1. AUTHORIZED THE EXECUTIVE OFFICER TO CONTRACT WITH CAPSTONE CALIFORNIA TO PURCHASE HEAT EXCHANGERS, SILENCERS, ONE
   60-kW MICROTURBINE AND ASSOCIATED EQUIPMENT, AND ASSIST WITH INSTALLATION, IN AN AMOUNT NOT TO EXCEED $260,000 FROM THE AES SETTLEMENT FUND.
   
   
2. AUTHORIZED THE EXECUTIVE OFFICER TO APPLY FOR CPUC SELF GENERATION INCENTIVE MONEY FOR ALL ELIGIBLE MICROTURBINES INSTALLED WITH AES OR DWP SETTLEMENT FUNDS.

35.

Adopt Proposed Changes to RECLAIM

36.

Adopt Proposed Rules 1631 – Pilot Credit Generation Program for Marine Vessels, 1632 – Pilot Credit Generation Program for Hotelling Operations, 1633 – Pilot Credit Generation Program for Truck/Trailer Refrigeration Units, and 2507 – Pilot Credit Generation Program for Agricultural Pumps

Ms. Carney expressed her belief that one of the problems with RECLAIM, from its inception until 2000, was that there was an abundance of inexpensive credits in the market, and it did not encourage RECLAIM facilities to install cost-effective emission controls. Ms. Carney proposed an amendment that would invoke a
one-year moratorium for private sector companies to be able to access and utilize mobile source credits for the four credit generation rules, so that staff can evaluate how the processes for conversion of MSERCs to RTCs have worked in the RECLAIM AQIP and the mitigation fee program. (Copies distributed to Board members and made available to the public)

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

TIM HEMIG, GARY RUBENSTEIN, and *SHARON RUBALCAVA, representing
El Segundo Power LLC and Long Beach Generation LLC
BILL QUINN, California Council for Environmental and Economic Balance
*RON WILKNISS, Western States Petroleum Association
LEE WALLACE, SDG&E, SoCal Gas Company, and Sempra Energy
CYNTHIA PRAUL, California Energy Commission
MIKE SCHEIBLE, Air Resources Board
MILES HELLER, Tosco Refinery
SCOTT EDWARDS, Association of Textile Dyers & Printers of Southern California
JOHN GUSTAFSON, Equilon Enterprises
JACK BROADBENT, Environmental Protection Agency
GEORGE HALL, Thermo Ecotek Corporation
*BOB WYMAN, Attorney for Regulatory Flexibility Group and Marine Fuel Cells
MARK WOODRUFF, AES Corporation
THOMAS McHENRY, Attorney, on behalf of metal companies
*CURTIS COLEMAN, CMTA Southern California Air Quality Alliance
*GAIL RUDERMAN FEUER, Natural Resources Defense Council
*TIM CARMICHAEL, Coalition for Clean Air
THOMAS TRAN, American Lung Association
CHUCK TIMMS, Attorney, on behalf of Cities of Burbank and Pasadena
*KIMBERLY LAGOMARSINO, Libbey Glass
ANN SHOLTZ, Automated Credit Exchange
*DAVID OPPENHEIMER, Natsource
JON OWYANG, Market-Based Solutions
*CRAIG MOYER, Western Independent Refiners Association
*MR. T. L. GARRETT, Port of Los Angeles/Pacific Merchant Shipping Association
TONY ENDRES, Energy Services Corporation

*Submitted Written Comments

The key comments are summarized as set forth below.

Comments from Industry:

• Believe the future year deduction provisions in the proposed amendments to RECLAIM will perpetuate what is a short-term crisis, not resolve it, and turn it into a chronic crisis. Urged the Board to direct staff to develop alternatives to that provision and bring the alternatives back to the Board within 30 days for consideration.

Dr. Wallerstein responded that the current SIP-approved RECLAIM program has a subsequent deduction for any overage. In the proposed amendments, staff is allowing greater flexibility for companies by extending that from the next year to two years later, and even possibly a third year for the last 25 percent. In addition, companies now have an opportunity to pay the mitigation fee. The mitigation fee, if AQMD is successful in properly investing it, will completely offset the emissions, and will restore the future year balances.

• The RECLAIM program is based on flexibility, and the complexity of the compliance plans and criteria for both preparing and approving the plans could take that flexibility away.

• A large number of smaller RECLAIM facilities are struggling with the requirements of RECLAIM and struggling with the purchase of RTCs. Urged the Board to consider future rule amendments that will be able to address the issues of structural buyers who have no hope of ever being able to reduce their emissions to the point that they will get out of the requirements to purchase RTCs to comply.

• Expressed concern with the detailed and prescriptive requirements for compliance plans that is proposed. Urged that any guidance prepared emphasize compliance with annual allocations, as opposed to every detail in the plan. Also, suggested that the proposed guidance be brought before the Board for consideration, and not just the Stationary Source Committee.

• Expressed concern that inclusion of unit-specific emission limits in the enforceable compliance plans will be counterproductive and will reduce operational and compliance flexibility.

Regarding the request not to enforce the emission limits, Dr. Chang responded that if a facility implements everything they can according to the manufacturer’s recommendation and the information provided in their compliance plan, a deviation from the emission limit will not be considered a violation of the compliance plan. The facilities only need to commit to the concentration limit that they relied upon in their calculation to demonstrate they meet the required emission reductions. Staff’s main objective is to have advanced planning and frank commitment as to how they are going to achieve reasonable cost-effective controls.

• Power plants are operating as near capacity as possible and doing everything possible to try to get more generation in this region; therefore, a much greater supply of credits is needed, not less. If the Board adopts the amendment proposed by Ms. Carney, a moratorium for a year would be extremely difficult in restricting the supply. Also, advancing technology will require significant capital investment. The mitigation fuel program will not be sufficient on its own to fund that magnitude of investment; the private sector investments that the mobile source credit program would provide is the only practical way to finance development of that technology. Proposed a private sector investment alternative to the mitigation fee program that would not eliminate the future year deduction and would, therefore, be SIP approvable.

• Expressed concern that certain metal working companies had low allocations upon entering the RECLAIM program because of the business climate for metal working facilities at that time. Because of an improvement in the market they have increased their business (and emissions), but do not have the flexibility to purchase necessary mobile source credits because the structural buyer option in PAR 2000 limits purchase of RTCs to those facilities which emitted less than 6 tons in RECLAIM year 1999.

• Requested that the 6 tons/year NOx emissions limit for companies (structural buyers) that are allowed access to credits in the RECLAIM AQIP be raised to allow companies with up to 25 tons/year of emissions.
  
  
• Because of the energy crisis and its effect on the RECLAIM program, power generators and other large companies dominated the meetings of the RECLAIM Working Group that was convened to study RECLAIM and stabilize RTC prices. Requested that the Board direct staff to convene a small source RECLAIM review committee, limited to companies with less than 25 tons/year of emissions, to study and further develop rules/amendments necessary to provide equity to these companies.

• A fundamental factor that brought industry support for the RECLAIM program was that mobile source credits and area source credits could be generated and brought into the program. Do not think it would be fair to delay it for another year.

• The cities of Burbank and Pasadena anticipate that their future year deductions will be large enough to completely eliminate their allocations, thereby robbing them of their ability to generate any power at all.

• It is inequitable to require only certain RECLAIM facilities to prepare enforceable compliance plans, while other facilities are only required to prepare nonenforceable forecast reports. Suggested that the Board either require all RECLAIM facilities to prepare forecast reports or require all RECLAIM facilities to prepare compliance plans.

• Expressed concern that the proposed credit purchase requirements under PAR 2009.1 will result in significant price spikes for non-power producing facilities.

• To alleviate some of the current implications of the RECLAIM program and provide small refiners additional flexibility, requested that the Board: 1) add a definition of small refiner to Rule 2000 (c)(71), and 2) add small refiners to PAR 2004(p), allowing them access to the AQIP.

• Mr. Garrett requested that the AQMD support PMSA in their request to CARB and EPA to ensure that the emission credits from the marine sector be credited to their burden under CARB’s Measure M13 when regulation dictates (currently year 2010).

Dr. Chang responded that with the $2 million prefunding to the AQIP, approximately 200 tons of reductions would be available for the AQIP, which is about the amount needed to meet the demand for new power plants and structural buyers. Allowing small refiners access to the AQIP would increase the demand for RTCs to approximately 300 tons, and raising the threshold for structural buyers from 6 tons/year to 25 tons/year would increase the demand to approximately 400 tons/year. Staff expressed concern regarding the ability to generate sufficient credits to meet the additional demand. However, staff does include in the resolution that if staff determines that the AQIP is capable of accommodating a greater demand, staff will bring a proposal back the Board to consider raising the threshold.

Comments from CEC, ARB and EPA:

• Support adoption of the proposed amendments to RECLAIM and adoption of the proposed credit generation rules. Urged the Board to require controls as soon as feasible through the use of enforceable compliance plans and requirement of installation of BARCT by a time certain.

• Emphasized the importance of having the larger sources of non-power generation facilities file compliance plans; believed that information will be critical in evaluating whether or not the ultimate emissions allocations under RECLAIM are adequate or whether control technology costs have declined and opportunities have increased to a point where the future AQMP should reflect a lower limit from those sources.

• The EPA plans to move quickly to propose SIP action on the proposed rules. Emphasized that the proposed changes to RECLAIM do not and must not relieve sources of their obligations to making the environment whole. Commented that the power generators have suggested that if they were to pay into the mitigation fee program that should relieve them of their future year deductions. Clarified that from an EPA standpoint that would be a
  SIP-approvability issue, and would not agree with that proposal.

Comments by the environmental community:

• Believe the RECLAIM program is badly broken and needs a big fix, and what is proposed is only a Band-Aid.

• Support the amendment proposed by Ms. Carney, because making the mobile source credits available will artificially bring down the prices. This will not help the market; it will only help companies delay installing controls even longer. The AQMD needs time to figure out how this will impact the market and make sure there is sufficient incentive for companies to reduce emissions.

• When the Board adopted RECLAIM in 1993, Rule 1135 at the time required power plants to install controls such as SCR by 1999 to achieve new, lower emission rates. The proposed amendments would allow these power plants until 2004 to install the controls they should have had in 1999. There is no reason to allow these facilities more than another year to install the controls; therefore, urged the Board to change the date to June 2002.

• Regarding mitigation fees, power plants should be allowed to produce as much power as needed, but only if they install the controls. The proposed amendment would allow them to pay a mitigation fee instead of installing the controls. If there is a shortfall in how much pollution they are creating relative to their allocations, they have up to three years to make up the difference—three years during which the public will have to breathe these emissions.

• The Resolution for the proposed amendments to RECLAIM previously stated that the Board direct staff to develop backstop rules; so that, if the proposed RECLAIM fix does not work, staff would be required to move ahead with other rules. The language now states that staff be directed to develop backstop measures to further enhance the RECLAIM program. Urged the Board to change the wording back and adopt the resolution with the previous language.

• Suggested that all RECLAIM facilities with over 25 tons/year of emissions be required to prepare enforceable compliance plans.

• Do not believe PR 1631 program is surplus to the SIP, and AQMD should not go forward with the program until a written analysis has been prepared by the state. Proposed Rule 1632 is distinct from all the other trading rules; whereas, all of the pollutants other than NOx are retired for the benefit of public health, in PR 1632, that language is not included. Staff’s intention appears to be to leave the door open to PM10 trading under PR 1632, which the NRDC and Coalition for Clean Air would strongly oppose.

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

Written Comments Submitted by:
Bob Kramer, Mayor, City of Burbank
Cynthia Kurtz, City Manager, City of Pasadena
Jane Harman, Member of Congress
Nader N. Mansour, Southern California Edison
Rick Rothman, Attorney at Law, McCutchen, Doyle, Brown & Enersen, LLP
Ronald F. Denton, Chief Legislative Analyst, City of Los Angeles

MR. BERNSON MOVED APPROVAL OF THE STAFF RECOMMENDATIONS ON AGENDA ITEMS 35 & 36 AS FOLLOWS:

1. ADOPTING RESOLUTION NO. 01-16, AMENDING RULES 2000, 2001, 2004, 2006, 2007, 2010, 2011, 2012, AND 2015 AND ADOPTING RULES 2009, 2009.1, AND 2020, AND CERTIFYING THE FINAL ENVIRONMENTAL ASSESSMENT;
   
   
2. ADOPTING RESOLUTION NO. 01-17, ADOPTING RULES 1631, 1632, 1633, AND 2507, AND CERTIFYING THE FINAL ENVIRONMENTAL ASSESSMENT; AND
   
   
3. INCLUDING THE FOLLOWING MODIFICATIONS.

"BE IT FURTHER RESOLVED, that the Governing Board directs staff to report to the Board, prior to July 2003, on as to whether the implications of reentry of Ppower Pproducing Ffacilities into RECLAIM. Staff is directed to evaluate and report on the potential impacts of both options of reentry into RECLAIM and continued bifurcation on power producing facilities, on the would result in any negative impact on remainder of the RECLAIM facilities, and or on California’s energy security needs. Further staff is directed to report on the status of the RECLAIM allocation accounts of whether power producing facilities for compliance years 2001-2005, including allocations, past and projected exceedances, participation in the Mitigation Fee Program, replenishment of allocation accounts from the emission reductions achieved, and outstanding future year deductions. If power producing facilities are not will be able to comply with their allocations, and if not, then staff should consider extending the mitigation fee program, and also to evaluate and report on whether any threat to California energy security needs which would occur due to inability to comply without substantial power curtailments outweighs any negative impact on the remainder of RECLAIM, and prepare amendments as appropriate; and"

"BE IT FURTHER RESOLVED, that the Governing Board directs staff that Rules 2009 – Compliance Plans for Power Producing Facilities and 2009.1 – Compliance Plans and Forecast Reports for Non-Power Producing Facilities, should not be submitted as a part of the amendment to the State Implementation Plan."

"BE IT FURTHER RESOLVED, that the Governing Board directs staff, in consultation with economists and interested parties, to evaluate the merits of a centralized RECLAIM trading market and report back to the Board on findings at the earliest practical date."

"BE IT FURTHER RESOLVED, that the AQMD Governing Board directs staff to track each of the source categories applicable to the proposed rules separately in the AQMD, and to closely monitor credit generation and use. , to evaluate the potential for localized impacts from the use of such credits, and to recommend to the Governing Board mechanisms to address such localized impacts, if any; and"

"BE IT FURTHER RESOLVED, that the AQMD Governing Board directs staff to report to the Mobile Source Committee on a monthly basis regarding the amount of NOx emission reductions generated through pilot credit generation rules, such as Rule 1612.1, and Proposed Rules 1631, 1632, 1633, and 2507; and"

"BE IT FURTHER RESOLVED, that the Governing Board directs staff to continue working with EPA, ARB, and other interested parties to evaluate the feasibility of amending Proposed Rule 1631 – Pilot Credit Generation Program for Marine Vessels to include marine vessels that are not used exclusively within district waters and repowering of diesel marine auxiliary engines; and"

"BE IT FURTHER RESOLVED, that during the development of the 2001 AQMP revision that the AQMD Governing Board directs staff to work with EPA, ARB, and other interested parties to evaluate if emission reductions generated from Proposed Rule 1631 are surplus after June 30, 2005 and to evaluate the feasibility of amending Proposed Rule 1631 to continue issuing surplus emission reductions, if any; and"

THE MOTION WAS SECONDED BY MS. GLOVER.

Ms. Carney commented that the whole idea of the market concept is to encourage cost-effective emission controls to be installed so that companies that then create additional credits can sell them at a good price. If that element is not in the market then it does not function to encourage RECLAIM facilities to install cost-effective controls.

Dr. Wallerstein indicated that staff has been in discussions with all of the stakeholders for many months on the credit rules, and throughout those discussions it was presumed that businesses would have access to the credits. Staff believes that creates stability in the pricing of the RTCs, and that the option for people to go to mobile source credits will keep the regular RTCs at a more reasonable price. Also, there are new facilities coming into the basin and the mobile source credits are the way to accommodate new growth.

MS. CARNEY MOVED TO AMEND THE MOTION BY
MR. BERNSON TO ADD THE FOLLOWING LANGUAGE TO RULES 1631(g), 1632(h), 1633(h), and 2507(h):

"With the exception of MSERCs generated for the RECLAIM Reserve pursuant to Rule 2020, or for power producing facilities, MSERCs generated for use in RECLAIM shall be issued only for those emission reductions occurring after May 1, 2002."

THE MOTION WAS SECONDED BY MR. PAULITZ, AND FAILED, BY THE FOLLOWING VOTE:

AYES: Burke, Carney, and Paulitz.

NOES: Antonovich, Bernson, Glover, Loveridge, Mikels,
Silva, and Wilson.

ABSTAIN: Verdugo-Peralta.

ABSENT: LaPisto-Kirtley.

MR. LOVERIDGE MOVED TO AMEND THE MOTION BY
MR. BERNSON TO INCLUDE LANGUAGE IN THE RESOLUTION FOR ADOPTION OF RULES 1631, 1632, 1633, AND 2507 THAT WOULD: 1) EMPOWER THE BOARD AT ANY MONTHLY BOARD MEETING TO DECLARE A MORATORIUM ON RECEIVING NEW APPLICANTS INTO THE PILOT CREDIT GENERATION PROGRAMS UNDER RULES 1631, 1632, 1633, AND 2507; 2) DIRECT STAFF TO REPORT MONTHLY TO THE MOBILE SOURCE AND

STATIONARY SOURCE COMMITTEES; AND 3) DIRECT STAFF TO REPORT TO THE BOARD EVERY SIX (6) MONTHS ON THE STATUS OF THE CREDIT GENERATION PROGRAMS. THE MOTION WAS DULY SECONDED AND CARRIED, BY THE FOLLOWING VOTE:

AYES: Antonovich, Bernson, Burke, Carney, Glover,
Loveridge, Mikels, Paulitz, Silva, and Wilson.

NOES: None.

ABSTAIN: Verdugo-Peralta.

ABSENT: LaPisto-Kirtley.

Ms. Glover indicated that she would be supportive of including a small refiner definition in RECLAIM and allowing the small refiners access to the RECLAIM AQIP.

Ms. Coy responded that staff’s concern with allowing small refiners access to the RECLAIM AQIP is that there is such a potentially large amount of emission reductions that may need to be applied for through the AQIP that it would preclude many small structural buyers from having an adequate amount of emission credits available for them.

Ms. Carney questioned why the small refiners should have access to the AQIP and not the small metal industry companies, and expressed her belief that if the Board started considering industry by industry there would no longer be any clear rational basis for the rule.

MS. GLOVER MOVED TO AMEND THE MOTION BY
MR. BERNSON TO INCLUDE THE FOLLOWING MODIFICATIONS TO RULE 2000(c)(71) AND RULE 2004(p):

"(71) SMALL REFINER means any person owning or operating a facility in California that produces materials from the processing of crude oil, provided such facility:

(A) has, and at all times had since January 1, 1978, a
crude oil capacity of not more than 55,000 barrels per
stream day; and

(B) has not been, at any time since September 1, 1988,
owned or controlled by any refiner that at the same
time owned or controlled refineries in California with a
total combined crude oil capacity of more than 55,000
barrels per stream day; and

(C) has not been at any time since September 1, 1988,
owned or controlled refineries in the United States
with a total combined crude oil capacity of more than
137,500 barrels per stream day; and

(D) has received the right to meet CaRFG2 standards in
connection with the CaRFG3 program from the
California Air Resources Board."

"(p) RECLAIM Air Quality Investment Program (AQIP)
Emission reductions from the RECLAIM AQIP may be used through the 2004 compliance year by RECLAIM facilities that meet the definitions of Structural Buyer and small refiner as defined in Rule 2000(c )(71) and (74)."

THE MOTION WAS SECONDED BY DR. WILSON, AND FAILED, FOR A LACK OF SEVEN (7) CONCURRING VOTES, AS FOLLOWS:

AYES: Antonovich, Bernson, Burke, Glover, Silva, and
Wilson.

NOES: Carney, Loveridge, Mikels, and Paulitz.

ABSTAIN: Verdugo-Peralta.

ABSENT: LaPisto-Kirtley.

MR. ANTONOVICH MOVED TO AMEND THE MOTION BY
MR. BERNSON TO ADD THE FOLLOWING LANGUAGE TO RULE 2004(o):

"(4) A power producing facility may apply to the Executive Officer to mitigate some or all of its own emissions through 2004 if it demonstrates by November 30, 2001, that (A) it can generate or obtain surplus emission reduction credits other than originally-issued RTCs, (B) such credits can be generated under District credit-generation rules, (C) its proposed investments, when considered as a whole, will advance the state of the art of emissions control or performance, and (D) its proposed strategies are technologically feasible. Upon approval by the Executive Officer, such power producing facility may direct that any funds it has already paid to the Mitigation Fee Program be applied to such investment. Such facility may apply emission reductions generated or obtained under this alternative proposal as mitigation of its emissions through 2004 in lieu of paying the mitigation fee. Credits generated beyond those needed to mitigate the facility’s 2001 through 2004 emissions may b transferred or sold to any other person (including, without limitation, other RECLAIM facilities and the District.)"

Dr. Wallerstein indicated staff’s opposition to the proposed amendment because it would violate agreements with CARB and U.S. EPA, could result in the rule not being approved, and would also delay the AQMD in achieving the required emission reductions under both federal and state law.

THE MOTION BY MR. ANTONOVICH TO AMEND THE MOTION BY MR. BERNSON TO ADD THE ABOVE LANGUAGE TO RULE 2004(o) WAS DULY SECONDED, AND FAILED, FOR A LACK OF SEVEN (7) CONCURRING VOTES, AS FOLLOWS:

AYES: Antonovich, Bernson, Burke, Glover, and Silva.

NOES: Carney, Loveridge, Mikels, Paulitz and Wilson.

ABSTAIN: Verdugo-Peralta.

ABSENT: LaPisto-Kirtley.

THE MOTION BY MR. BERNSON, SECONDED BY
MS. GLOVER, TO APPROVE THE STAFF RECOMMENDATIONS FOR AGENDA ITEMS 36 AND 37, AS AMENDED BY THE BOARD TO INCLUDE LANGUAGE IN THE RESOLUTION FOR ADOPTION OF RULES 1631, 1632, 1633, AND 2507 THAT WOULD: 1) EMPOWER THE BOARD AT ANY MONTHLY BOARD MEETING TO DECLARE A MORATORIUM ON RECEIVING NEW APPLICANTS INTO

THE PILOT CREDIT GENERATION PROGRAMS UNDER RULES 1631, 1632, 1633, AND 2507; 2) DIRECT STAFF TO REPORT MONTHLY TO THE MOBILE SOURCE AND STATIONARY SOURCE COMMITTEES; AND 3) DIRECT STAFF TO REPORT TO THE BOARD EVERY SIX (6) MONTHS ON THE STATUS OF THE CREDIT GENERATION PROGRAMS, CARRIED BY THE FOLLOWING VOTE:

AYES: Antonovich, Bernson, Burke, Carney, Glover,
Loveridge, Mikels, Paulitz, Silva and Wilson.

NOES: None.

ABSTAIN: Verdugo-Peralta.

ABSENT: LaPisto-Kirtley.

37.

Amend Rule 1166 - Volatile Organic Compound Emissions From Decontamination of Soil

In the interest of time, staff waived an oral report on this item. The public hearing was opened, and the Board heard testimony from the following individual.

BERNARD BIGHAM, CEG, Inc.
Suggested that the test method in the proposed amended rule used for measuring VOC concentrations in soil be amended to correspond with the test method adopted by the Bay Area Air Quality Management District.

Staff responded that the test method section of PAR 1166 does provide for the use of alternative or equivalent test methods, upon the approval of the Executive Officer.

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

ON MOTION OF DR. WILSON, SECONDED BY
MS. VERDUGO-PERALTA, AND CARRIED UNANIMOUSLY (Absent: Antonovich, Burke, LaPisto-Kirtley, Mikels, and Silva), THE BOARD ADOPTED RESOLUTION NO. 01-18, AMENDING RULE 1166 AND CERTIFYING THE EXEMPTION FROM CEQA REQUIREMENTS, AS RECOMMENDED BY STAFF.

Amend Regulations IX - Standards of Performance for New Stationary Sources, and X - National Emission Standards for Hazardous Air Pollutants

In the interest of time, staff waived an oral report on this item. The public hearing was opened, and the Board heard testimony from the following individual.

JOHN BILLHEIMER, Environmental Reality
Commented that since their original adoption, Regulations IX and X have been amended only to include updates of EPA actions. Suggested that Regulations IX and X be re-examined to determine if improvements to the nature of the regulations are needed.

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

ON MOTION OF MR. BERNSON, SECONDED BY
MS. CARNEY, AND CARRIED UNANIMOUSLY (Absent: Burke, LaPisto-Kirtley, Mikels, and Silva), THE BOARD ADOPTED RESOLUTION NO. 01-19, AMENDING REGULATIONS IX AND X AND CERTIFYING THE EXEMPTION FROM CEQA REQUIREMENTS, AS RECOMMENDED BY STAFF.

40.

Execute Contracts to Fund Marine Vessel Repower Projects Under RECLAIM and Executive Order Mitigation Account

ON MOTION OF MR. ANTONOVICH, SECONDED BY
MS. CARNEY, AND CARRIED UNANIMOUSLY (Absent: Burke, LaPisto-Kirtley, Mikels, and Silva), THE BOARD APPROVED AGENDA ITEM NO. 40 AS RECOMMENDED BY STAFF.

Rick Rothman, of McCutchen, Doyle, Brown & Enersen, LLP, addressed the Board on behalf of AES Huntington Beach, LLC, regarding an amendment that was made to PAR 1309.1 by the Board at its April 20, 2001 meeting. Mr. Rothman expressed their concern that the amendment, which raised issues that could potentially prevent AES from bringing additional power generation units on line by Summer 2001, was proposed at the hearing by a Board member after the close of public comment and was not available for review/comment prior to Board action.

Staff responded that Rule 1309.1 was properly before the Board for amendment at a publicly-noticed hearing. The Board’s proposal, which was made in response to public comment at the public hearing, involved limiting access to the priority reserve credits to those that entered into long-term contracts with the State of California to sell its power. The Board, at today’s meeting, had approved the interpretation of the amendment (Agenda Item No. 18), clarifying that "long-term" would be consistent with the Department of Water Resources practice (currently 10 years). It was staff’s belief that the interpretation in the Rule Implementation Guidance for Rule 1309.1(a)(4)(E) would address the issues raised by AES.

39.

Closed Session

The Board recessed to closed session at 12:55 p.m., pursuant to Government Code sections:

• 54956.9(a), to confer with its counsel regarding pending litigation which has been initiated formally and to which the District is a party--the actions are Communities for a Better Environment v. Cenco Refining Company, et al., United States District Court Case No. 00-05665 AHM (AIJx); Engine Manufacturers Association v. SCAQMD, United States District Court Case No. 00-09065 FMC (BQRx); and SCAQMD v. USEPA, et al., United States District Court Case
  No. SACV 98-9789 (HLH); and

• 54956.9(c), to confer with its counsel to decide, based on existing facts and circumstances, whether to initiate litigation (one case).