BOARD MEETING DATE: April 4, 2003
AGENDA NO. 27

Legislative Committee

SYNOPSIS: 

The Legislative Committee considered agenda items including the following proposals and legislation for which the Board will consider approving a position:
Legislative Analyst Proposal for CARB Emission Fee
Environmental Surcharge on Alameda Corridor/Port Activities
AB 740 (Pavley) – Clean Air, Clean Water, and Coastal Protection Act of 2004
AB 854 (Koretz) and AB 998 (Lowenthal) – Dry Cleaning Grant Program

RECOMMENDED ACTION:

Approve the positions recommended below.

Beatrice J.S. LaPisto-Kirtley, Chair,
Legislative Committee

Attendance

The Legislative Committee met on March 14, 2003. Present by videoconference were Committee Chair Beatrice LaPisto-Kirtley and Committee Members Michael Antonovich, William Burke and Roy Wilson. Committee Vice-Chair Jane Carney was unable to attend. [Attachment 1]

Washington Report/Update

Lynn Jacquez, AQMD Federal Legislative Representative, reported that Congress is currently working on Appropriations requests for 2004. Congressman Dreier has agreed to submit AQMD’s 2003 request for funding through the Department of Defense to enhance the AQMD’s Laboratory Mobile Emergency Response Unit. The AQMD’s request for funding to enhance the Hydrogen Fueling Infrastructure in Southern California will be submitted by Congressman Cox through the Department of Energy. Funding opportunities continue to be explored through U.S. EPA for health research and environmental justice efforts.

Congress is working on the 2003 Energy Policy Act. The Senate and House are both revising their legislation from last year and AQMD Washington representatives are actively supporting inclusion of provisions to fund alternative fuel school buses.

Sacramento Update [Attachment 2]

Allan Lind, AQMD State Legislative Representative, reported that two of the proposals from the AQMD’s State Legislative Agenda have been introduced as legislation. SB 981 by Senator Soto would place a 30-cent fee on each barrel of crude oil received at refineries in California to mitigate the health impacts associated with transportation fuels. The AQMD is also sponsoring AB 1063 (Firebaugh), which addresses the AQMD’s ability to promulgate rules and regulations related to the retrofit of diesel engines, particularly diesel emissions in the Alameda Corridor. A third proposal to seek ways to stabilize funding for air district subventions is in limbo due to the overall state budget crisis.

The Legislature plans to discuss CARB’s 2003-04 Budget at hearings on April 9 and 10. The Legislature is also holding informational hearings on various topics. One such hearing will be held by Assemblywoman Pavley in March on "User Fees for Environmental Protection." The hearing is focused primarily on state agencies.

Legislative Analyst Proposal for CARB Emission Fee [Attachment 3]

Staff reported that after considerable input from CAPCOA and AQMD, the Legislature reached a decision on identifying for CARB alternative sources of revenue for their stationary source fees. As a result, ABX1 10 (Oropeza) was passed by the Legislature and sent to the Governor. ABX1 10 would drop the pollution threshold for sources from the current 500 tons per year to 250 tons per year, would expand the fee to include Architectural Coatings and Consumer Products and would raise the revenue cap for CARB from $3 million to $13 million. The Legislative Analyst’s Office (LAO) is currently suggesting going beyond the provisions of ABX1 10 and recommends lowering the pollution threshold to 100 tons per year and seeking an additional $4.4 million for CARB.

Staff believes that the LAO’s proposal goes too far to quickly fund CARB’s stationary source program, especially in light of the fact that local air districts have primary regulating authority for industries in their respective jurisdictions. CARB has stated that the provisions of ABX1 10 will not raise fees for the largest sources (500 tons/year and higher) and that the increased revenues will be collected from Architectural Coatings and Consumer Products. The Legislative Committee adopted staff’s recommendation to Oppose the LAO Proposal.

Evaluation and Preliminary Concepts Regarding AQMD and State Legislative Authority [Attachment 4]

The Draft 2003 Air Quality Management Plan (AQMP) is currently out for public review. The 2003 AQMP predicts that there will be a need for a large number of emission reductions above and beyond what the existing AQMP calls for in order to attain the ozone standards. The Board held a retreat in January and directed staff to prepare concept proposals for consideration by the Legislative Committee that could possibly expand AQMD’s existing pollution control authority to help reach attainment. Staff brainstormed on this issue and the following concept proposals were submitted for Committee consideration:

Consumer Products

There are three proposals addressing consumer products, which CARB has primary responsibility for regulating.

The first proposal would seek to remove a prohibition in state law that states that when CARB adopts regulations for consumer products, they cannot adopt a regulation which results in the elimination of a product form. AQMD’s proposal would allow CARB to adopt regulations that would still be technically feasible and cost effective, but would allow CARB to ban a product form.

The second proposal would require CARB to revisit their consumer product regulations every three years to see if further reductions can be obtained that are feasible and cost effective and then adopt more stringent regulations, if feasible. Currently, CARB is not required to do this and in some areas the AQMD has adopted regulations that deal with industrial solvents which have more stringent emission limits than CARB has adopted for comparable products used in janitorial and commercial settings. The proposal would allow CARB to delegate to the AQMD Board authority for sources within the South Coast Air Basin if CARB felt assistance was needed to implement the program.

The third proposal would allow the AQMD to require that consumers living in the South Coast Air Basin use the lower-emitting of available consumer products. The authority to actually set emission limits would remain with CARB. However, if CARB sets a limit and there are products available that meet a lower limit, then the AQMD could adopt a rule requiring that products used in the South Coast Air Basin meet the lower limit.

Vehicle Inspection and Maintenance

Existing law gives the Bureau of Automotive Repair (BAR) authority to conduct remote sensing projects. These projects are intended to find the highest emitting vehicles and direct drivers to repair their vehicles. Staff believes that BAR has not been aggressive in pursuing this authority and the AQMD Board may wish to consider whether they want local authority for this.

The second proposal would be to expand CARB’s, or potentially the AQMD’s, authority to make manufacturers accountable for types of vehicles that have a high failure rate under the Smog Check program. The current Smog Check program has different failure rates for different models of vehicles. This concept proposes that if there is an unusually high failure rate for a particular model vehicle, then the automotive manufacturer would be required to pay for the repairs of those vehicles or a fee to offset emission increase.

Fees for Cargo/Emissions

The first proposal under this category would be an environmental surcharge on Alameda Corridor or port activities. The local ports and the Alameda Corridor are instrumental in carrying a great deal of the economic activity of the country through the South Coast Air Basin. But along with that are adverse impacts from air emissions connected with equipment that brings the cargo in and that distributes it throughout the basin. This concept would allow the AQMD to adopt a mitigation fee to offset the air pollution resulting from these types of activities. These are areas where the AQMD does not have authority to directly regulate the emission sources. There could also be exemptions from the fee for the use of clean technologies in vehicles and engines. There are some legal issues connected with how this concept would be developed to avoid federal preemptions and staff is looking further into these issues.

The second proposal is a mitigation fee applicable to emissions from mobile sources, consumer products, or other sources that are subject to CARB or U.S. EPA regulatory jurisdiction, but not subject to AQMD jurisdiction. The AQMP is asking CARB and U.S. EPA to regulate these sources in order to attain the standards. This concept would allow the AQMD to adopt a fee that would not go into effect if CARB and U.S. EPA did in fact adopt the control actions that are outlined in the AQMP.

Off-/On-Road

There are a number of vehicle-related proposals that pertain to off-road and on-road motor vehicles and equipment. The first would be to provide incentives to businesses that route their cleanest vehicles to the South Coast Air Basin. This idea is taken from a voluntary agreement that CARB has with the railroads that calls for routing cleaner locomotives to the South Coast Air Basin. Some fleet operators have some vehicles that are cleaner than others. The objective of this proposal is to provide incentives to fleet operators to use their cleanest vehicles in areas of extreme nonattainment.

The second proposal in this category is a two-prong approach to vehicle idling. Existing law provides that idling buses that create a public nuisance are subject to civil penalties under the Health and Safety Code. This proposal would broaden that current provision to provide that any heavy-duty diesel vehicle that creates a public nuisance while idling would be subject to penalties under existing law. The second part of this proposal would broaden the AQMD’s existing authority to deal with idling vehicles. Currently, the AQMD has authority to adopt an indirect source regulation and that regulation focuses on a particular facility that attracts vehicles to it. This proposal would broaden AQMD’s authority to regulate vehicle idling that may not be under the control of a particular indirect source.

Occasionally CARB enters into Memoranda of Understanding (MOUs) with industries that they might otherwise regulate, such as locomotives and airport ground service equipment. Under these MOUs the companies agree to voluntarily reduce their emissions over a specified period of time and CARB relies on these MOUs as part of the attainment demonstration for showing that federal standards are going to be attained. These MOUs are only enforceable by CARB. This third proposal would require CARB to put into the State Implementation Plan these MOUs, thus making them federally enforceable by the AQMD and citizens

The fourth proposal would be a mandatory retirement for older on-road and off-road vehicles. A disproportionate share of emissions comes from vehicles over a given age, both in the on-road and off-road categories. To accelerate the turnover of the fleet, this proposal would require that engines be retired after a specified age. The concept is that at least partial compensation would be available to assist in the purchase of a newer engine or vehicle and funding sources would have to be identified for the compensation. This proposal is similar to the existing vehicle scrapping program at the AQMD, except that it would be mandatory for engines over a certain age and would apply to construction equipment as well as vehicles provided funding is available.

The fifth proposal would expand the existing concept of tax incentives for alternative-fuel vehicles to a greater variety of vehicle applications that currently may not be covered, such as school buses and cargo delivery vehicles. This would be a special exemption only for those vehicles in extreme nonattainment areas.

The last proposal would be a tax incentive to provide a tax deduction to people who do scrap their old vehicles. This might be one way of providing partial compensation for the proposal mentioned above regarding vehicle retirement age. The tax credit could be varied according to the amount of emissions saved from scrapping a particular vehicle.

The above concept proposals were developed by staff for consideration by the Legislative Committee. The proposals were discussed with CARB and business and environmental representatives. The stakeholders understand the need for the AQMD to look at various ways to reach attainment given the huge emission-reduction shortfalls contained in the Draft AQMP.

The Committee requested that the proposals go back to staff so they could be prioritized, additional information could be added on which would be most cost effective and provide the most emission reductions, include the degree of difficulty associated with each, and also asked that staff work with CARB to identify which concepts CARB would be comfortable with.

Dr. Wallerstein added that at the Board Retreat there were a significant number of the participating Board Members that wanted staff to move forward in some manner, if feasible, on the cargo fee issue. Dr. Wallerstein asked the Committee if they would consider sending forward to the Board the proposal pertaining to an environmental surcharge on Alameda Corridor/port activities. If done early in the legislative process, there may be an opportunity to work with Assemblyman Firebaugh to incorporate this concept into AB 1063. The Legislative Committee unanimously approved sending forward for Board consideration the proposal to place an environmental surcharge on Alameda Corridor/Port Activities. The Committee further directed staff to 1) prioritize the remaining concept proposals; 2), determine which are most cost effective and provide the greatest emission reductions; 3) determine the degree of difficulty involved with each concept; and 4) work with CARB to identify the areas CARB is comfortable with and bring back to the Committee for consideration at the April Legislative Committee meeting.

Recommended Positions on Legislation

Staff provided analyses and position recommendations on three bills and provided information on a fourth bill for Committee consideration only. A brief description of each bill is provided below. [Attachment 5]
 

Bill/Title	Recommended Position
AB 740 (Pavley) – Clean Air, Clean Water, and Coastal Protection Act of 2004	SUPPORT air quality provisions; SEEK AMENDMENTS to clarify grant administration & funding priorities
AB 854 (Koretz) and AB 998 (Lowenthal) – Dry Cleaning	SUPPORT and work with authors on details of the legislation
AB 1090 (Longville) – AQMD Board Membership	NO POSITION

AB 740 (Pavley) would authorize the issuance of $2.9 billion in general obligation bonds with the proceeds to be used for clean air, water and coastal protection programs. The most significant portions of the bill to the AQMD are those that provide $200 million for the Carl Moyer Program; $100 million for school bus replacement and $500 million for fueling infrastructure for hydrogen fuel. The provisions of the bill require that the funds be administered by CARB, contrary to the current practice of allowing local air districts to administer the Carl Moyer funds. The Legislative Committee adopted staff’s recommendation to Support the air quality provisions of AB 740, and to seek amendments to clarify grant administration and funding priorities.

AB 854 (Koretz) and AB 998 (Lowenthal) are similar in nature and the foundation for both bills is the AQMD’s Rule 1421 – Control of Perchloroethylene Emissions from Dry Cleaning Systems. Both bills would place a $3 fee on each gallon of perchloroethylene purchased to fund a grant program to provide financial incentives to dry cleaners to transition to nontoxic cleaning alternatives. The most significant difference between the two bills is that AB 854 would phase out the use of perchloroethylene by January 1, 2014, which is six years earlier than the phase out deadline under Rule 1421 of December 31, 2020. Staff recommends Support on the intent of AB 854 and AB 998, and seeks direction from the Board to work with the authors on the proposed phase-out date contained in AB 854, the administration of the program and other details of both bills. Dr. Wallerstein clarified that staff is not seeking to move up the compliance date over what the Board established during the rulemaking process.

A motion was made to Support with the caveat that the authors recognize the phase out date currently included in Rule 1421. The Legislative Committee adopted a Support position with the caveat that the authors recognize the phase-out date currently included in Rule 1421, and directed staff to work with the authors on the details of the legislation.

AB 1090 (Longville) would permit the San Bernardino County Board of Supervisors to appoint any member of their board, regardless of residence, to the AQMD Board. The County believes that the member appointed to the AQMD Board is expected to represent the larger interest of the county as a whole and current law unnecessarily hamstrings them from possibly selecting the most technically-qualified candidate. The bill was forwarded to the Committee for consideration without staff recommendation.

The Legislative Committee briefly discussed the bill and unanimously voted to take No Position on AB 1090, stating that the bill could possibly set a precedent for other appointments to the Board. The Legislative Committee unanimously voted to take No Position on AB 1090.

Public Comment

Peter Okurowski, a representative for the Association of American Railroads, commented on the concept proposal that would place an environmental surcharge on Alameda Corridor/port activities. Mr. Okurowski stated that the railroads are very concerned about any program that would place an increased tax or fee on cargo or interstate commerce. When the Alameda Corridor was developed, it was designed to improve the efficiency of containers going out of the cargo area. The tie of an emissions fee to that area is contrary to its original intent. Additionally, the fees on these containers are a very delicate topic. They were heavily negotiated with all the parties that run on the Corridor. Any changes to that fee could have a significant impact. Finally, the railroad industry hopes that AQMD staff will talk with the railroads and all other parties that the fee is intended to apply to before making a recommendation to the Board.

Supervisor Antonovich stated that the Corridor was a partial Corridor when the fees were negotiated and did not include the San Gabriel Valley where there are now long delays at intersections that are causing congestion. Attempts are now being made to get the resources necessary to mitigate the congestion. Supervisor Antonovich added that it is hoped that a fair agreement can be reached with the railroads to ensure that this serious problem is mitigated.

Attachments

1. Attendance Roster
2. 2003 Legislative Status Report
3. LAO Proposal for CARB Emission Fee
4. Environmental Surcharge on Alameda Corridor/Port Activities
5. Recommended Positions on Legislation

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