San Joaquin Valley APCD (2/17/22) Pepsi zero-emission trucks + reduced emissions reported

Documenter: Josef Sibala

Here’s what you need to know:

• Air quality improvement efforts have reduced ozone and PM2.5, forming NOx emissions by over 75 percent. 

• Along with California Air Resources Board (CARB) and Valley stakeholders, the district will host the San Joaquin Valley summit in the Spring or Summer of 2022. 

• The Pepsi Beverage Demonstration Project will deploy 50 zero-emission battery-electric Tesla trucks, fast charging infrastructure, and battery storage at Pepsi Beverage’s South Central-Fresno facility. 

The Scene

According to its website, the San Joaquin Valley Air Pollution Control District comprises eight counties in California’s Central Valley: San Joaquin, Stanislaus, Merced, Madera, Fresno, Kings, Tulare, and the San Joaquin Valley Air Basin portion of Kern.

The Valley Air District includes a fifteen-member Governing Board consisting of representatives from the Board of Supervisors of all eight counties, one Health and Science member appointed by the Governor, one Physician appointed by the Governor, and five Valley city representatives.

The district held a meeting on Thursday, Feb. 17, 2022, at 9 am. 

Officials present:

• Chair and Supervisor at Kings County Craig Pedersen

• Vice-Chair and Supervisor at Merced County Lloyd Pareira

• City of Clovis Mayor Drew M. Bessinger

• Supervisor at Stanislaus County Vito Chiesa

• Supervisor at Kern County David Couch

• Councilmember at City of Stockton Christina Fugazi 

• Supervisor at Fresno County Buddy Mendes 

• Tania Pacheco-Werner, Ph.D. Appointed by Governor 

• Mayor Pro Tem at City of Avenal Alvaro Preciado 

• Vice Mayor at City of Porterville Monte Reyes 

• Robert Rickman Supervisor, San Joaquin County 

• Alexander C. Sherriffs, M.D. Appointed by Governor 

• Supervisor at Tulare County Amy Shuklian 

• Supervisor at Madera County Tom Wheeler 

• Councilmember at City of Los Banos Deborah Lewis 

• Executive Director and Air Pollution Control Officer Samir Sheikh 

Discussions/Actions

1. The board unanimously approved items #16-24 of the consent calendar as follows:

#16. Assembly Bill 361 And District Remote Teleconferencing Update 

#17. Approve Reappointment Of Hearing Board Attorney/Engineer Members Group 

#18. Approve Voluntary Emission Reduction Agreement With Calmat Co., Dba Vulcan Materials Company To Mitigate Air Quality Impacts 

#19. Rescind County Equipment Breakdown Rules From State Implementation Plan 

#20. Approve Agreements With Ambilabs Llc And Tropospheric Measurement Systems Inc Not To Exceed $544,719 For Community Air Monitoring Equipment In The Arvin/Lamont Ab 617 Community

#21. Approve Action Summary Minutes For The San Joaquin Valley Unified Air Pollution Control District Governing Board Meeting Of Thursday, January 20, 2022 

#22. Receive And File A List Of Scheduled Meetings For 2022 

#23. Receive And File Operations Statistics Summary For January 2022 

#24. Receive And File Budget Status Reports As Of January 31, 2022 

1.  Update On Implementation Of The Alternatives To Agricultural Open Burning Incentive Program

Through requirements of SB 705 and amendments to District Rule 4103 (Open Burning), Valley has implemented prohibitions that have significantly reduced open burning. 

Board has prioritized continued efforts to identify and demonstrate new alternatives to reduce open burning, including establishing a final phase-out strategy.

In June 2021, your Board adopted and CARB approved the final phase-out strategy for

remaining agricultural open burning:

The Board is currently in the process of implementing and enforcing the phase-out strategy. 

Extensive outreach to Valley growers is ongoing regarding phase-out requirements 2021 through 2024 and available resources for alternative practices. 

Open burning of agricultural material will continue to decrease in 2022 with the implementation of the final phase-out. 

Recognizing the need to develop new alternatives, in 2018, your Board authorized new Alternatives to Agricultural Open Burning Incentive Program.

The program provides financial incentives to chip ag material for soil reincorporation, land application, and off-site beneficial reuse.

Since 2018, your Board has allocated $25,309,504 in local District funding to the program.

In August 2021, Board accepted $178.200.000 in additional state funding to expand fleet capacity and support the deployment of new alternative practices. District relaunched the program on September 1, 2021.

Program to assist in developing alternative practices, increase the fleet capacity of chipping equipment, and offset the significant cost of implementing alternatives to open burning.

Since the re-launch of the enhanced program in September 2021, the District has seen an increase in program demand, nearly tripling the monthly average from prior years.

There has been an average of $5.3 million in executed contracts per month for alternative practices. 

Since December 2020, Board has directed that 30% of available funding be initially set aside for smaller agricultural operations, less than 500 acres in size. 

In August 2021, Board allocated an additional $100/acre for each funding category for agricultural operations less than 100 acres in size.

To ensure adequate capacity to accommodate the increase in chipping, your Board allocated up to $30,000,000 of the new state funding for new chipping/grinding equipment purchases within the program.

Since the launch of this program option in September 2021, the District has seen significant interest from chipping contractors in purchasing additional equipment, 46 pieces of equipment funded to date.

As required under the State Budget Act of 2021, CARB Board reached the necessary findings in October 2021.

Non-combustion alternatives are not available in needed numbers over the phase-out period, and nonstationary combustion alternatives, specifically air curtain burners, would help meet the need. 

The Board can use new state funds for air curtain burners as an additional alternative under certain conditions (wire-infused crops, second-priority when non-combustion options are not viable).

Based on CARB action, the District proposing enhancement to the program to include air curtain burners as additionally available alternative subject to the following criteria:

• The district will continue to prioritize non-combustion alternatives and will only authorize funding for air curtain burner alternative when non-combustion choices eliminated as viable options

• May only be addressing material with embedded wire (e.g., cordon-pruned vineyard material)

• Must comply with all current program requirements, including application, claim for payment, inspection and verification, and other program requirements

• Must comply with all applicable local, state, and federal requirements (e.g., District registration)

The district will monitor program participation levels to ensure the program is responsive to Valley ag needs.

Given that the current rate of the expenditure may increase, the District forecasting program funding will be exhausted in 12-18 months.

Significant additional funding is needed to support the final phase-out by 2024.

The District will advocate for additional state funding to support the transition away from open burning.

The District will continue implementing new phase-out requirements, including additional opportunities to provide targeted outreach to smaller growers regarding upcoming needs and available resources. 

Along with CARB and Valley stakeholders, the district will host the San Joaquin Valley summit in the Spring or Summer of 2022.

1.  Accept And Appropriate $36,573,008 In-State Cap And Trade Funding For Two Zero Emission Demonstration Projects. 

Mobile sources contribute over 85% of Valley NOx emissions (essential precursor to ozone and PM2.5) and most air toxic impacts in Valley communities, particularly near major roadways.

As a complementary strategy to the District’s ongoing stringent stationary source control program, Board has prioritized demonstrating and deploying new and innovative clean air technologies as part of a comprehensive strategy to meet air quality attainment goals.

Significant resources are needed to implement the successful incentive-based strategy.

The district has worked closely with Valley partners to advocate and compete for new clean air funding. 

The district submitted two proposals to CARB/CEC in response to ZeroEmission Drayage Truck and Infrastructure Pilot Project solicitation. 

Solicitation objectives include supporting large-scale deployments of on-road, zero-emission Class 8 drayage, regional haul trucks, and necessary vehicle charging infrastructure.

Projects would reduce criteria pollutants, toxic air contaminants, & GHG emissions around ports and freight facilities. 

The district informed that CARB/CEC selected proposals for total funding, and CARB/CEC is moving forward with grant agreements.

The total award of $36,573,008 Includes 5 percent in administrative funding to offset District’s costs to implement these demonstration projects.

The Albertsons Distribution Center Demonstration Project will deploy 50 zero-emission battery-electric Volvo Trucks and fast charging infrastructure at Tracy Distribution Center.

• Result in more than 5 million zero-emission miles per year –Goals include reducing criteria pollutants, toxic air contaminants, and GHG in and around freight facilities and truck routes.

• The project will also support ZEV workforce development and operator training.

The project will deploy equipment for 18 months, with full deployment expected by mid-2023.

Total Project Costs $52,296,587. State Grant amounts to $23,422,298, while Partner Match Funding is $28,874,289. 

The district will serve as the lead entity for this project and establish agreements with project partners for implementation. 

Project partners include Albertsons Companies, Inc., Volvo Technology of America, Bay Area and Sacramento Metro AQMDs, Burns & McDonell, Momentum, CALSTART, TEC Equipment of Oakland, Community groups: New Voices are Rising, Environmental Justice Program, Valley Vision, Economic Development, California Mobility Center, and Opportunity Stanislaus.

The Pepsi Demonstration Project will deploy 50 zero-emission battery-electric Tesla trucks, fast charging infrastructure, and battery storage at Pepsi Beverage’s South Central-Fresno facility. 

Project located in South-Central Fresno AB617 Community and aligns with the zero-emission priorities outlined in Board approved CERP.

The district expects the entire project deployment to be completed by mid-2023.

Total Project Cost: $26,303,710 – State Grant Amount: $13,150,710 – Partner Match Funding: $13,153,00 

The district will serve as the lead entity for this project and establish agreements with project partners as necessary for implementation.

Project partners include Bottling Group LLC, New Bern Transportation Corp., Tesla, CALSTART, Black & Veatch, Central Valley Air Quality Coalition, Pacific Gas & Electric, Duncan Polytechnic High School, and Reedley College. 

1. Update On District Emission Reduction Credit System And Consider Actions To Address Federal Offsetting Requirements.

Air quality improvement efforts have reduced ozone and PM2.5, forming NOx emissions by over 75%.

District Rule 2201 (New and Modified Stationary Source Review)

• Designed to meet both federal and state NSR requirements

• Subject to most rigorous NSR requirements due to attainment status 

Critical elements of Rule 2201 include: 

• Best Available Control Technology (BACT) mandates emission controls to minimize emission increases 

• Emission Offsets require emissions above specified offset threshold levels to mitigate with either concurrent reductions or banked ERCs. ERCs cannot be used instead of meeting other control requirements (e.g., BACT or prohibitory rules)

• Federal Offset Equivalency ensures local NSR offset requirements are at least as stringent as federal requirements.

• Public notification – a notice period before issuing Authority to Construct (ATC) to garner comments on projects that result in emissions above specified levels.

At January 2019 board meeting, CARB Board directed their staff to review the District’s ERC program. CARB Board released a final report on June 5, 2020. 

CARB Board hearing held June 26, 2020, approved their staff’s recommendations, including a commitment to support the District’s local process moving forward.

The district appreciates CARB’s general recognition of the stringency of the District’s air quality programs and the success in reducing emissions from stationary sources in the Valley. 

CARB’s review points to the need to revisit and potentially enhance aspects of the ERC and offset the equivalency program moving forward.

The Board conducted a public workshop each year to present the results of the annual equivalency demonstration before taking the report to the District’s Governing Board. 

• District held public workshops on November 5, 2020, and October 26, 2021, to present the draft results of the 2019-20 and 2020-21 annual equivalency demonstration, respectively.

• Public workshops allowed for review and comment on the draft demonstrations before finalizing the reports, submitting the final notices to EPA/CARB, and taking the last words to the Governing Board. 

The Board significantly enhanced the 2019-20 and 2020-21 annual offset equivalency demonstration reports.

• Incorporated stakeholder suggestions for making the report easier to understand

• Provided detailed explanations of the methodology used to assess equivalency

Last year, the Board convened a public advisory working group of affected stakeholders.

On September 17, 2020, the District Governing Board proactively withdrew the emission reductions from AG-ICE and orphan shutdowns from the District’s offset equivalency system.

Board action enacted Rule 2201 remedy as no longer demonstrating equivalency with the surplus-value test for NOx and VOC.

The district will begin the development of a new database and associated tracking infrastructure. EPA and ARB initially approved the District’s approach in 2001.

District performs an annual demonstration that the District’s ERC program is as stringent as federal offsetting requirements. 

The annual report must demonstrate both of the following:

• The quantity of offsets required by Rule 2201 equals or exceeds the number of federal balances necessary. 

• The surplus value of offsets required by Rule 2201 plus additional creditable emission reductions equals or exceeds the required number of federal balances. 

Rule 2201 contains remedies in the event of equivalency not demonstrated.

On the 2019-20 Offset Equivalency Demonstration, the Tracking year is from August 20, 2019, through August 19, 2020. 

Tracked federal projects are 15 Federal Major Modifications (3 NOx only, 8 VOC only, and four both NOx and VOC). 

Significant adjustments incorporated in the 2020 Demonstration include:

• Incorporate Board’s action regarding removal of AG-ICE and orphan shutdown credits (affects PM10, PM2.5, and SOx; affects surplus test).

• Address canceled/non-implemented projects (affects all pollutants, tracked increases and decreases, and the quantity and surplus tests)

• Federal Offset Ratio correction (affects NOx and VOC tracked increases from 8/20/2010 to 8/19/2014; affects the quantity and surplus tests)

• VOC no longer able to demonstrate offset quantity equivalency (Rule 2201 remedy enacted

2020-21 Offset Equivalency Demonstration has a tracking year from August 20, 2020, through August 19, 2021

Tracked federal projects are 16 Federal Major Modifications (4 NOx only, 7 VOC only, and five both NOx and VOC).

VOC is no longer part of equivalency demonstration –ERCs required for total federal offset quantity and must be surplus at ATC issuance. 

The 2020-2021 offset equivalency report identified a NOx shortfall in the offset quantity test.

Offset quantity equivalency for NOx was maintained using the NOx carry-over balance.

• Annual shortfall in the number of NOx offsets required highlights the possibility that the current surplus-value remedy in District Rule 2201 will not ensure the District will remain equivalent with federal offsetting requirements. 

Staff recommends that the Board require that all projects triggering federal offsets for NOx be needed to provide ERCs for the entire federal offset quantity and that credits be surplus at the time of ATC issuance. 

To effect this change, staff recommends that the Board direct the Executive Director/APCO to withdraw the NOx portion of the 2020-21 Annual Offset Equivalency Report, which would enact Rule 2201 7.4.1.3 remedy requiring project-level federal NOx offsetting. 

After the action, NOx offset requirements would be consistent with current VOC requirements. The district is currently pursuing a multipath approach. 

Under the offset equivalency remedies contained within Rule 2201, the District must now amend Rule 2201 requirements associated with federal offsetting of VOC and NOx.

The District will maintain an equivalency system for PM10, PM2.5, SOx, & CO.

Proposed amendments to District Rule 2201 will include:

• Adopting entire federal offsetting program for NOx and VOC

• Amendments to offset methodologies, exemptions, and requirements

• Modifications to existing offset equivalency remedies (PM10, PM2.5, SOx, & CO).

Public Advisory Workgroup will help inform the rule development process. Recommended action discussed at ERC PAW on February 3, 2022.

The preliminary analysis projects a possible future shortage of VOC and NOx ERCs. 

Limited opportunities for the generation of new ERCs will be available through traditional approved pathways. Facility/equipment shutdowns generate most new ERCs.

The rule development process will formalize mechanisms for generating or obtaining the credits necessary to meet offsetting obligations.

In the closed session, the Governing Board discussed the items as follows:

Conference With Legal Counsel – Existing Litigation under 

Government Code Section 54956.9(D)(1) In Comite Progreso De Lamont, et. al. 

v. SJVUAPCD, Fresno Co. Sup. Ct. Case No. 20CECG01008. 

The meeting of the governing board approximately ended at noon. The next meeting will be through Zoom on Thursday, March 17, 2022. 

If you believe anything in these notes is inaccurate, please email us at Documenters-admin@thefresnoland.com with “Correction Request” in the subject line.