MEETING BEFORE THE CALIFORNIA AIR RESOURCES BOARD HEARING ROOM CALIFORNIA AIR RESOURCES BOARD 2020 L STREET SACRAMENTO, CALIFORNIA THURSDAY, NOVEMBER 16, 1995 9:40 A.M. Nadine J. Parks Shorthand Reporter PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 ii MEMBERS PRESENT John D. Dunlap, III, Chairman Eugene A. Boston, M.D. Joseph C. Calhoun Lynne T. Edgerton M. Patricia Hilligoss John S. Lagarias Jack C. Parnell Barbara Riordan Ron Roberts James W. Silva Doug Vagim Staff: Jim Boyd, Executive Officer Tom Cackette, Chief Deputy Executive Officer Mike Scheible, Deputy Executive Officer Michael Kenny, Chief Counsel Terry McGuire, Chief, Technical Support Division Rich Bradley, Chief, Air Quality Data Branch, TSD Debbie Popejoy, Manager, Air Quality Analysis Section Marci Nystrom, Staff TSD Judy Tracy, Staff Counsel Peter Venturini, Chief, Stationary Source Division Dean Simeroth, Chief, Criteria Pollutants Branch, SSD Gary Yee, Manager, Industrial Section, SSD Jim Aguila, Staff, Stationary Source Division Kathleen Walsh, Staff Counsel, Office of Legal Affairs Ed Wong, Staff, Stationary Source Division Genevieve Shiroma, Chief, Air Quality Measures Branch, SSD Bob Jenne, Staff Counsel Bob Cross, Assistant Chief, Mobile Source Division Sue DeWitt, Staff, MSD North Edith Chang, MSD North Catherine Lentz, MSD North Karen Irwin, MSD North Patricia Hutchens, Board Secretary Wendy Grandchamp, Secretary Bill Valdez, Administrative Services Division PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 iii I N D E X PAGE Proceedings 1 Call to Order 1 Pledge of Allegiance led by Supervisor Roberts 1 Roll Call 1, 2 Opening Statement by Chairman Dunlap 2 Comments by Chief Counsel Mike Kenny 4 Further Comments by Chairman Dunlap 5 AGENDA ITEMS: 95-12-1 Public Hearing to Consider Amendments Criteria for Designating Areas of California as Nonattainment, Attainment, or Unclassified, Amendments to the Area Designations for State Ambient Air Quality Standards, and Amendments to San Joaquin Valley and Southeast Desert Air Basin Boundaries Introductory Remarks by Chairman Dunlap 6 Staff Presentation: Jim Boyd Executive Officer 7 Marci Nystrom Staff, Technical Support Division 9 Written Comments Entered into Record and Responded to by Debbie Popejoy 22 Questions/Comments 26 Record Officially Closed by Chairman Dunlap 38 Motion to Approve Resolution 95-46 39 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 iv INDEX, continued. . . PAGE AGENDA ITEMS: 95-12-1 Roll Call Vote 40 95-12-2 Public Hearing to Consider Amendments to the Gasoline Deposit Control Additive Regulation Introductory Remarks by Chairman Dunlap 41 Staff's Presentation: Jim Boyd Executive Officer 42 Jim Aguila Staff Stationary Source Division 44 Written Comments Entered Into Record by Gary Yee 52 Questions/Comments 53 PUBLIC COMMENTS: Steven Smith WSPA 56 Questions/Comments 58 Comments Continued by Steven Smith 59 Questions/Comments 62 Direction to Staff by Chairman 65 Questions/Comments 66 Additional Written Comments Entered into Record by Gary Yee 71 Record Officially Closed By Chairman to Await 15-day public comment period 72 Motion to Approve Resolution 95-47 74 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 v INDEX, continued. . . PAGE AGENDA ITEMS: 95-12-2 Roll Call Vote 74, 75 Announcement by Chairman Dunlap 75 95-12-3 Public Meeting to Consider A Status Report on Consumer Product Manufacturers' Compliance with "Future Effective" Standards Introductory Remarks by Chairman Dunlap 76 Staff's Presentation: Jim Boyd Executive Officer 78 Ed Wong Staff Stationary Source Division 79 Questions/Comments 88 Closing Remarks by Mr. Boyd 88 Closing Remarks by Chairman Dunlap 89 Luncheon Recess 91 Afternoon Session 92 95-12-4 Public Meeting to Update Board on Technological Progress of Zero-Emission Vehicles Introductory Remarks by Chairman Dunlap 92 Staff Presentation: Jim Boyd Executive Officer 92 Sue DeWitt Mobile Source Division North 93 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 vi INDEX, continued. . . PAGE AGENDA ITEMS: 95-12-4 Closing Remarks by Mr. Boyd 105 PUBLIC COMMENTS: David C. Nunenkamp for Assemblyman Bernie Richter 109 Questions/Comments 116 John G. Larrea for Assemblyman Mickey Conroy 117 M. John Grimley for Senator Ray Haynes 122 Valory F. Brown for Assemblyman Steve Baldwin 124 Questions/Comments 127 Reuel Jones for Assemblyman Bruce Thompson 128 Questions/Comments 132 Matt Saboraria for Assemblyman Curt Pringle 133 Questions/Comments 136 Tom Austin WSPA 138 Questions/Comments 144 (Direction to Staff) 149 Jamie K. Phillips Planning & Conservation League 149 Lewis K. Uhler National Tax Limitation Committee 152 Paul Knepprath American Lung Assn. of California 157 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 vii INDEX, continued. . . PAGE AGENDA ITEMS: 95-12-4 Questions/Comments 159 Steve Moss M.Cubed 160 Joseph Caves Union of Concerned Scientists 164 Bill Ward Drivers for Highway Safety 169 Questions/Comments 177 Janet Hathaway NRDC 177 Anthony Trujillo Citizen 180 Questions/Comments 186 Cecile M.Martin CATC 189 Jerry Mader Advanced Battery Task Force 195 Questions/Comments 199 Bill Van Amburg CALSTART 201 Michael Semmens Electrosource 204 Mike Wirsch SMUD 208 Anita Mangels CAHT 209 Bonnie Holmes Sierra Club California 216 Robert Efrus ALABC 221 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 viii INDEX, continued. . . PAGE AGENDA ITEMS: 95-12-4 Written Comments Entered into the Record in toto 224 Closing Remarks by Mr. Boyd 224 Closing Remarks and Directions to Staff by Chairman, and comments by Board members 228 Adjournment 242 Certificate of Shorthand Reporter 243 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 1 P R O C E E D I N G S 1 --o0o-- 2 CHAIRMAN DUNLAP: Will the November meeting of the 3 California Air Resources Board please come to order. 4 I'd like Supervisor Roberts to please lead us in 5 the Pledge of Allegiance. 6 (Thereupon, all persons in the hearing room 7 rose to recite the Pledge of Allegiance, led 8 by Supervisor Roberts.) 9 CHAIRMAN DUNLAP: Thank you, Ron. 10 I'd like the Board Secretary to please call the 11 roll. 12 MS. HUTCHENS: Boston? 13 DR. BOSTON: Here. 14 MS. HUTCHENS: Calhoun? 15 MR. CALHOUN: Here. 16 MS. HUTCHENS: Edgerton? 17 MS. EDGERTON: Here. 18 MS. HUTCHENS: Hilligoss? 19 MAYOR HILLIGOSS: Here. 20 MS. HUTCHENS: Lagarias? 21 MR. LAGARIAS: Here. 22 MS. HUTCHENS: Parnell? 23 MR. PARNELL: Here. 24 MS. HUTCHENS: Riordan? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 2 1 SUPERVISOR RIORDAN: Here. 2 MS. HUTCHENS: Roberts? 3 SUPERVISOR ROBERTS: Here. 4 MS. HUTCHENS: Silva? 5 SUPERVISOR SILVA: Here. 6 MS. HUTCHENS: Vagim? 7 SUPERVISOR VAGIM: Here. 8 MS. HUTCHENS: Chairman Dunlap. 9 CHAIRMAN DUNLAP: Here. Thank you. 10 During the week of October 30th to November 3rd, I 11 had the opportunity to travel the State from San Diego to 12 Walnut Creek with Secretary Strock and my colleagues from 13 our sister Cal-EPA agencies as part of Governor Wilson's 14 regulatory relief initiative. 15 In his initiative, the Governor directed State 16 agencies to look within themselves and to their regulated 17 communities and stakeholders in order to identify 18 regulations that might be outdated, ill-stated, 19 counterproductive, or for some other reason needed to be 20 changed. 21 By way of a status report on this subject, let me 22 briefly share with you our findings, and I will call upon 23 our legal counsel, Mike Kenny, for his assessment as well. 24 Our hearings were in San Diego, Loma Linda -- the 25 heart of the great Inland Empire I might point out, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 3 1 Supervisor Riordan -- Glendale -- and I think in your 2 district, too, as a matter of fact -- Glendale, Bakersfield, 3 and Walnut Creek. 4 We drew larger audiences than witness lists, and 5 took both written and oral testimony. 6 The comments, from my perspective, fell into two 7 broad categories. Broader policy issues, of which we were 8 well aware, Title 5, or permitting uniformity among air 9 districts was certainly discussed, and there are topics in 10 those categories that are being addressed by established 11 industry regulatory task force groups and working groups. 12 The second category would be concerns of 13 individual companies over the specific handling of their 14 regulatory relationship between the company or district 15 and/or the Air Resources Board. 16 Staff has prepared summaries of all testimony 17 received, both verbal and written. Each individual who 18 submitted testimony will receive a letter and followup by 19 the Board, not later than December, informing them of the 20 status of their issue, and outlining to them how each can 21 play an active role in the process, which we are engaged in. 22 In addition, Mr. Kenny, I understand that on 23 October 20, staff conducted a hearing to take public comment 24 on the question of which of the current regulations issued 25 by this Board and the State of California could be impacted, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 4 1 or that could be revised, or changed, or deleted in some 2 way. 3 Would you please inform us, the Board, of the 4 results of the meeting, what steps have been taken since, 5 and please offer, as well, any observations you may have on 6 the content and process of the regulatory relief initiative. 7 MR. KENNY: Yes, Mr. Chairman, and members of the 8 Board. On October 20th, we did hold a workshop here at the 9 Air Resources Board. The purpose of that workshop was to 10 really look at the regulations that are on the books for the 11 Air Resources Board in response to the Governor's Executive 12 Order. 13 What the staff had done was look at the 14 regulations and identify, of the regulations, those which 15 are either outdated or no longer necessary. We have 16 identified approximately 75 regulatory sections which no 17 longer had any real effect in the State as a result of them 18 being essentially obsolete through passage of time. 19 We noticed at the October 20th workshop that we 20 were planning to bring to the Board the elimination of those 21 particular sections. The notice went out to almost 2,000 22 people; however, we had a very small turnout. And I think 23 the primary reason for that was that there was really very 24 little significance to the regulations which we were going 25 to be eliminating. They really didn't have much of an PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 5 1 impact on the population. 2 We will go forward with the elimination of those 3 regulations either through a Section 100 change, which is an 4 administrative approach for getting rid of the regulations 5 very simply; or, in some instances, we need to come back to 6 the Board to request the Board's approval to eliminate 7 regulations which have a more substantive effect in terms of 8 moving, for example, the emissions criteria and inventory 9 guidelines out of Title 17, where they currently reside, and 10 into an actual guideline document, which will be more useful 11 and easy for the public to use. 12 We're in the process, also, of looking through the 13 regulations in their entirety to see if there are other 14 places where the regulations can be streamlined. 15 CHAIRMAN DUNLAP: Very good. Any questions of Mr. 16 Kenny? All right. Thank you, Mike. 17 As to the next steps, public and written comments 18 received during the hearings will be summarized and made 19 available for further review via Internet and other 20 published communications by December 1. 21 Cal-EPA will formally respond to the comments in a 22 package by February of next year. 23 Clearly, this is a time of great public scrutiny 24 of our regulatory institutions. Given the unfinished 25 business that we're dealing -- that is, striving to meet PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 6 1 clean air goals -- we need to move very deliberately and a 2 very carefully in a way that sends very clear signals that 3 we will not sacrifice any of those clean air goals and 4 progress that we need as we move forward. 5 So, thank you. And I'll continue to make sure the 6 Board is apprised of any efforts in this area. 7 I would like to remind those in the audience who 8 would like to present testimony to the Board on any of 9 today's agenda items to please sign up with the Board 10 Secretary. And if you wish to offer written comments, 11 please provide 20 copies to her. 12 The first item on the agenda today is 95-12-1, a 13 public hearing to consider amendments to the criteria for 14 designating areas of California as nonattainment, 15 attainment, or unclassified, amendments to the area 16 designations for the State ambient air quality standards, 17 and amendments to the San Joaquin Valley and Southeast 18 Desert Air Basin boundaries. 19 Before the staff begins its presentation, I'd like 20 to make a couple comments, brief comments, about the area 21 designations. 22 This year's review shows that several areas have 23 continued to improve, despite continued growth. This shows 24 that development and good air, or clean air, can coexist. 25 The South Coast Air Basin, well known for its air PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 7 1 quality problems, now meets the attainment requirements for 2 nitrogen dioxide. Attainment is proposed for several other 3 areas for carbon monoxide. These areas were previously 4 unclassified because of inadequate air quality data. 5 While these examples offer good news, there's also 6 some bad news to report. Our expanded monitoring efforts 7 have shown some problems. In particular, numerous 8 violations of the State CO standards have been found in 9 Imperial County near the international border. 10 While we don't know yet fully understand the 11 nature and causes of the problems, identifying this area as 12 nonattainment signals the need for further study and heads 13 us in the right direction for finding solutions. 14 At this point, I'd like to ask Mr. Boyd -- good 15 morning, Jim -- to introduce the item and begin the staff's 16 presentation. 17 MR. BOYD: Good morning, Mr. Chairman. Thank you. 18 Good morning, Board members, and good morning to our 19 audience. 20 Mr. Chairman, as you indicated, we are indeed 21 proposing amendments, not only to the area designations, but 22 also to two other regulations relating to air quality in 23 California. 24 The first proposed amendments affect the San 25 Joaquin Valley and the Southeast Desert Air Basin PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 8 1 boundaries. As you know, the Health and Safety Code 2 requires the Board to divide the State into air basins. The 3 San Joaquin Unified and the Kern County Districts have asked 4 us to consider a change in the boundaries of these two air 5 basins. 6 The second proposed amendment affects the criteria 7 we use to designate areas with respect to attainment status 8 for the State's ambient air quality standards. As you know, 9 the California Clean Air Act requires that your board adopt 10 criteria for designating areas as either attainment, 11 nonattainment, or unclassified. 12 Under the Act, we are required to review these 13 criteria periodically and to recommend changes to you if 14 needed. 15 During the last two years, we have identified some 16 situations that just do not fit within the requirements of 17 the existing criteria. The amendments we are proposing 18 today are designed to deal with these particular situations. 19 Finally, the Act requires us to review area 20 designations annually and to propose updates based on any 21 new information gathered. 22 A review of the recent air quality data indicates 23 that several changes to the current area designations are in 24 order, and the Chairman highlighted some. 25 With that introduction, I'd now like to call upon PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 9 1 Ms. Marci Nystrom of the Air Quality Analysis Section of the 2 Technical Support Division to give you the staff's 3 presentation. 4 MS. NYSTROM: Thank you, Mr. Boyd. Good morning, 5 Mr. Chairman and members of the Board. 6 As Mr. Boyd said, today, we're proposing changes 7 to three different, but related, regulations. 8 The first proposed change affects the air basin 9 boundary regulations. Specifically, it would change the 10 Kern County portion of the boundary between the San Joaquin 11 Valley and the Southeast Desert Air Basins. 12 Our proposal to change the air basin boundaries 13 was prompted by a change in the district boundary lines. 14 the districts have agreed to move their boundary line 15 further to the west. And, as a result, two areas -- the 16 Kern River Valley and the Cummings Valley -- are now 17 included in the Kern County District instead of the San 18 Joaquin Valley District. Both districts have requested that 19 we make the same change in the air basin boundaries. 20 We agree with the districts that the two areas in 21 question are more similar to the Southeast Desert than they 22 are to the San Joaquin Valley. Therefore, in response to 23 the districts' request, we propose changing the boundaries 24 to include these areas in the Southeast Desert Air Basin. 25 Now, I'd like to move on to the next set of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 10 1 proposed changes which affect the designation criteria 2 regulations. In general, the designation criteria are the 3 rules we use to designate areas for the State standards. 4 As shown here, there are four possible designation 5 categories. A nonattainment designation means that ambient 6 concentrations violate the State standards. In addition to 7 the simple nonattainment designation, there's a subcategory 8 of nonattainment called "nonattainment transitional." This 9 designation implies the area is getting close to attainment, 10 but still has a small number of violations. 11 In contrast to nonattainment, an attainment 12 designation means the air is generally clean. Although the 13 ambient concentrations in an attainment area do not violate 14 the State standards, they may show a small number of 15 exceedances. 16 Finally, an unclassified designation means that we 17 don't have enough data to determine attainment or 18 nonattainment. 19 You may have noticed that I used two terms in 20 explaining the designation categories. These terms are 21 "exceedance" and "violation." While the two terms are 22 similar, they have different and very specific meaning with 23 respect to the designation criteria. 24 An exceedance is any measurement that is higher 25 than the level of a State standard. However, not all PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 11 1 exceedances are considered violations. Some exceedances are 2 affected by uncommon circumstances or what we call "highly 3 irregular or infrequent events." 4 These exceedances are not considered to be 5 violations and, as a result, they're excluded from the 6 designation process. 7 In contrast, a violation is an exceedance that is 8 not affected by a highly irregular or infrequent event. 9 And, again, it's the violations that provide the basis for 10 the nonattainment designation. 11 the designation criteria currently define two 12 types of highly irregular or infrequent events. They are 13 exceptional events and extreme concentration events. 14 An exceptional event is a specific, identifiable 15 event that causes an exceedance of a State standard. An 16 exceptional event may be caused by an act of nature or it 17 may be related to human activity. 18 In contrast, an extreme concentration event is 19 determined by a statistical procedure, and represents a 20 concentration limit that we expect would recur less than 21 once per year. 22 Today, we're proposing to add a third type of 23 highly irregular or infrequent event called an "unusual 24 concentration" event. This change is needed because we 25 sometimes come across exceedances that cannot be excluded PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 12 1 under the existing criteria but, nevertheless, do not 2 support a nonattainment designation. 3 In general, an unusual concentration event would 4 be defined as an anomalous exceedance that does not qualify 5 as an exceptional event or an extreme concentration event. 6 We would identify unusual concentration events only for 7 areas already designated as attainment or unclassified. 8 In evaluating these events, we would consider 9 relevant information, such as the available air quality and 10 emissions data, the meteorological data, the potential 11 impacts on public health and welfare, and any rules or 12 regulations that might influence future concentrations. 13 Based on our review of these data, we would need 14 to make three findings: Specifically, we would need to find 15 that the impact of the exceedance is limited to the local 16 area, the exceedance is not expected to recur, and the data 17 are not sufficient to support a nonattainment designation. 18 An area could retain its attainment or 19 unclassified designation based on the exclusion of an 20 unusual concentration event for up to three consecutive 21 years. However, if such an exceedance occurred during the 22 fourth year, the area would have to be redesignated as 23 nonattainment. 24 Let me give you an example of how the unusual 25 concentration event could be used in the designation PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 13 1 process. During 1993, the Mojave Desert AQMD initiated 2 nitrogen dioxin monitoring at a new site in the Southeast 3 Desert Air Basin. At the time, this area was designated as 4 attainment. 5 In May, 1993, they measured a high one-hour 6 concentration of 0.36 parts per million. This exceeds the 7 State standard of 0.25 parts per million. In contrast, the 8 second highest measured value was only 0.05 ppm. 9 During last year's review of the area 10 designations, we could not exclude the high value. It 11 didn't qualify as an exceptional event, because we couldn't 12 document any activity that might have caused the exceedance. 13 It didn't qualify as an extreme concentration 14 event either, because there were not enough data to 15 calculate a reliable limit. 16 But, still, we didn't feel the measurement 17 supported the nonattainment designation and, as a result, we 18 went beyond the scope of the designation criteria and 19 postponed a designation call until we had more data. 20 Under our proposed amendment, this anomalous 21 exceedance could have been excluded as an unusual 22 concentration event, because it satisfies the proposed test. 23 The air quality and emissions data indicate the exceedance 24 is limited to the local area, because it's much higher than 25 the NO2 at any of the other sites in the air basin. In PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 14 1 addition, because the exceedance is so much higher than the 2 3 remaining data, it's unlikely to recur. Therefore, the 4 single exceedance does not by itself support a nonattainment 5 designation. 6 During this year's review of the area 7 designations, additional NO2 data were available for this 8 monitoring site, and we were able to calculate a reliable 9 extreme concentration limit. As expected, we can now 10 exclude the exceedance as an extreme concentration event. 11 This confirms the anomalous nature of this particular 12 exceedance and also the appropriateness of the unusual 13 concentration event as a mechanism for excluding such 14 exceedances. 15 In addition to the unusual concentration event, 16 we're proposing a number of other minor revisions to various 17 sections of the designation criteria. These minor revisions 18 don't change the way in which we apply the criteria; they 19 simply clarify current practices, delete unnecessary or 20 obsolete language, make the regulation internally 21 consistent, and correct grammatical errors. 22 Now, I'd like to describe the last set of changes 23 we're proposing. These changes affect the area designation 24 regulations. 25 As required by law, these proposed changes are PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 15 1 based on air quality data collected during 1992 through 2 1994. As shown on this slide, we propose redesignations for 3 three pollutants. Specifically, we propose redesignating 4 two areas for ozone, four areas for carbon monoxide, and one 5 area for nitrogen dioxide. 6 The first change, for ozone, would affect Northern 7 Sonoma County in the North Coast Air Basin. This area is 8 currently designated as unclassified. During the last three 9 years, there was only one exceedance and it's excluded as an 10 extreme concentration event. Therefore, we propose you 11 redesignate Northern Sonoma County as attainment for ozone. 12 The next proposed change affects Mono County in 13 the Great Basin Valleys Air Basin. This area was designated 14 as nonattainment-transitional for ozone last year by 15 operation of law. 16 The designation was based entirely on 1993 data, 17 which showed no exceedances. However, during 1992 and 1994, 18 the data for Mono County show a total of 19 exceedances. 19 Four of the 19 exceedances are excluded as extreme 20 concentration events. However, the remaining 15 are 21 considered violations. 22 Because of these numerous violations, this area no 23 longer qualifies for the nonattainment-transitional 24 designation, and we propose to redesignate Mono County as 25 nonattainment for ozone. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 16 1 The next four proposed redesignations are for 2 carbon monoxide. The first one affects Sutter county in the 3 Sacramento Valley Air Basin. Sutter County is currently 4 designated as unclassified. During 1992 through 1994, we 5 collected data at a site in Yuba City, and these data show 6 no exceedances. Therefore, we propose you redesignate 7 Sutter County as attainment for CO. 8 We have a similar situation in Inyo County in the 9 Great Basin Valleys Air Basin. This area is now designated 10 as unclassified. During the last three years, the district 11 collected data at a site in Bishop. Again, the data show no 12 exceedances of the State CO standards. Therefore, we 13 propose you redesignate Inyo County as attainment. 14 The third area is the Sacramento County portion of 15 the Census Bureau urbanized area. This area is located in 16 the Sacramento Valley Air Basin, and is currently designated 17 as nonattainment for CO. 18 Based on recent data, this area qualifies for the 19 nonattainment-transitional designation, and the Sacramento 20 District has requested this designation change. 21 CO data show that the State standards were not 22 exceeded at any site in this area during 1994. In addition, 23 our analysis that this area should reach attainment well 24 within the three-year limit required for nonattainment- 25 transitional areas. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 17 1 Therefore, we propose you redesignate the 2 Sacramento County urbanized area as nonattainment- 3 transitional. 4 The last area we propose redesignating for CO is 5 the City of Calexico in the Southeast Desert Air Basin. 6 This area is currently designated as unclassified. During 7 1994, the staff began monitoring at the Calexico-Ethel 8 Street site. 9 Data for the last three months of 1994, show a 10 total of 12 violations, including four violations of the 11 one-hour standard and eight violations of the eight-hour 12 standard. 13 At this time, we cannot exclude any of these 14 exceedances. We can't exclude them as exceptional events, 15 because there are no qualifying circumstances associated 16 with the exceedances. We can't exclude them as extreme 17 concentration events, because we don't have enough data to 18 calculate a reliable limit. 19 However, it's important to note that the extreme 20 concentration algorithm is designed to exclude, on average, 21 one value per year. So, even if we could calculate a 22 reliable limit, we wouldn't expect to exclude such a high 23 number of exceedances during a single year. 24 Finally, given the large number of exceedances and 25 the expectation that they will continue to occur, it would PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 18 1 not be appropriate to exclude them as unusual concentration 2 events. 3 The Imperial County APCD is concerned about this 4 proposed redesignation. The district believes the 5 violations are transport related and are caused by traffic 6 backing up at a nearby border crossing. 7 The district contends that Mexican vehicles 8 produce more emissions than similar California vehicles, and 9 that this, in combination with the stop-and-go traffic, 10 causes the violations at the Calexico site. As a result, 11 the district contends that it cannot mitigate the violations 12 and, therefore, should not be redesignated as nonattainment. 13 In contrast, we believe the nonattainment 14 designation is appropriate. Under State law, the area 15 designations are based on ambient air quality data. The 16 purpose of these designations is to provide information 17 about the healthfulness of the air. We do acknowledge that 18 because of the increased vehicle traffic in and around the 19 international border and the generally localized nature of 20 the CO violations, the CO problem in Calexico is probably 21 limited to the local area. 22 Therefore, we propose you redesignate only the 23 area within the Calexico city limits as nonattainment. 24 This nonattainment designation does not carry with 25 it any specific planning requirements. It simply identifies PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 19 1 a problem area so that the planning process can be 2 implemented. 3 At this time, we don't have enough information to 4 determine the cause of Calexico's CO problem. However, 5 based on this nonattainment designation, we will be 6 recommending that further study, such as remote sensing, 7 traffic counts, and saturation monitoring, be conducted in 8 this area. 9 These types of studies will help us to better 10 understand the nature and causes of the problem and whether 11 a local control program would be effective. 12 Our last proposed redesignation is for nitrogen 13 dioxide and affects the South Coast Air Basin. This area is 14 currently designated as nonattainment. During the last 15 three years, the South Coast District collected NO2 data at 16 a number of sites in the basin. They measured three 17 exceedances at two sites, and all three exceedances are 18 excluded as extreme concentration events. 19 Therefore, we propose to redesignate the South 20 Coast Air Basin as attainment. If you adopt this particular 21 redesignation, all areas of California will be designated 22 attainment for the State NO2 standard. 23 In addition to the areas we propose for 24 redesignation, there's one other area I'd like to talk 25 about. The area is Inyo County, and the situation there is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 20 1 important, because it uses our unusual concentration event 2 procedure. 3 Inyo County is currently designated as 4 unclassified for the State ozone standard. Prior to 1992, 5 no ozone data were available for this area. During 1992 6 through 1994, the local district collected data at a site in 7 Bishop, and these data show no exceedances. 8 However, in addition to the Bishop Data, the 9 National Park Service has been collecting data since 10 December, 1993, at a site at the Death Valley National 11 Monument. 12 The Death Valley data show a measurement of 0.098 13 ppm, which exceeds the State ozone standard of 0.09 ppm. 14 Because the Death Valley data are limited, we cannot 15 calculate a reliable extreme concentration limit and exclude 16 the value as an extreme concentration event. 17 Furthermore, we can't document any activity that 18 would justify excluding it as an exceptional event. While 19 we cannot exclude the exceedance under the existing 20 criteria, under our proposed amendments, we could exclude 21 it as an unusual concentration event. 22 Our review of the available air quality and 23 emissions data indicates that the impact of the exceedance 24 is limited to the local area. Furthermore, the air quality 25 data do not indicate that the exceedance is likely to recur. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 21 1 Finally, because the level of the exceedance is 2 close to the State standard and occurred on only one day, it 3 does not provide adequate support for a nonattainment 4 designation. However, we'll continue to monitor the 5 situation and reevaluate it next year when additional data 6 are available. 7 Identifying this exceedance as an unusual 8 concentration event would allow Inyo County to maintain its 9 unclassified designation for ozone; but, of course, it's 10 contingent upon your approval of the unusual concentration 11 event procedure. If you do not approve that proposal, Inyo 12 County would have to be redesignated as nonattainment for 13 ozone. 14 This slide summarizes our proposed changes. 15 First, we're proposing to change the Kern County portion of 16 the San Joaquin Valley and Southeast Desert Air Basin 17 boundaries. This change would add two areas to the 18 Southeast Desert Air Basin and would make the air basin 19 boundaries consistent with the district boundaries. 20 Second, we're proposing to add to the designation 21 criteria another type of highly irregular or infrequent 22 event called the "unusual" concentration event. This change 23 would allow us to exclude anomalous exceedances from the 24 designation process. 25 In addition, we're proposing a number of other PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 22 1 minor revisions to clarify and correct various sections of t 2 he criteria. 3 Finally, we're proposing seven changes to the area 4 designations for State standards -- two changes for ozone, 5 four changes for carbon monoxide, and one change for 6 nitrogen dioxide. 7 Two of these changes represent nonattainment 8 designations; however, the remaining five either move areas 9 into attainment or move them closer to that goal. This 10 shows that, overall, we're continuing to make progress 11 toward clean air. 12 This concludes the staff presentation. And now, 13 Debbie Popejoy, the Manager of the Air Quality Analysis 14 Section, will summarize and respond to the written comments 15 we've received. 16 MS. POPEJOY: Thank you, Marci. We received three 17 individuals who commented. The first one was from a 18 concerned citizen, Scott Johnson, in Albany, California. He 19 requests that the Board not adopt the proposed changes to 20 the designation criteria which affect the highly irregular 21 and infrequent events. 22 He believes, for sensitive people -- such as 23 asthmatics -- unusual concentrations can be life-threatening 24 and that the regulators should not be allowed to disregard 25 an outlier of an air pollution event. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 23 1 Our response to back to him is that our current 2 designation criteria allow, on average, an exceedance -- one 3 exceedance per year to be excluded as an extreme 4 concentration event. 5 By adding the unusual event to the criteria, we 6 are applying the same criteria to areas with incomplete or 7 new data as we do for areas where we can calculate the 8 extreme concentration. 9 By excluding the exceedance as unusual does not 10 represent further degradation in air quality. 11 The proposed regulation requires that the 12 potential health impacts be evaluated at the time an 13 exceedance is considered to be unusual. So, we feel it is 14 appropriate to amend the criteria to include the unusual 15 concentration event. 16 The second letter we received was from Doug 17 Quetin, the Air Pollution Control Officer of Monterey Bay 18 Unified District. 19 He said that he believes that the data from the 20 stations located to monitor the impact of specific sources 21 can result in regional designation values for PM10 which are 22 much higher than they otherwise should be, and that data 23 from a station which is impacted by a fire should not be 24 used to determine designation values either, and that the 25 data impacted by sources or fires should be deleted from the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 24 1 database completely. 2 We have called and talked with Mr. Quetin, and he 3 now better understands the designation process and no longer 4 has these concerns. But I will go through them a little 5 anyway. 6 Sources are not supposed to cause exceedances of 7 the ambient air quality standards. If the data from a 8 source specific monitor shows an exceedance -- shows an area 9 that is in nonattainment, then the planning process can be 10 designed to address the specific problem. 11 Monitors which are source specific can be 12 identified as special-purpose monitors, but the data are not 13 excluded from the database. 14 Data affected by fires can be excluded as 15 exceptional events. In the Monterey situation, the 16 concentrations of concern are lower than concentrations from 17 other sites in the district, and the ARB staff generally 18 does not formally exclude concentrations unless they have 19 the potential for regulatory impact. 20 Data affected by fires are flagged as such, but 21 are not deleted from the database. However, these data are 22 not used in the designation process. 23 The third written comment we got was from Mr. 24 Stephen Birdsall from the Imperial County APCD, and is the 25 APCO there in the district. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 25 1 Marci has already talked a little bit about his 2 concerns. An additional concern is that he believes the 3 Calexico monitor was put there to evaluate the impact of 4 transport from Mexico, and that the exceedances are caused 5 by cross-border vehicle traffic from Mexico and beyond 6 reasonable regulatory control and, therefore, the district 7 believes nonattainment is an inappropriate designation. 8 Mr. Birdsall asks the Board to delay the 9 designation decision until they can appear and present 10 testimony. Should the Board redesignate Calexico as 11 attainment, the district -- he feels the district should be 12 exempt from planning requirements until further studies have 13 been done. 14 The Calexico site was established to help assess 15 transport. However, as all monitoring sites which collect 16 data for record, the data from the Calexico site is 17 appropriate to be used for designations. 18 As with ozone designations, CO designations should 19 reflect air quality regardless of where the sources are 20 located. We do have two areas in California which are 21 designated as nonattainment for ozone, because the 22 exceedances are caused by overwhelming transport of 23 pollutants from other areas. These areas, although they are 24 designated as nonattainment, are not required to develop 25 local control strategies. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 26 1 If, after further study, it is determined that the 2 CO exceedances are caused by transport from sources in 3 Mexicali, the district would not need to develop a local 4 control program. 5 The district has already received a letter from 6 the Executive Office stating that a better understanding of 7 the nature of the CO air quality problem is needed in order 8 to determine whether a CO planning effort is warranted. 9 ARB staff will be working with the U.S. EPA and 10 possibly the World Bank to establish an emission inventory 11 in the area. By the winter of 1996-97, there will be at 12 least one more CO monitor in Calexico and a total of four in 13 Mexicali. 14 In addition, ARB's Monitoring and Laboratory 15 Division is planning a saturation study during the winter of 16 96-97 to determine the geographic extent of the CO problem. 17 So, with this study in mind, we believe it's still 18 appropriate to designate the area as nonattainment. 19 Those are all the comments we received, and we'd 20 be happy to answer any questions. 21 CHAIRMAN DUNLAP: Any of the Board members have 22 any questions of staff? 23 Mr. Parnell. 24 MR. PARNELL: Well, it seems to me that -- first 25 of all, I compliment the staff for doing what appears to be PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 27 1 a very complete and competent analysis of the situation. 2 But Mr. Birdsall comments with respect to Calexico seem -- 3 without knowing all of the ramifications and what the 4 redesignation will mean for the entire area, I wonder if 5 some additional consideration is warranted under the 6 circumstances? 7 Maybe you could -- you have just shared with me 8 your comment, and it's a complicated issue, in my view, to 9 understand what the ramifications would be for the entire 10 area because of a monitor which seems to be placed in what I 11 would consider to be a prejudiced area. 12 MS. POPEJOY: Well, first of all, the designation 13 is only for the Calexico -- the city limits within Calexico. 14 We're not including the entire Imperial County. 15 So, any control strategy would have to be designed 16 to reduce the concentrations in Calexico and would not 17 affect the rest of the district. 18 In addition to that, Caltrans has done some 19 traffic counts of December of 1994. We've taken a look at 20 that. And there appears to be just as much traffic going 21 into Mexico as coming out of Mexico during the evening when 22 we see the most potential for impact on the CO standard. 23 So, it appears that we have a lot of traffic 24 congestion in Mexicali -- or in Calexico in addition to the 25 traffic congestion in Mexicali. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 28 1 There may be some local measures that could be 2 implemented to reduce -- you know, to improve traffic flow 3 in Calexico that might reduce the concentration. So, we're 4 not really convinced that there is nothing the district can 5 do, and we really won't know exactly what the extent of the 6 problem is until after we've done further studies. 7 And so, we're proposing, until those studies are 8 completed, that the district not have to implement any local 9 controls, and that we continue to evaluate and monitor the 10 area until we understand what the problem is before anything 11 is required. 12 One other point is that the -- there will be an 13 additional border crossing opened between Calexico and 14 Mexicali. And that, in itself, may reduce some of the 15 congestion at the border. It is a commercial site. It 16 wouldn't be for private vehicles, but it may reduce some of 17 the congestion. 18 I don't think anybody would argue that the problem 19 isn't due to Mexican vehicles, but I think there might be 20 some other thing besides closing the border that might 21 improve the situation. 22 CHAIRMAN DUNLAP: Dr. Boston, you have a comment? 23 DR. BOSTON: Yes. 24 CHAIRMAN DUNLAP: And then Mr. Lagarias. 25 DR. BOSTON: Two questions, please. First of all, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 29 1 on the district changes in Kern County and the San Joaquin 2 Valley Districts, do those changes follow the political 3 boundaries of the supervisorial districts so there's a 4 continuity of political responsibilities? 5 MS. POPEJOY: I don't believe we really looked 6 into that. 7 DR. BOSTON: Shouldn't we? 8 MS. POPEJOY: It follows the district boundaries, 9 the air pollution control district boundaries. 10 DR. BOSTON: Aren't we required to have that type 11 of political responsibility -- 12 MS. POPEJOY: (Interjecting) Actually, we're not 13 required. It's required -- the air basin boundaries are 14 supposed to divide the State up into areas of similar 15 geographic, topographic, and meteorological, and air quality 16 characteristics, and, where practical, follow a political 17 boundary. 18 And this boundary that we're proposing for the air 19 basin does follow the air districts' boundaries. 20 DR. BOSTON: How about that, Mike? 21 MR. BOYD: Dr. Boston, as indicated, we consider 22 political boundaries. And I agree with the point you're 23 making that it pays dividends to be able to replicate 24 political boundaries. But topography doesn't always do 25 that, nor does meteorology always do that. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 30 1 And, as Supervisor Vagim knows, in creating the 2 San Joaquin Valley Unified District -- which was a product 3 of a lot of years of study and what have you -- there was 4 mutual concurrence on all parties that you couldn't always 5 do that, particularly with regard to Kern County itself, 6 because of its significant geographical division it created 7 and what have you. 8 So, while cognizant of that, the ultimate decision 9 was that couldn't be done. And so, all that we're proposing 10 here is just additional fine-tuning of those particualr 11 kinds of needs, recognizing that a different entity has been 12 established to deal with the eastern section portions which 13 are in Kern County, so on and so forth. 14 So, while that is a very desirable goals and pays 15 dividends usually when we pursue it, it isn't always 16 administratively or technologically feasible. And these 17 areas are examples of areas where it has not been practical. 18 and it's been acknowledged by all political entities, and 19 they're all actually doing a very good job of dealing with 20 it. 21 MS. POPEJOY: Dr. Boston, both districts -- the 22 San Joaquin Valley District as well as the Kern County 23 District, their boards have approved the boundary change for 24 their district, and have written and requested that ARB make 25 the same change to the air basin boundary. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 31 1 And so, after looking at the topography, and the 2 sources, and the meteorology, it was determined that it was 3 appropriate to take those two areas from the San Joaquin 4 Valley and put them in the Southeast Desert Air Basin. 5 DR. BOSTON: Okay. The second question is a 6 simple chemistry problem I want somebody to follow with me. 7 We're now in attainment for oxides of nitrogen 8 throughout the State, apparently. 9 MS. POPEJOY: Yes. 10 DR. BOSTON: And to my knowledge, you have to have 11 oxides of nitrogen to make ozone. We know we've got a 12 tremendous ozone problem. So, if we don't have any oxides 13 of nitrogen to mix into this big chemistry lab in the sky 14 and mix it with all these VOCs to make ozone, how can we be 15 in attainment with oxides of nitrogen? 16 MS. POPEJOY: You want to take that one, Mike? 17 MR. SCHEIBLE: The air quality standard that we're 18 concerned with for the NO2 standard is the effects on 19 health. And so, what we're saying is that the areas meet 20 the health-based standards for exposure for nitrogen 21 dioxide. 22 We deal with the need to control oxides of 23 nitrogen to lower PM10 values and lower ozone values under 24 those programs. 25 So, the level of nitrogen dioxide in the air meets PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 32 1 the State's standard and, therefore, the area's attainment 2 for that pollutant. The emission source does not -- it 3 doesn't mean that there's a less need of control of 4 emissions of oxides of nitrogen in order to address other 5 ambient standard problems. 6 DR. BOSTON: That would lead you to believe that 7 our fight with oxides of nitrogen is over and we're in 8 attainment. And yet, we really need to lower more in order 9 to reduce the other pollutants. 10 MR. SCHEIBLE: That's correct as an emissions 11 source. But we don't need to do it in order to lower the 12 NO2 level from a health perspective as measured by our 13 standards. We need to do it for PM10 and ozone. 14 MR. MC GUIRE: There are two additional, and if I 15 could add -- first, it's NOx, which is a collective group of 16 oxides of nitrogen that form ozone. This standard is NO2, 17 which is only one part of it. And even if the NO2 18 concentrations in the air are below the health effects 19 level, there still is enough nitrogen oxide to participate 20 in the ozone formation reaction concentration substantially 21 below the health standard. 22 DR. BOSTON: Okay. 23 CHAIRMAN DUNLAP: Thank you. Good point. 24 MR. SCHEIBLE: We will take extra care to 25 communicate the situation to the public, because it is easy PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 33 1 to be confused. 2 CHAIRMAN DUNLAP: Mr. Lagarias. 3 MR. LAGARIAS: I notice, in Calexico, there's a 4 population of 24,000; and right across the border of 5 Mexicali, the population is in excess of a million. So, 6 there's a 40-to-1 difference. And it seems like anything 7 that you can do in Calexico will have little meaning without 8 regard to what is being done in Mexicali. 9 It seems like Mexicali is in exceedance of the CO 10 standard in the United States rather than Calexico's in 11 exceedance. Is this correct? 12 MS. POPEJOY: Well, the air quality in Mexicali 13 could indeed be very bad. The sources that contribute to 14 the CO are usually motor vehicle. And they're occurring -- 15 the exceedances are occurring late at night, early in the 16 morning. So, it's usually the traffic that's happening in 17 the rush hour in the evening. 18 We don't really know what the sources, other than 19 vehicle sources, are in Mexicali, and we're hoping that we 20 can evaluate that better through cooperation with U.S. EPA 21 as well as, possibly, the World Bank, so we can get a better 22 idea of the stationary source contribution from Mexicali. 23 But it's probably due to motor vehicle, probably 24 uncontrolled motor vehicles, that are in Calexico. No doubt 25 there are cars that came across from Mexicali. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 34 1 MR. LAGARIAS: Thank you. 2 CHAIRMAN DUNLAP: Supervisor Riordan, then 3 Supervisor Vagim. 4 SUPERVISOR RIORDAN: Just to follow up -- and I 5 have talked to the staff and I've spoken to the Chairman. 6 Just traffic counts, I think, aren't going to resolve the 7 problem. I think you're going to have to go down to really 8 look at what's coming across the border. 9 My hunch is you've got some very, very old cars -- 10 MS. POPEJOY: Very, very old. 11 SUPERVISOR RIORDAN: -- coming across the border 12 out of the Mexicali area. And it's going to be very 13 complicated to try to resolve this. And the fact that the 14 economy is very poor down there, just extraordinarily poor, 15 so we may have to give some help from some other resources 16 than just right there at the, you know, at the point of 17 maybe trying to bring people across in some sort of mass 18 transit. That sort of thing might be helpful. 19 But my -- without even being there, my bets would 20 be that those are very, very old cars coming across. 21 MR. BOYD: Supervisor Riordan, your point is an 22 excellent and correct point. This issue of this designation 23 has been pending with us, frankly, for several years. 24 A few years ago -- to date it, I guess, Assistant 25 Executive Officer Witherspoon, who is no longer with us, and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 35 1 I spent a couple of days in the Mexicali-Calexico area 2 because of concern, even at that time, about whether or not 3 who dominates the issue and what is the issue. 4 And your observations are exactly correct. Mr. 5 Lagarias' point is well made about the population density. 6 However, because of near abject poverty, the ratio of 7 vehicles to people is much lower on the Mexican side of the 8 border. Yes, they are older cars. They do engage in 9 massive car pooling. I mean, they get more people in a car 10 than you're used to seeing as it comes across the border, as 11 they do, for employment purposes on a daily basis in the 12 Imperial Valley. 13 And they have the infamous maquiladores, the 14 industries along the border that are, frankly, not 15 controlled nearly to the extent that industries in 16 California or the United States are. 17 There have been a lot of mutual national 18 government to national government, and with the California 19 State Government involved, work over several years. And 20 because of the need to know these issues of transporter 21 pollutants-- not only into California but into the entire 22 lower Western United States -- as it relates even to such 23 things as the Grand Canyon Visibility Transport Commission's 24 work, there are number of monitoring stations that have been 25 and continue to be established as a result of national and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 36 1 national to State cooperation. 2 In addition, and probably the largest forcing 3 function for additional work has been NAFTA. And the border 4 environmental agreements that were made by our Cal-EPA and 5 the Mexican and National Governments relative to efforts to 6 clean up the border areas across California, which are 7 carried on by EPA to the other States, have also contributed 8 to pledges by the Mexican Government to bring its standards 9 up to a parallel with at least U.S. national standards on 10 their side of the border, or at least within a certain strip 11 of area that would influence the air in the United States. 12 So, a lot of actions are being taken. However, as 13 the staff has indicated, we've been living with this a long 14 time, and we have concluded that, standing alone, the 15 California side of the issue, i.e. Calexico, there are 16 actions that can be taken to improve the public health of 17 our own citizens on that side of the border while we 18 continue the long, but successful, program of working on the 19 problem on the other side of the border. 20 CHAIRMAN DUNLAP: Supervisor Vagim. 21 SUPERVISOR VAGIM: Thank you, Mr. Chairman. 22 First, Dr. Boston, there's no politics in air. 23 And the question I have is, isn't the Southeast Basin all in 24 Kern County or does it spill over into another county? 25 MS. POPEJOY: No. The Southeast Desert Air Basin PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 37 1 includes parts of L.A. County, parts of Kern County, parts 2 of San Bernardino County, and parts of Riverside County, and 3 Imperial County. 4 SUPERVISOR VAGIM: So, does that mean the 5 individual boards are managing their part of the basin? 6 Because they haven't formed a unified or anything. 7 MS. POPEJOY: Right. There are different 8 districts within that air basin. 9 SUPERVISOR VAGIM: Okay. as far as the boundaries 10 themselves on a map, do we have that available? 11 MS. POPEJOY: I believe it's in your package as 12 part of the appendix. 13 SUPERVISOR VAGIM: Because I know the Kern River 14 Valley goes quite a ways in. As a matter of fact, it's 15 right in the City of Bakersfield -- I mean, starts there. 16 So, this is just the eastern part of that. 17 MS. POPEJOY: Right. It's just a small sliver on 18 the eastern part -- 19 SUPERVISOR VAGIM: Okay. 20 MS. POPEJOY: -- just west of Tehachapi itself. 21 SUPERVISOR VAGIM: Okay. Very good. Thank you. 22 CHAIRMAN DUNLAP: Any other questions or comments? 23 Dr. Boston. 24 DR. BOSTON: I'd just mention to Supervisor Vagim 25 that I come from Orange County where accountability has PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 38 1 become a very big issue for our supervisors. 2 (Laughter.) 3 CHAIRMAN DUNLAP: Jim Silva can attest to that as 4 well. 5 All right. Mr. Boyd 6 SUPERVISOR RIORDAN: Dr. Boston! 7 (Laughter.) 8 CHAIRMAN DUNLAP: All right. Mr. Boyd, does staff 9 have any further comments? 10 MR. BOYD: MR. BOYD: No further comments, Mr. 11 Chairman. 12 CHAIRMAN DUNLAP: All right. Fine presentation. 13 thank you. Very thorough. 14 Madam Secretary, we have no witnesses; is that 15 correct? 16 All right. Anyone in the audience wish to comment 17 on this item? All right. We'll move along. 18 Since all testimony, written submissions, and 19 staff comments for this item have been entered into the 20 record and the Board has not granted an extension of the 21 comment period, I'm officially closing the record on this 22 portion of Agenda Item No. 95-12-1. Written or oral 23 comments received after the comment period has been closed 24 will not be accepted as part of the official record on this 25 agenda item. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 39 1 Again, a reminder to my Board members of our 2 policy concerning ex parte communication. While we may 3 communicate off the record with outside persons regarding 4 Board rulemaking, we must disclose the names of our contacts 5 and the nature of the contents on the record. 6 This requirement applies specifically to 7 communications which take place after notice of the Board 8 hearing has been published. 9 Are there any communications which need to be 10 disclosed on this item? 11 (There were no responses.) 12 CHAIRMAN DUNLAP: Okay. Very good. We have 13 before us a resolution, 95-46, which contains the staff 14 recommendations. Why don't we take a moment and review it. 15 Do I have a motion and a second to move this item? 16 SUPERVISOR VAGIM: Yes. Mr. Chairman, I'll move 17 for adoption of Resolution 95-46 18 CHAIRMAN DUNLAP: Okay. 19 SUPERVISOR RIORDAN: I'll second it. 20 CHAIRMAN DUNLAP: I have a motion made by Mr. 21 Parnell, seconded by Supervisor Riordan. Thank you, Doug, 22 though. We appreciate it. 23 SUPERVISOR VAGIM: I didn't hear him. 24 CHAIRMAN DUNLAP: He got to it first. 25 Any questions, comments, issues we need to discuss PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 40 1 before we move on the item? 2 All right. Will the Board Secretary please call 3 the roll. 4 MS. HUTCHENS: Boston? 5 DR. BOSTON: Yes. 6 MS. HUTCHENS: Calhoun 7 MR. CALHOUN: Aye. 8 MS. HUTCHENS: Edgerton? 9 Hilligoss? 10 MAYOR HILLIGOSS: Aye. 11 MS. HUTCHENS: Lagarias? 12 MR. LAGARIAS: Aye. 13 MS. HUTCHENS: Parnell? 14 MR. PARNELL: Aye. 15 MS. HUTCHENS: Riordan? 16 SUPERVISOR RIORDAN: Aye. 17 MS. HUTCHENS: Roberts? 18 SUPERVISOR ROBERTS: Aye. 19 MS. HUTCHENS: Silva? 20 SUPERVISOR SILVA: Aye. 21 MS. HUTCHENS: Vagim? 22 SUPERVISOR VAGIM: Aye. 23 MS. HUTCHENS: Chairman Dunlap? 24 CHAIRMAN DUNLAP: Aye. 25 MS. HUTCHENS: Passes 10-0. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 41 1 CHAIRMAN DUNLAP: Thank you. 2 The second item on the agenda -- why don't I give 3 staff a moment to change places. I'll give some brief 4 opening comments while we're setting up for this item. 5 Jim, my compliments to the staff on that rather 6 involved presentation. Good job. Lot of material there. 7 MR. BOYD: thank you, Mr. Chairman. Appreciate 8 it. 9 CHAIRMAN DUNLAP: The second item on the agenda 10 today is 95-12-2, a public hearing to consider amendments to 11 the gasoline deposit control additive regulation. 12 In 1990, the Board adopted a regulation requiring 13 that all commercial California gasoline contain deposit 14 control additives. At the 1990 Board hearing, staff showed 15 that when deposits form on critical areas of port fuel 16 injectors and intake valves, vehicles may experience a 17 significant degradation in performance and a corresponding 18 increase in vehicle emissions. 19 To implement the regulation, ARB staff established 20 an administrative process to certify gasoline additives. 21 Under the current process, gasoline formulations are 22 certified once an applicant demonstrates that the additized 23 gasoline is effective in reducing and preventing the buildup 24 of deposits on port fuel injectors and intake valves. 25 An enforcement procedure was also established to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 42 1 ensure compliance with the per-gallon standard specified by 2 the reg. Currently, compliance with the regulation is 3 monitored by auditing daily records which are kept at 4 additive facilities. 5 Since the implementation of the additive 6 regulation over three years ago, staff has approved over 200 7 applications for certification and has conducted two 8 separate field audits of virtually all additive facilities 9 throughout our State. 10 Based on the experience gained through evaluating 11 applications, along with information learned during field 12 audits, the staff is now proposing several housekeeping 13 amendments to the deposit control additive regulation. 14 These proposed amendments will enhance implementation of the 15 regulation and provide more operational flexibility, without 16 compromising its environmental benefits. 17 And, at this point, I'd like to ask Mr. Boyd to 18 introduce the item and begin his staff's presentation. Jim? 19 MR. BOYD: Thank you, Mr. Chairman. Well, as you 20 indicated, today, we are proposing several so-called 21 housekeeping amendments to update and to improve the current 22 deposit control additive regulation. 23 Our proposals do not reflect any fundamental 24 changes to the regulation. It will not affect significantly 25 how we evaluate certification applications. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 43 1 The proposed amendments are intended to improve 2 the overall clarity and specificity of the regulation, to 3 provide additional operational flexibility, and to provide 4 consistency with presumed future federal requirements. 5 As the Chairman mentioned, the staff proposal 6 preserves the environmental benefits and integrity of the 7 regulation. 8 To provide clarity, we propose to modify the 9 requirements for certification test fuel formulations by 10 providing criteria that applicants can follow to develop 11 their test fuels. 12 We also propose to clarify other provisions of the 13 regulation which have been misunderstood, if not 14 misinterpreted, in the past. 15 And to provide operational flexibility, we propose 16 to add a provision for manual correction of additive dosage. 17 This will allow additive facilities to so-call manually 18 correct, under certain conditions, underadditized gasoline 19 shipments which have been dispatched to a service station. 20 I'm not sure we haven't created a new word here, 21 "additized." But, nonetheless, we and the staff have been 22 struggling with this for weeks, and we just can't come up 23 with a better descriptor. 24 We propose, also, to provide consistency with the 25 vehicle test procedures that will likely be contained in the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 44 1 U.S. EPA final gasoline additive regulations they're 2 developing. 3 These test procedures reflect updated and more 4 precise versions of the original test procedures that were 5 adopted in our regulation. 6 With that, at this time, I'd like to introduce Mr. 7 Jim Aguila of the Stationary Source Division who will give 8 you the staff's presentation. 9 MR. AGUILA: Thank you, Mr. Boyd. 10 Good morning, Mr. Chairman and members of the 11 Board. As mentioned in the introduction, we are proposing 12 general housekeeping changes to the gasoline additive 13 regulation. 14 The proposed amendments will make the gasoline 15 additive certification program, which was established by the 16 regulation, easier to understand and easier to administer. 17 I will briefly discuss the background of the 18 regulation to lay the framework for today's proposal, then 19 I'll discuss our proposal. 20 In September of 1990, the Board adopted a gasoline 21 deposit control additive regulation to ensure that all 22 commercial motor vehicle gasoline would contain effective 23 deposit control additives to maintain clean fuel systems. 24 Maintaining clean port fuel injectors and intake 25 valves allow vehicles to operate as they were designed to. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 45 1 Staff also found that significant emissions reductions in 2 NOx, carbon monoxide, and hydrocarbon emissions could be 3 realized by cleaning up the fuel systems of the California 4 fleet that have accumulated deposits, and thereby avoid the 5 excess emissions caused by the port fuel injector and intake 6 valve deposits. 7 As this slide shows, port fuel injector deposits 8 can seriously degrade an injector's spray pattern, which 9 affects the combustion of the fuel. As deposits form on 10 port fuel injectors, the air/fuel ratio of the combustion 11 mixture is affected, resulting in improper combustion of the 12 fuel and increases in carbon monoxide, hydrocarbon, and NOx 13 emissions. 14 Deposits also form at critical areas of the intake 15 valve as well. When deposits build on the intake valve, an 16 airflow restriction to the combustion chamber occurs. This 17 results in leaning the air/fuel ratio in the cylinder during 18 combustion and causing an increase in NOx emissions. 19 This slide also shows how deposits form on intake 20 valves. 21 As presented by staff in the original rulemaking, 22 the major benefit of the additive regulation is to ensure 23 that all vehicles maintain clean fuel systems and thereby 24 operate as designed. 25 Staff also found that by removing deposits that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 46 1 have already accumulated in vehicle fuel systems excess 2 emissions can be reduced. This slide shows the emissions 3 reductions associated with the original implementation of 4 the additive regulation. 5 Today, since the U.S. EPA does not have a clean-up 6 requirement, California will realize an additional benefit 7 of cleaning deposits from out-of-State vehicles that are 8 operated in California. 9 The regulation adopted by the Board establishes a 10 program requiring all commercial gasoline to contain 11 effective deposit control additives. 12 To be certified, an applicant must submit an 13 applicatifon demonstrating additive effectiveness on a 14 worst-case, deposit-forming commercial gasoline. The 15 application must also include general information, such as 16 additive name, composition, minimum additive dosage 17 concentration, EPA registration, and vehicle test data. 18 The vehicle test data must show that the additive 19 concentration is effective in keeping port fuel injectors 20 and intake valves clean from deposits. 21 The vehicle test data must also show that the 22 additive concentration is effective in cleaning port fuel 23 injector deposits to a specified level. 24 As mentioned earlier, this requirement provides 25 assurance that vehicle fuel systems have deposits -- that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 47 1 have deposits will be cleaned. 2 Finally, the regulation also requires additive 3 facilities to maintain records indicating the volume of 4 gasoline sold as well as the amount of additive used. 5 To date, we have approved over 230 applications 6 for gasoline certification. We have also developed 7 procedures for certification review and enforcement to help 8 administer the additive program. 9 Our implementation of the additive program has 10 been effective in ensuring that all commercial gasoline 11 contains effective deposit control additives. However, we 12 have identified several elements of the additive program 13 that can be improved to facilitate the application process 14 and our issuance of certifications. 15 Today, we are proposing three specific amendments 16 as well as other minor amendments. 17 Changes are proposed to the criteria for 18 certification test fuels and additive evaluation test 19 methods. And, as I will explain later, we will be proposing 20 to delay the recordkeeping requirements. 21 Comments were made during the 45-day comment 22 period. We are proposing changes today to address these 23 comments. 24 I will discuss the changes during the 25 presentation. These proposed modifications are available to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 48 1 you in your package and to the audience on the table in the 2 lobby. 3 The amendments, which staff will propose today, 4 are intended to simplify the additive program certification 5 process and to enhance compliance with the regulation. 6 Since the amendments do not represent any 7 significant departure from the current program, the benefits 8 of the additive regulation are maintained. 9 Most applicants request gasoline certification for 10 the maximum pipeline specifications, which are the most 11 fungible specifications. To determine that their additives 12 are effective, applicants typically will conduct vehicle 13 tests on a primary certification fuel in conjunction with 14 supplemental test fuels that, together, represent the 15 maximum pipeline specifications. 16 This assortment of motor vehicle tests on several 17 fuels is cumbersome for applicants. We are proposing to 18 simplify the process by specifying definitive criteria for 19 certification fuels, thereby minimizing the need for 20 supplemental data. 21 Also, we propose to allow some flexibility by 22 allowing certain certification test fuel properties to be at 23 least 80 percent of the requested values. These properties 24 include aromatics, olefins, sulfur, and oxygen contents. 25 This flexibility recognizes the difficulty in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 49 1 blending a single certification test fuel to an exact set of 2 specifications. 3 For other gasoline properties, we propose that 4 those properties be formulated to represent typical 5 commercial motor vehicle gasoline. We also propose that 6 certification test fuels be formulated from typical gasoline 7 blendstocks. 8 To address industry's comments made during the 45- 9 day comment period to further clarify the criteria for 10 formulation of certification test fuels, we propose to 11 revise the original regulatory text as indicated on page 4 12 of Attachment A of the resolution before you. 13 The changes are identified by shading additions 14 and deletions to the text. 15 Whereas, in the past, the current regulatory 16 provisions have led to some degree of confusion, we believe 17 that these amendments will minimize any uncertainty for 18 applicants by being more specific. These amendments also 19 provide flexibility for providing a blending tolerance. 20 Initially, we propose to include clarifying 21 language in the regulation to address potential 22 misunderstanding concerning recordkeeping requirements. 23 However, we agree with industry comments made during the 24 45-day comment period to delay any action on the proposed 25 recordkeeping amendments until the U.S. EPA promulgates PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 50 1 their final rule in the spring of 1996. 2 This will allow us to consider how the U.S. EPA 3 regulation will apply to California and avoid potential 4 regulatory duplication. 5 When the Board adopted the additive regulation in 6 1990, the test methods referenced in the regulation to 7 evaluate port fuel injector and intake valve deposits were 8 the most generally accepted at that time. 9 Since then, the American Society for Testing and 10 Materials, better known as ASTM, has updated the test 11 procedures to incorporate improved quality control. 12 Therefore, we propose to amend our keep-clean test methods 13 to be consistent with these updated methods. 14 We also propose to revise our clean-up test method 15 to incorporate the ASTM test method. 16 Since the EPA proposes to require the use of the 17 latest ATSM test methods in their final additive regulation, 18 our proposed amendments will provide consistency with the 19 anticipated EPA vehicle testing requirements. 20 Since the newer test methods have better quality 21 control, we expect that the use of the newer test methods 22 may reduce invalid test runs. 23 Under the current provisions, all gasoline must be 24 additized prior to leaving the final distribution facility. 25 The final distribution facility is defined in the regulation PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 51 1 as the facility just prior to the service station, such as a 2 gasoline bulk terminal. 3 At our July 20th workshop, industry suggested that 4 it would be advantageous to provide the flexibility to 5 manually additize gasoline loads after the final 6 distribution facility. This would allow a facility to 7 correct any underadditized gasoline that has left the 8 gasoline terminal. 9 We agreed with this concept and proposed a 10 provision to allow manual additization with appropriate 11 documentation. Providing additional flexibility will not 12 result in any detrimental environmental impacts. 13 Originally, our proposal only allowed manual 14 correction up to the point of delivery. However, we have 15 now modified our proposal to allow manual correction up to 16 the point of retail sales of motor vehicle gasoline. 17 To add further clarity, we propose to make minor 18 changes to address previously misunderstood terms. We also 19 propose to add specificity to the regulation by requiring 20 applicants to provide the reproducibility of the additive 21 test method which they identify in their applications. 22 We also propose to require applicants to report 23 the minimum dosage of their additive on a volume basis 24 within their certification applications. 25 In summary, staff is proposing to the Board today PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 52 1 a series of amendments which will add clarity, specificity, 2 and flexibility to the regulation. 3 Also, while maintaining the current benefits of 4 the regulation, these amendments will provide consistency 5 with future EPA gasoline additive requirements. 6 Staff intends to evaluate the U.S. EPA final 7 deposit control additive regulation and determine the need 8 to recommend further adjustments to our regulation. 9 Thank you for your consideration. This concludes 10 the staff's presentation. And, at this time, I'd like to 11 introduce Gary Yee, Manager of the Industrial Section of the 12 Stationary Source Division, to provide a summary of the 13 comment letters received during the 45-day comment period. 14 MR. YEE: Thank you, Jim. 15 Basically, we've received four letters -- can you 16 hear me now? (Adjusting microphone) 17 Basically, we received four written responses from 18 companies in regards to the proposed amendments during the 19 45-day comment period. 20 One of the letters I will not be summarizing. 21 This letter is from the Western States Petroleum 22 Association, and I believe they will be making a 23 presentation today on their letter. 24 Three other letters are from Kern Oil Company, the 25 Atlantic Richfield Company, and Chevron. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 53 1 Basically, all three letters pertain to the 2 recordkeeping requirements that we proposed in our original 3 staff recommendations. 4 Their basic recommendations were basically 5 twofold: One was either be consistent with EPA's interim 6 regulations dealing with recordkeeping or to delay our -- 7 any action today until EPA comes up with their final 8 regulations on the additive requirements. 9 As you heard in our presentation today, we have -- 10 we basically agree with these comments, and we have proposed 11 to delay any action on recordkeeping. 12 Essentially, that is it. And those are the 13 comments that were presented. 14 Thank you. 15 CHAIRMAN DUNLAP: Okay. Any questions from my 16 colleagues on the Board of staff? 17 Dr. Boston. 18 DR. BOSTON: With the advent of our new cleaner 19 burning California gasoline, do these additives create a new 20 set of problems for that gasoline? Or what is the additive 21 usually that's used, and does it cause more air pollution 22 when it's used? 23 MR. SIMEROTH: I'm sorry, Dr. Boston. I missed 24 the last part of your question. 25 DR. BOSTON: Our new reformulated gasoline, which PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 54 1 we're now calling California clean-burning gasoline, does it 2 cause any problem when you add the additives to clean the 3 valves and the injectors to that fuel? And does the 4 additive, whatever it is, create more air pollution? 5 MR. SIMEROTH: Dr. Boston, at the moment, the 6 additives don't seem to cause any problems based on. Nissan 7 ran a test program where they specifically looked at the 8 issue; tore an engine apart after accumulating 30,000 miles 9 on it, and the -- their California reformulated gasoline 10 they used as a test fuel with additives had less deposits 11 than the conventional gasoline with the deposit control 12 additives. 13 One of the things we expect to happen as soon the 14 industry starts producing the cleaner-burning gasoline, and 15 knows what the parameters are for their specific gasolines, 16 they'll come back in and apply for certification of new 17 deposit control additive packages, primarily to lower the 18 dosage rates. 19 And by being cleaner burning, there's not a -- I 20 shouldn't say "not." We do not expect the need to have as 21 much deposit control additives needed in the future as are 22 needed now. And industry will take advantage of that and 23 save themselves some money. 24 CHAIRMAN DUNLAP: Okay. Any other questions? 25 MR. CALHOUN: One quick question. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 55 1 CHAIRMAN DUNLAP: Mr. Calhoun. 2 MR. CALHOUN: How do you enforce the additive 3 regulation? 4 MR. SIMEROTH: Primarily, it's been through the 5 recordkeeping requirements that industry maintains at each 6 terminal facility where the additives are injected. They 7 show the amount of gallons dispensed. They identify the 8 additive and its approval number and the rate of additizing 9 the additive, summarize -- at the present time, mostly 10 monthly, although a number of the terminal operators 11 maintain daily records to ensure they're not getting 12 themselves in trouble. 13 MR. CALHOUN: Do we ever take any samples, though? 14 MR. SIMEROTH: At the present time, we haven't 15 been analyzing for the presence of it. We've been doing it 16 primarily off the records. 17 MR. CALHOUN: All right. 18 CHAIRMAN DUNLAP: Any other questions? Is that 19 it? 20 DR. BOSTON: Is that a verb or an adverb, 21 "additize"? 22 CHAIRMAN DUNLAP: Additize? I don't know, but it 23 definitely caught my attention. 24 (Laughter.) 25 CHAIRMAN DUNLAP: We have one witness. Could I PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 56 1 have the witness come forward? Mr. Smith, Steven Smith, 2 from WSPA. 3 If there's anyone else that wishes to speak on 4 this item, please see the Board Secretary. 5 Good morning, Mr. Smith. 6 MR. SMITH: Good morning. Thank you. 7 Good morning, Mr. Chair and members of the Board. 8 My name is Steven Smith. I'm the Senior Fuels Planning 9 Engineer for 76 Products Company, which is an operating 10 group of Unocal in Los Angeles. 11 My remarks today will be on behalf of the Western 12 States Petroleum Association. And in light of some of the 13 proposals that staff has already explained, I will be 14 modifying and shortening my testimony significantly to focus 15 on the areas only where WSPA has a few concerns. 16 And I believe copies of my oral testimony should 17 be passed out to you this morning. 18 We applaud staff's goal, with these amendments, of 19 fine-tuning the existing regulation to provide additional 20 clarity and flexibility and to provide consistency with 21 anticipated future federal deposit control additive 22 regulation changes that we should be seeing, hopefully, in 23 early 1996. 24 The majority of staff's proposed changes, we 25 agree, are in line with these goals and, as a result, we PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 57 1 support many and, in fact, most of staff's proposed 2 amendment changes. 3 So, I'll focus just on those areas, like I said, 4 where we have concerns, and those are in three areas. 5 First, WSPA proposes that no changes be made to 6 CARB's current monthly recordkeeping requirements. And, as 7 staff explained, it sounds like they plan to hold that as an 8 amendment change this morning. 9 I'll just offer a few -- maybe a few supporting 10 comments. The current requirement that each producer, 11 importer, and distributor compile records for each grade of 12 gasoline on a monthly basis we feel is appropriate and 13 consistent with current EPA requirements. We do not feel 14 that daily recordkeeping -- additive recordkeeping -- is 15 justified or appropriate for the following reasons: 16 Our resources at this time are primarily 17 dedicated, as I'm sure most of you can guess, to various 18 aspects of the California Phase 2 reformulated gasoline 19 rollout. That's our primary task over the next three to six 20 months. 21 We're concerned that, to ensure compliance with 22 all of the various enforcement issues that could accompany 23 new recordkeeping requirements, that that would pull 24 resources away from our main objective, which is the rollout 25 of Phase 2 gasoline. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 58 1 So, we urge CARB to allow us to continue working 2 on this Phase 2 rollout effort without any unnecessary 3 diversions. 4 We also support the overall goal to achieve 5 consistency between CARB and EPA additive regulations where 6 justified. So, to this end, as staff explained, we 7 recommend that CARB delay changes to its additive regulation 8 until EPA comes out with its amended regulation -- we hope 9 in the next six months. 10 And based on our current information, at least, 11 it's unlikely that the final EPA proposal -- 12 CHAIRMAN DUNLAP: Mr. Smith, on that point, let me 13 be clear. So, you're asking us to withhold action to follow 14 a federal lead six months from now? Is that right? 15 MR. SMITH: Correct. 16 CHAIRMAN DUNLAP: Okay. 17 MR. SMITH: And that's consistent -- 18 CHAIRMAN DUNLAP: May I interrupt for a moment? 19 Staff, are we -- Mr. Boyd, are we involved in the 20 deliberative, technical, evaluative process that U.S. EPA's 21 going through in their effort? 22 MR. BOYD: I'll let Mr. Simeroth respond. 23 MR. SIMEROTH: Chairman Dunlap, we're following 24 what EPA is doing, and we're having phone conversations back 25 and forth on their activity. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 59 1 CHAIRMAN DUNLAP: Okay. I'm going to ask you 2 about what does it mean to us to delay when he's through. 3 So, be thinking about how we respond to that. 4 MR. SIMEROTH: Okay. 5 CHAIRMAN DUNLAP: Please continue, sir. 6 MR. SMITH: All right. Thank you. 7 That was the second point. And the third point 8 is, we feel -- at least at this time -- that there are no 9 demonstrable environmental benefits that are associated with 10 switching from monthly to daily recordkeeping requirements. 11 We don't feel like those environmental benefits have been 12 clearly defined to any degree. 13 That was my comment regarding recordkeeping, and 14 is in support, again, of staff pulling that issue from the 15 table today. 16 A second topic -- we propose that CARB add a 17 liability protection provision to the State regulation that 18 is similar to that exists in the federal regulations. And 19 we've offered specific language in our written comments that 20 we've provided to the staff. 21 In general, this provision would protect the 22 company from additive liability in certain circumstances if 23 they can demonstrate that they had an adequate contract and 24 proper oversight with a downstream company that they give 25 the gasoline product to for additization by that downstream PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 60 1 party. And that exists -- that liability protection exists 2 currently in EPA regulations, and we'd like to see something 3 similar to that included in the State regulation. 4 That was our second (sic) primary concern. 5 Finally, our third concern -- we propose a few 6 minor, very minor, changes to language regarding 7 certifications, additive certifications, that companies are 8 required to obtain from CARB, like Mr. Aguila explained. 9 Staff has clarified in Section 2257 amendments the 10 properties of the certification test fuel that they would 11 like to see in most cases, and has added language requiring 12 that a demonstration be provided that the test fuel is 13 produced from typical refinery blendstocks. 14 We support these requirements. That makes good 15 sense to us. That's very clear and direct. 16 However, staff has added language requiring the 17 companies provide a demonstration that the test fuel is 18 representative of typical commercial gasoline. And we feel 19 that this reference is very ambiguous and could be subject 20 to wide interpretation by industry and staff, because 21 "typical" commercial gasoline can vary widely in its 22 properties. 23 So, we request that the staff delete this 24 reference and add language specifically stating what they're 25 really looking for. A simple clarification is what we ask PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 61 1 for. 2 CHAIRMAN DUNLAP: Do you have suggested language? 3 MR. SMITH: We'd like to talk with staff about 4 really what additional properties they're interested in 5 besides sulfur, aromatics, olefins, oxygen, and T90. And if 6 they have interest in additional properties, we'd like to 7 see them specify that. 8 We view this certification issue as very important 9 for the following reasons. New certifications should be -- 10 must be capable of transportation system fungibility of a 11 pipeline and distribution system, and should be applicable 12 to any gasoline meeting Phase 2 reformulated gasoline 13 requirements. 14 And any overspecification of the certification 15 fuel requirements could lead to divergence in certification 16 ranges for individual companies, and that's our concern. It 17 could impact system fungibility, reduce exchange capability, 18 and, at a worst case, impact the rollout of Phase 2, which 19 none of us want. 20 And, obviously, we consider a smooth rollout of 21 Phase 2 reformulated gasoline our highest priority over the 22 next year, like I stated earlier. So, as a result, we just 23 recommend that staff remove that more vague requirement and 24 add more specific language. 25 CHAIRMAN DUNLAP: Okay. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 62 1 MR. SMITH: So, that concludes my comments. 2 CHAIRMAN DUNLAP: Thank you. 3 MR. SMITH: Be pleased to answer questions. 4 CHAIRMAN DUNLAP: Don't leave. Mr. Parnell. 5 MR. PARNELL: Mr. Kenny, can we, as a matter -- if 6 we were of a mind to, can we grant immunity for liability to 7 downstream blenders as they suggest? Have you read their 8 language? 9 MR. KENNY: I have actually looked at their 10 language. And the concern I would have with the language is 11 that what it effectively does is essentially move the 12 refiners out of being subject to the additive regulation. 13 And what the refiners would essentially be doing 14 is contracting out their liability under the additive 15 regulation to some third party. 16 The concern for the Board, I think, in terms of 17 trying to do enforcement, was that, as we were doing the 18 enforcement, we would end up basically getting into a 19 contractual review as opposed to an additive review. 20 It seems to me that the company could essentially 21 insulate itself from the concern that it has by simply 22 engaging in an indemnity agreement with the downstream 23 companies that it's contracted with for the additization. 24 MR. PARNELL: Rather than deal with the 25 regulation. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 63 1 MR. KENNY: Exactly. 2 MR. PARNELL: The second question, if I may. Do 3 the words, "representative of typical commercial gasoline" 4 cause heartburn in terms of future interpretation? That 5 seems fairly straightaway to me, and I just would be 6 interested in your comments. 7 MR. KENNY: I actually don't have a good response 8 to that. Let me turn that over to Mr. Simeroth. I think he 9 can respond to that better. 10 MR. SIMEROTH: Mr. Parnell, what it means to me is 11 that you comply with ATSM specifications for gasoline. I'd 12 also like to point out that that basic requirement has been 13 there since Day One of the regulation, and we've issued over 14 200 certifications with that requirement in the language 15 with really no problems at all. 16 It's meant to help us ensure that somebody doesn't 17 "gage" the fuel and give us something that doesn't represent 18 what they're actually going to be selling. 19 CHAIRMAN DUNLAP: State slowly what you interpret 20 that to mean so our friend from WSPA can get that down, so 21 there's no unusual take on it, Dean. 22 MS. SIMEROTH: Basically, what it means to us is 23 that you comply with the general ASTM specifications for 24 gasoline. And it's a requirement that has been in the 25 regulation since Day One of the regulation -- January 1st, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 64 1 '92. We've issued well over 200 certifications with that 2 requirement in the regulation. 3 CHAIRMAN DUNLAP: Mr. Smith, does that pin it down 4 for you? 5 MR. SMITH: We would acceptable (sic) to including 6 that reference to ASTM requirements in the regulation, and 7 removing the statement of "typical commercial gasoline." 8 MR. SIMEROTH: Chairman Dunlap, in the proposed 9 amendments, we're proposing a sentence to help clarify this 10 requirement already. 11 CHAIRMAN DUNLAP: Okay. 12 MR. SIMEROTH: It's already before you. 13 CHAIRMAN DUNLAP: All right. Could I -- Mr. 14 Parnell, did you have anything else? 15 Could I get you to respond to his initial question 16 about the six-month delay pending U.S. EPA action? 17 MR. SIMEROTH: EPA was supposed to have acted last 18 June. We're hearing another six months. We think that the 19 changes will help facilitate the new certifications we see 20 coming with the introduction of California reformulated 21 gasoline, and it would have some benefit to having them in 22 place when that rollout occurs. 23 Now, the recordkeeping, we recognize that there is 24 merit to waiting to see if we can avoid duplicate 25 recordkeeping requirements. That has merit, and we are PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 65 1 proposing to delay that till EPA comes out with their 2 regulation. 3 CHAIRMAN DUNLAP: Okay. what about the 4 recordkeeping issue? Mr. Smith, can you expand on that a 5 little bit? We're tightening down recordkeeping here? 6 MR. SMITH: Currently in the regulation, as staff 7 would probably agree, there are references to -- that all 8 gasoline be properly additized. And there's also reference 9 to monthly recordkeeping requirements. 10 And staff has taken the interpretation -- and some 11 of our companies agree -- that that means daily 12 recordkeeping is required, and that means every gallon of 13 gasoline needs to be properly additized. But the regulation 14 is really not clear. 15 Some companies have viewed that one way, some 16 companies have viewed it another. And, in all honesty, we 17 don't -- at this point, we aren't convinced that there's 18 environmental justification for tight daily recordkeeping 19 versus monthly. 20 So, EPA's going to clarify that, from their point 21 of view, with their proposed change. And we just would 22 suggest that staff wait and see where EPA starts. 23 CHAIRMAN DUNLAP: I'd like a comment about 24 recordkeeping. But let me just perhaps remind staff of a 25 point of philosophy that I've espoused a number of times PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 66 1 about administrative requirements that don't lead us to any 2 environmental benefit. 3 And if this is the case, I have a real problem 4 with tightening some administrative or recordkeeping 5 requirements that just, you know, is paper pushing. So, if 6 that isn't the case, please speak up; but, if it is, we need 7 to talk about making some changes in what we have before us. 8 Mr. Simeroth? 9 MR. SIMEROTH: Chairman Dunlap, one of the reasons 10 for proposing the delay and see what EPA comes out with is 11 to make sure we don't end up with unnecessary recordkeeping. 12 The regulation's basic tenet -- as was correctly described 13 by Mr. Smith -- was that our intention was that every single 14 gallon be properly additized. 15 Our view of the language, while it's more vague 16 than it should have been, was that meant that you keep 17 records showing that each day, for a 24-hour period, that 18 the gasoline that left a terminal would be properly 19 additized. 20 There are differences of opinions on how much 21 gasoline is necessary to cause in a vehicle. But reviewing 22 the certification data, some vehicles are susceptible -- 23 more susceptible than others to having problems develop; 24 gasoline does not have a nice, neat pattern of distribution 25 and can get a concentrated amount of gasoline to cause PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 67 1 problems. 2 CHAIRMAN DUNLAP: Right. And we want to tie that 3 down. But characterize for me how much tracking or 4 recordkeeping you think is reasonable in what we have before 5 us. 6 MR. SIMEROTH: Okay. I think what we view as 7 reasonable is that, on a daily basis, a terminal operator 8 knows how much additive he's putting in and knows if he's 9 underadditizing -- using that word again, excuse me -- of 10 putting too much additive in. And we really don't want 11 either one. Either one can cause problems. 12 Underadditizing results in deposits forming in 13 vehicles and an inherent increase in emissions associated 14 with that. Overadditizing can also cause problems, 15 particularly in the combustion chamber of the engine; too 16 much additive lets deposits form there. 17 CHAIRMAN DUNLAP: So, it's keeping total volumes 18 essentially -- 19 MR. SIMEROTH: (Interjecting) To maintain balance 20 so you don't go too far either way. 21 CHAIRMAN DUNLAP: Okay. But not a gallon-by- 22 gallon -- 23 MR. SIMEROTH: No. 24 CHAIRMAN DUNLAP: -- accounting in any way? 25 MR. SIMEROTH: We're not requiring that at all. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 68 1 You look at the total number of gallons coming out of a 2 terminal on a day, and that's millions of gallons -- 3 CHAIRMAN DUNLAP: Okay. 4 MR. SIMEROTH: -- and total amount of additive, 5 and there's a balance. 6 CHAIRMAN DUNLAP: All right. Again, just a 7 reminder, you know, administrative requirements that don't 8 get us anywhere is not something that I support. And I 9 certainly know my Board colleagues won't as well. 10 MR. BOYD: Mr. Chairman, let me -- 11 CHAIRMAN DUNLAP: Sure. 12 MR. BOYD: -- let me assure you that we're 13 sensitive to that; that is, that guides us. This is an area 14 where we've discussed it significantly. This is a complex 15 area. In some areas -- I just happened to be at a refinery 16 a couple days ago where, you know, this is totally 17 automated. There are tanks of secret formulas for each and 18 every different petroleum company standing to be added by, 19 you know, a computerized input, et cetera et cetera. 20 And it seems that that isn't too difficult. But, 21 as pointed out, gasoline emissions are inherently sensitive 22 to that particular issue. We are engaged in a couple of 23 very substantial enforcement settlements, as you know, at 24 this very moment over an issue very similar to this. That 25 is the dilemma of finding substantial amounts of gasoline PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 69 1 without the proper additive. 2 So, we're sensitive to our charge to protect 3 public health and our charge to worry about cost to the 4 industry. And this is an area where we could see no, at 5 present, reasonable way out of the woods. 6 If working with EPA gives us a better view in the 7 future and we find mutually a better approach, certainly, 8 we'll be sensitive to that. 9 CHAIRMAN DUNLAP: And that could emerge back here 10 at the Board level, right? 11 MR. BOYD: Yes. 12 CHAIRMAN DUNLAP: Okay. Very good. Thank you for 13 your patience. Any other questions of our witness or staff? 14 Mr. Silva. 15 SUPERVISOR SILVA: Actually, I have questions. 16 The first one has to do with recordkeeping. How long do we 17 currently require these records to be maintained? 18 MR. SIMEROTH: At the present time, it's two 19 years. 20 SUPERVISOR SILVA: Two years. 21 MR. SIMEROTH: Yes. And I believe EPA has a 22 longer time period that they require the records be 23 maintained. 24 SUPERVISOR SILVA: Mr. Smith, the Consumer Union, 25 auto engineers, and oil companies have debated the additive PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 70 1 issue, I think, for a long time -- whether it's, you know, 2 good, bad, or it's just throwing money away. 3 In your professional opinion, what do you think? 4 MR. SMITH: Well, I guess I'll speak on behalf of 5 WSPA. I think WSPA generally supports the additive program. 6 For one thing, obviously it's required by Federal rules. 7 And I think we support it -- as staff stated earlier, I 8 think the new, cleaner gasoline that's coming out 9 potentially is going to require less additive to be fully 10 effective. 11 The new, cleaner gasoline -- much lower olefins, 12 much lower aromatics, all of those -- the reductions in 13 those properties is making the gasoline a lot less likely to 14 form additives (sic), so -- 15 SUPERVISOR SILVA: So, a person who would drive, 16 let's say, a fuel-injected car wouldn't have to buy the 17 additives to pour into his fuel with this new gasoline. 18 MR. SMITH: I'll speak personally. 19 (Laughter.) 20 MR. SMITH: I don't think those will be necessary. 21 I think the cleaner gasoline, coupled with the detergent 22 requirements should be more than adequate. 23 SUPERVISOR SILVA: I'd like to ask Mr. Boyd the 24 same question. 25 MR. BOYD: Well, Supervisor Silva, ny reaction is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 71 1 that, one, history has shown the additives are beneficial. 2 Number two, the free market economy that we operate in has 3 allowed the petroleum companies to make this a marketing 4 issue and to have their own, as I said earlier, secret 5 formulas, and to compete with each other as to whose is the 6 best and the best buy, which gives the consumer a choice of 7 fuels. 8 And, number three, I agree with all that's said 9 with regard to tomorrow's cleaner-burning gasoline. There 10 has been a general consensus that it's likely that they'll 11 be able to scale back on the quantities of additives that 12 they use. But, again, it's going to be by choice. 13 And there's always those who choose to have 14 allegedly a little better, if not actually a little more, to 15 try to reap a market benefit in advertising, if nothing 16 else. 17 SUPERVISOR SILVA: Okay. Thank you very much. 18 Thank you, Mr. Smith. 19 CHAIRMAN DUNLAP: Anything else? Very good. Mr. 20 Smith, thanks again. 21 Okay. Mr. Boyd, I assume there's nothing else? 22 MR. BOYD: I believe we have a couple more letters 23 to put in the record. 24 CHAIRMAN DUNLAP: Okay. 25 MR. VENTURINI: Yes, Mr. Chairman, there were two PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 72 1 additional letters that just came in, and I'll ask Mr. Yee 2 to briefly summarize those for the record. 3 MR. YEE: The first letter is from 76 Products 4 Company. Basically, they support our updating of the ATSM 5 methodology, and also support the general housekeeping 6 requirements or clarifications that we are proposing. 7 They have reiterated concern about the 8 recordkeeping requirements, and their recommendation is to 9 delay any action on that. 10 Again, the concerns with the certification test 11 fuels, as Mr. Smith has discussed, in regards to clarifying 12 what we mean "typical" production gasoline -- they have 13 asked to clarify that, and staff has done that. 14 The second letter is from the American Automobile 15 Manufacturers Association. They have generally supported 16 all of the proposed amendments that staff are making today. 17 They have made one added recommendation that we consider a 18 combustion chamber deposit standard for which EPA is now 19 considering and will be developing, I guess. And that's 20 beyond the scope of today's hearing. 21 CHAIRMAN DUNLAP: Is that it? 22 MR. YEE: That's it. 23 CHAIRMAN DUNLAP: Okay. Very good. I will now 24 close the record on this agenda item. However, the record 25 will be reopened when the 15-day notice of public PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 73 1 availability is issued. Written or oral comments received 2 any this hearing date but before the 15-day notice is issued 3 will not be accepted as part of the official record on this 4 agenda item. 5 When the record is reopened for the 15-day comment 6 period, the public may submit written comments on the 7 proposed changes, which will be considered and responded to 8 in the final statement of reasons for the regulation. 9 Again, another reminder to the Board about ex 10 parte communication. Is there anything that needs to be 11 disclosed? 12 (There was no response.) 13 CHAIRMAN DUNLAP: Okay. Thank you. 14 We have before us a resolution, 95-47, which 15 contains the staff recommendation. Why don't we take a 16 moment or so to review it. Some of you may have already 17 looked at it. 18 MR. LAGARIAS: Mr. Chairman? 19 CHAIRMAN DUNLAP: Mr. Lagarias. 20 MR. LAGARIAS: I'd like to have an understanding. 21 If I were to add additional comments to this dialogue, would 22 I be "additizing," or would that be -- 23 (Laughter.) 24 CHAIRMAN DUNLAP: We would have to defer to Mr. 25 Kenny about that the "additizing" element of this discourse. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 74 1 MR. KENNY: You would be additizing. 2 (Laughter.) 3 MR. LAGARIAS: I do not wish to additize. 4 CHAIRMAN DUNLAP: Thank you, Mr. Kenny. 5 They coined a new phrase. A few years ago, it was 6 "incentivized." 7 Okay. Do we have a motion? Mr. Calhoun. 8 MR. CALHOUN: I move we adopt Resolution 95-47. 9 CHAIRMAN DUNLAP: Mr. Calhoun, thank you. Is 10 there a second? 11 SUPERVISOR SILVA: Second. 12 CHAIRMAN DUNLAP: Okay. Mr. Silva seconds the 13 motion. Any discussion that needs to occur before the Board 14 Secretary calls the roll? 15 Okay. Pat? 16 MS. HUTCHENS: Boston? 17 DR. BOSTON: Yes. 18 MS. HUTCHENS: Calhoun? 19 MR. CALHOUN: Aye. 20 MS. HUTCHENS: Edgerton? 21 MS. EDGERTON: Aye. 22 MS. HUTCHENS: Hilligoss? 23 MAYOR HILLIGOSS: Aye. 24 MS. HUTCHENS: Lagarias? 25 MR. LAGARIAS: Aye. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 75 1 MS. HUTCHENS: Parnell? 2 MR. PARNELL: Aye. 3 MS. HUTCHENS: Riordan? 4 SUPERVISOR RIORDAN: Aye. 5 MS. HUTCHENS: Roberts? 6 SUPERVISOR ROBERTS: Aye. 7 MS. HUTCHENS: Silva? 8 SUPERVISOR SILVA: Aye. 9 MS. HUTCHENS: Vagim? 10 SUPERVISOR VAGIM: Aye. 11 MS. HUTCHENS: Chairman Dunlap. 12 CHAIRMAN DUNLAP: Aye. 13 MS. HUTCHENS: Passes 11-0. 14 CHAIRMAN DUNLAP: Very good. Thank you. 15 The third item on the agenda today -- well, let me 16 excuse staff again. Thank you. Fine presentation. 17 Appreciate your time and energy. 18 Oh, one thing, while you're changing places, while 19 I have Mr. Venturini there, I'd like to maybe make a comment 20 or two about a project he worked on, and ask the staff 21 presenting the next item to please come forward. 22 On November 3rd, President Clinton formally 23 announced at the White House eight projects that have been 24 accepted to participate in a pilot environmental program 25 known as "Project XL," for "excellence in leadership." PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 76 1 Project XL is one of the environmental initiatives announced 2 by the President last March. 3 Peter Venturini, Chief of our Stationary Source 4 Division, was invited and attended the President's 5 announcement. Two of the accepted projects are here from 6 California. The first is a 3M's data storage and tape 7 technology plant in Camarillo in Ventura County. This 8 involves implementation of a beyond compliance permit at 9 their Camarillo facility. 10 3M is proposing to further reduce emissions below 11 required levels while developing a multimedia permit. The 12 ARB staff is participating with the districts in the 13 development of this prototype permit. 14 The other project is a project from South Coast, 15 which is an "alternatives to work trip reduction plans," 16 which provides employers alternatives for achieving 17 emissions reductions from the trip reduction area. These 18 projects are complementary to our own and Cal-EPA programs 19 to reduce the permitting burden on California businesses. 20 And I wanted to recognize Peter for his fine work, and draw 21 attention to the fact that he represented us at the White 22 House a couple weeks ago. Good show, Peter. 23 MR. VENTURINI: Thank you very much. Appreciated 24 the opportunity. 25 CHAIRMAN DUNLAP: Okay. The third agenda item PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 77 1 today is 95-12-3, public meeting to consider a status report 2 on consumer product manufacturers' compliance with future 3 effective standards. 4 This item is a status report on consumer product 5 manufacturers'' reformulation efforts to comply with the 6 second tier, or "future effective" standards, established in 7 the Phase I consumer product regulation and the amendments, 8 known as Phase II. 9 In today's meeting, we will be given a summary of 10 how and what manufacturers are doing to meet these VOC 11 standards. 12 As a reminder, the Board adopted the Phase I 13 consumer product regulation in October 1990, and the 14 amendments to the reg, known as Phase II, in January of 15 1992. 16 Combined, these Board actions established VOC 17 standards for 26 categories of consumer products. In 18 addition, at that time, there were technical and commercial 19 data available for selected categories to further support 20 reductions of VOCs by establishing future effective VOC 21 standards for 11 product categories. 22 However, when the Board adopted these standards, 23 we recognized that the future effective standards could 24 represent challenges to manufacturers. At that time, as 25 with all subsequent consumer product regulations, we PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 78 1 committed to working closely with industry during the 2 implementation of that regulation. 3 We also directed our staff to monitor the 4 industry's progress in meeting the future effective 5 standards and to provide reports to the Board at periodic 6 intervals. 7 Before I turn this over to the staff, I'd like to 8 mention that our consumer product regulations are an 9 important component of the State Implementation Plan. In 10 the years since the adoption of the Phase I reg and the 11 Phase II amendments, there has been a significant reduction 12 in VOCs from the use of consumer products due to the 13 implementation of the first tier VOC standards. 14 The future effective VOC standards in the consumer 15 product regs will provide additional VOC reductions, which 16 we must have, to the year 2000, and are an integral 17 component for meeting the emission reduction goals 18 established in our SIP. 19 At this point, I'd like to ask Mr. Boyd to 20 introduce the item and begin the staff's presentation. 21 Jim? 22 MR. BOYD: Thank you, Mr. Chairman. As you 23 stated, the Phase I consumer products regulations and the 24 Phase II amendments to the regulations were adopted by the 25 Board in October of 1990, and in January of 1992, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 79 1 respectively. 2 Since your passage of the regulation, we have 3 worked closely with this industry to implement the 4 regulation, and have monitored progress in complying with 5 the future effective standards. 6 Overall, we believe the outlook is very positive. 7 With the newer technologies evolving, and with the recent 8 changes to the definition of VOC in the regulation that you 9 made, manufacturers have greater flexibility in their 10 reformulation and in their marketing strategies. 11 This has resulted in an increase in the number of 12 products that can comply with the future effective standards 13 and also meet consumer demand for these types of products. 14 I would like to reiterate your points that the 15 anticipated emission reductions will be realized from the 16 product categories with future effective dates, and that 17 these reductions are indeed a very important part of our 18 State Implementation Plan. 19 With that brief introduction, I'd like to call 20 upon Mr. Ed Wong of the Stationary Source Division to 21 present to you the staff's status report. 22 Mr. Wong? 23 MR. WONG: Thank you, Mr. Boyd. 24 Chairman Dunlap and members of the Board, today, 25 we are presenting a status report regarding the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 80 1 reformulation efforts the consumer products industry is 2 undertaking to comply with the future effective volatile 3 organic compound, or VOC, standards in the consumer product 4 regulation. 5 Our presentation will focus on the future 6 effective standards contained in the Phase I consumer 7 product regulation and the Phase II amendments to that 8 regulation. 9 As a reminder, this regulation was the second 10 regulation adopted by the Board to regulate consumer 11 products. I will begin our presentation by providing you 12 with a brief background of the consumer product regulation. 13 I will then discuss our assessment of the manufacturers' 14 progress in complying with the future effective VOC 15 standards. 16 The ARB adopted the Phase I consumer product 17 regulation in October, 1990, and the amendments to the 18 regulation, known as Phase II, in January, 1992. 19 This regulation establishes VOC standards for 26 20 product categories. Eleven of these categories contain a 21 second tier of standards which we commonly refer to as 22 "future effective" standards. 23 These future effective standards are not 24 technology forcing in the true sense of the meaning, but 25 were established in product categories where lower VOC PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 81 1 complying products were available at the time of rule 2 adoption and where it was apparent that a further reduction 3 of VOCs was feasible. 4 As a reminder, this regulation provides several 5 compliance avenues that manufacturers may choose from to 6 comply with the VOC standards. These avenues include 7 meeting the specified VOC standard, the use of the 8 innovative products provision, or use of the alternative, or 9 use of the alternative control plan. 10 In the event the manufacturer encounters problems 11 beyond their control, the regulation also contains a 12 variance provision which provides temporary relief from the 13 VOC standard. 14 This slide lists the 11 product categories which 15 have future effective standards that begin in 1996 and 16 beyond. As you can see, they cover a variety of product 17 types, ranging from personal care products -- such as nail 18 polish removers -- to household care products and household 19 insecticides. 20 The consumer product regulation future effective 21 standards are an important component of the State 22 Implementation Plan. The emission reductions from these 23 future effective standards will be used by the local air 24 pollution control districts in demonstrating compliance with 25 their attainment and rate of progress commitment. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 82 1 As I previously mentioned, in most all cases, 2 there were products available that could comply with the 3 future effective standards at the time they were adopted. 4 However, some of these VOC standards represented formulation 5 challenges to manufacturers. 6 Because of this, the Board directed the staff to 7 monitor the industry's progress in meeting the future 8 effective standards and to report back to the Board on our 9 findings. 10 In response to your directive, we conducted a 11 study to assess manufacturers' efforts to comply with the 12 future effective standards. In our review, we focused on 13 the four product categories which have a standard effective 14 date on January 1, 1996. In addition, we have had some 15 preliminary discussions with the industry regarding the 16 post-1996 future effective standards and intend to continue 17 these discussions during the upcoming year. We will then 18 come back to the Board in 1996 and provide a second report 19 on the status of manufacturers' efforts to comply with the 20 seven product categories which have a standard effective 21 date on January 1, 1997, and beyond. 22 To gather the information that we are presenting 23 to you today, we conducted a phone survey of manufacturers, 24 raw material suppliers, and distributors to determine the 25 current status of the reformulation efforts. We also PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 83 1 reviewed the technical literature and other related sources 2 to review any pertinent technologies available that could 3 assist manufacturers in their effort to develop complying 4 formulations to meet the future effective standards. 5 Now, let's turn our attention to the four product 6 categories which have a standard effective date of January 7 1, 1996. 8 These categories include single-phase aerosol air 9 fresheners, engine degreasers, "all other forms" glass 10 cleaners, and nail polish removers. 11 The first category we will address is the 12 single-phase aerosol air fresheners. These are aerosol air 13 fresheners with the liquid content in a single, homogeneous 14 phase, which do not need to be shaken prior to use. They 15 are used in a variety of settings to treat unpleasant odors. 16 The current standard is at 70 percent VOC by 17 weight, which became effective in 1993. It is set to go 18 down to 30 percent in 1996. 19 To determine the status of manufacturers' 20 reformulation efforts, we contacted 30 manufacturers of 21 single-phase aerosol air fresheners. These manufacturers 22 represent approximately 70 percent of the market by weight. 23 Overall, the response from the manufacturers was 24 favorable. While the development of the 30 percent VOC 25 product is challenging, most manufacturers have already PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 84 1 developed products that meet the 30 percent standard and, in 2 some cases, their products are already in the marketplace. 3 Manufacturers have employed a variety of 4 formulation strategies to product complying products. Some 5 manufacturers have chosen to use HFC-152a, a non-VOC, in 6 place of hydrocarbon propellants. 7 Some of the manufacturers that are using HFC-152a 8 reported that they expected the cost to increase with the 9 use of this propellant. 10 Other manufacturers are developing formulations 11 based on DME and water or based on LVP solvents. Still, 12 others have developed single-phase aerosol air fresheners 13 that have qualified as innovative products. 14 A few manufacturers reported that they will 15 continue their reformulation effort in 1996, and use the 18- 16 month sell-through period to provide them additional time to 17 reformulate. 18 The second category we will be presenting our 19 findings on is engine degreasers. Engine degreasers are 20 specialty cleaning products designed to remove grease, 21 grime, oil, and other contaminants from the external 22 surfaces of engines and other mechanical parts, and are most 23 commonly used on motor vehicles in household or commercial 24 fleet settings. 25 The current standard for engine degreasers is 75 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 85 1 percent VOC by weight, which became effective in 1993. The 2 standard will go down to 50 percent in 1996. 3 For engine degreasers, we contacted 58 companies 4 to obtain an assessment of their progress in complying with 5 the 50 percent VOC standard. These companies are 6 responsible for approximately 95 percent by weight of the 7 market share for engine degreasers. So, we found that many 8 manufacturers are already marketing the complying product in 9 California or have begun reformulating their products to 10 sell in 1996. 11 Most manufacturers have developed formulations 12 that relied on increased water content, coupled with 13 stronger detergents or solvents. Other manufacturers were 14 moving towards the use of LVP solvents or terpene compounds. 15 Several manufacturers have utilized more recent technology 16 known as microemulsions. Microemulsions solvent technology 17 allows a greater use of water, while allowing the remaining 18 solvent to retain the performance characteristics of a 19 nonaqueous product. 20 The majority of the manufacturers reported that 21 they will have complying products available in 1996. Some 22 manufacturers have ceased selling engine degreasers in 23 California, because the sales volume or profit margin was 24 too small to retain the product lines. The decisions were 25 usually based on a combination of factors, including cost PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 86 1 considerations, mergers, and buyouts of other companies. 2 The next category we will cover is the "all other 3 forms" or nonaerosol glass cleaners. These products are 4 designed primarily for cleaning surfaces made of glass. The 5 many product forms of nonaerosol glass cleaners include 6 liquids, pumps, cloth wipes impregnated with glass cleaner, 7 and pastes. 8 The current VOC standard for the nonaerosol glass 9 cleaners is 8 percent by weight, which became effective in 10 1993. This standard will go down to 6 percent in 1996. For 11 this category, we contacted 33 manufacturers. These 12 manufacturers were responsible for over 70 percent of the 13 market by weight. For this category, we determined that the 14 majority of the manufacturers expect to have products that 15 meet the 6 percent VOC standard in 1996. 16 The manufacturers reported a range of 17 reformulation paths. These approaches include the increased 18 use of water with stronger surfactants, the use of LVP 19 solvents, the reduction in the use of alcohol, coupled with 20 an increased use of surfactants, and the use of other 21 non-VOC solvents. 22 The fourth and final category is nail polish 23 removers. These products are primarily used to remove nail 24 polish and coatings from fingernails and toenails. The 25 product forms include liquids, creams, gels, sponges, and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 87 1 towelettes. The current VOC standard is 85 percent by 2 weight, which became effective in 1994. It will be 75 3 percent beginning in 1996. 4 We contacted 25 manufacturers to determine their 5 status in complying with the 75 percent VOC standard. These 6 manufacturers are responsible for approximately 92 percent 7 of the market share by weight for nail polish removers sold. 8 For this category, we determined that the majority of the 9 manufacturers have already developed or will develop a 10 complying product by 1996. 11 Most nail polish removers contain acetone because 12 of its excellent ability to dissolve nail polish. However, 13 reformulation is no longer necessary for most acetone-based 14 nail polish removers, since the Board recently approved an 15 exemption for acetone from the definition of VOC. 16 For nonacetone formulations, manufacturers 17 reported that they would increase the water content and make 18 other adjustments in reformulation to comply or use more 19 non-VOC solvents. 20 In summary, we believe that the majority of the 21 manufacturers are meeting the formulation challenges to 22 comply with the 1996 VOC standards. They are meeting these 23 standards through the use of a variety of technologies and 24 marketing strategies. 25 As such, we believe that the consumer demand for PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 88 1 the four product categories just described will be met in 2 1996 and beyond. 3 Thank you. This concludes our presentation, and 4 we'd be happy to answer any questions you may have. 5 CHAIRMAN DUNLAP: Okay. Any of the Board members 6 have any questions? Mr. Calhoun. 7 MR. CALHOUN: Yes, I guess one question. 8 Did I understand you to say we recently removed 9 acetone from the list of volatile organic compounds? 10 MS. SHIROMA: Yes. That was the September Board 11 action to exempt four different compounds from the VOC 12 definition. 13 MR. VENTURINI: Mr. Calhoun, if I just might add, 14 that was based on some extensive analysis that was done to 15 evaluate the potential of acetone to produce ozone. And the 16 basic conclusion was that, it was somewhere in the order of 17 ethane and a very low negligible reactivity; and on that 18 basis, we recommended the Board approve removing that from 19 the definition. 20 CHAIRMAN DUNLAP: Any other questions or comments? 21 Okay. 22 Mr. Boyd, do you have anything else to add? 23 MR. BOYD: Well, I think to just elaborate on 24 what's already been said, I'd like to again emphasize that 25 our outlook in this reformulation effort is quite positive. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 89 1 We have and we'll continue to work very closely with the 2 industry in the implementation. 3 And I'd like to compliment them for their positive 4 work with us. I know that in the beginning it was a 5 difficult challenge to this particular industry. We're 6 finding out through our outreach efforts that not only are 7 more of the raw material suppliers getting actively involved 8 in this effort, but more distributors are taking 9 responsibility to ensure that their private label suppliers 10 and manufacturers keep abreast of this requirement and to 11 seek timely solutions. 12 So, this is part of the reason we're feeling 13 pretty good about all of this, and we look forward to coming 14 back and giving the Board yet another progress report in the 15 future. 16 CHAIRMAN DUNLAP: All right. Very good. Thank 17 you, Mr. Boyd. 18 We have no witnesses signed up. 19 I'd like to make a few closing remarks on this 20 item. I'd like to thank the staff for the presentation. I 21 work closely with the staff. I know how much they care 22 about making this program work, because it is truly a 23 cooperative program. 24 I'd like to thank all the companies for their 25 assistance that have been working with us in responding to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 90 1 staff inquiries, the folks that were surveyed. I appreciate 2 their followup, their timely followup, on the status of 3 their reformulation efforts. 4 It's very apparent that the industry will have 5 make adjustments in their product formulations to comply 6 with the '96 VOC standards. 7 I am very encouraged -- and this week, I had an 8 opportunity to make a presentation to one of the large 9 consumer products trade associations, and got to hear 10 firsthand some of their concerns in the Los Angeles area. 11 I am encouraged that there are many more complying 12 products available to the public today than there were at 13 the time of adoption of this regulatory framework. This, 14 once again, confirms our belief that standards that push 15 technology produce results. 16 This reflects to me the diligence and commitment 17 the industry has made to not only comply with the future 18 effective standards, but also to continue to meet the needs 19 of the consuming public. Even more important, this has been 20 accomplished without compromising public health 21 considerations. 22 I'd also like to remind us all that the emission 23 reductions to be gained from the future effective standards 24 are necessary and an important component of our State 25 Implementation Plan. And the industry's progress we have PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 91 1 heard about today will not compromise our emission reduction 2 commitment in the State Implementation Plan. 3 Again, thank you, Mr. Boyd and your team, for a 4 fine presentation. 5 Do we have any written comments on this item? 6 Okay. Very well. 7 Since it isn't a regulatory item, I don't need to 8 close the record. What I'd like to do, though, is take a 9 lunch break at this time. 10 I'd like to reconvene about 1:15 and give people 11 adequate time to have lunch. 12 So, thank you very much. 13 (Thereupon, the luncheon recess was taken.) 14 --o0o-- 15 16 17 18 19 20 21 22 23 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 92 1 AFTERNOON SESSION 1 --o0o-- 2 CHAIRMAN DUNLAP: The next item on the agenda is 3 95-12-4, a public meeting to update the Board on the 4 technological progress of zero-emission vehicles. 5 As many of you know, the Board met last month to 6 hear updated information about the series of forums on zero- 7 emission vehicle development and related issues that have 8 taken place on a monthly basis since early spring of this 9 year. 10 These forums have been very well attended, 11 including attendance by some of my Board member colleagues 12 and myself. As promised at the October hearing, the staff 13 will update the Board today on information received from the 14 final public forum on electrical costs and benefits, which 15 took place earlier this month, on November 8th. 16 At this point, I'd like to ask Mr. Boyd to 17 introduce the item and begin the staff's presentation. 18 MR. BOYD: Jim? Thank you, Mr. Chairman. 19 Well, as you know, our key leadperson for each of 20 the forums has been Bob Cross, Assistant Chief of the Mobile 21 Source Division, who has been fogbound in L.A. all morning. 22 And we heard the plane left, but. . . I was going to and 23 will continue to take this opportunity to publicly thank and 24 compliment Bob and our entire electric vehicle team for all PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 93 1 the hard work that they've put into conducting these forums 2 and reporting back to the Board. 3 And I will reiterate that if and when we see Bob. 4 I believe the forums have accomplished their goal of 5 soliciting input from concerned parties on the specific 6 issues surrounding the ZEV program, and I'm confident and 7 convinced the forums are assisting the Board in providing 8 input to the future program and will assist you in providing 9 direction to the staff to ensure a successful program. 10 With those brief comments, I'd like to introduce 11 to you for the staff presentation Ms. Sue DeWitt, who is 12 head of our ZEV team, and quite prepared and capable to 13 pinch hit for Bob and give the Board a summary of the last 14 final and last forum, the cost/benefits forum. 15 Ms. DeWitt? 16 MS. DeWITT: Thank you, Mr. Boyd, and thank you, 17 Mr. Chairman and members of the Board. 18 My name is Sue DeWitt, and I'm leading the 19 Technology Advancement Section on the ZEV program and 20 substituting for Bob Cross, who I know is disappointed that 21 he couldn't make it here today. I know that, because he 22 called about eight times before I got up here. 23 (Laughter.) 24 MS. DeWITT: On the screen, you have before you 25 the slides that we'll be working from today, and before you, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 94 1 you have those slides. 2 The next slide, please. 3 We have shown you a summary of the forums between 4 May 9th and October 11th. And today, the purpose of this 5 presentation is to bring you up to date on the benefits and 6 costs forum, the one that was just recently held in Los 7 Angeles. 8 Next slide, please. 9 Each forum covered specific themes, and this one 10 addressed the benefits and costs of the ZEV program and 11 electric vehicles. 12 Next slide, please. 13 We heard from a very representative sampling of 14 those affected by the ZEV mandate, including physicians who 15 treat ailments attributed to air quality, automakers, 16 electric utilities, petroleum industry representatives, 17 environmental groups, and other concerned citizens. 18 Next slide. 19 Staff received presentations that reported 20 findings of studies on incremental costs. These are two of 21 the significant studies that were presented at the forum. 22 And what we notice from these is that we found that the 23 studies found a broad range of incremental cost estimates. 24 These studies -- it seems that the reason why the 25 incremental cost estimates ranged was based on the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 95 1 differences in the assumptions used to report -- to come to 2 the results. You can see that the BKI/EPRI assumptions, 3 that they would include life cycle cost, and made an 4 assumption that the break-even point would be reached with a 5 fast-learning curve, EPRI incremental prices for the base 6 vehicle were -- I don't know what they were, but it was a 7 lead-acid battery that was assumed. 8 Where, in the Sierra study, they assumed an 9 initial vehicle price of $60,000 roughly; there was no brief 10 break-even point. There was a very small learning curve, 11 and they also included confidential incremental cost numbers 12 from the automakers. We actually don't know what they are. 13 In addition to those two studies, there was also a 14 presentation from DOE consultants, from advocates, who 15 presented their findings. But their findings came in 16 between the incremental cost estimates of the BKI and the 17 Sierra studies. 18 Staff also received a presentation that reported 19 the preliminary results of the ARB's own sponsored study 20 from the University of California at Davis. They found that 21 EVs were ranging in a life cycle cost analysis of 21 cents 22 to 26 per mile, where internal combustion engines were 23 running about 24 percents per mile for life cycle costs. 24 Again, the findings are based on the assumptions. 25 The UCD study used long-term, high-volume assumptions. They PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 96 1 did use the numbers that were given to them from the 2 independent Battery Panel. So, you can see that those have 3 been incorporated into the preliminary findings. 4 The model will not be finished until mid-1996. 5 So, these are, like I suggested, the preliminary findings. 6 So, they could change. But we wanted you to know that they 7 were presented at the forum. 8 Next slide, please. 9 We also received presentations on program cost 10 estimates and, again, the significant reports were one from 11 the University of California at Fullerton with Calstart, and 12 another from Sierra Research and the Western States 13 Petroleum Association. 14 These showed that there would be an increase in 15 gas vehicle prices of $10 to $70 per vehicle, depending upon 16 whether the vehicle costs were amortized for California 17 vehicle sales only or across the nation, where the Sierra 18 study showed a $20.3 billion estimated in program costs to 19 fund the mandate, essentially. 20 And no adverse economic impacts on personal income 21 as automakers won't spend more than $5,000. In the UCF 22 study, what they felt was that the automakers would make a 23 decision on whether they would opt to pay the penalty versus 24 spend more money than $5,000 each on each car sold. And so, 25 that's how they got to their conclusions on the $10 to $70. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 97 1 They did, also, find that jobs would be created as 2 a result of the ZEV program, where the Sierra/WSPA study 3 found that 363,000 jobs might be lost if the ZEV program 4 were continued. 5 Next slide, please. 6 The cumulative incremental program costs also used 7 these assumptions. In the UCF study, the incremental cost 8 assumption would drop quickly, and that California would 9 supply a significant portion of the components used in 10 electric vehicles, where Sierra assumed that high 11 incremental costs would remain for an extended period of 12 time and, by high incremental costs, essentially double the 13 price of the gasoline vehicle. 14 Electric vehicle manufacturing would also occur 15 outside of California, which was another key part of the 16 Sierra report. 17 Next slide, please. 18 And then, last, we also received some information 19 on studies on the air quality benefits related to the ZEV 20 program. Based on 2010 and in the South Coast Air Basin, 21 AAMA suggested that the estimate of savings would be 8.8 22 tons per day based on a low number of electric vehicles. 23 The UCS -- the Union of Concerned Scientists study -- now, 24 we're presenting here their high estimate, which was 25 assuming an emissions reduction of 40 tons per day at a 50 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 98 1 percent electric vehicle penetration rate. That is actually 2 their highest estimate. 3 They also had an estimate that was closer to 15 4 tons per day, which was closer to the ARB assumptions and 5 findings that you'll see there in the center. 6 Next slide, please. 7 And then, last, we had some studies on cost- 8 effectiveness that were also presented to us. BKI, on 9 behalf of EPRI, presented a range of from $2,000 to $10,800 10 per ton of emissions. And WSPA was more in the range of 11 $227,000 per ton. And again, the thing that we found is 12 that the results are based on the assumptions. BKI assumed 13 low incremental costs, break-even, and that we were able to 14 find savings, and they also found high-emissions benefits, 15 where WSPA found high cumulative incremental costs and 16 low-emissions benefits. 17 Next slide, please. 18 This is actually something that was new that we 19 found in these studies. And I want to go to my notes 20 quickly here. They're kind of important, because they're 21 different from things that we heard about at the other 22 forums. 23 For example, this ten to fourteen billions of 24 dollars per year in health costs was reported by one 25 physician who found that over 11 percent of the heart PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 99 1 failures in the local hospital were attributed to carbon 2 monoxide, and that this estimate is based on the cost to 3 treat the effects of air pollution. 4 So, that was new information we thought you might 5 find interesting. 6 In addition, some of the other new information 7 that was presented was on the cost of subsidizing the oil 8 industry; where, in the past presentations, where you're 9 comparing the benefits of ZEVs or the cost of ZEVs against 10 vehicles, what you'll find is that the vehicle assumptions 11 don't include the subsidies that are granted the oil 12 industry currently. 13 Next slide? 14 And then, last, this was also new. I think the 15 Board has also heard some presentations on the safety 16 hazards that might be associated with electric vehicles. At 17 this last forum, we had a number of presentations made on 18 the safety hazards that are also associated with gasoline 19 vehicles. And we thought you might like to know about that. 20 And then, in conclusion, there were significant 21 long-term emissions reductions associated with the ZEV 22 program. And you can see that, no matter what your 23 assumptions were, you actually found that ranges of tons per 24 day emissions reductions were in the 8.8 to possibly 40 tons 25 per day range. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 100 1 Next. 2 Air quality benefits of ZEVs are a critical 3 element of the California SIP. A number of people 4 emphasized this, and we also want to remind the Board that 5 that is -- that without ZEVs, our chances of complying with 6 the State Implementation Plan are slim to none. 7 Next. 8 And in this, I think you can see that's self- 9 evident from the information we've presented to you; that 10 the findings of each of these studies was pretty much driven 11 by the assumptions they used in the study. 12 And this was actually very clear -- that the 13 alternatives to existing ZEV programs must offer equivalent 14 or better benefits. And we found that people, no matter 15 what walk they were coming from at this final forum, they 16 were never suggesting not to bring in some alternative to 17 make up for those ZEV benefits. 18 And then, this slide we did specifically because I 19 believe that Chairman Dunlap asked us to respond to this in 20 order to bring together all of the forums and how the staff 21 feels about this. 22 And so, we're answering the question: How did the 23 benefit//cost forum affect the conclusions we'd reached 24 before? 25 And what we found was that the forum provided PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 101 1 information on the divergent views on the benefits and the 2 costs, and that staff remains convinced that the current ZEV 3 program could be amended to be more responsive to the issues 4 raised at these forums. 5 Next slide, please. 6 That concludes my presentation on the cost/benefit 7 forum. And now, I'd like to shift gears a little bit and 8 give you an update on safety issues that have been raised, 9 both at the forums and here at the Board. 10 There is a handout that I believe has already been 11 passed around, but is a recent staff fact sheet on electric 12 vehicle safety, and I think you have that before you. 13 We want to answer some of the questions that were 14 raised about electric vehicles. 15 And the first question that comes up often is: 16 Will electric vehicle batteries spill acid? 17 And the answer is, no. Advanced lead-acid 18 batteries in gel or glass mat form will not amount to any 19 significant fluid acid releases. You're talking about a 20 couple of ounces of material that is probably more akin in 21 fluidity to peanut butter. So, it's not going to pour out 22 and it's not going to splash around. 23 Next question. Will electric vehicle batteries 24 explode? 25 And the answer is, no. The batteries are sealed PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 102 1 lead-acid batteries. They have relief venting in them to 2 prevent overaccumulation of gases and overaccumulation of 3 pressure. So, they are designed not to explode. And with 4 proper charging controls, there should not be excess 5 hydrogen gas emitted. 6 Now, this is important because, if excess hydrogen 7 gases are being produced, then that means that the battery 8 is not being effectively used, and that could affect the 9 battery life. So, it's in the automakers' interest to bring 10 about good charging controls to minimize the effects of 11 excess of hydrogen production in order to sustain the 12 battery life. 13 Next slide. 14 Are the auto manufacturers addressing safety 15 issues? 16 Yes, yes, and yes. The vehicles are being crash 17 tested the same as gasoline vehicles, and modifications and 18 design changes are being made to accommodate for that. 19 In addition to that one point there, Bob wanted me 20 to make sure that you knew that battery manufacturers were 21 actually testing their own batteries off-board the vehicles 22 to do their own private crash testing. So, he wanted to 23 make sure that you knew about that. 24 And there was one point there made about EPRI and 25 the Infrastructure Working Council, and the National Highway PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 103 1 Transportation Safety Administration and many others are 2 working on the safety issues related to the new technology. 3 So, that is being addressed. 4 Will EVs be as safe as gasoline cars? 5 Yes, we believe so. We believe that they have 6 inherently safer attributes over -- where is the rest of 7 that slide? 8 (Speaking of only the top half of slide 9 showing on screen.) 10 MS. DeWITT: There is no combustion process 11 involved with the production of energy in order to move an 12 electric vehicle. So, we think that by reducing the 13 combustion process or eliminating the combustion process 14 from the vehicle, that it's probably inherently safer. 15 In addition, some people talked about the weight 16 of the electric vehicles. People have pointed out to the 17 Air Board staff that with a lower center of gravity, these 18 vehicles will be less prone to roll over in collision 19 situations. So, we think that they will be inherently 20 safer. 21 Gasoline vehicles also have safety issues, and I 22 don't believe people have brought that out to you before. 23 There are explosions, fires, and fumes related to gasoline 24 vehicles. In fact, I don't know if you all recall, but here 25 in Sacramento and up on Highway 50 just this last six PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 104 1 months, three times the interstates have been closed due to 2 gasoline transportation accidents. I just want to remind 3 you that that happens with gasoline, too. 4 So, if you talk about the public hazards of 5 electric vehicles, you should also discuss the public 6 hazards related to gasoline transport. Both are bad. 7 And, of course, the acid batteries that are in 8 gasoline vehicles right now are the fluid lead-acid type, 9 and they could, in the event of a collision -- if they're 10 ruptured -- spill as much as two quarts of acid. So, I'd 11 just point out to you that the lead-acid issues are also in 12 the gasoline vehicles as well. 13 Next slide. 14 This is to talk to you about emergency response 15 training that's been going on in this State. To date, the 16 Air Resources Board staff and many others have been 17 providing informal training programs with fire safety 18 professionals. 19 The California State Fire Marshal has offered an 20 emergency response training program, and it looks like that 21 will start sometime early next year. 22 Formal training -- yeah, that's the next bullet, I 23 already covered that one. 24 And then last, at the last Board meeting, you 25 asked that we schedule a meeting to start a working group on PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 105 1 emergency response issues. That meeting is now scheduled 2 for December 7th. 3 We have been working with the California Fire 4 Chiefs Association to get the names of people who are 5 experiencing in safety issues to attend that meeting. And 6 Mr. Craven, who testified before you at the last meeting, 7 will also be invited. 8 That letter of invitation should go out tomorrow 9 or early next week. 10 And I believe that concludes my presentation. 11 Thank you very much. 12 CHAIRMAN DUNLAP: Thank you. Bob would be proud. 13 MS. DeWITT: Thank you. 14 CHAIRMAN DUNLAP: Any questions from my Board 15 member colleagues to Sue at this point? 16 Okay. Jim, any final comments before we go to the 17 witnesses? 18 MR. BOYD: Yes, Mr. Chairman. If you don't mind, 19 since this is our last report on the final forum, I thought 20 I might take advantage of these few moments to kind of put 21 all of this in a little bit of context, and just give the 22 Board and the public a brief recap of the history of this 23 program. 24 As all have heard many times, this program, of 25 course, was enacted by the Board in 1990, as part of the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 106 1 California low-emission vehicle/clean fuels program package. 2 The program, though, was really conceived -- or began, let's 3 say -- in roughly the 1987-88 timeframe, as we here in the 4 air pollution business in California at the State and local 5 level, wrestled with the problems of how to achieve clean 6 air in California in order to meet both the State and 7 Federal ambient air quality standards. 8 I think, as those who've been around some time 9 will recall, the 1977 amendments of the Federal Clean Air 10 Act called for the nation to have clean air by 1987, and 11 called for States and areas to prepare plans to accomplish 12 that. 13 And indeed, in California, plans were prepared and 14 submitted both in 1979; and, in 1982, for the more severe 15 areas that were given a little more time. 16 California, indeed, did its plans; probably, I 17 believe, the most comprehensive in the world. But, at that 18 time, we still could not forecast clear air in all of 19 California's areas by the mandatory deadline of 1987. 20 Thus, at the time of submission of our plans, we 21 found ourselves already, in effect, in technical violation 22 of the 1977 law, even though we feel we pledged to do more 23 than anyone anywhere in the world, most likely. 24 Another bit of history is that the California 25 administration, the California Legislature, the California PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 107 1 business community, environmental community, and other 2 interested public collaborated to create the California 3 Clean Air Act in the 1987-88 timeframe, recognizing that 4 there was a void created by the lapse of the Federal Act. 5 This was enacted into law and became effective 6 January 1st of 1989. 7 Finally, as you know, the 1990 Federal Clean Air 8 Act amendments filled the void that was left from the 9 expiration of the Federal Clean Air Act in '87, and is 10 today's driving force for nationwide action, again to meet 11 national ambient air quality standards. 12 But by the time of the passage of this Federal 13 law, California, however, was well along the path to 14 establishing its LEV, ZEV, and clean fuels programs. 15 In enacting the LEV/ZEV program in 1990, the Board 16 instructed the staff to conduct continuous reviews of the 17 development of technology necessary to meet all facets of 18 the LEV program -- and I just wanted to remind everybody, 19 that meant the so-called TLEVs, the LEVs, the ULEVs, and the 20 ZEVs -- and to report biennially to the Board. 21 And, as you know, these reports have occurred -- 22 first in 1992, and again in 1994 -- on all facets and all 23 aspects of the program, not just the ZEV component. 24 Well, to us, your staff, the results of these 25 several years of review of technologic and economic PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 108 1 development, the results of the forums of this year have 2 continued to show the wisdom of California's progressive 3 approach to the solution of its public health as well as its 4 economic problems. 5 There's little question to us of the ability of 6 the world auto community, working in harmony with the great 7 host of related ZEV industries, to meet California's public 8 health needs. 9 Now, we're quite aware of the status of ZEV 10 technological development, and we've indicated more than 11 once we are ready to respond to the current state of 12 technology as it relates to our program needs and our 13 program requirements. 14 From the inception of this program, we and the 15 Board have consistently pointed out that the launch and the 16 execution of this program would recognize these facts and 17 would be tailored always for success. 18 So, having concluded this year's series of forums 19 and having had the advantage of the Battery Panel's input 20 and several previous reports, the staff still remains quite 21 positive in its view of the ability of manufacturers to 22 produce these vehicles in some form and in some quantities 23 in the future. And, of course, an incredible world market 24 has developed for these types of automobiles that provide 25 economic opportunity for the United States as well as for PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 109 1 California. 2 That concludes my comments, Mr. Chairman. 3 CHAIRMAN DUNLAP: Thank you, Mr. Boyd. 4 Mr. Cross, welcome. 5 MR. CROSS: Thank you. 6 (Laughter.) 7 CHAIRMAN DUNLAP: I've never seen a Board so 8 interested in your whereabouts. 9 MR. CROSS: I had a good time at Burbank Airport. 10 CHAIRMAN DUNLAP: Well, your staff did a fine job 11 in running through the slides. Any observations? Or I can 12 give you a few minutes when we're done with the witnesses? 13 MR. CROSS: I think that's probably preferable. 14 CHAIRMAN DUNLAP: Okay. Very good. 15 We have some 22 individuals signed up to testify 16 before the Board. So, I will ask, in the interest of time, 17 that you limit your comments to five minutes, and we'll run 18 through them as quickly as we can. Five minutes 19 individually, less than that if you can. 20 I'd ask that you not be repetitive, please. We'll 21 start off with Mr. Nunenkamp from the Office of Assemblyman 22 Bernie Richter, followed by Mr. Larrea from Assemblyman 23 Mickey Conroy's office. 24 Good afternoon. 25 MR. NUNENKAMP: Good afternoon. Mr. Chairman, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 110 1 Jack, and members of the Board, appreciate the opportunity 2 to share some time with you. 3 My name is David Nunenkamp. I'm the chief 4 consultant to the Assembly Committee on Environmental Safety 5 and Toxic Materials, and a member of Mr. Richter's staff. 6 I'm speaking in behalf of Mr. Richter, who extends 7 his deepest regrets to the Board for his inability to be 8 here today and to share time with you due to commitments in 9 his district that keep him away. 10 The public decision-making process is an arduous 11 process. Conflicts that are presented to you by your staff 12 in terms of the reviews that they've gone through I think 13 emphasize the point. 14 Before we start, I'd like to acknowledge that I'm 15 a poor substitute for Mr. Richter. For those of you that 16 know him, I do not possess his eloquence, his fervor, or his 17 fire. I cannot effectively communicate in his style. I 18 will, therefore, be as short as I reasonably can. I am 19 requested, however, to use his words to the extent possible. 20 In that regard, I respectfully request that you 21 disregard the image before you and, instead, visualize an 22 impassioned, articulate -- 23 (Laughter.) 24 MR. NUNENKAMP: -- and well-studied senior 25 statesman, a statesman who represents a significant land PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 111 1 area in the northern part of the State and a rational 2 populace, a statesman who is a product of and a successful 3 player in a free market environment. 4 I further respectfully request that you extract 5 from his words placed in my mouth his commitment to his 6 position on this issue, on the issue before you and, most 7 importantly, that you weigh heavily his views in you 8 far-reaching decision-making process. 9 As a preamble to his thoughts, permit me to set 10 the stage as might be viewed through his eyes. 11 Regulatory structure, regulatory reform following 12 23 to 25 years of significant, steady progress on 13 restoration of a viable, sustainable environment and a 14 viable, sustainable economy within the nation -- and 15 particularly within California -- must be predicated on the 16 following: 17 We need to refine regulation, not eliminate 18 regulation. And, in so doing, we must maintain and enhance 19 the positive effects of the regulations, while 20 simultaneously eliminating the burdens. 21 To reach these lofty goals, we must develop new 22 attitudes about the relationship between our environment and 23 the economy, and more critically about the direct working 24 relationships between the business sector -- or among the 25 business sector, the communities, and the government. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 112 1 To that end, we must collectively examine the 2 validity of existing and promulgated regulations. 3 We must seek efficiency and least costly 4 regulatory structures. 5 We must eliminate regulatory controls that do not 6 work and avoid the creation of new controls that cannot 7 work. We must seek a way to balance our limited fiscal 8 resources for the highest good. 9 Playing upon this stage and before the voters of 10 this State, Bernie, in his heart of hearts, would state that 11 "nothing, nothing could be a greater mistake for the 12 government and the people of this State than for this Board 13 to continue to mandate to the private sector what it must 14 produce; and, further, in his mind, nothing could be more 15 outrageous. 16 To emphasize that point, Mr. Richter would harbor 17 back to Frederick Hyatt's now famous book, The Road to 18 Serfdom, and he would postulate that the document provides 19 significant fuel to the thought that the end of a free 20 market society and to the failure of government as we know 21 it, and indeed the road to communism and socialism are 22 government mandates, which impact and limit market driven 23 product or which requires specific production options in 24 lieu of others. 25 He would further posture that this mandated PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 113 1 diversion from the creation of wealth will irrefutably harm 2 the struggling California economy; for, in his estimation, 3 we are in a rapidly changing world and, accordingly, we must 4 have the ability to respond to market changes to be 5 competitive. 6 We must avoid the burdens that exceed the gain and 7 we must avoid social engineering at all costs. 8 From his perspective, the proffered mandate is 9 nothing more than a gigantic raid on the taxpayers of this 10 magnificent State. In his estimation, the mandate, as 11 currently structured, will cost the taxpayers of this State 12 billions of dollars and thousands of jobs. And one input to 13 your staff clearly showed that as a possible -- possible 14 outcome. 15 The mandate -- to support his facts, he indicates 16 that the mandate has the potential to add several thousand 17 dollars to the cost of all new conventional vehicles in this 18 State and, in so doing, further reduce the competitiveness 19 of the business of this State and the quality of life of the 20 people of the State. 21 It will add to and not reduce air emissions from 22 the vehicles of this State by keeping older vehicles in 23 service and on the roads, furthering their disproportionate 24 contribution to our mobile source emission problems. 25 It will significantly increase the costs PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 114 1 associated with the needs to address the increased threat to 2 public health and safety and to the environment as a direct 3 result to the augmented lead battery (sic) -- lead-acid 4 battery from production, recycling, and the disposal 5 aspects, to say nothing of the increased threat to public 6 health and safety and the environment associated with 7 accidents involving vehicles containing multiple lead-acid 8 batteries, and nothing for all of us that no viable 9 alternative yet exists. 10 Mr. Richter would respectfully request that you 11 carefully note that the whole question of lead-acid battery 12 toxicity is at issue. As of yet, the toxicity cannot be 13 completely quantified and the potential significant 14 environmental effects have yet to be fully documented. 15 To that end, Mr. Richter wishes to advise you that 16 the Assembly Committee on Environmental Safety and Toxics 17 will hold a series of hearings in 1996, in a concerted 18 effort to determine if we are creating yet a new or another 19 toxic nightmare. 20 In retrospect, on the other hand, and upon second- 21 guessing the issue, Bernie might posture that such hysteria 22 is unwarranted. In reaching that conclusion, he would 23 proffer that the people of this State are not stupid and 24 would not purchase products that are not viable. 25 Harboring back to the limited range, the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 115 1 recharging times, additional limited range of air 2 conditioning is on-board and utilized, and then the impact 3 of a hilly environment, he would posture that reliance on, 4 quote, his words, "the crazy premise" that an 80 mile a day 5 range is a meaningful average to the drivers of the State is 6 more mindless than the premise itself. 7 He would conclude that smart people on a free and 8 fair market are not easily driven astray. And when the 9 technology is available for a viable electric vehicle based 10 upon new battery technology, we won't need the mandates. 11 But will we have a free market or will we fulfill 12 Frederick Hyatt's nightmare with this catastrophic mandate? 13 Will we further divert the wealth and the creation of the 14 working capital needed to address the mobile source emission 15 problem? 16 After listening with anticipation to Secretary 17 Strock's nonstatement regarding new developments with 18 respect to the electric vehicle mandate on Tuesday of this 19 week, Mr. Richter is deeply concerned that the Board is not 20 heeding the Governor's Executive Order regarding 21 cost-effective regulation. 22 Mr. Richter requests that we remind the Board that 23 in this era of smaller, less costly, smarter, leaner, not 24 meaner government, the promulgation of new rules and 25 regulations must be based on the following four criteria: PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 116 1 There must be a cost/benefit analysis that is 2 based on current science and dollars; that the regulations, 3 if promulgated, will significantly -- repeat -- will 4 significantly reduce human health and environmental risk; 5 that there is no regulatory alternative that is less costly; 6 and that a finding must be made that the cost/benefits do 7 justify the cost of the regulation. 8 These are the questions that you must wrestle 9 with. The answers will be evaluated by all. 10 In closing, Mr. Richter would strongly state that 11 the decision-makers associated with this disastrous mandate 12 had best very carefully second-guess the validity of the 13 mandate because, in his view, the mandate will do more to 14 discredit the regulatory class and directly undermine the 15 viability of the needed regulatory reform and the viability 16 of the environment in this State than anything else 17 currently before any other regulatory body. 18 And finally, every citizen in this State and those 19 cognizant on a national level will know how absurd the 20 mandate is and where the responsibility for its emergence 21 against all reasonable advice and counsel lies. 22 Thank you for the opportunity. 23 CHAIRMAN DUNLAP: Thank you, Mr. Nunenkamp. 24 Any questions of the witness? Mr. Lagarias. 25 MR. LAGARIAS: David, I'd like to acknowledge the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 117 1 fact that we've worked together over many years in the past. 2 And I'm well aware of your concern with the environment, 3 since that has been your principal area of expertise. 4 You can tell Assembly Richter we'll take his words 5 to heart and we'll certainly consider them. 6 MR. NUNENKAMP: Appreciate it. Thank you, sir. 7 CHAIRMAN DUNLAP: Mr. Larrea from Assemblyman 8 Mickey Conroy's office, followed by John Grimley from 9 Senator Ray Haynes' office. 10 Good afternoon. 11 MR. LARREA: Good afternoon, Mr. Chairman. 12 CHAIRMAN DUNLAP: Did I get the name right? 13 MR. LARREA: Yes, you did. I was going to 14 compliment you on it. That was well done. 15 Again, what went for Mr. Nunenkamp goes double for 16 me with Assemblyman Mickey Conroy. 17 I'm the Senior Consultant for the Assembly 18 Utilities and Commerce Committee and I worked for Mr. 19 Conroy. He is in his district, also, but wanted to make a 20 brief statement with regards to the last meeting here. 21 "Government is a fine servant, but it makes a 22 terrible master." George Washington made that statement, 23 and the truth of it has never been more evident than in the 24 Air Resources Board's adoption of the California zero- 25 emission vehicle program. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 118 1 Although it has been stated many times before, it 2 is worth stating again, and that is that under a 3 costs/benefits analysis, this unfunded mandate will cost 4 California ratepayers at least $20 billion over the next 15 5 years to fund EV research and development with little or no 6 benefit, despite all the optimistic predictions of the 7 experts. 8 Even the Air Board's most favorable estimates show 9 that all the electric car mandates will result in less than 10 one percent of the reductions required by the Clean Air Act. 11 A lesson can be learned from the gas crisis of the 12 1970s, when the so-called experts predicted that oil prices 13 would rise to $200 a barrel. That speculation fueled the 14 investment in what are now unwanted nuclear plants for which 15 t he ratepayers are still paying. 16 Today, those self-same nuclear plants represent 17 one of the biggest hindrances to bringing competition to the 18 electrical services industry and are one of the reasons, if 19 not the reason, that the electricity rates in California are 20 one and a half times the national average. 21 Is it any wonder that the rosy predictions of the 22 so-called industry experts that t his mandate will fuel the 23 demand for electric cars, spurring technological development 24 and economic growth -- unsupported by facts -- are looked 25 upon so skeptically by a majority of Californians? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 119 1 The studies suggest that Californians are, at est, 2 ambivalent about electric vehicles, given the media hype 3 that they have to wade through. However, in no way can this 4 ambivalence be construed as support for this mandate. 5 As far as I'm concerned, this mandate puts the 6 environmental cart before the technological horse. The 7 mandate's supporters want California ratepayers and 8 manufacturers to foot the bill for this environmentalist- 9 backed boondoggle in the hope that some technological 10 breakthrough will occur before the ratepayers get tired of 11 footing the bill. 12 For example, there are predictions of future 13 technological improvements to batteries. This is a "Fields 14 of Dreams" approach -- "Build it, and they will come." 15 "Build it, and maybe we'll have some advancement 16 there." 17 But there are no assurances. There are no 18 guarantees. And remember, the mavins of 1970 were wrong 19 about the oil prices and the natural gas reserves. And we 20 are still paying the price for those decisions. Are we 21 prepared to pay based, yet again, upon -- to pay again, yet 22 again, upon predictions (sic)? I don't think so. 23 To expend such vast amounts of time and resources 24 for so little return is counterproductive on a variety of 25 levels. First, the mandate flies in the face of the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 120 1 deregulation efforts that have been sweeping across the 2 country. 3 Airlines, natural gas, trucking, and soon, 4 electrical services all bear witness -- will all bear 5 witness to the great strides that the competition can bring 6 in research and development. 7 Environmentally, this plan exchanges one demon for 8 a variety of others. For the barest of clean air benefits, 9 a whole new toxic waste hazard is created. The disposal of 10 used or worn batteries containing toxic chemicals promises 11 to be on part with other major waste disposal problems. 12 The safety and efficiency of the batteries or the 13 vehicles themselves is of grave concern. Just how much 14 safety protection is sacrificed for economy and efficiency? 15 What really concerns me is that electric vehicle 16 supporters are now pressing for exemptions in environmental 17 and hazardous waste regulations in order to facilitate 18 continued development of EVs, unhindered by the restraints 19 placed on other unfunded manufacturers in many other fields. 20 Given everything that has transpired over the last 21 five years since the mandate's adoption, there is only one 22 reasonable action left to be taken in this matter. The 23 solution is not to change the timetables for EV sales or the 24 quotas -- simply scrap the entire EV mandate and let the 25 market handle it. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 121 1 George Santayana once said, "Those who cannot 2 remember the past are condemned to repeat it." 3 And nothing could be truer in this case. It is 4 well known that the navies of the world during World War II, 5 and since then, have spent countless hours and untold 6 millions of dollars attempting to build efficient, long- 7 lasting batteries to power submarines. 8 Despite being unhindered by environmental, safety, 9 and funding concerns, they were unsuccessful. Eventually, 10 they ended up turning to nuclear power. 11 I'm not suggesting we explore nuclear-powered 12 cars. What I'm suggesting is that free enterprise and 13 competition have been the wellspring feeding this nation's 14 technological advancement. Government's role has always 15 been to foster that innovation and development, not mandate 16 it. 17 I would urge the Board to find ways to support 18 research and development through other than unreasonable 19 deadlines and unrealistic quotas; in other words, through 20 other means than this mandate. 21 Thank you. Any questions of the witness? 22 (There was no response.) 23 CHAIRMAN DUNLAP: All right. Very good. 24 Appreciate your time. 25 Mr. Grimley, followed by Valory Brown from the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 122 1 Assemblyman Steve Baldwin's office. 2 Good afternoon. 3 MR. GRIMLEY: Good afternoon. Mr. Chairman and 4 members, on behalf of Senator Haynes, I appreciate the 5 opportunity to present a statement by him. 6 My name is John Grimley. I'm the Administrative 7 Assistant to Senator Haynes here in the Capitol. 8 Firstly, Senator Haynes would like to emphasize 9 that he is a pro free enterprise not pro unrestrained 10 business person. There are many businesses in the private 11 sector in favor of regulations which apply to their 12 competitors, which then limit their competition. 13 There are also businesses that favor regulation, 14 because it forces people to deal with their particular 15 business. The unfortunate circumstances in California today 16 is that many regulations have strong vested interest in the 17 private sector. A good example of this is the electric car 18 production mandate shamelessly enacted and enforced by the 19 California Air Resources Board. 20 The mandate requires that a certain number of cars 21 manufactured for delivery to California be electric. It 22 does not require that people buy these cars, only that they 23 be manufactured. 24 The manufacturers' claim -- persuasively in my 25 estimation -- that, in order to manufacture these cars and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 123 1 sell them at a price which might induce people to buy them, 2 will add $2,000 to $5,000 to the cost of a gas-powered 3 vehicle in order to subsidize electric cars. 4 Of course, electric companies support the mandate. 5 They want to raise electric car rates to finance the 6 research programs to promote the policy. 7 Oil companies and car manufacturers oppose the 8 policy. 9 The issue is not who supports or opposes the 10 policy, but rather what advances a free market economy. 11 Production mandates enforced by government are what 12 destroyed the Soviet economy. Government bureaucrats who 13 are not driven by cost considerations or consumer 14 preferences are inherently poor at deciding what people 15 should buy. 16 These bureaucrats want you to buy electric cars so 17 they, in turn, can order someone to make them. According to 18 these bureaucrats, if you don't buy electric cars, you're 19 ill-informed not to recognize the wisdom of the bureaucrat's 20 decisions. 21 Mandates are based on socialist economic policy 22 and, in the end, will fail. Interestingly enough, the 23 electric companies, who argue so vehemently for mandates on 24 car companies, argue against the mandates which require them 25 to buy power from independent power companies at PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 124 1 artificially high prices. 2 In fact, arguments against mandates on any 3 business is the correct position, as this policy promotes a 4 free marketplace. 5 A number of marketplace participants produce 6 consumer goods of high quality at a price which a maximum of 7 consumers can afford. If a company cannot produce a 8 desirable product, a quality, affordable product, it will go 9 out of business. 10 If a government mandate is required to enforce 11 sales goals, the cost of the mandate will be passed on to 12 other products, depriving people who otherwise could afford 13 the product out of the market (sic). 14 Thank you, Mr. Chairman and members. 15 CHAIRMAN DUNLAP: Thank you. Any questions of the 16 witness? Thanks very much. 17 Ms. Brown from Assemblyman Baldwin's office, 18 followed by Reuel Jones from Assemblyman Bruce Thompson's 19 office. 20 Good afternoon. 21 MS. BROWN: Hi. Good afternoon. Mr. Baldwin also 22 apologizes that he couldn't come in person. And if you have 23 any questions or comments regarding his statement, he 24 welcomes any calls in his district office. 25 I have followed the electric car debate with great PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 125 1 interest and feel very strongly that this is one unfunded 2 mandate that never should have been allowed to progress as 3 far as it has. 4 In the name clean air, millions of taxpayer 5 dollars have already been appropriated or spent to subsidize 6 the electric vehicle industry in California, yet the Air 7 Resources Board's own figures indicate that emissions 8 reductions from mandated electric vehicles, even in the 9 final year of the mandate, will be negligible. 10 I believe the figure is less than one percent of 11 required reductions. It is conservatively estimated that 12 before the mandate expires, $20 billion of taxpayer, utility 13 ratepayer, and consumer funds have been spent to subsidize, 14 and manufacture, and sell -- manufacture and sell -- I can't 15 read -- these vehicles, and that doesn't include the cost of 16 public infrastructure necessary to support their operation. 17 There has been a massive public relations effort 18 on the part of the EV lobby and the Air Resources Board to 19 convince the public that the electric vehicles are the only 20 salvation for a State suffering from serious air pollution 21 problems. Much of that effort has been financed with 22 taxpayer dollars. 23 It is unfortunate that a comparable effort has not 24 been made to inform the public that for billions of dollars 25 they must spend they will get virtually nothing in air PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 126 1 quality benefits. 2 If I, as a legislator, supported a mandate that 3 not only told manufacturers what to make, when to make it, 4 and how many units to sell, but also expected taxpayers to 5 underwrite that product and receive no benefit, voters in my 6 districts would be understandably upset. 7 As an elected official, I have a fiduciary 8 responsibility to ensure that the people's money is spent 9 wisely and that the public receives maximum benefits of the 10 expenditure of their hard-earned tax dollars. 11 The electric car mandate is not only imprudent; 12 from a practical standpoint, it is a gross waste of taxpayer 13 funds. 14 Even though you, as Board members, are not 15 elected, you have no less a responsibility to the citizens 16 of California. Your appointment status does not give you 17 license to act as technology czars no with no accountability 18 to the public. 19 If the goal is clean air, there are plenty of 20 other ways to achieve the goal without forcing an expensive, 21 ineffective technology. The electric car mandate is the 22 least cost-effective method of emissions reduction, and it 23 creates needless failures in the marketplace to the 24 development of other more cost-effective and efficient 25 technologies (sic), which would do far to reduce mobile PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 127 1 source pollution. 2 I urge you to abandon the electric car mandate now 3 before another penny of public funds is wasted on the failed 4 experiment that will cost billions of dollars, but achieve 5 less than one percent in air quality improvement. 6 Sincerely, Steve Baldwin. 7 CHAIRMAN DUNLAP: Ms. Brown, thank you. 8 Just a point of clarification. Several, about 9 half of the members of this Board, are elected officials who 10 serve on other boards, and by virtue of that, have been 11 appointed here. 12 MS. BROWN: Okay. 13 CHAIRMAN DUNLAP: But your point's well taken. 14 Thank you. 15 Dr. Boston? 16 SUPERVISOR VAGIM: This is a point, if I may, 17 before Dr. Boston? 18 CHAIRMAN DUNLAP: Yes, Supervisor Vagim. 19 We've lost our witness. 20 SUPERVISOR VAGIM: That's okay. We'll just make a 21 general statement here. 22 At least two of the members here are -- and that's 23 not I, but at least two of the members -- San Diego and 24 Orange County -- are elected by more people than the 25 Assemblymen who are being represented here today. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 128 1 And my district is about half an assembly 2 district. 3 CHAIRMAN DUNLAP: Thank you. Dr. Boston? 4 DR. BOSTON: I was going to ask Ms. Brown if 5 Assemblyman Baldwin voted for the California Clean Air Act, 6 and if he didn't consider that to be a mandate. You might 7 ask the other assembly member representatives who may came 8 up that same question. 9 CHAIRMAN DUNLAP: Okay. 10 SUPERVISOR ROBERTS: Mr. Chairman, if I might -- 11 CHAIRMAN DUNLAP: Yes, Supervisor Roberts. 12 SUPERVISOR ROBERTS: There are no czars here. 13 CHAIRMAN DUNLAP: Pardon? 14 SUPERVISOR ROBERTS: There are no elected czars. 15 CHAIRMAN DUNLAP: That's correct. 16 (Laughter.) 17 CHAIRMAN DUNLAP: One of the points that was well 18 taken. 19 Good afternoon, Mr. Jones. 20 MR. JONES: Thank you. I am Reuel Jones of 21 Assemblyman Bruce Thompson's Budget Consultants (sic). My 22 area of responsibility on the Budget is -- on the Budget 23 Committee and subcommittee three (sic), transportation, 24 environment, resources, and agriculture. 25 As you will notice, I am reading from my -- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 129 1 remarks from a personal computer. This is a great 2 technological advance directly attributable to governmental 3 space program (sic). 4 When I first started using a computer -- personal 5 computers in 1980, it was my dream to be able to have a 6 computer that I am now using. Fifteen years ago, I could 7 not have purchased this computer at any cost because the 8 technology had not progressed to where we are today. 9 Even though computers were first developed by the 10 government for government use, the private sector, 11 consumers, and market forces -- supply and demand -- refined 12 the use of the computers. And the ability to make a profit, 13 a free market economy, made these computers affordable. 14 Had these forces not been in use, then only the 15 government would have been able to afford computers. When 16 governments mandate something, no matter how noble the idea, 17 and these three forces are not at work, then we have 18 products that no one wants, or can afford, or are profitable 19 to produce. 20 So is the subject of this hearing today. There 21 are three areas that Assembly Thompson would like to stress 22 in this manner. First, unfunded mandates; second, 23 technologies that are not available yet; and, thirdly, the 24 mandate is not cost-effective for the results expected. 25 I would like to cover each of these in orders PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 130 1 (sic). In these times of higher cost of government and 2 higher taxes, we should not be requiring the citizens of 3 this State to pay for items just simply because of a noble 4 idea. 5 With Governor Wilson pushing for the Federal 6 Government to reimburse our State for unfunded mandates as a 7 result -- excuse me -- as a result of laws passed by 8 Congress, are we any better to demand the citizens of this 9 State pay for this mandate of possibly $20 billion? 10 Back to my little computer for an example. This 11 computer is very powerful and very useful, but it does have 12 a problem. As you can see, it is being run by batteries. 13 These batteries are very expense, about $120 for each 14 battery pack. Unfortunately, this battery only lasts for 15 about an hour. Then, I have to plug it back into the power 16 source and recharge the batteries. I might say, 17 parenthetically, that I did this last night, and I plugged 18 it back in. And it was completely discharged. And when I 19 got up this morning, there was only a 60 percent charge on 20 it. It's supposed to charge a hundred percent, but it 21 didn't. 22 This takes about two hours to charge. And that 23 would mean that in an nine-hour day, I could only use the 24 computer three hours and charge it for six. What are my 25 options? I could sit around waiting for six hours every day PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 131 1 or buy two more battery packs at $120 apiece, or use an AC 2 adapter to plus into the wall and use the computer all day. 3 Yes, I can make it work on batteries, but it is 4 not the best use of my time or resources. 5 Likewise, this is the same problem with electric 6 vehicles. We are a mobile society. In California, it is 7 not uncommon to drive 60 miles to work. The current working 8 range of an electrical vehicle is between 30 to 50 miles. 9 If I were to drive to work and, like the computer, have to 10 stop for two hours to recharge the battery so that I could 11 drive another few miles to get to work, I -- like the rest 12 of California drivers -- am going to use the old standby 13 gasoline engine. I do not care that the air quality is 14 going to be improved only by one percent. 15 If my choices are to take three hours to get to 16 work rather than one, or having to buy an additional battery 17 pack at the cost -- current cost of 9,000 to $15,000, 18 knowing that the batteries would weigh so much that the car 19 could not carry the extra pack, what choice would the 20 drivers of California make? The same one they are making 21 today with carpool lanes. Go to any freeway that has a 22 carpool lane during rush hour and see the parking lot of 23 cars with one driver creeping along at ten miles an hour, 24 while the cars in the diamond lane cruise at the speed 25 limit. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 132 1 I am not advocating giving up on clean air. But 2 spending $20 billion to get one percent improvement in air 3 quality is hardly the wisest thing to do with our resources. 4 If we have to spend $20 billion, let us give a -- 5 get a 5, 10, or even 20 percent increase in air quality. 6 Let the market forces work, and we will have a better 7 product. I ask you to reconsider this mandate and give one 8 small measure of relief to the taxpayers of the State of 9 California, because it is an unfunded mandate, the 10 technology is not there, and it is not cost-effective use of 11 taxpayers' funds for only one percent of improvement in air 12 quality. 13 Thank you for your time. 14 CHAIRMAN DUNLAP: Thank you. Mr. Lagarias. 15 MR. LAGARIAS: You referred to the current range 16 of electric vehicles today as being 30 to 50 miles. What 17 car are you referring to? 18 MR. JONES: Just from the research that I've been 19 given on that. 20 MR. LAGARIAS: But what car are you referring to? 21 MR. JONES: I am not -- I'm not referring to any 22 specific car. 23 MR. LAGARIAS: Well, can you refer to any car? 24 MR. JONES: No. 25 MR. LAGARIAS: Then, how do you know you have a 30 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 133 1 to 50 mile range? 2 MR. JONES: Because that is what the research that 3 I've been given states. 4 MR. LAGARIAS: Yes, but I'm trying to know where 5 that research is coming from. What car is giving 30 to 50 6 miles? 7 MR. JONES: I am not aware of it, sir. 8 MR. LAGARIAS: I suggest you check your research. 9 CHAIRMAN DUNLAP: Any other questions for Mr. 10 Jones? Thank you. 11 Matt Saboraria from Assemblyman Pringle's office, 12 followed by Tom Austin of WSPA, and Jamie Phillips from the 13 Planning and Conservation League. 14 Did I butcher your name, sir? 15 MR. SABORARIA: Pretty close. Saboraria. 16 CHAIRMAN DUNLAP: Saboraria. Okay. 17 MR. SABORARIA: Yes. Good afternoon. I'm a 18 legislative aide with Assemblyman Curt Pringle's office. 19 Mr. Pringle represents part of Orange County, and is 20 currently the Republican leader in the State Assembly. He, 21 too, regrets that he could not be here today, but asked me 22 to relay the following brief statement on his behalf. 23 Mr. Chairman and members, I wish to take this 24 opportunity to express my strong opposition to zero-emission 25 vehicle mandate. I have followed this issue closely since PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 134 1 the adoption of the mandate in 1990. 2 Having studied a substantial amount of information 3 on the feasibility of electric vehicles over the past five 4 years, I have come to oppose the policy on several grounds. 5 First, the mandate will not accomplish its primary 6 objective -- improving the State's air quality. Based on 7 the California Air Resources Board's own estimates, as 8 reported in the November 8th, 1995, Sacramento Bee, quote, 9 "Use of electric vehicles will reduce less than 1.5 percent 10 of the principal ingredients of smog in Southern California 11 required under the Federal Clean Air Act by the year 2010," 12 unquote. 13 In addition, electric vehicles powered by lead- 14 acid batteries will be far from pollution free. Indeed, the 15 source of toxic pollutants is simply shifted to more 16 concentrated locations, such as lead mining and processing 17 centers, and electric power generating stations. 18 Second, the costs associated with this negligible 19 reduction in air pollution are unacceptably high. Even the 20 most conservative estimates of the cost per ton of 21 pollutants from existing internal combustion engines that 22 would be reduced through the implementation of this mandate 23 are at least ten times higher than other pollution reduction 24 methods. 25 These costs, both in terms of the production costs PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 135 1 of electric cars and the necessary infrastructure 2 improvements, will be heavily subsidized by electric utility 3 ratepayers and all car buyers in California. 4 Third, the zero-emission vehicle mandate forces a 5 product onto the market prematurely. Electric cars, while 6 advanced in many respects, currently lack the technology to 7 compete favorably with existing internal combustion 8 automobiles, particularly in terms of range. 9 In addition to the negative implication in terms 10 of cost and consumer acceptance, limitations of lead acid 11 and other battery technologies raises serious concerns about 12 the safety of electric vehicles. 13 The auto industry has made great strides in 14 improving the efficiency and cleanliness of internal 15 combustion engines over the past 25 years. Furthermore, 16 several alternative fuel technologies, such as natural gas, 17 have emerged in recent years and show a much greater promise 18 in moving the State towards the air quality goals mandated 19 in the clean air act, while continuing to meet the cost, 20 performance, and safety demands of consumers. 21 I urge you to rescind the zero-emissions vehicle 22 mandate and turn your attention to more feasible means of 23 addressing this issue. 24 Thank you for your consideration of these remarks. 25 And I would also add that I have been asked to submit PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 136 1 letters of opposition to the Board on behalf of Senators 2 Dick Montieth, Ross Johnson, and Assemblyman Bill Hogue, and 3 Assemblyman Bill Morris. And I will give those to the Board 4 Secretary. 5 CHAIRMAN DUNLAP: The Board Secretary will record 6 them. Thank you. 7 Yes, Ms. Edgerton has a question. 8 MS. EDGERTON: I want to thank you for coming. 9 I just wanted to respond to a couple of issues. 10 I'm a little perplexed as to a couple of points. First, 11 with respect to the negligible benefits f rom the zero- 12 emission vehicle program, I think maybe you saw on the 13 Board -- were you here for the presentation, the staff 14 presentation? 15 MR. SABORARIA: I'd appreciate it if you would 16 inform Assemblyman Pringle of the other studies that have 17 shown significant reductions -- 40 tons per day was one of 18 the ones that was from USC -- because that's very important 19 in Southern California. Our shortfall is about 79 tons. 20 I assume you're from Orange County, also? 21 MR. SABORARIA: Yes. 22 MS. EDGERTON: If it were more like 40 tons, it's 23 really a large part of the tonnage that we need to reduce in 24 order to make the State Implementation Plan goals. 25 The second thing is that I want to be sure that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 137 1 the staff has gotten to you the response to that battery 2 study that was put out indicating that there was more of a 3 lead risk. 4 We want to make sure that he gets the -- your 5 response to that, because we don't feel -- we've had a 6 number of hearings on it and a lot of workshops, and I 7 wanted to be sure that you had that information. 8 MR. SABORARIA: Right. Well, Mr. Pringle is aware 9 that the State is under a mandate by the Federal Government 10 and, therefore, is limited in the action that it can take. 11 But his concern is that sufficient study be done in terms of 12 how best to meet that mandate in terms of the cost- 13 effectiveness of the various means of reducing total 14 aggregate pollutants in the air, and that the zero-emission 15 vehicle mandate itself is not necessarily the only viable 16 option, and that there are others that could, in fact, bring 17 the State into compliance at a far reduced cost. 18 MS. EDGERTON: Well, just so you know, one of the 19 things that's very interesting to me since I've been on this 20 Board is learning that one of the steps that is taken, as we 21 look at each regulation, is an effort to compare the price 22 per ton of a pollutant reduction or emission reduction 23 strategy with others. 24 And I think some of the figures there do show 25 that, at least for our calculations, that the program is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 138 1 cost-effective. 2 But I just want to reassure you that that is a 3 grid that we do use, which is always something we have in 4 mind. In fact, when we submitted our report to the 5 Legislature on the 2766 program, I think we had some 6 discussion on the price per ton of emissions reduction. 7 And with respect to the safety issues, do you have 8 this fact sheet on safety issues? 9 MR. SABORARIA: I don't believe so. 10 MS. EDGERTON: Let me just give it to you so you 11 can take it back to -- 12 MR. SABORARIA: Okay. 13 MS. EDGERTON: -- the Assemblyman. 14 (Thereupon, Ms. Edgerton supplied the 15 witness with a copy of a two-page handout.) 16 CHAIRMAN DUNLAP: Thank you, Ms. Edgerton. 17 Mr. Austin from WSPA, followed by Jamie Phillips, 18 Planning & Conservation League, and Lew Uhler from the 19 National Tax Limitation Committee. 20 MR. AUSTIN: Thank you, Mr. Chairman, I'm Tom 21 Austin from Sierra Research. 22 Because our electric vehicle cost estimates have 23 been used by so many people who oppose the mandate and 24 because we knew they'd be highlighted here today, the 25 Western States Petroleum Association asked us to provide the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 139 1 Board an update on our estimates of the costs and the 2 emission reductions associated with EVs. 3 During the Board's May, 1994, review of the low- 4 emission vehicle program, I presented testimony comparing 5 ARB staff estimates of LEV and ZEV costs, the estimates that 6 we developed using confidential information supplied by five 7 different vehicle manufacturers and several emission control 8 equipment vendors. 9 At that time, the ARB staff was projecting the 10 price premium for electric vehicles would be approximately 11 $1400. In contrast, our independent estimate for "purpose- 12 built" electric vehicles using advanced batteries with a 13 price premium of approximately $21,000. 14 As I told the Board in 1994, the ARB staff's EV 15 cost estimate was based on the assumption that the battery 16 would be the only significant cost item, and that a battery 17 cost of about $1400 would be adequate. 18 Our cost estimate was based on relatively 19 optimistic projections of battery costs being provided by 20 battery developers. We assumed that batteries would be 21 available meeting the midterm targets for cost and 22 performance established by the U.S. Advanced Battery 23 Consortium. 24 The results of using those estimates were a $5,000 25 battery cost for a four-passenger car with about a hundred PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 140 1 mile range. 2 We've monitored the progress being made in battery 3 development since our original cost estimates were prepared, 4 and it now appears that even our estimates of battery costs 5 were optimistic. More important, there are significant 6 nonbattery costs that have been ignored by your staff. 7 During the May, 1994, meeting, our estimates were 8 criticized on the basis that we did not disclose all of the 9 details that went into our cost model. In response to our 10 criticism, I immediately offered to provide details to the 11 ARB staff regarding how our estimates were prepared. 12 I followed up my verbal offer with a letter and 13 additional verbal communications with the staff. On several 14 occasions, most recently this summer, I was told that the 15 staff would get back to us with a suggested meeting date 16 during which we would disclose the details of exactly how we 17 came up with our numbers. 18 Eighteen months later, we have still not been 19 given the opportunity to meet with your staff. And this 20 morning, I listened again to Ms. DeWitt talking about how 21 there's problems getting at the details behind our analysis, 22 that today was referred to as the basis for the $14,000 23 estimate for the price premium for an electric vehicle. 24 Today, I want to briefly summarize the results of 25 our latest work, which take into account the fact that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 141 1 advanced technology EVs will not be available within the 2 timeframe we originally assumed. For a combination of 3 reasons, it's now apparent that a continuation of the 4 mandate will force manufacturers to produce less 5 sophisticated electric vehicles using lead-acid batteries. 6 The unavailability of batteries meeting the 7 midterm goals of the U.S. ABC during the early years of the 8 mandate is not the only factor, however, that will cause 9 this to happen. 10 Market research indicates that the public will not 11 be willing to pay the price associated with advanced 12 technology EVs even when batteries meeting the midterm goals 13 are available. As a result, it will be in the economic 14 interest of vehicle manufacturers to produce a significant 15 number of suboptimal EVs based on converted gasoline 16 vehicles. 17 Although the public will be willing to pay less 18 for such vehicles, the subsidy required to sell converted 19 gasoline vehicles will be much less than the subsidy 20 required to sell purpose-built vehicles. And if you run the 21 economics out, it will be in the interest of the car 22 companies to build a number of those vehicles. 23 Our latest cost estimates are based on a projected 24 50-50 split between purpose-built vehicles and converted 25 gasoline vehicles over the 1998 to 2010 timeframe. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 142 1 With a price premium for conversions at just under 2 $8,000 and a price premium for purpose-built vehicles at 3 just over $21,000, we're projecting an average EV cost 4 premium of 14,600, as was shown early on a slide presented 5 by your staff. 6 Using this estimate, the cost of producing 7 vehicles to comply with the ZEV mandate for the 1998 to 2010 8 period is $19 billion. An additional one billion in 9 infrastructure costs are also projected. More details on 10 how we arrived at these estimates were provided to your 11 staff during the November 8th workshop. 12 Although the cost of EVs produced from converted 13 gasoline vehicles is lower than the cost of purpose-built 14 EVs, this will not make the ZEV mandate more cost-effective. 15 The limited range of conversion-type vehicles with less 16 sophisticated batteries means that the vehicles will be less 17 able to meet the needs of motorists. 18 Market research indicates that such vehicles will 19 typically serve as the second or third car in a household. 20 They will often be left in the garage while the gasoline- 21 fueled vehicle is used for trips that require or that the 22 owner thinks might require longer range. 23 To a lesser extent, the same phenomenon will occur 24 with purpose-built vehicles. They won't replace gasoline 25 vehicles on a hundred percent basis. However, the staff's PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 143 1 estimates of the emissions reductions associated with the 2 ZEV mandate, the 14 tons per day that was shown on the 3 slide, are based on the assumption that every single EV sold 4 will completely replace a gasoline-fueled vehicle. 5 Several other assumptions used by the ARB staff 6 have substantially inflated the emission estimates 7 associated with the ZEV mandate. For example, the staff 8 assumes that the higher average vehicle price associated 9 with the mandate will have absolutely no effect on new car 10 sales. 11 It's been clearly established that higher vehicle 12 prices reduce new car sales. It's a fact of life that has 13 already slowed down the turnover of the fleet, keeping 14 older, higher polluting vehicles on the road for a longer 15 period of time. 16 In addition, the staff's estimates are based on 17 the assumption that all EVs sold in California stay in 18 California forever. Migration of vehicles into and out of 19 California is also a fact of life that needs to be taken 20 into account. 21 Even ignoring the factors described above, the ARB 22 staff estimates of the emission reduction potential of the 23 ZEV mandate are too small to produce any measurable change 24 in air quality. When such factors are accounted for, a 25 credible case can be made that the net effect of the ZEV PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 144 1 mandate is an increase in emissions. 2 We prepared a detailed projection as to why this 3 is likely to occur and we'd be pleased to share it with you 4 or your staff. The detailed review will show that our 5 projections are based on a cost and technology forecast that 6 are consistent with the conclusions of your own Battery 7 Technology Advisory Panel and your staff's projections are 8 not. 9 I'd be pleased to respond to any questions you 10 might have. 11 CHAIRMAN DUNLAP: Well, maybe I'll kick it off. 12 You will have a meeting within the next 10 days with the 13 proper level of staff. If there's been any miscommunication 14 about staff not being available to you, we'll get that 15 cleared up. Thanks for pointing that out to us. 16 Could you say a bit more about the actual -- you 17 mentioned a cost increase for the introduction of these 18 vehicles to society. Say a little more about that, would 19 you? 20 MR. AUSTIN: What it's attributed to? 21 CHAIRMAN DUNLAP: Yes. 22 MR. AUSTIN: Well, there's a combination of 23 factors. One significant cost item's going to be the 24 battery itself. There's been numbers tossed around showing 25 cost premiums of as low as a thousand dollars I think I saw. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 145 1 When I listened to what your Battery Panel told 2 you about the cost of advanced technology batteries that are 3 projected to be available sometime after 2000 -- and I used 4 those numbers -- I come up with costs that are several 5 thousand dollars per vehicle just for the battery. 6 The rest of the cost is associated with the fact 7 that, in order to achieve a hundred mile plus range, which 8 most motorists are really going to be interested in, there's 9 going to have to be other investment made in improving the 10 efficiency of the vehicle that are going to raise costs 11 somewhat. But a big factor is going to be that we're 12 talking about economies of scale here which are going to 13 drive costs up. 14 We have a very detailed cost model which accounts 15 for all of these factors -- the R and D costs, the tooling 16 expense, the volume of product necessary to comply with the 17 mandate. And when you run the numbers out, you end up 18 seeing that the price increase associated with producing two 19 to ten percent electric vehicles is going to be in the range 20 that we projected. 21 CHAIRMAN DUNLAP: Okay. Ms. Edgerton. 22 MS. EDGERTON: Yes. Do you compare that with the 23 amount of increase which results when the car company 24 invests, say, $6 billion to revise the Taurus? 25 MR. AUSTIN: Well, for example, I heard the number PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 146 1 used that we were projecting the initial cost would be 2 60,000 or something like that. Obviously, when Ford Motor 3 Company manufactures or invests in producing a new Taurus, 4 they don't frontload all of the cost associated with, in 5 some cases, a multibillion dollar development program, and 6 try to amortize it during the first few years of production. 7 We didn't do that either. Our estimate of a 8 $14,000 cost premium is not assuming that the car companies 9 are going to attempt to recover all that investment during 10 the first few years of the program. That's assuming it's 11 going to be recovered over the 1998 to 2010 timeframe, a 12- 12 year period, which we think is quite reasonable, given the 13 scope of the program that we're talking about. 14 If we were to assume that they were trying to 15 recover it more quickly during the first five years of the 16 mandate, the cost would be much higher than $14,000. 17 Clearly, the companies will lose money as they do on any new 18 vehicle when you start looking at how much it costs to get 19 unit number one out the door. You've got to have a little 20 bit longer range view. 21 And the long-range view that we used was looking 22 out 12 years and recovering all the investment costs over 23 that period of time. 24 MS. EDGERTON: What was the average cost of 25 bringing out a new model for one of the Big Three American PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 147 1 companies? 2 MR. AUSTIN: Well, it ranges -- 3 MS. EDGERTON: What's the investment? What's the 4 capital investment? 5 MR. AUSTIN: It ranges from hundreds of millions 6 to several billion, depending on how much effort was put 7 into the vehicle, how new it really is. I think one of the 8 most recent examples that ran into the billions was the new 9 Ford compact vehicle that has been advertised -- it's been 10 reported on quite heavily in automotive news as being one of 11 the more expensive vehicles ever developed. 12 MS. EDGERTON: What were the numbers on that? 13 MR. AUSTIN: It was in several billion dollars 14 investment. But they're talking about a very high volume 15 model that's going to have a very long life. And if you run 16 the numbers out, it looks like it, you know, it's going to 17 work for the company over that period of time, the same kind 18 of analysis that will be done for an electric vehicle. 19 Unfortunately, in the case of electric vehicles, 20 no manufacturer can anticipate the kind of free market 21 demand for an electric vehicle with a limited range like 22 they would expect from a gasoline-fueled vehicle that's 23 going to be able to meet 100 percent of a motorist's 24 expectations. 25 MS. EDGERTON: I guess, in comparison, Ford has PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 148 1 said they put 150 million into their EV program and the 2 World car they put two billion. 3 In comparing the health costs at 9 billion a year 4 down in Southern California -- I've got 135 billion in 5 health costs for Southern California versus -- even assuming 6 your 20 billion -- 7 MR. AUSTIN: Well, I notice on the slide of the 8 numbers thrown up, Sierra/WSPA says 20 billion. Someone who 9 testified at the workshop said the health costs could be in 10 between 10 to 20 billion. And I'm sure it created the 11 impression that it's a reasonable tradeoff. But the facts 12 are, as many people have stated, that your own staff's 13 estimates show that the EV mandate is not going to eliminate 14 those health costs. It's only going to chip away at the 15 problem, at best reducing emissions by about one percent. 16 Those aren't numbers the other people are making 17 up. That's coming from your own staff's estimates of what 18 the benefits of the mandate are going to be. 19 MS. EDGERTON: But, Mr. Austin, doesn't it beg the 20 question -- as I said to a friend of mine, if I only eat two 21 percent of the chocolate cake, I only get two percent of the 22 calories. It doesn't take a rocket scientist to figure 23 that. You're not going to get -- if you're requiring only 24 two percent of the market to be zero-emission vehicles, you 25 obviously are only going to have two percent of the cars PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 149 1 zero-emission vehicles. 2 So, people make a lot of that. It doesn't seem to 3 resonate quite to the extent that -- 4 MR. AUSTIN: (Interjecting) Well, I think 5 spending $20 billion for something that the public will not 6 be able to see and then even ARB will not be able to measure 7 in the ambient air does resonate with the public. 8 MS. EDGERTON: Well, I think zero is zero and of 9 course, we don't accept the $20 billion. But thank you for 10 coming. 11 CHAIRMAN DUNLAP: Appreciate it. Jim, would you 12 follow up with the necessary meeting and make sure that 13 happens, please. 14 Mr. Austin, thank you. 15 MR. AUSTIN: You're welcome. 16 CHAIRMAN DUNLAP: Jamie Phillips, Planning and 17 Conservation League, Lew Uhler next, followed by Paul 18 Knepprath, American Lung Association. 19 Good afternoon. 20 MS. PHILLIPS: Good afternoon, Mr. Chairman, 21 members of the Board. Thank you for the opportunity to 22 speak with you this afternoon. 23 My name is Jamie Phillips, and I represent the 24 Planning and Conservation League, and the Planning and 25 Conservation League Foundation. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 150 1 We are a private, nonprofit organization dedicated 2 to sound environmental policy, and I might add we do not 3 receive any tax dollars as was indicated by a prior speaker. 4 On behalf of our 12,000 individual and 150 5 organizational members across California, I urge you, please 6 do not back down from this program. We are so close. We 7 are close to having an exciting new technology, a technology 8 that will bring jobs and economic growth to our State, a 9 technology that will help make California a leader in the 10 competitive global economy. 11 This is a technology that will help clean our air. 12 Our lives and our livelihoods are depending on your support 13 of the zero-emission vehicle program. 14 We applaud your work. You, the California Air 15 Resources Board have led the country and the world in the 16 drive for clean air, and all the while the opponents -- the 17 oil and the auto industries whose interests are driven by 18 profits, not public health, not environmental health -- are 19 fighting your every move. 20 They're spending hundreds of thousands, and 21 millions perhaps, to misinform the public and sway you away 22 from what you know is right. 23 We applaud your work. In recent months, over the 24 last few years (sic), PCL and PCL Foundation have followed 25 your efforts to develop a fair and effective air quality PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 151 1 program. We have attended zero-emission vehicle workshops 2 and the Board meetings. We have heard the testimony on all 3 sides, and we know that it is clear that Californians want 4 zero-emission vehicles. They want a choice. The technology 5 exists to give them that choice. And, as battery technology 6 improves, Californians will have even more choice. They 7 deserve that choice. 8 We encourage you to hold firm on the zero-emission 9 vehicle program. Yes, consider flexible measures if they 10 assure that we can reach our air quality goals, if they 11 allow for a better product, if they allow for public 12 education about this new personal transportation technology, 13 and if they guarantee a successful introduction of this new 14 technology to the public. 15 We encourage you to continue to hear the views of 16 the public, to continue to conduct open and public meetings 17 as you have, continue your thoughtful and scientific 18 evaluation of this technology and as you have done so 19 effectively to date. 20 Please, also continue to allow public comment on 21 any modifications in the program that you may consider. 22 The San Francisco Chronicle today says, "Don't 23 bargain away electric vehicles." 24 The Planning and Conservation League and the 25 Planning and Conservation League Foundation say, "Don't lose PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 152 1 your nerve now. Hold the course for two percent in '98, 2 five percent in 2001, and 10 percent in 2003. 3 Thank you. 4 CHAIRMAN DUNLAP: Thank you. Any questions? Very 5 good. Appreciate your time. 6 Lew Uhler, National Tax Limitation Committee. 7 MR. UHLER: Mr. Chairman, members of the Board, 8 I'm Lewie Uhler, President of the National Tax Limitation 9 Committee headquartered here in the capital area, with tens 10 of thousands of members about the State. 11 We have prepared a brief statement, which I will 12 leave with you, and I won't attempt to read it, but rather 13 try to make several, what I hope, are relevant, significant 14 points. 15 This is a major taxpayer issue, because it's going 16 to cost the taxpayers and consumers of this State a lot of 17 money. I would suggest that what is not broke you should 18 not try to fix. You have plans for air pollution control on 19 into the future -- things like taking the most polluting 20 automobiles, the 10 percent that present some 50 percent of 21 the smog in our State, a low cost way to achieve the 22 objective and goal for which the Board was established. 23 I think the stakes in this game are very high. 24 They're very high for our citizens, our economy, our 25 taxpayers. I believe they are very high for this Board and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 153 1 its future as well. And let me defer that for just a 2 moment. 3 A very important threshold issue for this Board to 4 consider is whether or not your statutory authorization even 5 gives you authority to deal and to issue orders about 6 electric vehicles. An opinion of the Legislative Analyst 7 prepared for Senator Ayala underscores a point that I took a 8 look at myself early on, and that is, what is the scope of 9 this Board's authority? 10 It is to deal with emissions, i.e. pollutant 11 emitting things that move. And since an electric vehicle is 12 not a polluting emitting thing that moves, there's a 13 question as to whether or not this Board even has 14 jurisdiction to issue this order. 15 Very clearly, the statutory authority that 16 establishes the Board, requiring that you look at cost- 17 effectiveness and technological feasibility before issuing 18 an order, it is hard for me to determine -- from what I have 19 read and observed -- that those threshold requirements and 20 statutory impositions have been met or properly addressed by 21 the Board. 22 It is clear from what an earlier speaker said and 23 what the general literature identifies -- and that is that 24 the premium on electric vehicles is going to be substantial, 25 whether it's 10,000, 20,000, we're talking hundreds of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 154 1 billions of dollars. 2 Those costs will be defrayed how? They're dead 3 weight costs. They need not be imposed. They do nothing in 4 terms of economic improvement in this State. 5 Those costs will be distributed either by cross- 6 price subsidies for emission vehicles (sic), for regular 7 combustion engines, or by tax credits, or some combination. 8 But those costs will be borne. They'll be borne by each of 9 us as consumers and as taxpayers. 10 So that represents, no matter how you disguise it, 11 a tax increase, which this Board -- and the last time I 12 checked its jurisdiction, did not have the authority to 13 impose a tax increase on the people of this State. 14 Technology feasibility -- I can tell you from 15 personal experience, when I talk with citizens who know 16 nothing of this order, and this is the best kept secret in 17 California, that when they learn that the vehicles that are 18 being described and discussed will go 30 to 70 miles, 19 depending on whether you turn the air conditioning on or go 20 up a hill; that they'll have battery packs that have to be 21 changed every year or every two years, and those at a great 22 cost, and they look at all these issues, why, they laughed. 23 The technological feasibility, as expressed by the 24 experts is one thing; by the average person who is talking 25 about vehicles and looking to buy them, when they laugh, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 155 1 then you have a problem. 2 The impact on the economy of California, of 3 course, is clear. We have a fragile economy. We're trying 4 to come out of a long-term depression. And this order, to 5 the extent that it adds dead weight cost to the economy, is 6 not helpful at this time. 7 Forcing this on local government in a fleet 8 context to try and defray the cost and require absorption is 9 simply to redistribute the impact and make this the mother 10 of all unfunded mandates on local government. 11 So, I urge you to very carefully consider those 12 aspects. 13 Bottom line, the risk is not only for California, 14 but I believe for this Board. And I think that, in your 15 deliberations, you ought to take this one in very -- under 16 very close consideration. To date, while there has been 17 debate, discussion, conflict over orders of this Board and 18 the efforts to reduce air pollution, reasonable people can 19 disagree, but you've led to the improvement of the air 20 quality of the State. 21 When, on the other hand, you issue an order that 22 is not only inexplicable in terms of its cost, but 23 essentially it simply does not achieve your goals, i.e. 24 cleaning up the air in any meaningful way, and that there 25 are much less costly alternatives, then the common sense PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 156 1 and, therefore, the authority of this Board is put in 2 serious question. 3 Hence, all future decisions will be subject to 4 serious question by the people of this State. Already we 5 have a giant chasm, as we all know, between government and 6 the people. Orders of this kind that defy common sense, it 7 seems to me, widen that chasm. 8 You can do yourself, as a Board, as an 9 institution, a favor. You can do the people of this State, 10 in terms of their confidence in government, a favor by 11 addressing this issue directly, face-on, head-on. Don't 12 round the edges. Don't say, "Well, we'll just require three 13 vehicles." You've still done the same thing. You've 14 required and forced something that is simply not ready in a 15 marketplace environment. 16 Review this, think about it, rescind the order, 17 wait the time for the technological development of the 18 private marketplace. Let the smart people -- they may 19 figure out how to take the sun and translate the sun into 20 power in an efficient way very soon. 21 Something will happen along that line. You can't 22 force it. We've got a lot of smart people working on it. 23 But I would urge that you consider the issue in the context 24 of your own authority, your own future, and the relevance of 25 the orders that, in the future, you will be issuing for the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 157 1 benefit of the State of California. 2 Thank you. 3 CHAIRMAN DUNLAP: Thank you. Any questions? Very 4 good. 5 Mr. Knepprath, American Lung Association of 6 California, followed by Steve Moss of M.Cubed, and Joe Caves 7 of the Union of Concerned Scientists. 8 Good afternoon, Paul. 9 MR. KNEPPRATH: Good afternoon. Mr. Chairman, 10 Board members, thank you very much for the opportunity to 11 speak to you today. 12 I want to congratulate you on the process that 13 you've undertaken over the last year to hear the views of 14 Californians -- of physicians, of consumers, and others -- 15 on this very important issue, and we want to applaud you for 16 the leadership you've shown over the many years in 17 promulgating progressive air quality regulations that 18 benefit public health. 19 I want to speak here today on behalf of the 20 American Lung Association, and also on behalf of my primary 21 constituents, and those are people who have chronic lung 22 disease, asthma, and suffer other kinds of lung diseases for 23 which air quality and the issues that we're dealing with 24 today are a life-and-breath/a life-and-death issue. 25 For them, the decisions that you make on the zero- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 158 1 emission vehicle program is clearly one that affects their 2 way of life and their ability to breathe. 3 I would also remind the Board and the public that 4 most Californians live in polluted air basins. And for 5 those of us who are subject to that, the zero-emission 6 vehicle program holds some benefits and holds a light of 7 hope that we may achieve clean air one day. 8 Is the zero-emission vehicle program and the 9 mandate the panacea? Is this going to clean up our air for 10 now and into the future? The answer's obviously, no. It is 11 one very important strategy for cleaning up the air and 12 reducing ozone-producing emissions. And those ozone- 13 producing emissions cause the people that I represent, those 14 with lung disease, severe problems. 15 We've talked about cost and benefits, and we 16 testified last week at the hearing in Los Angeles, and one 17 of the costs that you don't see -- I mean, you've heard the 18 $10 billion and $14 billion in health costs in California, 19 and that is true. But one thing you don't see is the kids 20 who can't go out and play when they have a polluted day. 21 The ZEV mandate is going to clearly help people 22 who suffer lung disease and for the children of California 23 that are depending on you to show them the way, to show them 24 a cleaner future and a cleaner environment. 25 So, we're here today to certainly urge you on, to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 159 1 continue the methods, and continue your commitment to the 2 ZEV mandate, and to cleaning up our air, to providing a 3 healthier place for people of California, for the children, 4 for those with lung disease. And, as an earlier speaker 5 said, we are close. This was promulgated in 1990. We 6 supported the measure then. We support it now, because it 7 has public health benefits, lung-health benefits. 8 And I just want to remind the Board that we are 9 talking about people who have to breathe the air and, for 10 them, air quality is definitely a public health issue. 11 Thank you. 12 CHAIRMAN DUNLAP: Thank you, Mr. Knepprath. Good 13 to see you today. 14 MR. KNEPPRATH: Thank you. 15 CHAIRMAN DUNLAP: Yes, Ms. Edgerton. 16 MS. EDGERTON: Mr. Knepprath, I wanted to just ask 17 you, I gather from -- if I understand your remarks 18 correctly, you think that the LEV/ZEV program brings credit 19 to the regulatory class. 20 MR. KNEPPRATH: Absolutely. I think that both 21 nationally -- and we supported what's happening in the 12 22 Northeastern States. That's an important regulation. It's 23 important for California. 24 And, again, what we do here in California is going 25 to have impact across the country. And so, protecting folks PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 160 1 here is going to protect people in other States. 2 Thank you. 3 CHAIRMAN DUNLAP: Thank you. Mr. Moss, followed 4 by Joe Caves, followed by Bill Ward. 5 MR. MOSS: I'd like to thank the Board for this 6 opportunity to speak. I'm Steven Moss. I'm a partner with 7 M.Cubed, which is an economic consulting firm specializing 8 in resource economics and policy analysis. 9 I thought the Board gave a very straightforward 10 presentation. And to me, what was most striking about it 11 was that there was a two-handed economist behind every 12 chart, which was, on the one hand, zero-emission vehicles 13 are going to cost very little, be very good for the State of 14 California, and promote growth. But, on the other hand, 15 they're going to be very bad for the State of California; 16 they're going to cost a whole lot of money, and no one's 17 going to want to buy them. 18 And, then, what the Board did -- what the Board 19 staff did I thought was very interesting. They said, "And, 20 therefore, they're good," which I think is an inadequate 21 answer. 22 And I think what I'd like to tell the Board today 23 is really, there are a couple of issues that need to be 24 addressed or at least focused on as you move forward. What 25 is it that drives these different points of view? Why is it PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 161 1 that there are these two hands that are way far apart? And 2 everybody has really alluded to most of the reasons why. 3 One is, a lot of people think that electric 4 vehicles are going to cost a lot more than gasoline-powered 5 vehicles. Some people think they're going to cost about the 6 same or just slightly more. I would say -- and I'm a guy 7 who can't even fix my own car -- that based upon the 8 evidence that I've looked at, it's more likely that electric 9 vehicles are going to cost more than it's likely they're 10 going to cost not so much. 11 That's just based upon my reading of the evidence 12 and examining the analysis that's out there. 13 Secondly, what drives economic benefit numbers? 14 Well, mostly, that's driven by the notion that these cars 15 will be produced in this State or at least that substantial 16 amounts of the components of these cars will be produced 17 here. 18 Again, I don't produce cars. Most of us don't. 19 But, in looking at the evidence that I've seen, that doesn't 20 seem very likely. It seems much more likely that, if these 21 cars are produced en masse, they will be produced out of 22 State, and any money for them will go to those other 23 locations. 24 I'm just pointing these things out. I'm not 25 saying I'm right or wrong. I'm saying these are the things PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 162 1 that are driving these economic estimates that you see on 2 the board. 3 The third thing is that some people believe that 4 these vehicles are desired by Californians, and they want 5 these things. They want to get 'em, and drive 'em, and go 6 and buy 'em right now. They'd like to go down to the auto 7 dealership and get 'em. 8 Other people believe that that's not true; that, 9 if they wanted 'em, they'd get 'em now, that the oil 10 companies would give 'em to them (sic). 11 Again, I am not -- I haven't bought a car 12 recently. But my understanding of the evidence that I've 13 seen is that there's no reason to believe that Californians 14 want these vehicles. 15 These vehicles are being pushed by regulators and 16 not being pulled by consumers. And so, there's no obvious 17 reason to think that people are going to go out and en masse 18 to buy these things, unless they're really much better than 19 something they can buy today. 20 So, those are the things that are driving the two 21 hands that are up on the board. There are two other issues 22 that I just want to speak to real quickly. 23 One is that, in my sitting in on some of these 24 meetings, is that the idea of an industrial policy that 25 these things will act as some sort of industrial policy of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 163 1 the State of California is bandied about. 2 I personally reject that as a reason to even 3 consider this policy. If you wanted to have an industrial 4 policy, there's lots of things you might want to invest in. 5 This may be on the list or this may not. Maybe you'd like 6 to invest in truck engines, or maybe you'd like to invest in 7 ways of getting rid of rice straw. 8 But there are other things to do with money. This 9 should not be viewed as an industrial policy. And, as part 10 of that notion, I think it's important to understand that 10 11 percent is not good enough; that this mandate, for it to 12 really work, has got to bounce far past ten percent; that 13 the underlying idea here is to jump technology into a 14 different phase so that we have real fuel diversity in 15 California. 16 Again, that may be something that's desirable, but 17 let's understand what we're talking about. This program is 18 a failure if you only get a ten percent market penetration 19 rate. You've got to move it far past that. Let's understand 20 what we're talking about. 21 The final thing I want to say is that there's just 22 no doubt there is uncertainty about this policy. That is 23 one thing we're certain about. Some people say one thing; 24 some people say another. It's all based on a couple of 25 people, really, that have done some analysis and run some PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 164 1 models. 2 And so, I'd like to close with sort of a parable 3 that staff's already heard and some of the people in the 4 audience, but I'll tell it to you again, because I like it, 5 which is that we've often had the experience -- or I have 6 anyway -- of walking through a field and seeing off in the 7 distance something that looks like a snake. 8 And we keep our eyes on the snake, and we walk 9 closer and closer in the field, and never take our eyes off 10 of it. Sometimes, when we get close to the snake, it turns 11 out that it's a coil of rope. It wasn't a snake after all. 12 Our eyes deceived us. 13 Other times, it is a snake, and we, like, shy away 14 from it. 15 My reading of the evidence is that what we've got 16 here is a snake right now. 17 Thank you. 18 CHAIRMAN DUNLAP: Thank you. Any questions of Mr. 19 Moss? Very good. 20 Mr. Caves, followed by Bill Ward. 21 Good afternoon. 22 MR. CAVES: Good afternoon, Mr. Chairman and 23 members. My name is Joe Caves, representing the Union of 24 Concerned Scientists. And I think our considered view is 25 what we have here is a coil of rope. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 165 1 (Laughter.) 2 MR. CAVES: I want to commend this Board, and 3 particularly the Chair, for its leadership and vision on 4 this issue. UCS follows technology issues and particularly 5 transportation technology issues worldwide. And we think 6 the ZEV regulation has been the most important force driving 7 transportation technology globally. 8 And I would just mention, based on some things 9 that some previous speakers have mentioned, I think that it 10 continues to be the case that there is strong support for 11 this policy, not just among the public, but in the 12 Legislature as well. You heard from a number of speakers 13 who represent a particular perspective in the Legislature. 14 I spend most of my time as a lobbyist there. I'll 15 tell you that Assemblyman Richter, who introduces a bill 16 last year to eliminate this mandate, receives, if memory 17 serves, two votes for that legislation. 18 While I don't want to predict what would happen in 19 the future on that, I think that it's fair to say that there 20 is a very strong level of support in the Legislature. And 21 our polls indicate, which we've supplied previously to the 22 Board staff, very strong public support for this. 23 And I think that's because there is a fundamental 24 and gut level recognition that the status quo in automotive 25 technology today is inadequate. And it has been the courage PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 166 1 and creativity of this Board to be unwilling to accept that 2 status quo that gives us some hope that we can actually 3 solve our air quality problems in the future. 4 UCS' view is that, without making a technology 5 leap, without actually being able to transcend the inherent 6 problems in internal combustion engines and those -- we 7 think, for example, and tend to disagree with the staff that 8 we believe in-use emissions of automobiles have been 9 consistently understated by our models, and is one of the 10 consistent problems we have and that, over the long term, 11 with increases in VMT, with those inherent problems of 12 dealing with the degradation of performance of gasoline- 13 powered engines, of driver performance and all the problems 14 that they creates, that until we have the technology that 15 transcends that and allows us to get a real emissions 16 reduction in the zero range from those vehicles, we're not 17 going to be able to have clean air in our most polluted 18 basins. 19 That's just a fundamental problem. And I know 20 it's one that this Board has looked at very closely and 21 understands that all the debates over the fractional 22 improvements that we might get from early mandated numbers 23 notwithstanding, that ultimately, unless we figure out a way 24 to change the technology, we are not gong to have clean air 25 in this State, and I submit in virtually every polluted air PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 167 1 basin in the world. 2 We participated in the workshops in detail and 3 tried to provide technical comments, and I don't want to get 4 into reiterating those here. I think your staff has done a 5 good of providing those presentations. 6 I would say that we share your staff's optimism 7 about the state of the technology development. I think we 8 also share their general view that ZEVs are a critical 9 component of California's air quality program. If we're 10 going to meet our SIP obligations, we have to continue on 11 this path. 12 I know that there's been a great deal of 13 discussion about trying to provide some early year 14 flexibility. We've tried to deal with this issue not as one 15 of political rhetoric but as one of how we produce a 16 workable program. How do we achieve a program that puts 17 vehicles in the market people want to buy? 18 We respect and I think recognize there may be a 19 need to provide greater flexibility to the automakers in the 20 early years, and we'd be happy to try to work with you along 21 those lines. 22 I just want to mention what we think are key 23 factors to keep in mind if that becomes the case. It has 24 been this regulation that has driven the technology. And 25 you heard a number of statements early on, I think, from the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 168 1 Assembly representatives that this mandate somehow conflicts 2 with economic theory. And it may not work in theory, but I 3 think the Battery Panel has suggested that it has worked in 4 practice; that we have moved the technology substantially. 5 And the key thing that I heard from their 6 presentation is the need to maintain that momentum. It is 7 our view that however this mandate is modified -- and I 8 would tell you that our view is that it's worked very 9 effectively, and we would resist major modifications -- that 10 we think it has to provide a clearly identifiable path to 11 commercialization at the 10 percent by 2003. 12 That's the timeframe, that 2003 to 2010 period, 13 that is critical for us to have a significant amount of 14 zero-emission vehicles in the market. 15 We recognize that they have to be commercially 16 acceptable vehicles. And we have a lot of issues to work on 17 in that regard, and we would be happy to try to work with 18 you on that. 19 I guess I would agree with the previous speaker in 20 this regard. We think 10 percent is too low. We think that 21 the goal, our long-term goal should be to produce 22 commercially acceptable zero-emission vehicles that become 23 a significant fraction of California's fleet if we're going 24 to have the real potential to have clean air -- to be able 25 to see the sky, blue skies again in Los Angeles. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 169 1 And we think that's the fundamental issue. Thank 2 you. 3 CHAIRMAN DUNLAP: Thank you, Mr. Caves. Any 4 questions of the witness? Appreciate your remarks. 5 Bill Ward, Drivers for Highway Safety, followed by 6 Janet Hathaway, NRDC. 7 MR. WARD: Good afternoon, Mr. Chairman and Board 8 members. I'm Bill Ward, Chairman of the Drivers for Highway 9 Safety, the Transportation Forum. 10 We're a group of technically oriented people 11 interested in promoting self -- safe, cost-effective 12 transportation. Our organization is a founding member of 13 the Orange County Committees of Correspondence. 14 My degree is in chemistry, and my interest has 15 always been research and development. I earn my living by 16 sorting out ideas that can work from those that can't. 17 The first thing I do with a new idea is to give it 18 a sanity check. Can it be ruled out on basic principles? 19 If it can be shown to violate any fundamental laws of 20 chemistry and physics, there is no point in pursuing it 21 further; it simply won't work. 22 I've attended the Southern California EV meetings, 23 and observed much confusion over some rather basic physical 24 concepts. The primary misconception is that some day, an 25 advanced storage battery will be developed which will allow PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 170 1 EVs to compete with IC powered vehicles. In the next few 2 minutes, I will show you how development of such a battery 3 can be ruled out on elementary principles, independent of 4 technology. 5 All vehicles require energy to be stored on board 6 in some form, not only for propulsion, but to maintain a 7 comfortable temperature, provide lights, and run other 8 accessories. 9 In an EV, the necessary energy is contained in a 10 storage battery, while internal combustion vehicles store 11 their energy in a tank of hydrocarbon fuel. The amount of 12 energy needed is set only by the tasks to be done, 13 regardless of how the energy's stored. 14 First slide, please. 15 Okay. Both internal combustion engines and 16 storage batteries store chemical energy, but with grossly 17 different reactivities. Hydrocarbon fuels are relatively 18 inert at room temperatures, while battery chemicals, by 19 necessity, must react spontaneously and vigorously. 20 An important point we'll get to in a minute is 21 that chemical reactions usually release energy as heat. 22 Careful control is required to coax it out as electricity. 23 And, of course, electricity is not a fuel and it is not 24 stored in batteries. Batteries convert electricity to 25 chemical energy and back, but only chemical energy is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 171 1 stored. 2 Next slide, please. 3 Chemical energy is usually stored by separating a 4 fuel from an oxidizer. For example, our fossil fuels were 5 formed by ancient plants, which used solar energy to 6 separate oxygen from CO2 and water, forming organic 7 compounds, which became coal, oil, and gas. The 20 percent 8 oxygen in our air comes from that process. 9 Another example of separating a fuel from an 10 oxidizer is a common lead-acid battery. During charging, 11 the electric current separates lead sulfate on both plates 12 into lead, the fuel, on one plate, and lead peroxide, the 13 oxidizer, on the other plate, plus sulfuric acid. 14 The next slide. 15 When a fuel and oxidizer are recombined, the 16 energy originally stored is released. For example, food is 17 a fuel. Muscles oxidize that fuel with oxygen from the air, 18 releasing the original solar energy as mechanical energy. 19 Batteries also release energy during discharge by 20 recombining fuel and an oxidizer. More about that in a 21 minute. 22 Next slide, please. 23 And, as we all know, internal combustion engines 24 combine hydrocarbon fuel with oxygen from the air at high 25 temperatures and convert some of the heat to mechanical PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 172 1 energy. 2 Next slide, please. 3 Like the IC engine, rechargeable batteries also 4 involve a fuel and oxidizer, but they are formed in place by 5 passing a charging current from an external energy source 6 through the battery. When the reactants are allowed to 7 recombine in a carefully controlled manner, the chemical 8 energy is converted back to electricity. Note that 9 electrical energy is not stored directly. Chemical energy 10 is stored by using the electrical energy to separate a 11 reducing agent, or fuel, from an oxidizer. This is an 12 important slide, so we'll spend a minute on it. 13 There are five essential components to a storage 14 battery. From top to bottom of this diagram of a fully 15 charged cell, you can see first an electrode, which 16 electrically connects to the load or source; the fuel 17 supply, which in a lead-acid cell would be lead metal; an 18 electrolyte separator, which would be sulfuric acid; the 19 oxidizer, which would be lead peroxide; and, lastly, the 20 other electrode. 21 As the battery discharges, the lead fuel is 22 oxidized to lead sulfate and the lead peroxide oxidizer is 23 reduced to lead sulfate again, removing sulfuric acid from 24 the electrolyte. During charge, the lead and lead peroxide 25 plates are rejuvenated by reversing the current flow, and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 173 1 the resulting sulfate ions go back into the electrolyte. 2 I've used a common lead-acid battery for the 3 example, but the same principle holds for all batteries no 4 matter how sophisticated and expensive. 5 A fuel and an oxidizer are held in close proximity 6 and allowed to react to release electricity instead of heat. 7 In a sodium sulfur battery, the fuel is molten sodium and 8 the oxidizer is molten sulfur. 9 For nickel metal hydride, the fuel is hydrogen and 10 the oxidizer is a nickel oxide. The higher the energy 11 density and range, the more reactive the chemicals must be. 12 High energy batteries must, by necessity, contain some of 13 the nastiest, most dangerous, and energetic chemicals known 14 to man or woman. 15 The electrolyte keeps the reactants apart, but 16 allows electrically charged ions to pass. Remember, earlier 17 I said chemical energy is usually released as heat. The 18 electrolyte is what forces the reaction to produce electric 19 energy rather than heat. It needs to be thin to keep the 20 internal resistance down and efficiency high. 21 In high performance batteries, it may be only a 22 few thousandths of an inch thick. 23 Next slide, please. 24 This shows what happens if the electrolyte fails. 25 It's the only thing standing between two reactive chemicals. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 174 1 If that membrane fails, they react with nothing to limit the 2 reaction rate and all energy in the battery is quickly 3 released as heat. 4 The technical term for such a device capable of 5 releasing a lot of energy in a short time is a bomb. Then, 6 why don't existing batteries explode, you might ask. 7 For the same reason they don't provide a practical 8 range. They just don't store enough energy. If advanced 9 storage batteries were ever developed which could store 10 anywhere near the energy in a tank of gasoline, they would 11 pose a serious explosion hazard, independent of any 12 particular battery chemistry. 13 If there is enough energy to be useful, there is 14 enough to be dangerous. No one could guarantee a battery 15 failure would not cause a sudden release of the energy it 16 contains. 17 Air breathers, such as internal combustion 18 engines, don't have that problem, as hydrocarbon fuel is 19 relatively inert, stored compactly, and the reaction rate is 20 limited by access to oxygen. 21 Gas tanks don't explode unless they are grossly 22 ruptured and there's an ignition source. There are many 23 serious auto accidents without fires, some with fires, but 24 very few with an actual explosion. 25 It's clear to me, and I hope clear to you at this PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 175 1 point, that we must rule out storage batteries as a vehicle 2 power source on simple basic principles. Storing highly 3 reactive fuel and oxidizer in close proximity is 4 fundamentally and inherently hazardous, yet any high energy 5 storage battery requires just that. 6 That's why I have a problem with CARB claiming 7 that electric vehicles are inherently safer than gasoline- 8 powered cars because they are cleaner and cooler. 9 On an equal energy basis, the EV has to be far 10 more hazardous, because both fuel and oxidizer are stored in 11 close proximity. Even if the battery burns instead of 12 exploding, a battery fire is almost impossible to 13 extinguish. Since gasoline requires outside oxygen to burn, 14 a fire can be smothered by cutting off the air. 15 Let's not get tangled up arguing over trivial 16 matters like range, cost, and customer acceptance when there 17 are fundamental safety issues involved. Nothing will kill 18 electric cars faster than mandating bombs in California 19 garages. 20 Okay. If we rule out storage batteries, is there 21 any other way to get a practical EV? 22 Next slide, please. 23 The only approach I see with much promise is an 24 air-breathing fuel cell. A fuel cell is a battery with a 25 continuous supply of reactants from external sources. The PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 176 1 energy released during a failure is limited by the small 2 amount of reactants present in the fuel cell. 3 The fuel can be carried in a tank and oxygen can 4 be obtained from the air as with an internal combustion 5 engine. Since it's not a heat engine, the efficiency should 6 be much higher. The main problem is that no one yet knows 7 how to build a practical fuel cell running on a practical 8 fuel. 9 A lot of development is necessary, and the current 10 EV mandate is distorting the market by diverting research 11 money from actual researchers to proposal writers seeking 12 grants. 13 I believe any attempt to mandate technology is 14 doomed to failure. Without mandates, the free market will 15 probably provide the first niche market fuel cell vehicles 16 in five to ten years. Any attempt to mandate them would 17 delay or kill legitimate research. 18 Thank you. Any questions? 19 SUPERVISOR RIORDAN: Thank you. Are there any 20 questions, Board members? I don't see any questions, and we 21 thank you, Mr. Ward, for being here. 22 MR. WARD: I think there's a question for me over 23 there. 24 SUPERVISOR RIORDAN: Oh, excuse me. I'm sorry. 25 Supervisor Silva. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 177 1 SUPERVISOR SILVA: Yes. It's nice seeing you up 2 here, Bill. 3 MR. WARD: Thank you. 4 SUPERVISOR SILVA: Did you have a copy of that for 5 the Board? 6 MR. WARD: Yeah. I'm sure I can get one. You can 7 have this one. 8 SUPERVISOR SILVA: If you wouldn't mind. Thank 9 you. 10 MR. WARD: Okay. Any other questions? 11 SUPERVISOR RIORDAN: I don't think there are. 12 Thank you, Mr. Ward, very much. 13 The next speaker is Janet Hathaway, and she's 14 going to be followed by Anthony Trujillo. 15 MS. HATHAWAY: Thank you. I'm happy to be here in 16 front of the Board, and just want to make a brief comment to 17 you here. 18 I'm representing the Natural Resources Defense 19 Council. My name is Janet Hathaway, and I've been involved 20 in this process of workshops and discussions about electric 21 vehicles that you've engaged in this year. And I just 22 wanted to commend you on an outstanding process. This is 23 one of the most contentious and also most innovative 24 programs worldwide to try to deal with a very, very 25 perplexing and difficult problem of how to reduce ozone in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 178 1 our cities. 2 And you have the most outstanding staff of any 3 agency I've worked with. I just want to tell you that this 4 program is clearly making a big difference. Were it not, 5 you would not have this outpouring of consultants, experts, 6 and people who have every different possible angle on what 7 you could do and should do. 8 You definitely are making a big difference in the 9 technology and what's going to be possible in the automotive 10 industry in the next five to ten years. 11 And apropos of some of the conversations that have 12 been reported on in the media, I want to just congratulate 13 you on finding openings with automobile companies who seem 14 to really want to find some way to make this electric 15 vehicle program work. And that is absolutely a 16 breakthrough. And I just want to thank you all for the 17 efforts that have gone into making those conversations 18 productive. 19 For the Natural Resources Defense Council, it is 20 not our concern that it have to be exactly the form of the 21 regulation that you currently have. Our goal is to get the 22 air quality benefits that you have, and also to ensure that 23 there is a process that enables the public to have its 24 concerns represented. 25 And to date, we've seen nothing but an excellent PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 179 1 process, a revolutionary change in the views of the 2 industry. We're suddenly hearing the industry talking about 3 how they can indeed produce vehicles that will be desired by 4 the public. And that is something that we want to 5 capitalize on and make real. 6 The one caveat I would just put forward, although 7 I'm sure that you have this in mind, is that the year 2003 8 or 2010 is far away, and most of you probably won't still be 9 sitting on this Board, and many of us will have gone on to 10 other assignments, whether we're in the private sector or 11 public. 12 And so, whatever is determined and any agreement 13 that is forged with auto companies, I just hope that what is 14 done will have some kind of enforceability that is outside 15 of the parties to agreements. That's the crucial thing. I 16 know that this program has so many people looking over 17 people's shoulders and trying to get involved in the process 18 that there's a danger, that when you have outsiders 19 involved, they may scuttle things. 20 But, on the other hand, to make it really last 21 through the many years that this program has to be effective 22 if it's going to make the air quality benefits that we all 23 hope it will, it has to stand up and be able to stand the 24 test of time that our laws and regulations have. 25 And that's my only concern here. But thank you PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 180 1 very much for what has gone on. And, really, I wish you the 2 very best in these further discussions. And if there's any 3 way that NRDC can be party, we hope that we can offer you 4 some help in that. 5 Thank you. 6 CHAIRMAN DUNLAP: Thank you. Thank you, Ms. 7 Hathaway. Any questions of her? All right. Very good. 8 Mr. Trujillo. Mr. Trujillo is a citizen, followed 9 by Cecile Martin from the California Electric Transportation 10 Coalition. 11 Good afternoon, sir. 12 MR. TRUJILLO: Good afternoon, Mr. Chairman, 13 members of the Board. My name is Anthony Trujillo. I've 14 25 years of experience in designing motor controls, 15 converters, power supplies, transformers, and things of that 16 nature, all of the thing that go into building electric 17 automobiles. 18 I'm intimately familiar with every bit of the 19 technology from power input, heat transfer, and everything 20 else that's involved in every one of the technologies -- 21 semiconductors, power hybrids, and everything else. 22 I'm here to tell you that the idea of an 23 electrical vehicle mandate is stupid, because of the 24 following technical problems. The problems consist 25 primarily of two things -- the battery and power plant, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 181 1 which are very inefficient. 2 All batteries are chemical storage devices as Mr. 3 Ward just said. I don't know about you, but I'm not aware 4 of any research to reduce the work function between the 5 electrolyte and the active plates or to maintain the 6 electrolyte conductivity as a battery discharges. 7 If anyone is aware of this, please let me know. 8 There is no other way, except using higher conductivity 9 metals, to increase the battery efficiency. 10 Battery efficiency is about 55 percent at the 11 eight-hour charging rate and the battery's Achilles' heel, 12 because it's a function of the charging current, as you'll 13 soon see. 14 All batteries contain toxic chemicals as Mr. Ward 15 just pointed out. Special permits are required to transport 16 sodium, lithium, cadmium, potassium, and sulfur. Yet these 17 are proposed for new batteries because they can increase 18 energy density. 19 Why is increased efficiency never mentioned? 20 Because there's no work being done on improving it, it 21 cannot be done. How will emergency public service agencies 22 respond to all of the possible materials? Will electric 23 vehicles get special permits to carry these toxic batteries? 24 Are you going to do that for them? 25 Will emergency public service agencies need to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 182 1 carry a chemical warehouse for every emergency, or are you 2 going to limit the number and type of battery that they can 3 use? 4 At the workshop held on October 11th, battery 5 recharge requirements between 16 and 48 kilowatt hours were 6 given by the manufacturers who spoke. This is a real eye 7 opener, because only modern, single-family homes have 240 8 volt/40 amp service. 9 Under ideal conditions, a hundred percent 10 efficiency, unity power factor, zero line voltage droop, 11 which no one can have, they're capable of a little over 27.5 12 kilowatt hours over an eight-hour charge. 13 A more realistic value would be 24 kilowatt hours. 14 All apartment and condominium dwellers only have 120 volt/20 15 amp service. They only have half of that, 12 kilowatt 16 hours. They are not capable of recharging the minimum 16 17 kilowatt hours that the manufacturers stated was necessary. 18 Extending the battery range is an important topic 19 for battery research. Why? If you double the battery 20 range, that requires at least doubling the energy that the 21 batteries can carry. How are you going to get this if you 22 cannot even charge the existing batteries? What good does 23 it do? 24 What's the purpose of the mandate if you can't do 25 that? The outlet current is the limiting factor. The only PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 183 1 solution is a longer charging time. Nobody can fast-charge 2 at home, because they don't have the capacity. They're 3 limited to that outlet. And that's only in new homes, 4 single-family homes. 5 Fast charging is mentioned as a panacea to reduce 6 waiting time and to simulate refueling at a gas station. 7 Nothing can be further from the truth. 8 Slide, please. 9 Conduction losses are proportional to the square 10 of the current. That's the first thing an engineering 11 student learns, "I squared R." 12 If you double the current, you quadruple the 13 losses. If you cut the charging time from a normal eight 14 hours, which is reasonable, down to a half hour for fast 15 charging, your losses have increased 256 times. What does 16 this do for the system efficiency? 17 If it's already less, the system efficiency from 18 an electric vehicle already less than a gasoline engine, 19 what happens if you try to fast charge? If you want to fast 20 charge even faster, in 15 minutes, it's unbelievable how 21 much power you need. No one can do it except maybe Edison. 22 Fast charging is anathema to system efficiency. 23 Yet it is a common theme. But fast charging and high 24 efficiency are mutually exclusive. You can have one or the 25 other, but not both. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 184 1 And that's a fundamental physical law. Nobody can 2 violate that. 3 I've heard people mention that electric vehicles 4 don't require any maintenance. I don't know about you, but 5 I think replacing the batteries, the battery pack, every 6 year or two at a 10 or $15,000 cost is a lot of maintenance. 7 The power plant is the other weak link in the 8 system. 9 The power plants are the most efficient link in 10 the electric vehicle system. The thermal efficiency of 11 power plants is about 35 percent, much worse than a battery. 12 Much more efficient ones could be built, but the 13 attraction of electric vehicles is that new construction is 14 not necessary, because electric vehicles can be recharged at 15 night. That's a Catch 22. Retaining low-power efficiency 16 power plants and buying RECLAIM credits to operate a system 17 which is less efficient than an existing one, which is the 18 gasoline driven vehicles, is irrational, because air 19 pollution will increase with electrical vehicles, not 20 decrease. More fuel must be burned to do the same amount of 21 work. 22 With fast charging, pollution will get worse even 23 after new plants are built, which are much more efficient. 24 Basic chemistry teaches us that oxides of nitrogen are 25 generated at high combustion temperatures, and they are PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 185 1 difficult to remove in excess air. Are you aware of any 2 power plants which don't operate this way that burn fossil 3 fuel? I don't know of any. 4 The only ones I know that don't do that are those 5 that are nuclear fueled or hydroelectric. But every fossil 6 fuel burning plant operates at a high temperature, has a 7 high stackings on its temperatures, and burns excess air. 8 All fossil fuels also release carbon dioxide, 9 which is a global greenhouse pollutant. Burning more fuel 10 than is necessary, especially if you try to fast charge, 11 will harm the environment globally, even as it will increase 12 local pollution. 13 This is the case at Four Corners and Pekin 14 (phonetic) plants, which burn coal, since they're less 15 efficient and also burn coal. Coal-burning plants also emit 16 sulfur dioxide. 17 I expect an answer to each of these valid 18 technical objections before the EV mandate goes forward. 19 Are there any questions? 20 CHAIRMAN DUNLAP: Any questions of Mr. Trujillo? 21 SUPERVISOR ROBERTS: Mr. Chairman? 22 CHAIRMAN DUNLAP: Yes, Supervisor Roberts. 23 SUPERVISOR ROBERTS: Mr. Trujillo, would you go 24 back over with me the time you said that it's going to take 25 to recharge a battery in a house? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 186 1 MR. TRUJILLO: The available time is only about 2 eight hours. You have from about ten o'clock at night to 3 about six o'clock in the morning. This is the minimum 4 demand time for the power utilities. Prior to that time, 5 the utilities don't want you to charge -- 6 SUPERVISOR ROBERTS: Did you say it was going to 7 take you longer to charge it than that, though? 8 MR. TRUJILLO: If you have a longer range, if you 9 have to recharge more energy, it must take more time, 10 because you don't have the current capacity. 11 SUPERVISOR ROBERTS: What kind of time limit is it 12 going to take you now? 13 MR. TRUJILLO: Well, it depends on the range. 14 Now, I don't know exactly what they are. The numbers that I 15 got on the range was that the -- what the auto manufacturers 16 gave at the last workshop that I went to, which was October 17 11th. They have the ranges for the vehicles that they have. 18 I'm just using their numbers. 19 SUPERVISOR ROBERTS: And how long would that take 20 to charge? 21 MR. TRUJILLO: Well, it depends on what you have 22 available. If you live in an apartment or a condominium, 23 you cannot do it if you take all eight hours. 24 SUPERVISOR ROBERTS: Okay. 25 MR. TRUJILLO: It cannot be done, because you PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 187 1 don't have the capacity. 2 SUPERVISOR ROBERTS: If you live in a single- 3 family house. 4 MR. TRUJILLO: If you live in a single-family 5 house, you can do it, but you can only do it the minimum, 6 because -- 7 SUPERVISOR ROBERTS: How long will it take in a 8 single-family house? 9 MR. TRUJILLO: In a single-family home, it will 10 take 16, 24, it's about six hours. 11 SUPERVISOR ROBERTS: About six hours? 12 MR. TRUJILLO: For the minimum. But for the 13 midrange or the maximum, there's no way that you can do it. 14 And if you extend the range and double the energy 15 requirements, nobody can do it. 16 SUPERVISOR ROBERTS: Well, Mr. Chairman, somehow 17 I'm breaking the laws of physics, I think, because I've been 18 using a car now, as you know, for about a week. 19 CHAIRMAN DUNLAP: Right. 20 SUPERVISOR ROBERTS: and it hasn't taken me six 21 hours yet. 22 MR. TRUJILLO: Well, you -- I don't know -- 23 SUPERVISOR ROBERTS: And, in fact, not even 24 anything close to six hours. 25 MR. TRUJILLO: It depends on how far -- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 188 1 SUPERVISOR ROBERTS: I'm sure that his charts are 2 accurate and everything, but I'll just tell you, somehow, in 3 the real world that's -- 4 MR. TRUJILLO: (Interjecting) Not at all. It 5 depends on how far you drive and how much use you put on the 6 car. 7 SUPERVISOR ROBERTS: I understand. 8 MR. TRUJILLO: If you use it more, then you have 9 to replace more -- 10 SUPERVISOR ROBERTS: Believe me, I'm running the 11 battery down virtually all the way, and your numbers are not 12 close. 13 MR. TRUJILLO: Well, they're -- 14 CHAIRMAN DUNLAP: Supervisor Roberts has the GM 15 Impact, I think, in the preview program, he's been driving 16 for the last week. 17 SUPERVISOR ROBERTS: That's correct. 18 CHAIRMAN DUNLAP: So we have some personal 19 experience, realtime personal experience. 20 Mr. Trujillo, thank you for the time and attention 21 you put into this. I appreciate you coming as a citizen and 22 sharing your perspectives with us. I appreciated your chart 23 as well. 24 Thank you. 25 MR. LAGARIAS: Mr. Chairman. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 189 1 CHAIRMAN DUNLAP: Yes. 2 MR. LAGARIAS: Mr. Trujillo? 3 MR. TRUJILLO: Yes. 4 MR. LAGARIAS: I want to tell you, many of your 5 comments are indeed sound, and they are issues, and they are 6 being addressed. The limitations, I think, may not be as 7 extensive as you think. But, certainly, the issues that you 8 brought up are those that require attention. 9 MR. TRUJILLO: Well,l the number of requirements 10 came from the automobile manufacturers, not from me. I just 11 used them. 12 MR. LAGARIAS: Yes. And, as you are aware, we are 13 addressing them. 14 CHAIRMAN DUNLAP: Okay? Thank you, sir. 15 MR. TRUJILLO: Thank you. 16 CHAIRMAN DUNLAP: Cecile Martin, California 17 Electric Transportation Coalition, followed by Jerry Mader, 18 Advanced Battery Task Force, followed by Bill Van Amburg, 19 CALSTART. 20 MS. MARTIN: Good afternoon, Chairman Dunlap and 21 members of the Board. I want to thank you for this 22 opportunity to speak with you today concerning the zero- 23 emission vehicle mandate. 24 I would also like to commend the leadership and 25 success of this Board for this rule and many previously, and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 190 1 note that through three successive Chairs, we have seen 2 great leadership, I think, on this very visionary and 3 necessary zero-emission vehicle program. 4 We also would like to commend Chairman Dunlap for 5 showing leadership and bringing all parties to the table to 6 discuss what we need to do from here. 7 I represent the California Electric Transportation 8 Coalition, which is a nonprofit business association. Our 9 founding members and the members of our Board of Directors 10 are the Los Angeles Department of Water & Power, the Pacific 11 Gas & Electric Company, Sacramento Municipal Utility 12 District, San Diego Gas and Electric Company, and Southern 13 California Edison Company. 14 We also have other industry members, including 15 Westinghouse and the Advanced Battery Task Force. 16 We have participated in all of the staff workshops 17 as well as previously on this issue for a period of about 18 four years now. 19 I'm trying to resist the temptation to address 20 several of the misstatements that have been made to the 21 Board today, but I'm going to place my trust in the Board. 22 I know several Board members have sat through these very 23 long workshops. It's been a lot of work to do so, and I 24 know not necessarily something you were tasked with you. 25 And I know, also, that the staff is giving you good PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 191 1 summaries with a lot of documentation. I trust that you 2 will be able to sort issues out. 3 However, I just -- I want to take just two points. 4 One of them is -- we took the opportunity in the workshop to 5 present cost data that we felt said significant things about 6 the zero-emission vehicle regulation. And the particular 7 report was produced by Jane Hall of the Institute of 8 Environmental and Economic Studies at California State, 9 Fullerton. 10 Just a couple of the points that that report made 11 were that our State economy is better with the requirement 12 than without, and even a worst-case scenario in terms of 13 vehicle costs shows an increase in California's personal 14 income. 15 The other point that I think is important is that, 16 while other measures could, in the short term, offset some 17 of the tons that we would get from zero-emission vehicles, 18 there's no substitute cost-effective measure that is good 19 for the long-term benefits other than zero-emission 20 vehicles. 21 Our comments today will address the staff's 22 comments at the end of their presentation today, and that 23 was they asked the question -- how to make the mandate more 24 responsive to the issues that we've all discussed during the 25 long series of workshops. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 192 1 And so, we want to ask the Board and staff to 2 consider some things that we have considered while working 3 with industry for the last several years. We believe that 4 whatever mechanism is in place is put in place to provide 5 flexibility and to allow the market to work must be an 6 enforceable measure. 7 Right now, as you know, the market has nothing to 8 drive. We believe from market research that Californians 9 want zero-emission vehicles. They've shown they want 10 electric vehicles. But we've nothing to drive. The market 11 cannot work without an electric car. 12 Whatever numbers are put in place, we ask that the 13 Board and the staff take into consideration that air 14 quality, industry, and investor plans have been made already 15 in relation to the two percent, five percent, and ten 16 percent numbers. 17 And for the utility industry, there is a minimum 18 threshold that is needed to justify utility programs and 19 investment. Automakers and industry are not the only entity 20 that need to make a business case for electric vehicles. 21 There's also a minimum threshold for the 22 continuation of work in progress by component and battery 23 manufacturers who will be suppliers to the automakers. In 24 most cases, these companies are not the traditional 25 suppliers. They are the new companies or small programs in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 193 1 very large companies. 2 A delay in reaching significant numbers of 3 vehicles threatens their very existence and so threatens our 4 opportunities for a successful market launch. 5 We also believe there's a minimum threshold for 6 vehicles to be priced for commercial viability. While we 7 need to keep developing and demonstrating vehicle and 8 battery advancements, we will need significant numbers of 9 vehicles to reach the consumer market. 10 As we have learned over the past five years, 11 demonstration vehicles carry a high price. And because they 12 are usually returned to their manufacturer, they provide 13 only very short-term emissions benefits. We need a 14 commercially priced, commercial viable electric vehicle. 15 We'd also like to encourage the Board and the 16 staff to consider opportunities to reward manufacturers, to 17 offer some sort of a regulatory incentive to manufacturers 18 who actually sell vehicles in order to encourage the kind of 19 marketing and pricing strategies that the conventional 20 vehicles have been benefiting from all these years. 21 We don't want to see any loss of tons either in 22 the short term or the long term. And we don't want to see 23 any shifting in the responsibility for those tons. That's 24 of concern to us as stationary sources who have taken time, 25 and money, and planning to reduce emissions very PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 194 1 dramatically throughout the State. 2 California, due to air quality regulations as well 3 as to some innovative technology forcing programs for 4 generating fuel, such as solar, wind, geothermal, has the 5 cleanest power plant -- lowest power plant emissions in the 6 nation, the cleanest generating system in the nation. 7 We would also like to reemphasize a theme that 8 General Motors introduced into the recent series of zero- 9 emission vehicle workshops. Not to single out a particular 10 company, but I think this is something that has been a 11 resounding theme through the workshops, and it certainly is 12 something that we wholeheartedly support. They called for a 13 partnership of automakers, utilities, and government working 14 together to create a successful program. 15 We'd like to see the program be successful from 16 an automaker perspective, and also a program that improves 17 the health of Californians. And to pick up on a theme that 18 I think was introduced earlier today, I'd like to turn that 19 rope into a lasso and harness the creative and cooperative 20 energy that California has to offer for our clean air 21 future. 22 CHAIRMAN DUNLAP: Thank you, Ms. Martin, I 23 appreciate your comments. Any questions? Very good. 24 Mr. Mader, Advanced Battery Task Force. 25 Sir, hold off for a moment. Our long-suffering PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 195 1 court reporter needs a moment. The entire year I've been 2 Chair, she's asked for a break I think once. 3 (Thereupon, there was a brief pause in 4 the proceedings to allow the reporter to 5 replenish her stenographic paper.) 6 CHAIRMAN DUNLAP: As a reminder to the remaining 7 speakers, of which there are about seven, I asked at the 8 outset if we could limit for five minutes or less. A lot's 9 been said. Please try not to be redundant. If we could 10 wind up, I'm going to lose one or two of my Board members to 11 travel that cannot be changed. 12 So, please be respectful of that. 13 Mr. Mader. 14 MR. MADER: My name's Jerry Mader. I'm pleased to 15 be here today. I represent a group called the Advanced 16 Battery Task Force, and we're members of the Cal-ETC. 17 And the Task Force is comprised of several 18 companies that are developing advanced battery technologies; 19 namely, sodium sulfur, sodium chloride, zinc bromine, and 20 zinc air. 21 Now, these -- kind of in the order of magnitude, 22 these technologies will cost these manufacturers somewhere 23 in the range of 200 to $250 million to develop. And they're 24 putting -- those are private companies putting private money 25 into these developments. They're not government and they're PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 196 1 not subsidized. 2 They also are very interested in when these -- 3 when the vehicles become commercial, of siting plants in 4 California, and that's going to be investment money in the 5 economy of California. 6 And I want to just briefly -- I won't be more than 7 five minutes, and I want to congratulate the Chairman and 8 the staff on the process of the last several months. I 9 really believe that, when the idea of the first -- these 10 rounds of forums were presented, and when I went to the 11 first meeting, I thought, well, this might become a waste of 12 time. But after -- I've sat through many of those, and what 13 I've seen come out of it, I think it was very useful, very 14 useful for the debate, very helpful for the Board and the 15 staff to hear from all the parties. And I applaud that open 16 process. 17 One thing, there's been a lot of debate that came 18 out of these meetings, and we've even saw in the summary 19 people on one side or the other on the costs and benefits of 20 electric vehicles. I think there is one nondebatable issue 21 that came out of those forums, and that is that the mandate, 22 as it was identified and defined in 1990, has done a 23 tremendous service to the development of electric vehicles. 24 I don't think you'd even get any of the automakers 25 to disagree that there's been tremendous progress because of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 197 1 the mandate. And from a battery development standpoint, I 2 would say that we would want to keep in place the mandate or 3 anything else you do that is going to assure that there's a 4 market that's going to be established. 5 I want to just mention a concern that I have as I 6 think about this today. In 1990, the mandate was put in 7 place to really handle emissions problems. And in 1995, 8 California has gone through some difficult economic times, 9 and between then and now, the electric vehicle is being seen 10 by some as an economic development, a boon potentially and a 11 jobs issue. 12 And I would like to see some emphasis being put on 13 this from other agencies in the State. If we look at what 14 it's going to take to successfully introduce electric cars, 15 we have the issue of infrastructure, both recharge 16 infrastructure and vehicle infrastructure. Market 17 development strategies, you start with a few thousand units, 18 but we want to obviously get to -- get in the millions of 19 units before the year 2010. And then, we're going to 20 require and I think need some advanced technology 21 demonstrations, both for batteries and other technologies. 22 And, to me, that says that this -- the mission of 23 electric vehicle introduction is somewhat broader than just 24 the Air Resources Board and this mandate. And, you know, 25 just off the top of my head, I can think of the focus of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 198 1 other agencies like the Energy Commission, the Caltrans, 2 Trade and Commerce, the PUC, air quality districts trying to 3 bring together and bring to bear, you know, resources that 4 they have available so that this transition of launching 5 electric vehicles can be more easily take place, and that we 6 can increase the probability of success. 7 And in talking to auto companies kind of off the 8 record, I believe there are auto companies who are 9 interesting in making a business out of electric vehicles. 10 I think they're making some of their ideas known. And I 11 really believe they've been consistent over the last few 12 years in saying they need assistance in the early years to 13 make this a viable business prospect for them. 14 So, I just want to encourage Chairman Dunlap and 15 the Board to think of a vision beyond your own purview and 16 say how can we evaluate this issue and get more involvement 17 in a coordinated way, so that we make sure we have success 18 in 1998 and beyond. 19 Thank you. 20 CHAIRMAN DUNLAP: Thank you, Mr. Mader. Any 21 questions? Yes, Dr. Boston. 22 DR. BOSTON: Mr. Mader? 23 MR. MADER: Yes, sir. 24 DR. BOSTON: We've had a lot of questions from 25 people asking about the lead pollution coming from lead-acid PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 199 1 batteries, if that's the first battery to be used, and how 2 the environment will be influenced by the lead that's 3 produced. Can you give a brief summary on what happens to 4 those lead batteries and what do you do with the lead from 5 the old batteries? Is it dumped on the roadside, or what do 6 you do with it? 7 MR. MADER: Well, I know there's a lead-acid 8 manufacturer here today that will probably be speaking, but, 9 you know, the lead-acid battery system, most of the lead is 10 reclaimed. And there's a business reclamation process for 11 that. And there are a couple of very large reclamation 12 sites. I know there's one in Texas and one here in 13 California. And they're under environmental regulation like 14 every other industry. So, they have to make sure that 15 they're not dumping pollution out. And so, that's tightly 16 regulated. But it's a business to extract out of the lead- 17 acid batteries and get it back into the new batteries. 18 CHAIRMAN DUNLAP: Gene, just from my experience at 19 the South Coast Air District and the Department of Toxic 20 Substances Control, they're a very high profile process, and 21 people watch them very closely. 22 MR. MADER: You know, there's millions of 23 batteries recycled every year, so I don't think that's an 24 issue. 25 And all advanced batteries are also working, as PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 200 1 part of their development, is to work on a whole system of 2 reclamation. That's a requirement. It's even a requirement 3 by the U.S. ABC. 4 CHAIRMAN DUNLAP: Supervisor Vagim. 5 SUPERVISOR VAGIM: In that same vein, if indeed 6 there is a newer type of battery or batteries that get 7 beyond lead-acid, is there going to still be a demand for 8 reclamation of lead-acid batteries? 9 MR. MADER: Well, I think the lead-acid -- my own 10 opinion is, I think the lead-acid battery will always find a 11 niche, not only starting and lighting, but I think also in 12 automotive applications in the electric car. 13 I think there will be other advanced batteries 14 that will overtake a large proportion of the market, but if 15 you can produce -- if the lead-acid battery is reliable and 16 cost-effective, even if it doesn't provide as much range, 17 people will buy it and use it. It'll be a cost issue. And 18 I think the market will define that. 19 SUPERVISOR VAGIM: So, you see a niche for lead- 20 acid way beyond then the early years. 21 MR. MADER: Yes. The analogy I like to use is 22 very similar to the aircraft industry. When the jet engines 23 came in place, they overcame a lot of prop planes, but you 24 still see a lot of people who want a short-range prop plane. 25 They buy them for personal use, and you still see them used PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 201 1 by private industry. 2 SUPERVISOR VAGIM: Thank you. 3 CHAIRMAN DUNLAP: Thank you. Mr. Van Amburg, 4 followed by Michael Semmens from Electrosource, Mike Wirsch, 5 Anita Mangels, Bonnie Holmes, and Robert Efrus. And that is 6 all of the speakers. So, please line up. We need to do the 7 two-minute drill. Not two minutes, but we need to do it 8 quickly. 9 (Laughter.) 10 MR. VAN AMBURG: I understand. We're approaching 11 another workshop here, I'm afraid. 12 CHAIRMAN DUNLAP: Good to see you. 13 MR. VAN AMBURG: Mr. Chairman, good to see you, 14 members of the Board. It's not -- is it Chairman Czar or 15 Mr. Czar? I was a little unclear earlier. 16 CHAIRMAN DUNLAP: Just Chairman. 17 (Laughter.) 18 MR. VAN AMBURG: Okay. Thank you for allowing us 19 to speak today. It's been a long process. And I think from 20 CALSTART's perspective, we want to commend your staff. 21 They've sat through an awful lot of these hearings. They've 22 heard from everybody, and they've kept an open-door policy 23 to make sure all opinions have been heard. 24 They've probably sat through a lot more than I 25 myself would have been willing to sit through. And I think PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 202 1 they should be commended for that. 2 It feels like it's been more than six months. It 3 feels like this has been more than six years during these 4 workshops, but I think they've been valuable to get out 5 information. 6 I wanted to share just a couple new things. 7 Number one, last Friday, we opened an advanced 8 transportation business incubator at Alameda Naval Air 9 Station. It's the first civilian reuse of Alameda Naval Air 10 Station. It's at Hangar 20 there. They will now be 11 manufacturing electric vehicle chassis and vehicles, 12 maintaining vehicles that are being used in the station car 13 program in the Bay Area developing new technologies, and 14 some such. 15 So, we're very excited about that, and I wanted to 16 share that news with you. They will be maintaining an 17 electric car that will be built in California for a 18 projected price of $10,000, a small two-person commuter car 19 that's rapidly coming to market, and will be built in 20 California. 21 Mainly, I wanted to share something that, Mr. 22 Chairman, you had requested from us. I shared with staff 23 what we call an Advanced Transportation Yellow Pages, and I 24 don't know where we got that term; it just came to us one 25 day. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 203 1 (Laughter.) 2 MR. VAN AMBURG: It was a listing of our 160-plus 3 participants in CALSTART. But we've broadened it to give 4 you an idea of what's going on in this industry. So, we 5 tried to get not just CALSTART's participant base, but the 6 much broader industry base. There are over 450 companies 7 working on technologies around the country represented here. 8 And we share it with you as a resource guide to partly, to a 9 great extent, what you have driven forward in the last five 10 years. Over 300 of those companies are in California, and I 11 think you should be proud of that. We certainly are. It 12 shows an industry coming to bear in the State of California, 13 and I welcome you to look through it. 14 I also would like you to keep in mind -- I think 15 lots of people are talking about flexibility. I think 16 you've created one of the most flexible regulations probably 17 that has ever been put forward. You've put all types of 18 options into the ZEV regulation. 19 However, as you look for additional flexibility 20 that could be put into this, I think -- keep in mind that 21 it's crucial to keep in mind this new industry you've also 22 helped to create, that there is a responsibility here in 23 terms of investment dollars that have been channelled to 24 bear, knowing what was going to be required, knowing the 25 tough goals California had set, companies have come forward. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 204 1 You must be careful when you change rules, or 2 tweak, or try to change things. You ought to look for more 3 flexibility. But be aware that you have -- you will not 4 affect the base of companies that wasn't in existence or 5 weren't applying their talents to this field just a few 6 short years ago. 7 And I'd like the Board to please consider that. 8 You have created basically, in essence, what you wanted to 9 create -- a support base for going beyond two percent, five 10 percent, or ten percent up to those numbers that will be 11 meaningful in terms of electric vehicle and clean fuel 12 vehicle implementation. And you want to be careful, as you 13 look at options, that you keep that in mind. Because small 14 changes can make large impacts on investments and strategies 15 that businesses have. 16 Thank you. 17 CHAIRMAN DUNLAP: Thank you. Thank you very much, 18 Mr. Van Amburg. 19 Mr. Semmens. 20 MR. SEMMENS: Thank you, Mr. Chairman, members of 21 the Board. 22 Thank you for the opportunity of visiting with you 23 today. I do not have a prepared presentation. I did not 24 plan to attend this meeting. I was in town evaluating a 25 potential site to locate a manufacturing plant for the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 205 1 Horizon battery. 2 And when the meeting was going on, there was a 3 little discussion addressing our product and the products of 4 my competitors and colleagues. I thought it would be useful 5 to share some of my opinions with you. 6 In the way of background, I'm President and CEO of 7 Electrosource, Incorporated. We have developed an advanced 8 battery. It happens to be lead-acid, but it is, in my 9 opinion, the most creative battery in existence in the world 10 today. 11 We participated in your Battery Panel, so I won't 12 go through all the technical detail. But suffice it to say, 13 we have a battery that's been proven and tested by National 14 Lab, and it works, and it works in electric vehicles today, 15 and it's ideal for hybrids and other low-emission vehicles 16 as well. 17 We have invested nearly $45 million in the 18 development of the technology and bringing a manufacturing 19 plant, which is in operation today, to a state of readiness, 20 so we would be prepared to provide batteries to support the 21 1998 mandate, and we are prepared at this time to do so. 22 I would also like to add that not one penny of 23 that $45 million comes from any government funding, but is 24 entirely private. 25 We intend to go on with the market as this PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 206 1 technology is useful in portable power utility applications, 2 and starting applications as well. And here, I would not 3 only like to compliment you on your courage to tackle the 4 very important job, the very tough job of the environmental 5 question in California, but I'd like to compliment you on 6 catalyzing a new industry -- first in California, and in 7 other parts of this nation, and no doubt the world -- the 8 industry of new energy and transportation technology. I 9 think it's outstanding, and I think Electrosource is proud 10 to be part of it. 11 I'd like to also point out that our battery is 97 12 percent recyclable. We use reprocessed lead. Our most 13 expensive piece of equipment is environmental equipment. We 14 meet and exceed all California standards on the environment. 15 It would be nonsensical to produce a plant that did not 16 comply with the environment when we're trying to solve an 17 environmental problem. We have done so. And I extend an 18 invitation to you, sir, and the members of the Board, and 19 the staff to visit our plant so they can kick the tires and 20 see for themselves. There's no arm waving. We've done it. 21 It's there for you to see. 22 The range of his battery is sufficient to exceed a 23 hundred miles, and we have done so inside cars, in Geo Metro 24 and others. 25 But it's important also to realize that the system PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 207 1 efficiency within an automobile is critically important. 2 Here, the cooperation with the automotive companies and the 3 suppliers of the automotive platform, with the energy 4 suppliers, and others is critically important, and I applaud 5 your efforts in this area as well, and we look forward to 6 supporting it as well. 7 As we all know, the mileage on the normal 8 automobile can vary drastically. We've probably driven cars 9 that range from a few miles to many miles. So will it be 10 with electric vehicles, and we're only in the very early 11 stages of solving some of those problems, and they will be 12 solved. 13 I would just like to say that Electrosource 14 supports your effort. We're dedicated to supporting the 15 requirements of the mandate and the cooperation. 16 And I, once again, sir, would like to invite 17 anyone to visit our facilities and discuss this matter in 18 more detail. 19 Thank you. 20 CHAIRMAN DUNLAP: Thank you. Very good, Mr. 21 Semmens. No questions. 22 Mike Wirsch from SMUD, followed by Anita Mangels 23 and Bonnie Holmes. 24 MR. WIRSCH: Good afternoon, Mr. Chairman, members 25 of the Board. I have a very short comment here as a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 208 1 representative of the Sacramento Municipal Utility District. 2 I manage the Electric Transportation Department for the 3 district. 4 My main point here is that the Sacramento District 5 and the other utilities in California are working 6 proactively with automakers and other members of the 7 industry to develop a practical approach to this new market 8 for this important development. 9 Sacramento Municipal Utility District has a large- 10 scale technology testing program. We've tested a number of 11 vehicles and are operating them currently in our fleets. 12 We have a number of demonstration programs where 13 we're showing people in the fleets and members of the public 14 how the vehicles work and how they'll operate in practical 15 use. We have installed a substantial number of public 16 charging stations in advance of the market in order to allow 17 folks to understand how these things are going to work and 18 to show the automakers, as well, that we're committed to 19 providing sufficient infrastructure to fuel these new 20 vehicles. 21 The district is also offering very low offpeak 22 charging rates so that we can promote the use of our 23 existing resources and use excess capacity we have offpeak. 24 I just want to assure the Board that we're 25 committed to helping make a success of this market. And PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 209 1 when vehicles are made available, we'll be there to fuel 2 them. 3 Any questions? 4 CHAIRMAN DUNLAP: Thank you. Very good. Ms. 5 Mangels, followed by Bonnie Holmes and Robert Efrus. 6 MS. MANGELS: Thank you, Chairman Dunlap, members 7 of the Board. 8 My name is Anita Mangels. I'm Executive Director 9 of Californians Against Hidden Taxes. We are a coalition 10 representing the Howard Jarvis Taxpayers Association, 11 National Federation of Independent Business, California 12 Manufacturers Association, Western States Petroleum 13 Association, the California Business Alliance, the 14 California Farm Bureau Federation, and many other 15 businesses, organizations, and individuals. 16 I'd like to commend Ms. DeWitt on her synopsis of 17 the last workshop. I've attended all of the workshops on 18 behalf of our coalition. I would like to note, though, that 19 it's been my observation that in Mr. Cross' report last time 20 in October and in Ms. DeWitt's report, not once was it 21 mentioned that there has been substantial presence of 22 taxpayer groups and individual tax activists raising some 23 real concerns. 24 So, with your permission, I would very much like 25 to go through those to guarantee that you firsthand have a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 210 1 clear picture of where the people who are going to pay the 2 bills for this mandate are coming from. 3 We have some serious questions about the overall 4 impact of the ZEV mandate. First and foremost is the 5 question, how much will this unfunded mandate cost? As you 6 heard from Tom Austin, Sierra Research has estimated $20 7 billion in taxes, utility rate increases, and other hidden 8 costs over the next 15 years. 9 We believe that to be a conservative projection 10 based on the fact that it primarily doesn't take into 11 consideration any of the public infrastructure cost to 12 support the introduction of EVs. And that's going to be an 13 enormous cost borne by the taxpayers. I think Mr. Austin 14 also mentioned some other contributing factors, which prove 15 this to be a conservative estimate. 16 Who will pay the cost? Apparently everybody but 17 the people who should; i.e. the shareholders of the investor 18 owned companies and utility monopolies who will repeat huge 19 profits if the EV industry is successful. 20 The people who will pay are the ones who will 21 benefit the least. Taxpayers will pay through tax credits, 22 purchase incentives, or rebates, municipal fleet purchases, 23 and public infrastructure. 24 Utility customers will pay through higher rates, 25 which will subsidize everything from research and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 211 1 development to slick public relations campaigns to launch 2 utility companies' forays into the electric car business. 3 And consumers will pay through surcharges as high 4 as $2,000 each on the price of conventional cars, which will 5 serve to absorb manufacturers' losses on selling electric 6 cars at artificially low prices as well as higher prices for 7 goods and services passed along to the end user by private 8 businesses who are coerced into purchasing EVs for their 9 vehicle fleets. 10 We have heard testimony at these other public 11 workshops from those folks, and that's all a matter of 12 record. 13 What will we get for our money? According to 14 CARB's own calculations, virtually nothing. In a letter 15 dated August 4th, 1995, CARB staff estimated that in 2010, 16 the final year of the mandate, EV-related reductions of 17 emissions of the primary ingredients of smog, organic gases 18 or NMOG, or nitrous oxide, or NOx, will amount to less than 19 one percent of the total reductions required in the South 20 Coast Air Basin by CARB State implementation plan, or SIP. 21 May I have the first slide, please? 22 The first slide indicates the required reductions 23 in NMOG under the SIP. And, again, this number comes from 24 CARB's own report of 1994, November. 1194 tons per day in 25 required reductions in the year 2010. Over on the right- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 212 1 hand side, where you can barely see it, are reductions 2 realized by the EV mandate, 4.1 tons. 3 Second slide, please. I'm waiting for the second 4 slide. There we go. 5 The second slide indicates the required reductions 6 in NOx under the SIP. That's 808 tons per day. Reductions 7 realized by the EV mandate, only 8.6 tons. 8 So, of the aggregate required reduction in NOx and 9 NMOG of 2,002 tons per day, the EV mandate will achieve only 10 12.7 tons per day in the year 2010, or less than one percent 11 of the necessary amount. 12 This figure that I'm using is pretty much 13 consistent with the number that staff introduced earlier of 14 14 tons per day. I believe the differential is in the 15 marketing cost, which we did not factor in. However, at a 16 rate of 14 tons per day, you would still be looking at only 17 about 2 percent reduction. 18 I think last week in the Sacramento Bee, CARB 19 staff estimated optimistically that you would get less than 20 1.5 percent in emissions reductions from full implementation 21 of the mandate in the year 2010. 22 In the year 2010, this calculation assumes there 23 will be 724,000 EVs operating in the South Coast Air Basin 24 alone. That bears repeating. In the 13th year of the 25 mandate, with almost three-quarters of a million electric PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 213 1 cars on the road in the South Coast Air Basin, we will enjoy 2 less than one percent or, most optimistically, maybe two 3 percent of the air pollution relief that the Air Resources 4 Board itself has declared necessary. 5 Now, a spokesman of CARB told the Sacramento Bee 6 last week that he thought one percent was actually pretty 7 good. With all due respect, we strongly disagree. One 8 percent is not pretty good, and it's certainly not worthy of 9 the expenditure of billions of taxpayer dollars that could 10 well be put to use to fund essential services such as police 11 and fire protection, health care, and education. 12 Now, if we accept the fact that CARB has given a 13 number of one to two percent, how cost-effective will that 14 relief be? The next slide, if I might have it, please, 15 compares the cost-effectiveness of various mobile source 16 measures in terms of cost per ton of emissions reduction. 17 As you can see -- I think on the larger screen 18 it's more legible -- that enhanced inspection and 19 maintenance, or basically your smog check programs, cost 20 about $1500 a ton. 21 On-board diagnostics, which are computer 22 technologies built into new cars to alert the driver to any 23 smog-related maintenance problems, cost about $1720 per ton. 24 Scrappage, programs to remove older, higher- 25 polluting cars from the road, runs about $4,000 per ton. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 214 1 And reformulated gasoline, the cleaner burning 2 fuel which will be introduced early in 1996, will cost about 3 $8,000 per ton. 4 Now, we come to the cost of EVs. Sierra Research 5 has estimated that emissions reductions from EVs will cost a 6 staggering $227,000 per ton rounded. That's more than 25 7 times more than the closest alternative method. There are 8 other studies, I believe in 1994, again in November, the 9 State Implementation Plan Economic Analysis that was 10 prepared for CARb, came up with something in the area of 11 about $140,000 per ton. And that was based on a higher 12 percentage of EVs being in the market than what this 13 estimate assumes. 14 So, again, I think it's a realistic assessment. 15 And these enormous costs are rationalized by EV proponents 16 in the name of the environment. We've heard a lot of talk 17 today about air quality challenges facing California, 18 particularly in the L.A. Basin. We don't dispute that those 19 challenges exist. 20 Smog and its impact on the quality of life is a 21 real problem, and it deserves a real solution. But based on 22 your own staff calculations, the mandate is clearly not a 23 viable solution. Based on these calculations, the EV 24 mandate is the least cost-effective means of reducing motor 25 vehicle emissions. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 215 1 We all want cleaner air, and we can have it, but 2 not through mandated electric vehicles which will cost 3 taxpayers billions of dollars and achieve less than one 4 percent or less than one or two percent of the required air 5 quality benefits. 6 It's important to note as well that air quality 7 has been steadily improving already, most notably in the 8 last decade. Many of the measures which will be implemented 9 in the next few years, such as enhanced inspection and 10 maintenance, vehicle scrappage, and reformulated gasoline, 11 will lead to even greater improvements. 12 By comparison, the electric vehicle mandate will 13 contribute virtually nothing towards advancing these 14 charges. For these reasons, we urge you to abandon this 15 costly EV experiment and allow the private sector to 16 identify and develop clean air technologies, such as the 17 alternatives just described, at prices consumers can afford 18 that will deliver real value for the money. 19 I'd also like to mention that, because of the -- 20 shall I say the omissions in some portions of the staff 21 report, we've prepared an analysis of testimony that we 22 thought was important that the individual Board members may 23 like to see. I've mailed that to you, and I've also brought 24 another copy with me today to put into the record so that 25 you can compare it with other information that you got. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 216 1 And we very much appreciate the availability of 2 time to speak today. 3 CHAIRMAN DUNLAP: Thank you. Any questions? Very 4 good. 5 MS. MANGELS: Thank you. 6 CHAIRMAN DUNLAP: Ms. Holmes? Bonnie Holmes from 7 the Sierra Club. Good afternoon. 8 MS. HOLMES: Good afternoon. 9 I'm Bonnie Holmes, representing Sierra Club 10 California, and I'm here to present to you the overwhelming 11 support of the Sierra Club members on behalf of the zero- 12 emission vehicle requirement. And I have boiled my 13 testimony down to three points, but I feel the need to 14 expand it to five points after the last testimony, although 15 I will be brief. 16 First of all, I'd like to make the point and 17 emphasize the critical need of the ZEV mandate to resolve 18 our in-use emissions problem. I know you're aware of that, 19 and the tremendous fraction of our emissions inventory that 20 comes from in-use vehicle emissions. 21 But I think it's important to remember that the 22 auto industry has never been willing to guarantee the 23 emissions performance of cars beyond a limited warranty 24 period. And, therefore, there are huge consumer costs for 25 the inspection and repair in keeping up the vehicle to try PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 217 1 and keep the in-use emissions at the certified level. 2 Therefore, we are extremely concerned about the 3 consumer being saddled with the responsibility, the cost, 4 the burden of the inspection, repair, and maintenance costs. 5 And those, of course, increase as the vehicles get older and 6 pass on to second and third owners. 7 And much of this burden for the inspection and 8 repair costs unfortunately falls disproportionately on low- 9 income people. I think we need to remember that, also. 10 Our concern is that once the so-called gross 11 emitters are identified and repaired, even after that point, 12 cars don't stay clean. So, we have to remember the 13 shortcomings of attempts to scrap vehicles to solve our in- 14 use emissions vehicle problem, and the failures of the 15 emission -- the inspection and maintenance program, even 16 though it is a critical component, but it certainly does not 17 resolve our need to look beyond emissions reductions through 18 inspection and repair, and move on to new technologies. 19 The ZEV requirement constitutes an unconditional 20 lifetime warranty that the tailpipe and evaporative 21 emissions remain at zero for however long the car is on the 22 road. 23 And we believe this is critical to moving beyond 24 our in-use emissions vehicle problem and truly resolving our 25 air quality problem in the next century. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 218 1 Second of all, I'd like to remind the Board of the 2 truly high comparative costs of staying with the gasoline 3 vehicle. We have participated in workshops that you've 4 presented, mostly recently at a cost/benefit workshop in 5 L.A. 6 And I'd like to emphasize the theme of our 7 testimony at the workshop, which is that we have not fully 8 considered the true life cycle cost of the pollution 9 emissions from gasoline vehicles, and the petroleum 10 production, refining, and distribution infrastructure. 11 We believe that currently the numbers show that 12 electric vehicles are cost-effective now and for 1998, and 13 2000, and beyond. 14 However, the electric vehicle can be shown to be 15 even more cost-effective when we take into account the true 16 life cycle analysis. And this means considering the cost 17 not only of the air quality impacts and the health impacts. 18 We've already talked about the $10 billion number about the 19 costs of air pollution, but also the health and safety 20 impacts, the impacts -- the safety impacts of handling 21 gasoline, accidental ingestion, burns, explosions from 22 gasoline, the costs of refinery accidents, which we've had 23 several in the Bay Area in the past year; oil pipeline 24 accidents, hazardous waste, and toxic emissions among 25 others. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 219 1 A true estimate of life cycle costs, again, we 2 believe shows the electric vehicle to be far more cost- 3 effective than the gasoline counterpart. 4 Third, I'd like to just comment that the public 5 does subsidize the oil industry, and we must remember that 6 the oil companies currently are receiving $400 million in 7 subsidies through tax credits that result from SB 671 in 8 1993, an it authorized a 6 percent manufacturer's investment 9 tax credit for reformulated gasoline. 10 Additional subsidies include government funding to 11 mitigate environmental costs, controlling use through air 12 quality mitigation, hazardous material cleanup. And this is 13 in addition to a huge number of Federal tax subsidies 14 through appropriations for oil research and development, 15 other tariffs, import quotas, license fees, and other types 16 of subsidies. 17 So, I do want to make the point that the public is 18 subsidizing the oil industry, and we cannot discount that 19 huge cost. 20 Finally, I would just like to comment, since there 21 has been such tremendous discussion about the safety of 22 electric vehicles, I was in Los Angeles a couple weeks ago, 23 and had the opportunity to talk to a fire marshal of a city 24 in Los Angeles County. And I commented to him about some of 25 the testimony that had been given on the safety issue and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 220 1 mentioned some of the concerns that had been raised by the 2 oil industry. 3 And he kind of smiled and shook his head, and he 4 said, "You know, high-rise buildings have whole rooms full 5 of batteries. So, it's really unrealistic to make the 6 argument that we're increasing a safety risk, explosion risk 7 through introduction of electric vehicles. 8 As your staff has stated, we are in the zero- 9 emission vehicle program for the long term. This program 10 will serve as the basis of substantial emissions reductions 11 through the next century. 12 We urge you to stay the course with the two 13 percent requirement, not to settle for anything less, and 14 certainly not to settle for any of the inferior alternatives 15 that have been presented to you, including vehicle 16 scrappage. 17 Thank you for your time. 18 CHAIRMAN DUNLAP: Thank you, Bonnie. Any 19 questions? Very good. 20 And our last witness, Robert Efrus, Advanced Lead- 21 Acid Battery Consortium. 22 MR. EFRUS: Thank you, Mr. Chairman. The hour is 23 late, and I promise to be brief. 24 I'm Robert Efrus, representing the Advanced Lead- 25 Acid Battery Consortium. And it is indeed fitting that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 221 1 ALABC is batting cleanup today, because -- for without the 2 mandates, ALABC would have never come into being. And we 3 have appreciated the opportunity to work with CARB and your 4 staff regarding the mandates. 5 You are to be applauded for your efforts to gain a 6 comprehensive and accurate understanding of the involved 7 issues so that CARB may move forward in a well-planned and 8 deliberate manner. 9 It appears to us, however, that there are 10 significant misconceptions regarding the status of the 11 technology, particularly battery technology. The Advanced 12 Lead-Acid Battery Consortium is a global consortium 13 representing 90 percent of the world's lead-acid battery 14 industry. Dramatic improvements to the lead-acid battery 15 have been made by ALABC members over the past few years. 16 These improvements would have not been possible without the 17 mandate. 18 These improvements have significantly increased 19 the technical and commercial viability of EVs, and include 20 range extension, rapid recharging, and increase of cycle 21 life. Expected improvements by 1998, will continue to build 22 on this progress and will enable lead-acid powered EVs to 23 support daily commuting requirements of 100-plus miles, will 24 provide for recharging in a few minutes, and will have 25 batteries last at least 36 months. These facts have been PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 222 1 communicated to CARB and its staff. 2 Importantly, the energy costs are at least 3 comparable and probably significantly better than those of 4 internal combustion engines. Opponents of the mandates have 5 repeatedly pointed to the state of battery technology as the 6 primary impediment to the successful implementation of the 7 1998 mandates. 8 The fact is that, by 1998, ALABC realistically 9 projects that EVs powered by advanced lead-acid batteries, 10 as was discussed earlier by my colleague from Electrosource, 11 will satisfy the range requirements of the majority of daily 12 commuters at a cost comparable with those of operating and 13 maintaining a car with an internal combustion engine. 14 Existing and commercially available lead-acid 15 batteries are capable of daily commuting ranges of 75 miles, 16 recharging times of a few minutes, and cycle life in excess 17 of 500 cycles, approximately three years. 18 Most importantly, the fuel cost per mile of 19 running an EV powered with lead-acid battery has already 20 dropped by an order of magnitude during the course of 21 ALABC's program. By 1998, the projected cost will drop 22 further to 5 cents per mile and, thus, will be comparable 23 with the cost of fueling conventional IC engines. 24 The range of lead-acid powered EVs is less than 25 half of an internal combustion automobile with a full tank PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 223 1 of gas. By 1998, however, lead-acid powered EVs will be 2 more than adequate for those drivers whose daily commutes 3 are less than a total of a hundred miles. 4 Further, the refueling necessary to drive a lead- 5 acid powered EV beyond a single charge range can now be 6 accomplished in a very short time with virtually no 7 inconvenience to the driver. 8 The infrastructure for the manufacture of lead- 9 acid batteries is in place now, and the industry already 10 recycles some 97 percent of its product. 11 ALABC takes strong exception to any suggestion 12 that advanced batteries will not be available by 1998. 13 ALABC welcomes the opportunity to support this position by 14 working with the automakers in test fleet evaluation of EVs 15 prior to the mandates. 16 ALABC member companies are committed to putting 17 into production by 1998 the advanced lead-acid batteries 18 that will cost-effectively satisfy the midterm performance 19 criteria and all of the daily driving needs of U.S. 20 commuters. 21 In order for such pilot production to take place, 22 however, CARB must maintain the market momentum generated by 23 the 1998 mandates. 24 Thank you. 25 CHAIRMAN DUNLAP: Thank you very much. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 224 1 No questions? All right. That concludes the 2 witnesses that have signed up. 3 I'm not going to ask if there's anyone else that 4 wishes to speak. 5 (Laughter.) 6 CHAIRMAN DUNLAP: I will ask staff, though, to 7 briefly summarize -- is it 100 letters that we received? Is 8 that correct? What was the number? 9 MS. GRANDCHAMP: 107. 10 CHAIRMAN DUNLAP: 107 written pieces of 11 correspondence. I would appreciate kind of a theming -- is 12 that right, thematic? -- of those 107 letters, whoever's 13 going to summarize. 14 MR. CACKETTE: I skipped through them. I think a 15 105 of them said, "Stay the course," and two of them said, 16 "Don't." 17 (Laughter.) 18 CHAIRMAN DUNLAP: I'm sure that's a fair 19 assessment, Mr. Cackette. 20 Mr. Boyd, do you have anything else to add? 21 MR. BOYD: Well, very quickly, Mr. Chairman, thank 22 you. 23 First, I'd just like to say that, in spite of the 24 long and many hours, the staff is grateful to all the 25 individuals who've attended and who have spoken at the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 225 1 forums, the workshops, and the Board meetings on this 2 subject. 3 Frankly, I believe we all, staff and audience, 4 have learned a lot as a result of all these meetings. 5 Secondly, I'd like to make quick reference to the 6 SIP, which is our roadmap into the Twenty-First Century, 7 quickly frankly, submitted in November of last year. It has 8 a lot of assumptions and presumptions that help frame the 9 context in which we're operating and make this task today 10 seem a little less minuscule as has been perhaps implied or 11 inferred. 12 In reference to vehicle scrappage, vehicle 13 scrappage will be implemented per the SIP in numbers that 14 are orders of magnitude greater than the numbers that were 15 being thought about when we entered the year 1994. So, I 16 think the benefit of that program has been recognized. The 17 benefit of that program has been presumed in the SIP, and 18 we're only -- we're hopeful and expectant that we will get 19 the benefits that we hope from that program. 20 This reminds me of figures we hear constantly. 21 I've been hearing them for years. 10 percent of the cars 22 being X-percent of the air pollution problem, fill in the 23 blank. I'd just like again to repeat it for the record, not 24 so much for the Board; you've heard me before, but to the 25 audience. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 226 1 It's 10 percent of the vehicles, older vehicles, 2 are responsible for 35 or 40 percent of the mobile source 3 emissions' problem that we have in this State, which is why 4 the SIP that you passed recognizes the need to deal with 5 this. 6 The SIP also presumes that the auto industry, 7 through strategy M2 that you may recall, will be called upon 8 for another 25 tons of emissions reductions on into the 9 future from advanced technology measures that are as yet 10 undefined. This is beyond the LEV/ZEV program that has 11 already been presumed in the baseline. 12 The SIP has an undefined black box, or shortfall, 13 in the South Coast Air Basin. At least 28 tons of that 14 black box are allocated to the mobile source sector and has 15 to be realized somehow. 16 So, 14 tons is a big number in the business that 17 we've been in for many, many years together. 18 Let me just say that I think we all know 19 California is seeking to regain or hold onto its identity as 20 the Golden State. Its historical concern for the quality of 21 life, which we knows includes protecting its public health, 22 its environmental integrity, its economy, and its basic 23 infrastructure, frankly, has sustained it as the Golden 24 State. And this historical concern has always spawned 25 innovation, creativity, and resultant progress. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 227 1 I think, historically, the ARB's goal has been to 2 protect and improve the public's health, and we have 3 constantly worked within the long-term goals that I've 4 indicated, and the long-held facts of those goals -- the 5 LEV/ZEV/clean fuels program, our contribution by this 6 organization to this effort, I believe the forums. The 7 Battery Panel's work has shown that to be a positive 8 contribution. 9 Your staff has no desire or intention to spend or 10 to squander the reputation of the Air Resources Board for 11 sound technical work and leadership in air pollution 12 emissions control arena. The recommendations that we bring 13 to the Board -- that we do, that we will -- will always 14 recognize technical feasibility and, as always, are brought 15 forward in the context of the principles and the need of 16 California for a healthy economy as well as a healthy 17 environment. 18 So, we've learned a lot from the forums and the 19 workshops, and we're prepared to follow the Board's guidance 20 on where we go in the future. 21 Thank you, Mr. Chairman. 22 CHAIRMAN DUNLAP: Thank you, Mr. Boyd. And thanks 23 as well to your team for the summary on the workshops, the 24 forums, and summarizing the Battery Panel's work. An awful 25 lot of effort went into this process. The forums and the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 228 1 advice of the independent Battery Panel have provided a 2 wealth of new information for consideration by the Board. 3 The participation of many of my colleagues on the 4 Board has also been invaluable and most appreciated by the 5 Chair. The ZEV program, which began, of course, in the 6 Deukmejian administration, was born of great expectations. 7 The realization of its purpose has far-reaching, positive 8 implications for public health and the California economy as 9 we've heard today. 10 For these reasons, we cannot abandon its 11 principles. It is clear that the existing program has taken 12 us far, but we haven't reached the end of the journey. At 13 this juncture, we need to check to be sure we're on the path 14 that leads to the light at the end of the tunnel. 15 Over the past few weeks, the Board's technical 16 staff and I have had an opportunity to meet with many of the 17 stakeholders, including environmental groups, utilities, 18 automobile manufacturers, and, of course, business groups. 19 I have been impressed with their depth of interest and their 20 concern that the ZEV program be successfully implemented. 21 Through this process, I solicited input from these 22 stakeholders on how we might best proceed. We received from 23 many of these groups proposals to modify the policy to 24 ensure its success. While some found the existing program 25 and time lines achievable, others suggested a market-driven PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 229 1 program based on emission reductions or a more flexible 2 introduction in the market launch of the ZEVs. 3 Although the initial proposal of the automobile 4 manufacturing industry was unacceptable, subsequent 5 proposals from the industry and others and proposals 6 developed by the ARB staff appear to have some promise. 7 In evaluating the program, in light of these 8 suggestions, I have relied on several principles to guide my 9 thinking. First, the Board is categorically committed to 10 achieving the emission reductions in the current rule and 11 SIP; no change should give up even a pound of emission 12 reductions. 13 Second, the Battery Panel we commissioned has 14 identified the steps that must be taken to realize high- 15 performing, long-range vehicles. And I think it would be 16 wise to heed the Panel's advice. 17 Third, Governor Wilson, in his letter to me last 18 summer -- and Secretary Strock, in a speech made earlier 19 this week -- identified the need for flexibility and the 20 maximum use of market forces in achieving environmental 21 standards. 22 Finally, I am very mindful of the significant 23 investment of resources that members of California's 24 business community have put forth as a result of the ZEV 25 program. The fact that the ZEV program has brought so many PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 230 1 companies and industries together in a common cause is an 2 example of the best of what makes up California. 3 After extensive consultation with the Board's 4 technical staff, our conclusion is the ZEV program has had 5 demonstrable achievements in inspiring and creating the 6 conditions for advanced transportation technology. 7 As the Battery Panel pointed out, the ZEV program 8 has resulted in significant investment in and development of 9 vehicle and battery technology over the past five years. 10 The technological progress achieved would not have been made 11 in its absence. But some of the suggestions for change may 12 contribute to the program's future success without 13 deflecting us from the goal this Board established in 1990. 14 And I believe we need to seriously consider them. 15 Let me share again my thinking on this point. 16 Confidential information provided by individual vehicle 17 manufacturers indicates that several companies will offer 18 ZEVs for sale beginning in late 1996 and '97, and the 19 industry will have the capacity to collectively produce up 20 to 14,000 vehicles annually by 1998. 21 As we heard in the marketing forum, demand for 22 these vehicles is uncertain. It does us little good unless 23 these vehicles are sold and are being operated on the 24 roadways in our State, substituting, of course, for 25 higher-emission vehicles. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 231 1 A market-based approach which would provide more 2 flexibility than the current two percent production 3 requirement will therefore be beneficial during the first 4 few years of the program. 5 If the Board were to ignore the recommendations of 6 the Battery Panel and insist on the implementation of the 7 program which requires 20,000 electric or ZEV vehicles to be 8 produced for sale in 1998, the State may well be 9 jeopardizing all of the progress to date. 10 There's no doubt that the industry would, under 11 these circumstances, have to rely on a product that would 12 not appeal to many consumers and could lead to a negative 13 backlash as consumers become increasingly dissatisfied and 14 reject some of the capabilities of these new vehicles. 15 The State's compelling interest is to provide for 16 a program that will lead to clean air and meet the stringent 17 and very demanding requirements of both the Federal and 18 State clean air laws. 19 There is no question that the ZEV, a ZEV that will 20 be purchased and driven by consumers, is integral to our 21 program. Supporting investment in pilot production of 22 advanced batteries was one of the recommendations of the 23 Battery Panel. This can be accomplished by an evaluation of 24 these advanced batteries in several thousand vehicles. 25 The Panel concluded that this is an essential step PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 232 1 to reaching full commercial battery production. The ZEV 2 program should be modified to provide for such a program 3 beginning in 1998. I reiterate that we must achieve the 4 emission reductions set forth in the SIP. And by all 5 assessments, this will require the widespread introduction 6 of zero-emitting vehicles. 7 Modification along these lines discussed will 8 ultimately strengthen the ZEV program, contribute to its 9 success, and help assure we meet our clean air goals. 10 Taking these steps will result in a new 11 partnership which will assure all interested parties are 12 working together to make this program succeed. 13 With the support of my colleagues, I would like to 14 direct the staff to develop and bring to the Board proposals 15 for final action no later than March of 1996, and to also 16 provide us with a status report on progress at the December 17 Board meeting. 18 The proposal should be consistent with the 19 modification of the requirement for 1998, and the 20 substitution of a program that provides a realistic 21 introduction of a significant number of high-quality 22 vehicles in the first year. 23 I would like the staff to engage all the 24 stakeholders in this regulatory process. I have very much 25 appreciated how people have come to the table, particularly PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 233 1 in the last several weeks, but throughout the last six 2 months, to communicate openly in a way that moved the debate 3 or the dialogue forward. I appreciate that very much. And 4 I think we all can build upon that. 5 And, at this point, I would entertain some staff 6 and Board member discussion and, of course, concurrence. 7 MR. LAGARIAS: Mr. Chairman? 8 CHAIRMAN DUNLAP: Mr. Lagarias. 9 MR. LAGARIAS: Mr. Chairman, I support your 10 proposed program, especially the first part, which requires 11 that whatever actions are taken, that we get emission 12 reductions equivalent to the ZEV program from the motor 13 vehicle segment. 14 And I understand that there are sources that we 15 have not identified. I think the discussions have been 16 colored in large part by doomsday projections -- people 17 talking about by the year 2010, we will have 1.1 million 18 electric vehicles on the road, having a range of -- if we 19 take today's numbers -- of 50 to 80 miles per charge. They 20 will be lead acid batteries, and they will cost $14,000 more 21 than present cars. 22 Does anybody in this room think that that would 23 ever occur? We certainly wouldn't support that. And we've 24 had our technology reviews periodically, after passing the 25 regulation, just to see where the technology was going. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 234 1 Dr. Boston and I were on that Board that passed 2 the clean car/clean fuel regulation, and it was primarily 3 directed at the health-related issues. We didn't realize we 4 were setting such an economic engine that now is going 5 faster than we had predicted. 6 But our technology review that you set up has 7 shown that, for '98, other than lead acid batteries, no 8 advanced battery is available and would have to go through 9 pilot plant production before the advanced batteries could 10 even be evaluated. 11 So, we need time to find out how these advanced 12 batteries are going to work out, which we don't have as yet. 13 We don't have the infrastructure answers that have been 14 coming up that we never envisioned -- the fast-charging 15 requirements, the load distributions. And I think that a 16 pilot program would help us get some of these issues 17 addressed. We don't know what the niche market is for 18 electric vehicles. We talk about commuters, but we haven't 19 seen that yet. And I think we have to get some cars on the 20 road to find out how people are using them, where they're 21 going to use them, and what innovative ways they will find 22 for electric vehicles. 23 And I think the program has to be defined in that 24 regard. 25 And in the case of electric vehicles, we've been PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 235 1 talking about putting them on the IC engine frame. And I 2 don't know that that's right. The electric vehicle has a 3 special -- it's different from the IC engine. Weight is 4 much more important. And issues that can be ignored on the 5 conventional car are very important to electric vehicles. 6 These include aerodynamics, construction materials, brake 7 energy regulation. These are all important that were not of 8 concern to the conventional engine. 9 And finally, whatever programs that we can work 10 out must be designed to succeed, not designed so that they 11 can show they won't work. 12 CHAIRMAN DUNLAP: Thank you, Mr. Lagarias. Ms. 13 Edgerton. 14 MS. EDGERTON: I'd like to agree with Mr. Lagarias 15 on his point about the high-efficiency vehicle and some of 16 the differences that need to be worked on and must be worked 17 on to have a successful electric vehicle, such as 18 aerodynamic design and brake -- regenerated braking, et 19 cetera. 20 In addition to that -- and I think that we must 21 take that into account in our -- as the staff looks at this 22 issue -- as to whether we can provide more guidance one way 23 or another on that aspect of the effort. 24 I also would like to emphasize a couple points 25 that Secretary Strock made. Incidentally, historically, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 236 1 Secretary Strock has had an important role -- those of you 2 on staff who are familiar with working with him very hard 3 and tirelessly in 1991 to get the waiver from Bill Riley in 4 early '92, so that our LEV/ZEV program could go forward -- 5 the two points that he made that have not perhaps been made 6 yet were that, to the extent that automakers propose an 7 interim alternative compliance option for the regulations, 8 they must provide a clean air -- technology-based clean air 9 premium of pollution reductions significantly greater than 10 those provided by the current regulation. 11 This would represent, in essence, a risk premium 12 for the State, whose SIP would be, in that period, less 13 certain of Federal Government approval. 14 Also, the automakers should provide clear, 15 enforceable commitments for accelerated research, 16 development, testing, and commercialization of zero-emission 17 vehicles beginning immediately. 18 Again, echoing Chairman Dunlap's insistence that 19 whatever is considered be consistent with the commitment of 20 California companies -- and other companies which are not in 21 California, such as Mr. Semmens' Electrosource, which we 22 hope will be in California. We recognize the significant 23 investment, and I appreciate Mr. Simmons pointed to his own 24 private investment on his behalf -- on their behalf. And I 25 mention that I happen to know that he's a conservative PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 237 1 Republican. 2 (Laughter.) 3 MS. EDGERTON: And I think that this is 4 tremendously important, and we must be mindful of that 5 investment. All environmental regulation, and this one in 6 particular, requires consistency. 7 And finally, Mr. Strock, Secretary Strock, 8 indicated that, in terms of the SIP, care must taken to 9 assure that the higher pricing of new vehicles, including 10 ZEVs, does not inadvertently lead to older, more polluting 11 vehicles remaining on the road for reasons of consumer cost. 12 That's a tall order. I'm not quite sure. I mean 13 there's a lot of variables in that, but I think that's one 14 of the ones which is -- has been brought up in the workshops 15 and which is very important. 16 Thank you. 17 CHAIRMAN DUNLAP: Mr. Calhoun. 18 MR. CALHOUN: Mr. Chairman, I've attended all the 19 workshops. And I'm convinced that what we have on our hands 20 is a program that is headed for a train crash. 21 And I'm convinced that we need to make some 22 changes to the program. And there's several reasons for it. 23 I've followed this Board's actions since it was first 24 created in 1968. I'll go back and review a little history 25 here if you can bear with me for a couple of minutes. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 238 1 I was one of the staff members and presented many 2 proposed regulations to this Board, and one of which was a 3 retrofit program that -- then I left. Someone else had to 4 carry on the responsibility for implementing that. And it 5 turned out we didn't do our homework as well as we should 6 have, and we put those vehicles on the road. And it was a 7 disaster. 8 And the Legislature pulled the plug on it. That's 9 one particular incident that I have in mind. 10 I want to tell you about another incident where we 11 had a successful program that was introduced, and that was 12 the case of the catalytic converter. Before any vehicles 13 were sold in this State that were equipped with catalytic 14 converters, there were a number that were really tested very 15 thoroughly here in the State. 16 General Motors entered into an agreement with the 17 State of California for a minimum of a hundred vehicles that 18 had catalysts on them. They were with, I think, the 19 Department of Water Resources. 20 The Air Resources Board had a staff person that 21 followed this. The Division of Highways or the Water 22 Resources had a staff person that followed it, so did 23 General Motors. And they tracked those vehicles throughout 24 the several years. And any difficulties that they 25 encountered, they were later fixed; so that, when the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 239 1 catalyst was finally introduced on the '75 model car, it has 2 been one of the most successful automotive emissions program 3 that we've ever had. 4 And I think, in order to be assured that we have 5 some type of a successful program, we need to crawl before 6 we walk. And I'm very, very concerned that the way things 7 are present in the program, that if we just go ahead with 8 this business of forcing the introduction of 2 percent of 9 the vehicles and just turn them loose in the hands of the 10 public, that we're going to really, really have this sort of 11 a disaster. And I don't want to be a part of it, really. 12 I think that I'm mostly more interested in having 13 a program that's going to be a success, and I think the way 14 to do that is to have some type of incremental improvement; 15 let the system evolve. 16 You start with a small program, and then learn 17 from your mistakes, and then you can sort of ramp the system 18 up, and that can occur over a period of years. That's the 19 way the vehicle manufacturers -- they know more about how to 20 introduce a new product than we do. And I think we ought to 21 listen to any input that we get from them. 22 But I don't think we have to sacrifice air 23 quality. And I think that's what I heard the Chairman 24 saying, and I don't think we ought to back away from that. 25 I think there are ways of meeting the air quality PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 240 1 requirements, but I also think that this program requires 2 some modification. And I'm willing to support that. Thank 3 you. 4 CHAIRMAN DUNLAP: Thank you. Any other comments? 5 Supervisor Vagim. 6 SUPERVISOR VAGIM: Mr. Chairman, thank you. 7 It will be of extreme interest, I'm sure, to 8 everyone what the staff comes back with per your direction. 9 But no matter what we do and what we have talked 10 about today, primarily the last many conversations and 11 discussions have been on the -- just how well the battery 12 technology is -- I think the staff's focus is, it's the 13 battery, stupid; it's the battery, stupid. 14 And it shall remain that way. The fact that the 15 motor and the regulator are here, I think we all have seen 16 that. 17 But I think, Mr. Chairman, there are other issues 18 that we shouldn't forget about no matter what numbers of 19 EVs, or ZEVs, are produced. And that is, if it is going to 20 be a battery car, what assurances are we going to have that 21 the battery's going to come back? Is it going to be like 22 the tires of today, where you pay a deposit but you have 23 somebody else pick them up, and they end up along the 24 roadsides of our counties? 25 Is there going to be such that the battery has got PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 241 1 such a high cost value, because of the deposit and return, 2 they're starting to be stolen out of cars? Now, you have a 3 creation of an automatic market effect. 4 These are questions that are begging to be 5 answered. I don't think we should give up on that. There 6 are other agencies in this State that need to be dealing 7 with those on a parallel track. 8 What's going to happen with the energy tax credit 9 or energy tax shift? Where's it going to go? The sales 10 tax, where's it going to go? 11 Where's the road tax? Who's going to pick that 12 up? So far, those discussions haven't really even hit the 13 ground yet. And, of course, who will pay for the 14 infrastructure costs? 15 All those issues need to be done parallel. I 16 don't think we should stop discussing them. I think the 17 State needs to move along with them, because they have 18 nothing really to do with the technological issues that are 19 here today. They have a lot to do with the societal issues 20 that need to be dealt with. Thank you, Mr. Chairman. 21 CHAIRMAN DUNLAP: Good point. Thank you. 22 Okay. Yes, Ms. Edgerton. 23 MS. EDGERTON: I think it is, maybe it is -- it is 24 certainly the battery. But I don't think -- but, for me, 25 it's more than the battery. It's putting the battery in a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 242 1 car that is really efficient, using all the technologies, 2 including light-weight materials, et cetera, and design that 3 Mr. Lagarias brought up. Forgive my lawyerly trying to 4 define the problem a little broader than that or the 5 opportunity a little broader (sic). 6 CHAIRMAN DUNLAP: Thank you. With that, Mr. Boyd, 7 Mr. Cackette, you have the direction, the sense, the will of 8 the Board at this point. 9 I'd like to see you move forward and hit those 10 target dates. Jim? 11 MR. BOYD: Thank you, Mr. Chairman. 12 CHAIRMAN DUNLAP: Okay. Anything else, Mr. Boyd, 13 that needs to come before the Board? 14 MR. BOYD: No, we have no further business for 15 today's meeting. 16 CHAIRMAN DUNLAP: Okay. With that, the November 17 meeting of the Air Resources Board stands adjourned. 18 (Thereupon, the meeting was adjourned 19 at 4:45 p.m.) 20 21 22 23 24 25 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 243 1 CERTIFICATE OF SHORTHAND REPORTER 2 3 4 I, Nadine J. Parks, a shorthand reporter of the 5 State of California, do hereby certify that I am a 6 disinterested person herein; that the foregoing meeting was 7 reported by me in shorthand writing, and thereafter 8 transcribed into typewriting. 9 I further certify that I am not of counsel or 10 attorney for any of the parties to said meeting, nor am I 11 interested in the outcome of said meeting. 12 In witness whereof, I have hereunto set my hand 13 this 27th day of November , 1995. 14 15 16 Nadine J. Parks 17 Shorthand Reporter 18 19 20 21 22 23 24 25 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345