State of California

Summary of Board Meeting
May 22, 1997

Air Resources Board
Board Hearing Room, Lower Level
2020 "L" Street
Sacramento, California

MEMBERS PRESENT: Hons. John D. Dunlap, III, Chairman
Joseph C. Calhoun, P.E.
Lynne T. Edgerton, Esq.
William F. Friedman, M.D.
M. Patricia Hilligoss
Jack C. Parnell
Sally Rakow
Barbara Riordan
Ron Roberts
James W. Silva
97-4-1 Public Meeting to Consider Approval of a Proposed Report to the California State Legislature on Funding Sources of California's Air Pollution Control Districts with Annual Budgets Exceeding One Million Dollars


State law requires the Board to report annually to the Legislature on funding sources of California's air districts with annual budgets larger than one million dollars. The report is to describe the air districts' budgets, budget processes, sources of funding, and the relative contribution of each funding source to air districts' programs.

There were 12 districts with annual budgets greater than one million dollars during fiscal year 1995-96. These were: South Coast, San Francisco Bay Area, San Joaquin Valley, Santa Barbara, San Diego, Sacramento, Ventura, Monterey Bay, Great Basin, Mojave Desert, Yolo-Solano, and San Luis Obispo. Data for the report were collected through a questionnaire supplemented by consultation with district staff.

The budgets of the 12 districts in 1995-96 ranged from $1.7 million for San Luis Obispo to $96 million for South Coast. Fees charged to stationary sources of air pollution comprised the largest sources of revenue--about 50 percent. Motor vehicle registration fees provided 23 percent; local taxes, state subventions, and federal grants combined provided 15 percent; and miscellaneous sources accounted for 10 percent. Fines and penalties from enforcement activities contributed about 2 percent of total funding.

The largest category of stationary source revenue was the manufacturing and industrial sector at 52 percent of total fee revenues. Another significant category was services and commerce (including electric utilities, wholesale, and retail trade) at 26 percent.

District programs with the highest expenditures, on a composite basis, were stationary source permitting and enforcement (18 and 23 percent respectively). Air monitoring received 12 percent of district expenditures, while other programs such as air quality planning, modeling and emissions inventory, transportation, rule development, and public outreach received less than 10 percent each.



The Board approved the report for submittal to the Legislature.


STAFF REPORT: Yes (35 pages)

97-4-2 Public Hearing to Consider the Adoption of a Statewide Methodology to Calculate the Value of Interchangeable Emission Reduction Credits


State law requires the Board to adopt a calculation methodology for use by air pollution control districts when developing and implementing programs that allow the interchangeable use of surplus emission reductions, or credits, from stationary, mobile, and area sources to meet applicable district requirements.

The State regulation proposed for the Board's consideration contained the following features:

* A uniform credit currency to standardize and facilitate credit exchange in a trading market (i.e., pounds of a pollutant generated in a specific year).

* General requirements and criteria that districts must meet in calculating, certifying, banking, and authorizing the use of credits to ensure that credits are granted only for emission reductions that are real, properly quantified, permanent, enforceable, and surplus to applicable federal and state requirements and district air quality plans. (The proposed regulation allows districts to maintain a separate pool of credits not affected by the proposed regulation to ensure that new industrial growth can be accommodated within existing State and federal new source review permit requirements.)

* Annual performance audits by districts to ensure that implementation of trading programs continues to comply with applicable State and federal requirements.

Staff proposed several modifications to the proposed regulation that added definitions, and clarified language related to (1) credit denomination, (2) the interchangeability of RECLAIM credits, (3) trading that may have air toxic impacts, and (4) determining an emissions baseline for calculating credits.

The Board heard testimony from individuals representing affected industries and environmental groups on the proposed regulation. The testimony generally supported the staff's proposal, but also suggested modifications. Testimony from a representative of environmental groups urged the Board to consider tightening the air toxics provision in the rule. Industry representatives supported the air toxics provision in the draft regulation, but asked for more flexibility for district compliance with the State regulation.

The Board voted to adopt the regulation with the modifications proposed by staff. The modifications presented at the hearing will be made available for public review and comment for 15 days in a Notice of Public Availability of Modified Text.


Bob Lucas, California Council for Economic and Environmental Balance
Deborah Kurilchyk, Southern California Edison
Tim Carmichael, Coalition for Clean Air
Michael Carroll, Latham & Watkins/Regulatory Flexibility Group


Approved Resolution 97-19 by a vote of 9 -1.


STAFF REPORT: Yes (56 pages)

97-4-3 Public Hearing to Consider a One-Year Postponement of the Requirement that 1998 and Subsequent Model-Year Vehicles Produced by Ultra-Small Volume Manufacturers Meet the Enhanced Evaporative Emission Requirements


The ARB staff recommended that the Board amend Title 13, California Code of Regulations, section 1976, and the incorporated "California Evaporative Emission Standards and Test Procedures for 1978 and Subsequent Model Motor Vehicles," in order to allow ultra-small volume manufacturers (USVMs) a one-year delay in complying with the enhanced evaporative emission requirements.

The ARB's current evaporative emission regulation requires that small-volume manufacturers (SVMs--manufacturers with California sales less than or equal to 3,000 vehicles per year) comply with the enhanced evaporative emissions test procedures for 100% of their vehicle fleet starting in the 1998 model year (MY).

On December 13, 1996, representatives from the Coalition of Small Volume Manufacturers (COSVAM) met with ARB staff to request that the ARB allow USVMs (manufacturers with California sales less than or equal to 300 vehicles per year) to delay compliance with the enhanced evaporative emission requirements until the 1999 MY, which would harmonize with similar federal evaporative emission regulatory requirements for SVMs. COSVAM indicated that some USVMs would forgo sales of their 1998 MY vehicles in California if the ARB did not grant this delay.

By granting COSVAM's request, ARB staff determined that the proposed regulatory amendments would result in a very small loss of the emission benefits that would otherwise result from imposition of the enhanced evaporative emission requirements on all SVMs in the 1998 MY. By granting a one-year delay for USVMs, the affected vehicles would be subject to a less stringent evaporative emissions requirement and, therefore, emit more evaporative emissions throughout their useful life. The estimated number of vehicles cited in the petition is very small--about 550. Testimony by COSVAM at the public hearing revised this estimate of affected vehicles to be approximately 150. Staff estimated that the increase in evaporative emissions projected to the year 2010, based on the revised number of vehicles, would be 3 lbs. per day of hydrocarbons.

The Board adopted amendments which added a definition of USVM in the regulation and test procedures. USVM is defined as a manufacturer with California sales of less or equal to 300 new vehicles based on the average number of vehicle sales in the previous three consecutive MYs. The amendments also require that USVMs comply with the regulation with 100% of their vehicle fleet in the 1999 MY.


Lance Tunick, Coalition of Small Volume Automobile Manufacturers, Inc.(COSVAM)
Randal Busick, Aston Martin Lagonda
Bruce Qvale, British Motor Car Dist. Ltd.
Simon Rodd, Aston Martin Lagonda
Tim Holland, Lotus Cars Ltd.
Bill Fink, Morgan Motor Co. Ltd. U.K.


Approved Resolution 97-20 by an 8-2 vote.


STAFF REPORT: Yes (27 pages)
97-4-4 Public Meeting to Consider the Role of Fuel Cell Technologies in the Low- and Zero-Emission Vehicle Program


Staff updated the Board on emerging fuel cell technologies and summarized implications of advanced fuel cell systems on the low- and zero-emission vehicle program.

Fuel cells, which convert chemical energy in the fuel (e.g., hydrogen (H2), methanol) to electrical energy, are receiving considerable interest due to their potential for zero emissions, long driving range, high energy conversion efficiency, good durability, and use of alternative fuels.

The ARB's Low-Emission Vehicle program requires that automobile manufacturers introduce progressively cleaner light- and medium-duty vehicles with more durable emission controls. Also, in 2003, ten percent of the largest manufacturers' light-duty vehicle fleets must be comprised of Zero-Emission Vehicles (ZEVs). H2-powered fuel cell vehicles (FCVs) produce water as the only exhaust constituent and therefore are expected to meet the ZEV standard. In fact, on-board stored-H2 fuel cell technology has experienced rapid progress in the recent past, and has resulted in the demonstration of prototype vehicles by Daimler-Benz AG and Toyota Motor Corporation. Further, according to Dr. Larry Berg of Ballard Power Systems Inc. (BPS), BPS and Daimler-Benz have agreed to invest over $450 million to develop and commercialize fuel cell engines. Dr. Berg has also indicated that Daimler plans to introduce over 100,000 FCVs by the year 2005.

Lack of a H2 refueling infrastructure seems to be a strong issue for commercialization of stored H2 fuel cells. While the H2 refueling issue may be addressed by using an on-board fuel processor that generates H2 from another fuel (e.g., gasoline, methanol), this approach could lead to emissions, add complexity, and perhaps reduce the energy efficiency unacceptably. These factors, however, vary with the fuel being utilized. Basically, the choice of fuel will affect the level of emissions, the pace of introducing fuel cell vehicles into the market place, their durability, and their cost-effectiveness.


Jim McDowell, Nova BUS
Dr. Larry Berg, Ballard Power Systems
Dr. Chung Liu, South Coast Air Quality Management District




97-4-5 Consideration of Research Proposals

The Board approved Resolutions 97-21, 97-22, 97-23, 97-24, 97-25, 97-26, 97-27 by unanimous approval.