Western Riverside Council of Governments Regional Air Quality Task

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					             Western Riverside Council of Governments
                            Regional Air Quality Task Force
                                                      AGENDA
                                            Thursday, August 13, 2009
                                                   10:30 a.m.

                                                County of Riverside
                                               Administrative Center
                                          1st Floor, Conference Room 2A
In compliance with the Americans with Disabilities Act and Government Code Section 54954.2, if special assistance is
needed to participate in the Regional Air Quality Task Force meeting, please contact WRCOG at (951) 955-8311.
Notification of at least 48 hours prior to meeting time will assist staff in assuring that reasonable arrangements can be
made to provide accessibility at the meeting. In compliance with Government Code Section 54957.5, agenda materials
distributed within 72 hours prior to the meeting which are public records relating to an open session agenda item will be
available for inspection by members of the public prior to the meeting at 4080 Lemon Street, 3rd Floor, Riverside, CA,
92501.

1.      CALL TO ORDER (Mike Harrod, Chair)


2.      INTRODUCTIONS

3.      PUBLIC COMMENTS
        At this time members of the public can address the Regional Air Quality Task Force Committee regarding any
        items with the subject matter jurisdiction of the Committee that are not separately listed on this agenda. Members
        of the public will have an opportunity to speak on agendized items at the time the item is called for discussion. No
        action may be taken on items not listed on the agenda unless authorized by law. Whenever possible, lengthy
        testimony should be presented to the Committee in writing and only pertinent points presented orally.


4.      CONSENT CALENDAR

        All items listed under the Consent Calendar are considered to be routine and may be enacted by one motion.
        Prior to the motion to consider any action by the Agency, any public comments on any of the Consent Items will be
        heard. There will be no separate action unless members of the Agency request specific items be removed from
        the Consent Calendar.

        A.      Action Minutes from the June 10, 2009, Regional Air Quality Task                            P. 1
                Force meeting are available for consideration.

                Requested Action:                1.       Approve Action Minutes from the June 10, 2009, Regional
                                                          Air Quality Task Force meeting.
5.      REPORTS/DISCUSSION

        A.      Selection of Regional Air Quality Task Force                  Barbara Spoonhour            P. 3
                Vice-Chair for FY 2009/2010

                Requested Action:                1.      Select Vice-Chair for Fiscal Year 2009/2010.


        B.      Policy Matrix                                                 Sonia Slavinski              P. 5

                Requested Action:                1.      Discuss and provide direction to WRCOG staff.


        C.      Grant Update                                                  Sonia Slavinski             P. 13
                Requested Action:                1.      Discuss and provide direction to WRCOG staff.


        D.      SB 696 Update                                                 Sonia Slavinski             P. 17

                Requested Action:                1.      Discuss and provide direction to WRCOG staff.


6. ITEMS FOR FUTURE AGENDAS                                                   All

Members are invited to suggest additional items to be brought forward for discussion at future Regional Air Quality Task
Force meetings.


7. GENERAL ANNOUNCEMENTS                                                      All

Members are invited to announce items/activities which may be of general interest to the Regional Air Quality Task Force.


8. NEXT MEETING:                The next Regional Air Quality Task Force meeting is scheduled for Thursday,
                                October 15, 2009, 10:30 a.m., in the Riverside County Administrative Center,
                                Conference Room TBA.


9. ADJOURNMENT
                                                                                                Item 4.A

Regional Air Quality Task Force
June 10, 2009
Action Minutes


1. CALL TO ORDER

The meeting of the Regional Air Quality Task Force was called to order at the County of Riverside
Administrative Center, 12th Floor, Conference Room B, at 10:44 a.m.


2. INTRODUCTIONS

Robert Lemon, City of Moreno Valley
Chris Durham, City of Riverside
Mike Harrod, County of Riverside Planning Department
Paul Ryan, Inland Empire Disposal Association (IEDA)
Edward Filadelfia, Eastern Municipal Water District (EMWD)
Barbara Spoonhour, Western Riverside Council of Governments (WRCOG)
Sonia Slavinski, Western Riverside Council of Governments (WRCOG)
Araceli Ruiz, Western Riverside Council of Governments (WRCOG)


3. PUBLIC COMMENTS

There were no public comments at this time.


4. CONSENT CALENDAR

A.     Action Minutes from the November 12, 2008, Regional Air Quality Task Force meeting

       Action:        1.     Approved Action Minutes of the November 12, 2008, Regional Air Quality
                             Task Force meeting.

B.     Revised Regional Air Quality Task Force 2009 Meeting Dates

       Action:        1.     Approved the 2009 Regional Air Quality Task Force meeting schedule.

Items 4.A and 4.B were unanimously approved by those members present.


5. REPORTS/DISCUSSION

A.     Selection of Regional Air Quality Task Force Chair and Vice-Chair for FY 2009/2010

       The Regional Air Quality Task Force (Task Force) elected Mike Harrod, County of Riverside, as
       Chair for Fiscal Year 2009/2010. The Task Force sustained from electing a Vice-Chair until its
       next meeting.

       Actions:       1.     Elected Mike Harrod, County of Riverside, as Chair for Fiscal Year
                             2009/2010.
                      2.     Elected to wait until the next Regional Air Quality Task Force meeting to
                             select a Vice-Chair for Fiscal Year 2009/2010.
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B.    Fiscal Year 2009/2010 Proposed Projects

      Barbara Spoonhour, WRCOG Program Manager, provided a brief history of the Regional Air
      Quality Task Force (Task Force). Ms. Spoonhour reminded the Task Force of their past
      accomplishments, such as the Truck Route Ordinance Guidelines, and the Good Neighbor
      Guidelines. The Task Force brainstormed the following project options:

          •   Grant Matrix - includes grant summary, executive order, policy direction, timelines, and
              what other jurisdictions or agencies are doing;
          •   Policy Matrix – develop a listing of local and State policies, rules, and regulations
              pertaining to particulate matter and other criteria pollutants from mobile and stationary
              sources;
          •   Track SB 375: Transportation, Land Use, and CEQA; and
          •   Track SB 696, CEQA exceptions: emission reduction credits.

      The Task Force requested that WRCOG staff present a draft of the Grant Matrix and the Policy
      Matrix at the next Task Force meeting.

      Action:        1.      Requested WRCOG staff to provide a Grant Matrix.


C.    Regional Air Quality Task Force Committee Structure

      Barbara Spoonhour, Program Manager, WRCOG, provided an update of the April 15, 2009,
      Western Riverside County Clean Cities Coalition (Coalition) meeting. The Coalition approved to
      have the Task Force as a working committee of the Coalition. The Coalition requested that the
      Task Force provide a list of projects to work on.

      Action:        1.      WRCOG staff will provide the Western Riverside County Clean Cities
                             Coalition with a Regional Air Quality Task Force Committee meeting
                             update.

Items 5.A through 5.C were consented by those members present.


6. ITEMS FOR FUTURE AGENDAS

      The Task Force requested that the Grant Matrix draft be discussed at the next Task Force
      meeting.


7. GENERAL ANNOUNCEMENTS

      The Task Force requested that meetings be moved to a different day of the week. Araceli Ruiz,
      WRCOG Secretary, will e-mail the Task Force with a date survey.

      Barbara Spoonhour, mentioned that she will be mailing an Air Quality Task Force invitation letter
      to the subregion to help generate more regional participation.


8. NEXT MEETING: The next scheduled Regional Air Quality Task Force meeting is scheduled for
                 Wednesday, August 12, 2009, at 10:30 a.m., at the Riverside County
                 Administrative Center, Conference Room TBA. This date is also subject to
                 change depending on the-date change survey.


9. ADJOURNMENT: The meeting was adjourned at 11:21 a.m.                                                   -2-
                                                                                                    Item 5.A
                              Western Riverside Council of Governments
                                  Regional Air Quality Task Force

                                                           Staff Report

Subject:         Selection of Regional Air Quality Task Force Vice-Chair for FY 2009/2010

Contact:         Barbara Spoonhour, Program Manager (spoonhour@wrcog.cog.ca.us), (951) 955-8313

Date:            August 13, 2009


At the last Regional Air Quality Task Force (Task Force) meeting, the Task Force elected Mike Harrod, County
of Riverside, as Chair for Fiscal Year 2009/2010. The Task Force abstained from electing a Vice-Chair until
this months meeting.


Prior WRCOG Action:           None.

Fiscal Impact:                None.

Requested Action:             1.      Select Vice-Chair for Fiscal Year 2009/2010.

Attachment:                   None.




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                                                                                                            Item 5.B
                                 Western Riverside Council of Governments
                                     Regional Air Quality Task Force

                                                              Staff Report

Subject:         Policy Matrix

Contact:         Sonia Slavinski, Intern (slavinski@wrcog.cog.ca.us), (951) 955-8306

Date:            August 13, 2009


On June 17, 2009, the Regional Air Quality Task Force members directed WRCOG staff to develop a listing of
local and State policies, rules, and regulations that pertain to particulate matter and other criteria pollutants for
mobile and stationary sources. WRCOG staff has developed a draft policy matrix for members to review and
discuss.


Prior WRCOG Action:              None.

Fiscal Impact:                   None.

Requested Action:                1.      Discuss and provide direction to WRCOG staff.

Attachments:                     1.      Policy Tracking Matrix.
                                 2.      AB 32 Scoping Plan Local Impacts.




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                     Particulate Matter Air Quality Measures
       The rules and measures listed below affect air quality by setting limitations on particulate
matter and other air pollutant emissions.




Agency        Measure #      Measure Name                 Measure Requirements

                                                          This rule requires public fleets (15 or more
                             Clean On-Road Light- and     vehicles) to acquire lower-emitting gasoline and
                             Medium-Duty Public Fleet     alternative fuel vehicles when procuring or leasing
SCAQMD        Rule 1191      Vehicles                     vehicles in the AQMD.

                                                          This rule requires public fleet operators to acquire
                             Clean On-Road Transit        alternative-fuel heavy-duty vehicles when procuring
SCAQMD        Rule 1192      Buses                        or leasing these vehicles.



                                                          This rule requires public and private solid waste
                                                          collection fleet operators (with 15 or more solid
                                                          waste collection vehicles) to acquire alternative-fuel
                             Clean On-Road                refuse collection heavy-duty vehicles when
                             Residential and              procuring or leasing these vehicles to reduce air
                             Commercial Refuse            toxic and criteria pollutant emissions. (Schedules
SCAQMD        Rule 1193      Collection Vehicles          for amendment in November)
                             PM10 Emissions from
                             Paved and Unpaved            This rule reduces the amount of particulate matter
                             Roads, and Livestock         from vehicular travel on paved and unpaved public
SCAQMD        Rule 1186      Operations                   roads, and at livestock operations.


                                                          This rule requires street sweeper fleet operators to
                                                          acquire and operate alternative-fuel or otherwise
                                                          less-polluting sweepers when purchasing or
                                                          leasing these vehicles. (Amendments are
SCAQMD        Rule 1186.1    Less-Polluting Sweepers      proposed)

                                                          This rule requires public fleets operating heavy-
                                                          duty vehicles to acquire alternative-fuel, dual-fuel,
                             Clean On-Road Heavy-         or dedicated gasoline heavy-duty vehicles when
SCAQMD        Rule 1196      Duty Public Fleet Vehicles   procuring or leasing these vehicles.
              AB 1493
              (Pavley                                     Enforces clean car standards beginning model year
              Clean Cars                                  2009. The tailpipe emissions are restricted
CARB          Law)           Air Quality Standards        according the vehicle type.

                                                          This bill requires the review of ARB's Diesel Risk
                             Healthy Heart and Lung       Reduction Plan and Emission Reduction Plan for
CARB          AB 233         Act                          Ports and Goods Movement.



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Agency   Measure #    Measure Name                  Measure Requirements
         Off-Road
         Diesel
         Vehicle      Buying Tier 0 Vehicles        No fleet may purchase a Tier 0 off-road diesel
CARB     Regulation   Prohibted                     vehicle (generally built before 1996).
         Off-Road
         Diesel                                     Limited idling time with exceptions for vehicles that
         Vehicle                                    need to idle to perform work, or vehicles being
CARB     Regulation   Idling Limited to 5 Minutes   services, or in a queue waiting for work.

         Off-Road                                   The seller must provide disclosure of the regulation
         Diesel                                     on the bill of sale or invoice, with the exact
         Vehicle      Selling Any Off-Road          language provided in the regulation, and keep
CARB     Regulation   Diesel Vehicle                records for three years.

         Off-Road                                   Equipment Identification Numbers will be assigned
         Diesel                                     to reported vehicles. (Already in effect for larger
         Vehicle      Reporting and Labeling        fleets, small fleets - 2,500 horsepower or less, have
CARB     Regulation   Vehicles                      until August 1, 2009 to report)


                                                    Large fleets must meet the fleet average targets for
                                                    NOx or must 'turn over' 8 percent of the fleet's
                                                    horsepower with newer engines, replacing Tier 0s,
         Off-Road     Emissions and                 moving to electric or alternative fuel vehicles,
         Diesel       Performance                   designating low-use vehicles, rebuilding to a higher
         Vehicle      Requirements for NOx          emissions standard, or installing NOx-reducing
CARB     Regulation   (Effective March 1, 2010)     retrofits.

         Off-Road     Emissions and                 Large fleets must meet the fleet average targets for
         Diesel       Performance                   PM or must 'turn over' 20 percent of the fleet's
         Vehicle      Requirements for PM           horsepower with newer engines, replacing Tier 0s,
CARB     Regulation   (Effective March 1, 2010)     or install ABR-verified retrofits.
                      Emissions and
         Off-Road     Performance
         Diesel       Requirements for NOx and
         Vehicle      PM (Effective March 1,        The same regulations for large fleets will apply to
CARB     Regulation   2013)                         medium fleets.
                      Emissions and
         Off-Road     Performance
         Diesel       Requirements for NOx and
         Vehicle      PM (Effective March 1,        The same regulations for large and medium fleets
CARB     Regulation   2015)                         will apply to small fleets.




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            Global Warming Solution’s Act Scoping Plan Measures
       The Assembly Bill 32 Scoping Plan contains the main strategies California will use to reduce
the greenhouse gases (GHG) that cause climate change. The scoping plan has a range of GHG
reduction actions which include direct regulations, alternative compliance mechanisms, monetary and
non-monetary incentives, voluntary actions, market-based mechanisms such as a cap-and-trade
system, and an AB 32 cost of implementation fee regulation to fund the program.

       The Scoping Plan contains 73 listed measures and an implementation timeline from 2009
through 2020. The measures that directly impact local government are listed below.

                  Planned         Implementation
Sector            Adoption Date   Date             Description


                                                   Energy Efficiency Measures: This measure sets statewide energy demand
                                                   reduction targets of 32,000 GWh relative to business as usual projections for the
                                                   year 2020 through increased utility energy efficiency programs, more stringent
Electricity and                                    building and appliance standards, and additional efficiency and conservation
Natural Gas       Ongoing         Through 2020     programs.


Electricity and                                    Increasing Combined Heat and Power Use by 30,000 GWh: This measure
Natural Gas       2009            2020             adds an additional 4,000 Mw of installed CHP capacity by 2020.
                                                   Renewables Portfolio Standards: This measure would increase utilities
Electricity and                                    renewable portfolio standard from 20% by 2017 to 33% by 2020 but must be
Natural Gas       2009            2020             codified into statute.



                                                   Sustainable Forest Target: This measure sets the goal of the Sustainable
                                                   Forest Target is to maintain the current -5 MMTCO2E net forest sink through
                                                   2020, using the mechanisms provided by the Forest Practice Rules, timberland
                                                   conversion regulations, fire safety requirements, and forest improvement
                                                   assistance programs, as well as the California Environmental Quality Act (CEQA)
Forests           TBD             Through 2020     which mandates avoidance or mitigation of forest carbon losses to conversion.


                                                   Greening New Residential and Commercial Construction: This measure
Green Building                                     requires all new construction to meet the California Green Building Standards
Strategy          TBD             TBD              Code.



                                                   Stationary Equipment Refrigerant Management Progra- Refrigerant
                                                   Tracking/Reporting/Repair/Deposit Program: This measure requires
                                                   commercial and public facilities with large stationary air conditioning and
                                                   refrigeration equipment to minimize emissions of high GWP refrigerants through
                  September,                       reporting, leak repair, improved servicing, and end-of-life control. The measure is
High GWP          2009            2010             also anticipated to include deposit elements.

                                                   Sulfur Hexafluoride (SF6) Emission Reductions from the Electricity Sector
                                                   and Particle Accelerators: This measure requires the use of best achievable
                  December,                        control technology for the detection and repair of leaks, and the recycling of SF6
High GWP          2009            2011             through the establishment of regulations mandating performance standards.

                                                   Alternative Suppressants in Fire Protection Systems: This measure is two-
                                                   fold: to reduce emissions and banks of high GWP gases from the fire protection
                                                   sector, and to ensure low end-of-life emissions from halon systems. For high
                                                   GWP systems, this measure will consider options for existing and new systems
                                                   for both total flooding and portable applications. Leak reduction, mitigation fees,
                                                   use of lower GWP agents, and end-of-life agent recycling and destruction are
                                                   potential options to be examined. Most halon systems will reach their end of life
                  December,                        by 2020, so a goal of this measure is to have all halon systems that are
High GWP          2011            2012             decommissioned either recycle or destroy the halon.



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                 Planned         Implementation
Sector           Adoption Date   Date                 Description
                                                      Mitigation Fee on High GWP Gases: This measure establishes an upstream
High GWP         May, 2010       2010                 mitigation fee on sales of high GWP industrial gases.



                                                      Landfill Methane Control Measure: This measure requires owners and
                                                      operators of landfills to install gas collection and control systems at smaller and
                                                      other uncontrolled active landfills. Additionally, all affected landfills will be
Recycling and                                         required to satisfy enhanced methane monitoring requirements to ensure that
Waste            June, 2009                           their gas collection and control system is operating optimally and that fugitive
Management       (Adopted)       2010                 emissions are minimized.


Recycling and                                         Increase the Efficiency of Landfill Methane Capture: This measure lays out
Waste                                                 the implementation of Best Management Practices at landfills and improve gas
Management       June, 2009      2020                 collection efficiencies beyond the control measure.
Recycling and
Waste                                                 Commercial Recycling: This measure calls for jurisdictions to implement
Management       2010            2020                 mandatory commercial recycling.



                                                      Regional Transportation- Related Greenhouse Gas Targets: This measure
                                                      requires the State to work with regional and local governments to develop
                                                      regional targets for transportation-related greenhouse gas emissions in a process
                                 Set targets by       that considers the projected benefits of vehicle and fuel changes and each
                                 2010. Local          region’s potential for such reductions and would also require the implementation
                                 actions have         of regional plans that would meet the targets through the blueprint planning
                 September,      begun already in     process to map out land use and transportation scenarios that are preferable to
Transportation   2010            some areas.          meet the regional targets.


                                                      Tire Pressure Program: This measure requires that tire inflation is checked at
                                                      smog checks and provide public outreach / education on the importance of tire
                                                      inflation. Placing regulations on tire standards is proposed in a two (2) tier
                                                      fashion. First, ARB will gather data and education and then follow up with
Transportation   March, 2009     2010                 development and adoption of tire rolling resistance standards for California.




                                                      Cargo Handling Equipment- Anti-Idling, Hybrid, Electrification: California
                                                      ports, railroad operators, shipping companies, terminal operators, ship
                                                      owners/operators, importers, exporters, trucking companies serving ports and rail
                                                      operation, government agencies, and the public would participate in developing
                                                      and implementing programs to achieve system-wide reductions in GHG
                                                      emissions from goods movement activities. These programs would be in addition
                                                      to existing measures for goods movement sources, and would be developed over
                                                      time through a public process. In many cases, these programs would involve
                                                      innovative,
                                                      incentive based approaches, or unique strategies specific to a company, port, or
Transportation   2010            2010 - 2011          facility, that may not be feasible across an entire industry segment.
                                                      Heavy-Duty Vehicle GHG Emission Reduction: This measure would require
                                                      existing trucks/trailers to be retrofitted with the best available technology and/or
                                                      ARB approved technology. This measure has been identified as a Discrete Early
                                 Phased-In            Action, which means it must be enforceable starting in 2010. Technologies that
                                 Schedule for large   reduce GHG emissions and improve the fuel efficiency of trucks may include
                 December,       fleets: Beginning    devices that reduce aerodynamic drag and rolling resistance. The requirements
                 2008            2010; Final          would apply to California and out-of-state registered trucks that travel to
Transportation   (Adopted)       compliance 2013      California.

                                                      Medium- and Heavy-Duty Vehicle Hybridization: This measure would adopt
                                                      and/or provide an incentive program that reduces GHG emissions from these
Transportation   TBD             TBD                  types of new trucks sold in CA beginning in 2015.




                                                                                                                                             - 10 -
                  Planned         Implementation
Sector            Adoption Date   Date             Description


                                                   High Speed Rail: ARB expects a high rail system to be constructed to connect
                                                   Southern and Northern California. This measure is laid out in phases with the
Transportation    N/A             2020             first phase complete in 2020 to connect Anaheim with San Francisco.

                                                   Water Use Efficiency: This measure calls for a 20% reduction in per capita
Water             Spring 2009     2020             urban water use by 2020.

                                                   Water System Energy Efficiency: This measure proposes a requirement for
                                                   development and implementation of water recycling plans by wastewater
                                                   management agencies working with water supply agencies. This requirement
                                                   would apply where the recycling of treated effluent is not maximized at
                                                   wastewater treatment plants located in areas of imported water supply and where
Water             TBD             2020             water recycling could require less energy than current water sources.


                                                   Reuse Urban Runoff: This measure proposes that Low Impact Development
Water             TBD             2020             (LID) be required to maximize infiltration or storage in urban areas.
                                                   Increase Renewable Energy Production: This measure is to identify and
                                                   implement specific projects that take advantage of the State’s water system-
Water             TBD             2020             related opportunities to generate renewable electricity.
                                                   Public Goods Charge for Water: A public goods charge applied to water will
                                                   raise funds for reducing GHG emissions resulting from capturing, storing,
                                                   conveying, treating and disposing of water. Regulations need to be put into place
                                                   before implementation of this measure can go forward. ARB will be presenting
                                                   this rule to its Board in 2010 or 2011 timeframe. This charge would apply to each
Water             TBD             2012             water connection.
                                                   Energy Efficiency (Natural Gas): This measure sets statewide energy demand
                                                   reduction targets of 800 million therms relative to business as usual projections
Electricity and                                    for the year 2020 through increased utility energy efficiency programs, building
Natural Gas       Ongoing         Through 2020     and appliance standards and additional efficiency and conservation programs.




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                                                                                                      Item 5.C
                              Western Riverside Council of Governments
                                  Regional Air Quality Task Force

                                                              Staff Report

Subject:         Grant Update

Contact:         Sonia Slavinski, Intern (slavinski@wrcog.cog.ca.us), (951) 955-8306

Date:            August 13, 2009


On June 17, 2009, members of the Regional Air Quality Task Force directed WRCOG staff to develop a matrix
of air quality grants that will be available. WRCOG staff is providing a draft matrix for members to review and
discuss.


Prior WRCOG Action:             None.

Fiscal Impact:                  None.

Requested Action:               1.      Discuss and provide direction to WRCOG staff.

Attachment:                     1.      Air Quality Grants Matrix.




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                                                                                                         Item 5.D
                             Western Riverside Council of Governments
                                 Regional Air Quality Task Force

                                                             Staff Report

Subject:       SB 696 Update

Contact:       Sonia Slavinski, Intern (slavinski@wrcog.cog.ca.us), (951) 955-8306

Date:          August 13, 2009


On June 10, 2009, members of the Regional Air Quality Task Force (Task Force) requested that WRCOG staff
provide an update to SB 696: Air Quality: California Environmental Quality Act (CEQA) exemptions: emission
reduction credits and its potential impacts to the region. WRCOG staff has contacted South Coast Air Quality
Management District (SCAQMD) in regards to the local impacts of SCAQMD not being able to issue permits in
the Basin. Currently, SB 696 is on its second read, amended, and re-referred to the Committee on
Equalization. WRCOG staff will continue to provide updates to the WRCOG committee members on the
progress of this piece of legislation.

On August 3, 2009, the WRCOG Executive Committee took a position of Support on SB 696.

1. The Problem:

Due to a state court CEQA decision, the SCAQMD has been unable to issue any permits to facilities since
November 3, 2008, that rely on the SCAQMD internal bank to offset their emissions as required by the Clean
Air Act. The permitting program has virtually stopped. The SCAQMD currently has on hold over a thousand
permits for about 500 facilities. In addition, the court decision required the SCAQMD to set aside
approximately 3,000 permits that were previously issued during the litigation pending.

The affected facilities include essential public services, such as sewage treatment plants, hospitals, schools,
and landfill gas renewable energy (which would generate about 150 megawatts). In addition, affected facilities
include those that are exempt from the requirement to provide private Emission Reduction Credits (ERCs),
where the SCAQMD’s internal bank provides the needed offsets. These include equipment replacements, air
pollution control projects, relocations of existing equipment, and emergency backup engines. Also, small
facilities emitting less than 4 tons per year of a given pollutant can no longer get permits. There will likely be
over a thousand additional permits that can not be issued, or may not even be submitted to the SCAQMD, if
the SCAQMD has to wait another year before issuing any permits. If a facility buys ERCs on the private
market, it can still get a permit, but these credits are expensive and may not be available. Examples of the
estimated costs to obtain credits on the open market include the following: Police station (emergency backup
generator) $77,000; Gas station ($234,000); Auto body shop (spray booth) $435,000; Food manufacturer
(tortilla chip fryer and oven) $1.6 million; Sewage treatment plant (expansion with new digester and flare) $2.4
million; landfill (landfill gas renewable energy project with five turbines) $115 million.

The court order invalidated the SCAQMD’s rule, which made credits available to new power plants under
narrowly defined circumstances. Unlike other facilities, power plants had been required to pay substantial
mitigation fees ($92,000 per pound for PM2.5) in order to access SCAQMD credits. The SCAQMD rule limits
access to these credits to those power plants that have a contract from the electric utility, or are municipal
plants serving only their native load. Obtaining credits on the open market is not a viable option. All the
private PM10 credits in existence in the SCAQMD would supply less than half the needs of just the three
power plants that have obtained contracts with SCE as of today. A small municipal plant recently paid
$300,000 per pound of credit. Moreover, many of the power plants in the SCAQMD are aging and should be
                                                                                                              - 17 -
replaced with new, clean facilities. And additional peaking power will be needed to support the increased wind
and solar power that will help the state meet AB32 and renewable portfolio goals.

2. Reasons Legislation is Needed

In this economy, the hardship on business and essential public services would be extreme. Countless jobs
would be lost. It may be suggested that the SCAQMD could simply re-adopt the invalidated rules after a
revised CEQA analysis. But there is not enough time for such an approach. The rule adoption would likely
take an additional 9-12 months, and potentially more than another year to resolve the inevitable litigation.
Meanwhile, the permit moratorium would continue. Moreover, there is no guarantee that the court would
uphold the next CEQA document. The judge required the SCAQMD to assume that all emissions in the
internal bank are “in the air.” It will be difficult to prepare an environmental analysis of potential impacts on all
environmental areas when it is unknown which projects will access credits in the future. Moreover, the
proposed legislation avoids duplicative CEQA analysis. It provides an exemption for the adoption of rules,
NOT the issuance of permits. Any power plants obtaining credits would still be analyzed under CEQA by CEC
(or other lead agency if too small for CEC jurisdiction. Such analysis must under CEQA consider cumulative
impacts of past, present, and reasonably foreseeable future related projects. For projects other than power
plants, the applicable lead agency would decide what type of CEQA review is needed.

3. The Solution

Urgency legislation is needed to overturn the effect of the Court’s order by providing an exemption from CEQA
for SCAQMD rules creating, tracking, or providing credits from the SCAQMD’s internal bank, in order to end
the permit moratorium, and reverse the holding requiring the SCAQMD to set aside thousands of already-
issued permits. The proposed legislation would provide the exemption only if discretionary projects using the
credits were subject to CEQA, or covered by an existing exemption. Also, the legislation requires the
SCAQMD’s rules to provide stringent requirements to limit emissions of criteria and toxic air pollutants, and
requires the SCAQMD to account for the use of these credits in its air quality plan, and demonstrate that such
use will not interfere with attainment of the air quality standards.

For power plants, there are additional requirements. Power plants must meet even more stringent
requirements than other projects. The power plant must have a long term contract with the utility, or be a
municipal utility serving only its native load. The power plant must pay a mitigation fee, which is to be used to
mitigate emissions in areas impacted by the project, with a minimum one-third for alternative or renewable
energy. Importantly, the bill would require that the California Energy Commission (CEC) perform a needs
assessment, which finds that the project is necessary to meet power needs in Southern California, and that it is
necessary to locate the plant in the SCAQMD. The bill would require CEC to perform a needs assessment for
plants to be located in the SCAQMD. These requirements are intended to address concerns that the
SCAQMD may not actually need additional power plants, or that such need could be served by renewable or
alternative energy.

Background

Under the Federal Clean Air Act, state and local air pollution agencies are required to adopt programs that
assure that major new and modified sources of nonattainment air pollutants are required to obtain permits,
meet emission standards that constitute the lowest achievable emission rates, and provide offsets for their
emission increases. Offsets are equivalent emission reductions from other sources that have shut down or
overcontrolled their emissions beyond applicable legal requirements. The offset requirement may be met
programmatically, on an aggregate basis.

In the SCAQMD sources that are not exempt from offsets and do not obtain credits from the SCAQMD’s
“Priority Reserve”, but are subject to offset requirements, must submit “ERC” to the SCAQMD in order to get a
permit to construct. ERCs are created when a source either shuts down or overcontrols, and applies to the
SCAQMD to obtain an ERC. The SCAQMD validates the emissions reductions, applies the applicable rule
calculation methodologies, and issues the credit. The person who created the ERC can now sell it on the open
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market to sources that need to provide offsets to get a permit. As a practical matter, most ERCs are created
from shutdown of facilities.

In some cases, a facility shuts down and lets its permit expire without applying to the SCAQMD for an ERC. In
such cases, the SCAQMD waits until it is too late to apply for an ERC, or to reinstate the permit, under
SCAQMD rules, and then claims the shutdown reduction for the SCAQMD’s “internal bank.” These are referred
to as “orphan shutdowns.” The internal bank also takes credit for certain other sources of surplus credit, such
as payback of offsets previously provided, but orphan shutdowns constitute the bulk of the credits deposited in
the internal bank.

The credits in the internal bank are used to offset emissions from sources using the “Priority Reserve” (mostly
essential public services such as sewage treatment plants, hospitals, schools, landfills, etc.) They are also
used to offset emissions from new and modified facilities that are exempt from offsets under SCAQMD rules
but not exempt under federal or state law. Examples include facilities that implement air pollution control
strategies that reduce one pollutant (such as Volatile Organic Compounds or VOCs) with an afterburner, but
where the control strategy increases a collateral pollutant, e.g., Nitrogen Oxides or NOx. Other exempt sources
are facilities under 4 tons per year of a given pollutant, emergency equipment including emergency backup
engines, relocations of existing equipment, and equipment replacements with no increase in maximum rating.
Annually, the SCAQMD provides an accounting showing the new credits deposited in the bank as well as the
debits (credits used to offset new or modified source emissions). These credits are provided to facilities free
of charge.

SCAQMD Rule Adoption

A.      Rule 1309.1: In 2006, SCAQMD amended its Priority Reserve rule (1309.1) to allow power plants
        access to the SCAQMD’s internal account; however, unlike essential public services, power plants
        would need to pay mitigation fees for every pound of credit they obtained. The SCAQMD had
        previously had a similar provision in this rule during the 2000-2001 power crisis in California. The
        SCAQMD was concerned that there were projected potential shortfalls of electricity, and the SCAQMD
        had already received applications from several developers for new power plants. The SCAQMD
        realized that all the PM10 ERCs in existence in the SCAQMD that could be sold on the private market,
        whether or not they were actually for sale, would not be enough to support more than a small fraction
        of pending applications. Later, SCAQMD learned that all the private PM10 ERCs in existence in the
        SCAQMD would be less than half the amount required by just the three power plants that have, up to
        today, received contracts from Southern California Edison.

B.     Rule 1315: In addition, SCAQMD adopted Rule 1315, setting forth the eligible credits for the internal
       account and the tracking mechanism for such credits, at the request of EPA. Previously the SCAQMD
       had filed annual reports with EPA, but did not have a rule specifying how the tracking was to be done.
       In addition, EPA had expressed concern about certain pre-1990 credits for which SCAQMD no longer
       retained any documentation. SCAQMD agreed to remove these credits retroactively from its accounts.
       92% of PM10 credits in the account were removed, along with varying amounts of the other pollutants.
       However, since these credits had already been used to offset increases from permits issued in years
       past, since 1990, EPA agreed that SCAQMD could substitute credits derived from “minor source
       orphan shutdowns” since 1990, and certain other types of surplus credits. (Previously, SCAQMD had
       only tracked and taken credit for “major source” orphan shutdowns.)

CEQA Lawsuit

Several environmental groups sued the SCAQMD under CEQA. The SCAQMD contended that the power
plant amendment was exempt under Pub. Res. Code § 21080(b)(6) as an early action related to a thermal
power plant that would be subject to CEQA review by the California Energy Commission. The SCAQMD
contended that the adoption of Rule 1315 was exempt under the “common-sense exemption” for projects
having no possibility of a significant environmental impact. SCAQMD requested the court to dismiss the case
as it applied to the Rule 1309.1 power plant amendments, based on the above exemption. When that motion
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was unsuccessful, SCAQMD determined to readopt Rule 1315 and the amendments to 1309.1, after a full
CEQA analysis.

Rule Re-adoption

A.     Rule 1309.1: In readopting the amendments to Rule1309.1 significant changes were made. These
       included new stringent emission limits and efficiency requirements for power plants in environmental
       justice areas (areas of relatively high toxic or PM10 pollution and relatively high poverty levels). In
       addition, power plants were required to pay mitigation fees of nearly $100,000 per pound. Projects
       were required to demonstrate that renewable energy was not a feasible alternative for power to be
       generated at that site. The rule limited access to credits to those projects obtaining contracts from a
       public utility, or municipally-owned facilities serving only their native load. Finally, the rule limited
       access to 2700 MW of capacity, with any subsequent projects needing to obtain permission from the
       SCAQMD Governing Board. The re-adoption occurred in August, 2007.

B.     Rule 1315: In August 2007, Rule 1315 was readopted in the same form as it was adopted in 2006.

CEQA Analysis

SCAQMD prepared what it believed to be a comprehensive CEQA analysis of the potential impacts of both
rules, including examining the expected amount of emissions from power plants, and the potential annual
increase in emissions resulting from the new tracking system as compared to the old tracking system. The
SCAQMD analyzed both rules together because the amendments to Rule 1309.1 were dependent on the
credits in the SCAQMD’s internal bank that are made available by Rule 1315. For the power plants, SCAQMD
examined all the available CEQA documents that had already been prepared for the California Energy
Commission, and analyzed the effects of the plants both individually and cumulatively.

Second CEQA Lawsuit

The environmental groups again sued, arguing that SCAQMD had no authority to adopt a rule providing credits
to power plants, as that interfered with CEC’s exclusive authority, as well as raising numerous CEQA issues.
CEC and Cal-ISO attempted to file amicus briefs supporting the SCAQMD position, but the court decided not
to consider the briefs. Ultimately, the court ruled that SCAQMD did have authority to adopt the rules.
However, the court also ruled that the CEQA analysis had been inadequate, in areas including project
description, visibility analysis, and health risk analysis. With respect to Rule 1309.1, the court concluded that
the environmental analysis failed to adequately analyze the alternative of siting power plants outside the basin
and transmitting power into the basin, and failed to consider an “appropriate” mitigation measure of limiting
access to credits to wind and solar power only. (Note: such projects do not require credits. Also, because
wind and solar power are not available 24/7, additional fossil fuel fired peaking capacity is needed to support
solar and wind power.) The court found the mitigation fees to be inadequate mitigation because they were not
required to be spent in the immediate area of the power plant, although they were contrary to the court’s
conclusion – required to be spent in the impacted area. The court also held that a tiered mitigation fee was as
a matter of law a superior mitigation measure than a flat fee.

In particular, with respect to Rule 1315 the court decided that SCAQMD must assume that all the newly
tracked credits in the SCAQMD’s accounts would in the future be emitted into the air, and therefore must be
analyzed as causing environmental impacts, even though this was contrary to SCAQMD’s experience. The
court invalidated both Rule 1315 and the amendments to Rule 1309.1, and enjoined SCAQMD from further
implementing the rules, as well as ordering SCAQMD to set aside the rules and any approvals issued pursuant
to those rules, including several thousand permits that had been issued since rule adoption but before the
decision. (Plaintiffs failed to bring a motion for preliminary injunction to stop SCAQMD from implementing the
rules pending the lawsuit.)




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Prior WRCOG Action:   None.

Fiscal Impact:        None.

Requested Action:     1.      Discuss and provide direction to WRCOG staff, if necessary.

Attachment:           1.      SB 696 Amended.




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