BOARD MEETING DATE: May 6, 2016 AGENDA NO. 20 REPORT: Legislative Committee SYNOPSIS: The Legislative Committee held a meeting on Friday, April 8, 2016. The next Legislative Committee meeting is scheduled for Friday, May 13, 2016 at 9 a.m. in Conference Room CC8. RECOMMENDED ACTION: Receive and file this report. Judith Mitchell Chair Legislative Committee LBS:GSA:PFC Attendance [Attachment 1] The Legislative Committee met on April 8, 2016. Committee Chair Judith Mitchell and Committee Member Janice Rutherford were present at the South Coast Air Quality Management District’s (SCAQMD) Diamond Bar headquarters. Committee Members Michael D. Antonovich, Joe Buscaino, Dr. William A. Burke, and Dr. Clark E. Parker attended via videoconference. Report on Federal Legislative Issues SCAQMD’s federal legislative consultant Gary Hoitsma of the Carmen Group reported that Congress has returned from its Easter break and will begin negotiations over the proposed budget resolution which is critical to pass if there is to be any chance of returning the appropriations process to some regular order. Just before the recess began last month, the House Budget Committee passed a budget resolution, but it is unlikely that there will be enough votes to pass it on the House floor by the April 15 deadline. The more probable scenario is that appropriations will likely be completed through an omnibus bill in a lame duck session after the November election. Mr. Hoitsma then noted that just before the break, the House Appropriations Subcommittee on Interior, Environment, and Related Agencies, chaired by Congressman Ken Calvert, held a budget oversight hearing on the Administration's FY 2017 Budget proposal for U.S. EPA. SCAQMD staff worked with the Carmen Group to provide Chairman Calvert with suggested questions to ask U.S. EPA Administrator Gina McCarthy. Those questions were submitted as a part of the record, to which U.S. EPA will provide written responses. Chairman Calvert specifically mentioned the South Coast Air Basin’s significant pollution issues, SCAQMD’s efforts to clean up the air, and the need for U.S. EPA to continue to support programs like the Targeted Airshed Grant Program and Diesel Emission Reduction Act (DERA). He also specifically mentioned the new 70 ppb ozone standard, which the Basin cannot meet without federal ‘fair share’ support. Administrator McCarthy said she appreciated the work of SCAQMD and she agreed with Calvert regarding the value of the DERA and Targeted Airshed Grant programs. Mr. Hoitsma also reported on a bill introduced by Delegate Eleanor Holmes Norton of Washington, D.C. (H.R. 4675 - No Lead in the Air Act of 2016). Delegate Norton seeks to include her legislation as an amendment into the Federal Aviation Administration (FAA) Reauthorization legislation. Currently, FAA provisions have been extended through short-term legislation until July 2016. However, a longer term FAA Reauthorization bill is still being negotiated. Finally, Mr. Hoitsma stated that there has been some movement by the Federal Highway Administration (FHWA) regarding the implementation of Section 1413 of the current surface transportation bill, the Fixing America’s Surface Transportation (FAST) Act, which calls for the designation of National Corridors that provide for electric vehicle charging and hydrogen, propane, and natural gas fueling infrastructure. FHWA will be holding listening sessions to solicit feedback from the public. SCAQMD has contacted the FHWA and extended an offer to host one of these listening sessions at the District's Headquarters. Committee Chair Mitchell inquired about the accessibility of about $10 billion in goods movement funds provided for in the FAST Act and wanted to confirm that a portion of those funds were set aside for California. Mr. Hoitsma confirmed that $10 billion over five years was included as part of the Freight Program in the FAST Act, which allocates formula money to states, including California, and also creates a discretionary grant program. Chair Mitchell asked that the Committee be updated periodically on the grant program so that SCAQMD might be able to take advantage of these funds. Committee Member Burke inquired if there was a formula set for the distribution of the funds going to the states. Mr. Hoitsma said there is and that it follows closely the complicated highway funding distribution formula, which involves numerous factors. He stated that this money flows from the federal government through the departments of -2- transportation in each state. At Committee Member Burke’s request, Mr. Hoitsma affirmed he would look up California’s portion of funds and provide it later that same day, for distribution to SCAQMD Board Members. SCAQMD’s federal legislative consultant Tom Dennis of Cassidy Group reported that the two legislative vehicles – the Senate Energy Bill and the Safe Pipes Act – used to carry the Boxer/Feinstein Aliso Canyon Task Force Amendment, are still pending in Congress. However, the Administration announced recently that it will launch a new Interagency Task Force on Natural Gas Storage Safety to address issues raised by the Aliso Canyon natural gas leak. The task force will be co-chaired by the Department of Energy's Undersecretary for Energy and Science, Dr. Franklin “Lynn” Orr and Marie Theresa Dominguez, the Administrator of the Pipeline Safety and Materials Safety Administration at the Department of Transportation. A number of other Federal agencies will be part of the Task Force, including representatives from the U.S. EPA, the Department of Interior's Bureau of Safety and Environmental Enforcement, the National Oceanographic and Atmospheric Administration (NOAA), the Department of Health and Human Services and the Federal Energy Regulatory Commission (FERC). Mr. Dennis shared that the Task Force will hold workshops with industry, state and local leaders, and stakeholders to support development of best practices for ensuring well integrity and proper response plans and safe operations of storage facilities, and intends to publish its findings later this year; but it is now in its formative stages. The Task Force intends to coordinate with state and local agencies in California as part of its work. The respective designees from each Department on the Task Force have been identified and their contact information has been provided to SCAQMD staff. The developments of the Task Force will continue to be monitored and reported on so that recommendations can be made on how SCAQMD can best contribute to the Task Force’s mission. Mr. Dennis reported that a U.S. District Court judge has given Volkswagen (VW) until April 21 to come up with a plan to bring the nearly 500,000 offending diesel vehicles in the United States into compliance. The Judge has declared that if VW does not offer an acceptable remedy by April 21, he will “consider” going ahead with a trial this summer. This effort is only a remedy to “stop the bleeding” of the continued NOx pollution from non-compliant VW diesel vehicles on the roads. All other penalties (punitive damages, FTC complaint, U.S. EPA penalties, class action lawsuits, etc.) are to be determined and not part of this negotiation between the Department of Justice (DOJ) and VW. VW is negotiating with DOJ behind closed doors on an appropriate remedy now. The most commonly suggested approach is to recall the offending vehicles and retrofit them with appropriate emissions controls. For some vehicles, this would require a simple software fix. However, there are retrofits required for the initial 115,000 of these vehicles that would be a hardware fix (which apparently is not currently available or approved by U.S. EPA) and would be so complex and costly that other remedies, including simple -3- buy-backs, appear to be on the table. At this point, there is only speculation concerning penalties to which VW might be subjected, but it ranges from the low to high $20 billion levels. Mr. Dennis further reported that the Center for American Progress is calling for DOJ to require VW to mitigate or offset the NOx emissions from its vehicles by replacing or retrofitting diesel engines in publicly operated vehicle fleets – buses, garbage trucks, etc. – with cleaner technologies. This would be much in the style of U.S. EPA’s Clean Diesel program. Senator Jim Inhofe (R-OK), Chairman of the Environment and Public Works Committee, has suggested requiring VW to manufacture and market natural gas vehicles as part of any mitigation efforts. Consumer advocacy groups such as Consumer Watchdog are calling for VW to issue buy-backs of all vehicles (not just retrofits). The various proposals will continue to be actively monitored. SCAQMD’s federal legislative consultant Mark Kadesh of Kadesh & Associates reported that although a Continuing Resolution or possibly an omnibus appropriations bill are still the most likely outcomes, the Appropriations committees are beginning to move forward on the FY 2017 appropriations bills. In the Senate, the Energy and Water appropriations bill is expected to be one of the first bills out of committee. In connection with that bill, SCAQMD is working with Senator Feinstein's staff on report language that would direct the Department of Energy to fund zero-emissions projects. This would be a continuation of past successful efforts working with Senator Feinstein to receive similar zero emission project funds. The House Energy and Commerce Committee is planning to hold a hearing on H.R. 4775 - Ozone Standards Implementation Act, a bill by Congressman Pete Olson (R- TX). This bill would among other things change the Review and Implementation schedule for ozone standards. It will also include technological feasibility as a criteria for establishing and revising the National Ambient Air Quality Standards (NAAQS). It also stipulates that prior to establishing or revising a national ambient air quality standard, the Administrator shall take into account adverse public health, welfare, social, economic, or energy effects.