CALIFORNIA AIR RESOURCES BOARD Please note that this November 5, 1998 Board meeting was recorded in two parts by two court reporters. Part 1 concludes on page 166 and Part 2 begins on page 167 and includes its own Index. PUBLIC HEARING TO CONSIDER THE "LEV II" ) AND "CAP 2000" AMENDMENTS TO THE ) CALIFORNIA EXHAUST AND EVAPORATIVE ) EMISSION STANDARDS AND TEST PROCEDURES ) FOR PASSENGER CARS, LIGHT-DUTY TRUCKS ) 98-12-1 AND MEDIUM-DUTY VEHICLES, AND TO THE ) EVAPORATIVE EMISSION REQUIREMENTS FOR ) HEAVY-DUTY VEHICLES. ) ___________________________________________) TRANSCRIPT OF PROCEEDINGS November 5, 1998 9530 Telstar Avenue El Monte, California REPORTED BY: Lynne R. Rutledge CSR No. 11091 Our File No.: 1-49953 APPEARANCES OF BOARD MEMBERS: Chairman Dunlap Mr. Calhoun Supevisor DeSaulnier Ms. Edgerton Dr. Friedman Mr. Parnell Supervisor Patrick Ms. Rakow Ms. Riordan Supervisor Roberts Supervisor Silva INDEX Proceedings PAGE Call to Order 1 Pledge of Allegiance 1 Roll Call 1 Opening Remarks by Chairman Dunlap 2 AGENDA ITEM: 98-12-1 Public Hearing to Consider the "LEV II" 10 and "CAP 2000" Amendments to the California Exhaust and Evaporative Emission Standards and Test Procedures for Passenger Cars, Light-Duty Trucks and Medium-Duty Vehicles, and to the Evaporative Emission Requirements for Heavy-Duty Vehicles Introductory Remarks by Chairman Dunlap 10 Staff Presentation Mike Kenny 11 Annette Guerrero 13 Jim Schoning 40 Public Coments Kelly Jensen 53 Vic Weiser 60 Till Stoeckenius 65 Kelly Brown 72 Matt Kevnick 87 Charlie Kitz 93 Peter Welch 99 Manuel Cunha 105 Mike Wade 110 Kevin Cullen 114 Sam Leonard 121 William Innes 132 Barbara Kiss 136 Greg Dana 138 Wolfgang Groth 142 Dick Shaw 147 Andy Frank 151 Bruce Bertelsen 157 Roland Hwang 166 1 CHAIRMAN DUNLAP: Will the November meeting 2 of the California Air Resources Board please come to 3 order. Will the audience please rise and join the Board in 4 the Pledge of Allegiance. 5 (Pledge recited.) 6 CHAIRMAN DUNLAP: Thank you. Ms. Hutchins, 7 will you please call the roles. Ann, will you please call 8 the role. 9 ANN: Calhoun? 10 MR. CALHOUN: Here. 11 ANN: DeSaulnier? 12 SUPERVISOR DESAULNIER: Here. 13 ANN: Edgerton? 14 MS. EDGERTON: Here. 15 ANN: Friedman? 16 DR. FRIEDMAN: Here. 17 ANN: Parnell? 18 MR. PARNELL: Here. 19 ANN: Patrick? 20 SUPERVISOR PATRICK: Here. 21 ANN: Pat Riordan? 22 MS. RIORDAN: Here. 23 ANN: Roberts? 24 SUPERVISOR ROBERTS: Here. 25 ANN: Silva? 1 1 SUPERVISOR SILVA: Here. 2 ANN: Chairman Dunlap? 3 CHAIRMAN DUNLAP: Here. 4 Thank you. What I'd like to do prior to 5 getting into our sole agenda item today is I would like to 6 call up Firoz Razul, who is president and CEO of Ballard -- 7 Firoz, if I could get you to come forward -- who will give 8 us a brief presentation but will also present a fuel cell 9 demonstrator unit to the Board. I'm pleased to have Firoz 10 with us. He's come to us from British Columbia His 11 company is very important to us in the technology area. So 12 welcome. 13 We are pleased to hear what you have to say 14 this morning. 15 FIROZ RAZUL: I'm Firoz Razul, president and 16 chief executive officer of Ballard Power Systems. 17 Mr. Chairman, Members of the Air Resources 18 Board, it is a pleasure to be with such an important body 19 and to be in Southern California on a day when you are once 20 again addressing such critical issues such as the 21 protection of our environment and the restoration of air 22 quality. The California Air Resources Board, under the 23 leadership of John Dunlap, has done so much over the years 24 to improve air quality throughout this region. 25 But more than this, the Air Resources Board, 2 1 through its actions, has had a profoundly positive impact 2 on environmental policy throughout North America and the 3 world, particularly in promoting responsible energy 4 technologies. For that, we all owe you a tremendous debt 5 of gratitude and we will for years to come. 6 At Ballard, our vision is the power to 7 change the world with the support of our strategic 8 partners -- the Ford Motor Company, Daimler Benz or soon 9 Daimler Chrysler. The Ballard family in developing fuel 10 cells and fuel cell applications to provide clean, quiet, 11 reliable, and efficient power for a number of markets. 12 Whether you drive a car or ride a bus to work, fuel cell 13 power will take you there. When you turn on the light 14 switch in your kitchen or go to work in the morning, fuel 15 cells will provide the power to homes and hospitals, office 16 buildings and factories. If you need power for your camper 17 or in remote parts of the world, fuel cells will provide 18 it, and they will do it without the harmful emissions 19 produced by traditional combustion agents. 20 The Air Resources Board has led the way in 21 promoting fuel cell technology not just by talking about it 22 but in actively working to educate everyone to the benefits 23 of fuel cells and other clean environmental technologies. 24 As an expression of Ballard's appreciation for your 25 efforts, it is our pleasure to deliver to you and the 3 1 citizens of California a 100-watt Ballard portable 2 fuel-cell generator. 3 Everyone should have the opportunity to 4 learn more about clean energy technologies, and we know how 5 much the Air Resources Board is looking forward to using a 6 fuel cell to do so. 7 We are proud of the long meaningful 8 relationship that Ballard has had with the state of 9 California. We are proud to have one of our Ballard family 10 members DBB Fuel Cells in Poway, California. Several years 11 ago, the South Coast Air Quality Management District 12 provided partial funding for our prototype fuel cell 13 busses. And soon after, California gave us a very early 14 opportunity to demonstrate that fuel cell busses can and 15 will be the clean transportation mode for our cities. And 16 today, we are proud to join California in showing everyone 17 that fuel cells are not only the power of the future, 18 they're today's reality. 19 Last month Ballard hosted the world's first 20 round table discussion on fuel cell technology, which was 21 web cast live on the internet to an international audience. 22 We were honored to be joined that day by Secretary Rooney 23 and Lynne Edgerton. Like all of you true champions for 24 clean energy technology including fuel cells, during that 25 meeting Ms. Edgerton stated and I quote, "I'm confident 4 1 that just as the internal combustion engine was the power 2 choice for the 20th century, fuel cells will be the choice 3 for the 21st century." Ms. Edgerton, we couldn't agree 4 more. We are on the cusp of the 21st century today, and 5 Ballard is ready to meet that challenge. 6 Ballard thanks you Mr. Chairman for 7 permitting us to be a part of your legacy here at the Air 8 Resources Board, and we wish you every success in the 9 future. We thank every member of the Board for allowing us 10 to participate in your legacy as one of the most 11 influential and environmental agencies in the world. And 12 we thank you for showing the people of California that fuel 13 cells are more than just a promise. We have indeed the 14 power to change the world. 15 Thank you very much. 16 CHAIRMAN DUNLAP: Thank you. He's going to 17 give us a fuel cell first before you pepper him. 18 Thank you very much. Thank you, and we 19 appreciate your kind words. And I must say, as I've gotten 20 to know you and your company, I've appreciated the fact 21 that you've devoted some time to educate us as to what the 22 potential is worldwide in fuel cells, and it has meant a 23 lot to us to really be able to pull for technology that has 24 such a, we believe, great potential. 25 So with that, if you're willing, can we ask 5 1 you a couple questions? I know Mr. Parnell and Ms. 2 Edgerton would like to ask you a few things. 3 MR. PARNELL: I'm just wondering in view of 4 trying to understand practical applications, where are you 5 in terms of having fuel cells developed and ready to drop 6 into a vehicle such as we saw out front today? Could you 7 expound on that just a bit? 8 FIROZ RAZUL: Mr. Parnell, over the last few 9 years, we have been working to develop the technology to 10 demonstrate that it has the performance that is equivalent 11 or better than existing technology, and I believe Ballard 12 has been able to demonstrate that. 13 The challenge today for us is to maintain 14 that performance and deliver the technology at a lower 15 cost, and this is where our partnerships with the Ford 16 Motor Company and with Dymler Benz or Dymler Chrysler soon 17 has been very important in helping us get those 18 technologies into high-volume manufacturing to be able to 19 be competitive with today's technology. 20 So over the next few years, we will be 21 working to start to produce the technology that we have 22 developed, and I'm optimistic it will be in many different 23 applications including automobiles and busses in much less 24 time than most people expect. 25 MR. PARNELL: Thank you very much. 6 1 MS. EDGERTON: Thank you. Thank you so much 2 for all your contributions. They have just been enormous 3 and for the opportunity to participate with you, I thank 4 you as well. 5 Could you give us some numbers for the 6 people of California to look forward to in terms of fuel 7 cell vehicles, light-duty vehicles in the future, and can 8 you give us some dates as to what your target dates are for 9 seeing significant numbers of fuel cell vehicles on the 10 road in California? I don't want to put you in a box. I 11 don't want you to say anything you don't feel comfortable 12 saying. But if there are projections that you can make 13 that can be then reported to people in California, I think 14 it would be very exciting for them to hear. 15 FIROZ RAZUL: We are a developer of a 16 component which is a very important part of the power 17 system of the future, which is the fuel cell. 18 Our objective is to have the technology 19 ready early in the 2000-2001 time frame for all the 20 companies to then start to integrate those into design and 21 integrate those into their vehicles. And the design, the 22 development and design of a vehicle varies by manufacturer. 23 It can be as low as three or four years or as high as seven 24 years. 25 And from that point in time, the oil 7 1 companies, once they are comfortable that the technology 2 works to their satisfaction, they will then start to design 3 the fuel cell into their vehicles. So exactly when they 4 decide to announce a car with the fuel cell, I think is 5 really both a, I'm sure, a competitive information on their 6 part and that's a decision they would make. That would not 7 be a decision we would participate in. However, our 8 objective is to be ready for them to make their decision as 9 early as possible. 10 MS. EDGERTON: Is it correct that I've seen 11 data that where Ballard is discussing 100,000 fuel cell 12 vehicles on the road around 2004? 13 FIROZ RAZUL: I think a number of auto 14 companies -- there are about six auto companies today that 15 have made some sort of public statement that they intend to 16 have fuel cell vehicles available in the 2004-2005 time 17 frame. I think the numbers vary. One of our projections 18 for preparing a manufacturing facility for this, as far as 19 a supplier for the automotive industry, is in the order of 20 those numbers. 21 But I think that's not a commitment from us. 22 Obviously, we don't put the vehicles on the road, but we 23 certainly are preparing to manufacture in the quantities of 24 between 100,000 and 250,000 ready for automotive companies 25 to be able to use the technology in their vehicles. 8 1 MS. EDGERTON: Let me follow up a little bit 2 because it is relevant to this hearing. Today, obviously, 3 we're adopting standards that would apply from 2004 on, 4 and this is the time frame in which you envision your fuel 5 cells being very increasingly used by the auto companies 6 and comprising in an increasing number of vehicles on the 7 road. 8 With respect to larger vehicles such as 9 sports utility vehicles, would you envision your fuel cell 10 as being able to power them and at very low emissions, near 11 zero emissions? 12 FIROZ RAZUL: The fuel cell is a modular 13 power source. As you are aware, we have busses today 14 running on fuel cells as we have in the city of Chicago and 15 Vancouver. So the size is not an issue. It is a question 16 of the models that the auto companies decide to introduce 17 fuel cells in first. I think that's a decision we haven't 18 heard what vehicles they've selected yet. We will 19 certainly be prepared to put a fuel cell in any size 20 vehicle. 21 MS. EDGERTON: So there is nothing to 22 preclude the auto companies from running sports utility 23 vehicles on fuel cells, selling them at the same price in 24 that time frame? 25 FIROZ RAZUL: I can only speak about the 9 1 technology, and certainly we expect the technology to be 2 ready. I think when and how they introduce the vehicles, 3 as I said, is not in our control. 4 MS. EDGERTON: Thank you. 5 CHAIRMAN DUNLAP: Are we done peppering our 6 friend and colleague? Thank you very much. I appreciate 7 your time. I look forward to keeping abreast in your 8 progress. 9 All right. I'd like to acknowledge we have 10 been joined by, I think, one or two other are Board 11 members; so we have our entire Board here today. 12 Let's move into our sole agenda item 13 98-12-1. It's a public hearing to consider the "LEV II" 14 and "CAP 2000" amendments to the California exhaust and 15 evaporative emission standards and test procedures for 16 passenger cars, light-duty trucks, and medium-duty vehicles 17 and to the evaporative emission requirements for heavy-duty 18 vehicles. 19 The proposal today is regarded as one of the 20 most significant mobile source items for Board 21 consideration this year. The proposed LEV II amendments 22 target emission reductions from light-duty vehicles as 23 required under the state implementation plan for ozone 24 attainment. These amendments modify the low-emission 25 vehicle program initially adopted by this Board in 1990. 10 1 Also proposed are CAP 2000 amendments to modify motor 2 vehicle certification and in-use compliance requirements. 3 At this point, I would like to ask Mr. Kenny 4 to introduce the item and begin the staff's presentation. 5 Mike? 6 MR. KENNY: Thank you, Mr. Chairman and 7 Members of the Board. Good morning. 8 The primary impetus for the proposed 9 amendments comes from the ARB's obligation under the state 10 implementation plan adopted by the Board in 1994. State 11 implementation plan contains mobile source Measure M2 which 12 calls for the adoption of technology based control 13 strategies for light-duty vehicles beginning with the 2004 14 model year. 15 The plan specifies for this measure and 16 emission reduction of 25 tons per day of reactive organic 17 gases plus oxides of nitrogen in the South Coast Air Basin 18 in 2010. In addition to Measure M2, SIP recognizes that 19 the greater Los Angeles area, designated as extreme ozone 20 non-attainment, may need to rely on the development of 21 further technology measures to meet an additional 75 tons 22 per day of reactive organic gases plus oxides of nitrogen 23 emission reduction. 24 This has been commonly referred to in the 25 past as our black box. The proposed amendments are 11 1 intended to achieve emission reduction targets of M2 and 2 over two-fifths of the emission reductions in that black 3 box. The proposed LEV II amendments are a comprehensive 4 set of modifications. They include the application of 5 passenger car exhaust emission standards to most sport 6 utility vehicles, pickup trucks and minivans; and lower 7 exhaust standards for all light-duty vehicles. 8 Other amendments include evaporative 9 emission standards, more stringent requirements for the 10 phase-in of cleaner vehicles, additional mechanisms for the 11 generation of zero-emission vehicle credits, and numerous 12 technical modifications. Also proposed are CAP 2000 13 amendments that consist of streamlining the current motor 14 vehicle certification requirements while strengthening the 15 in-use compliance requirements. 16 Extensive research and test programs were 17 conducted to determine the technological feasibility of the 18 proposed LEV II exhaust and evaporative emission 19 standards. These involved over 4,000 hours of testing 20 time. The results of staff's testing indicate that the 21 LEV II standards are technologically feasible. The 22 estimated emission benefits for the proposed adoption of 23 these standards are 51 tons per day oxides of nitrogen and 24 6 tons per day of reactive organic gases in the South Coast 25 Air Basin by 2010. 12 1 The estimated cost effectiveness of the 2 staff's proposal averages approximately $1 per pound of 3 pollutant reduced. Annette Guerrero of the LEV II team 4 will now provide the background for the staff's proposal 5 and present staff's recommendation for the Board's action. 6 Annette? 7 ANNETTE GUERRERO: Could I have someone dim 8 the lights, please. Thanks. 9 Thank you, Mr. Kenny. Good morning, 10 Chairman Dunlap and Members of the Board. Welcome to our 11 mobile source test facility here in El Monte. 12 Today I will be presenting staff's proposed 13 revisions to California's low emission vehicle program. As 14 mentioned in the opening remarks, the proposal before you 15 today is one of the most significant mobile source items 16 for Board consideration this year. It achieves large 17 emission reductions and implements on schedule Measure M2 18 of the SIP. It is also probably the most complex as it 19 affects every mobile source regulation. In our 20 presentation today, I will describe for you the key 21 elements of our proposal. 22 I'll start with some brief background and 23 some review of the regulations, present the key elements of 24 the emission proposal, present the results of our 25 technological feasibility and cost analysis, and summarize 13 1 the environmental impact and cost effectiveness of LEV II. 2 And lastly, I'll explain some of the outstanding issues. 3 To begin, I'd like to give you some 4 background and some review of the current regulations. 5 As Mr. Kenny mentioned in his opening 6 remarks, the primary impetus for this Board item comes from 7 mobile source Measure M2 of the SIP, in which the Board 8 committed to reduce reactive organic gas or ROG, plus 9 oxides of nitrogen (NOx) emissions by 25 tons per day in 10 the South Coast Air Basin. This green box here. 11 The SIP also requires us to make significant 12 progress in reducing emissions by another 75 tons per day. 13 This is the so-called black box. As I will demonstrate 14 later, the proposed LEV II amendments are expected to 15 achieve the NOx emission reduction goals of Measure M2 and 16 also provide significant NOx emission reductions which will 17 further shrink the black box. In addition to the 18 reductions to the South Coast Air Basin, this proposal 19 would also achieve needed statewide emission reductions for 20 NOx, carbon monoxide, and also fine particulate matter. 21 Today's proposal is an evolution of the 22 original Low-Emission Vehicle, or LEV I Program, that was 23 adopted by you in 1990. The key elements of California's 24 LEV Program include the introduction of four increasingly 25 stringent emission categories -- transitional low-emission 14 1 vehicle or TLEV, low-emission vehicle or LEV, ultra-low 2 emission vehicle or ULEV, and finally zero emission vehicle 3 or ZEF. 4 In addition, considerable compliance 5 flexibility is built into the program for the introduction 6 of low-emission vehicles. A manufacturer may choose which 7 portion of its fleet is certified to each of these 8 standards as long as the average hydrocarbon exhaust 9 emissions of its entire fleet meets a fleet average 10 requirement. The only required percent phase in is that 11 10 percent of the fleet must be certified as ZEVs in 2003. 12 The original LEV Program has completed its 13 fourth model year of implementation, is on schedule, and 14 meeting emission reduction and cost targets. Currently, 43 15 percent of the '98 model year vehicles are certified as 16 TLEVs, another 26 percent of the fleet is certified as 17 LEVS, and Honda introduced the first gasoline powered ULEV 18 this past model year as well. The LEV I Program will be 19 fully implemented by 2003. 20 The original enhanced evaporative 21 regulations were also adopted by the Board in 1990. 22 Evaporative emissions are hydrocarbon vapors that escape 23 mainly from the vehicle fuel and evaporative control system 24 into the atmosphere and can originate from the on-board 25 canister, permeation through hoses, joints, and plastic 15 1 fuel tanks, and other sources. The enhanced regulations 2 require that motor vehicles be designed to more effectively 3 control the three types of fuel evaporative emissions -- 4 diurnal, hot soak, and running loss. 5 Diurnal emissions occur when a vehicle is 6 parked and are caused by daily ambient temperature changes. 7 Hot soak emissions occur immediately after a 8 fully warmed-up vehicle is stationary with the engine 9 turned off and are due to high under hood temperatures. 10 Running loss emissions occur when the fuel 11 heats up during driving and can originate from numerous 12 sources. 13 Staff will only be proposing modifications 14 to the diurnal plus hot-soak emission standards in the 15 evaporative proposal today. 16 With that brief background, I will now 17 explain the key exhaust and evaporative elements of the 18 LEV II proposal, beginning with exhaust and followed by the 19 evap proposal. 20 Staff is proposing three major modifications 21 to the LEV tailpipe regulations. The first is a 22 requirement that sport utility vehicles, pickup trucks, and 23 minivans meet the same emission standard as cars. The 24 second is lower tailpipe standards for all light- and 25 medium-duty vehicles. The third provides partial ZEF 16 1 credits for near-zero emitting vehicles. 2 Perhaps the most defining element of LEV II 3 is the proposal that sport utility vehicles, pickup trucks, 4 and minivans be required to meet the same emission 5 standards as cars. The current trend toward the use of the 6 sport utility vehicles and pickup trucks for personal 7 transportation, coupled with their ever-increasing 8 popularity representing nearly half of new vehicle sales, 9 has greatly altered the usage patterns of this vehicle 10 segment and increased their impact on air quality. It is 11 now the norm for these vehicles to be used for personal 12 transportation. 13 However, under current regulations, these 14 vehicles have separate, less stringent emission standards 15 because they have been traditionally used for work purposes 16 and had more rigorous duty cycles. This trend has a 17 substantial impact on air quality because, although these 18 vehicles are used as passenger cars, SUVs and light trucks 19 emit one-and-a-half to two-and-a-half times the emissions 20 per mile as a passenger car, as you can see from this 21 chart. 22 The medium-light trucks in the red bar of 23 this chart include the Jeep Grand Cherokee, the Chevy 24 Blazer, Ford Explorer, and all minivans. The vehicles 25 included in the bar on the right-hand side of the chart are 17 1 the Ford F150 pickup truck, the Ford Expedition, the Dodge 2 Ram 1500 pickup truck, and the Chevy Suburban. 3 For this reason, staff is proposing that 4 most trucks included in this chart -- that is, trucks under 5 8,500 pounds gross vehicle weight -- be subject to the same 6 emission standards as cars. 7 The second element of the LEV II proposal is 8 lower emission standards and increased durability 9 requirements for passenger cars and light trucks. Some of 10 the new standards in the LEV II proposal are listed in this 11 table in green. Two of the more important standards staff 12 is proposing include a 75-percent reduction in NOx for LEVs 13 and ULEVs to .05 grams per mile, and a new emission 14 category, super ultra low-emission vehicle or SULEV. 15 All of these emission categories include 16 increased durability requirements to 120,000 miles or, 17 optionally, 150,000 miles. You'll notice that staff is 18 proposing to retain the current TLEV standards to allow 19 manufacturers additional flexibility for their more 20 difficult to control vehicles. Diesel vehicles would 21 likely certify to the TLEV standard. Because the new SULEV 22 category contains some additional features, I'll discuss 23 that later in the presentation. Also not listed on this 24 table are the special standards being proposed for 25 medium-duty work trucks under 8,500 pounds GVW. 18 1 Another element of the LEV II exhaust 2 proposal is the new flexible implementation schedule where 3 a manufacturer can choose the standards category to which a 4 vehicle may certify as long as the emissions of their 5 entire product line meet a fleet average NMOG requirement. 6 In other words, as long as the manufacturer meets the two 7 curves on this chart, it can tailor its implementation to 8 its own product schedule. As you can see from this chart, 9 the fleet average and NMOG requirement would decline from 10 LEV I levels in 2003 through 2010. 11 There are two separate curves because the 12 ZEF requirement is linked only to passenger cars and the 13 lightest trucks. The second less stringent curve has been 14 established for heavier light trucks and sport utility 15 vehicles because zero-emission vehicles are not required in 16 this class. 17 There are several other compliance 18 flexibility options available to a manufacturer when 19 implementing LEV II. For example, fleet average credit 20 trading is allowed between passenger cars and light trucks. 21 In addition, manufacturers may continue to sell LEV I 22 vehicles through the 2006 model year. Truck models used 23 principally for work are provided with a less stringent 24 tailpipe standard, and an optional TLEV standard is 25 provided which recognizes the low-emission deterioration 19 1 rates of diesel engines. 2 The first element of the evaporative 3 proposal is lower emission standards. The proposed 4 standards represent a 50- to 75-percent reduction from 5 current standards, depending on vehicle category. Today, 6 using certification data, approximately 20 percent of the 7 '99 model year cars have certified evaporative emission 8 levels lower than the staff's proposed standards. For 9 example, one of the largest vehicles, the Chevy Suburban, 10 can already comply with the proposed standards in its 11 category. 12 The second element is the increased 13 durability requirement from 10 years or 100,000 miles to 15 14 years or 150,000 miles. We are proposing this because 15 there are concerns that significant evaporative emission 16 deterioration may occur for vehicles more than 10 years 17 old. Current data show that more than 20 percent of the 18 California vehicle fleet is between 10 and 15 years old. 19 The proposal would require manufacturers to demonstrate 20 that the evaporative emission components remain durable as 21 the vehicles become old. 22 The last element of the evaporative proposal 23 is the implementation schedule. The proposed 24 implementation schedule is phased in over three years, 25 starting in the 2004 model year. In the first year, 40 20 1 percent of the manufacturer's vehicle fleet would be 2 required to comply with the proposed evaporative standard 3 with 100-percent compliance being required by the 2006 4 model year. At the manufacturers' request, an optional 5 alternative phase-in schedule has been added to allow 6 compliance flexibility to a manufacturer. 7 I'll move now to the next section of our 8 presentation, which covers the technological feasibility of 9 the standards. First I'll discuss the tailpipe, followed 10 again by the evap. 11 With industry generally conceding that the 12 proposed tailpipe standards can be met by passenger cars 13 and the lightest trucks, staff focused its resources on 14 demonstrating that the proposed standards are feasible for 15 sport utility vehicles and heavier trucks. Staff used the 16 lowest emitting vehicle currently available in this sector, 17 the Ford Expedition. 18 Staff installed advanced catalyst systems 19 with air injection on several Expeditions that were 20 obtained from catalyst suppliers, such as the one shown 21 here. The catalysts were aged to simulate 50,000 miles of 22 use, using the procedure that Ford uses to ensure that even 23 work trucks that are loaded with cargo or used for towing 24 will comply with emission standards in use. It's also 25 important to note that testing was conducted using 21 1 California Phase II cleaner burning gasoline to demonstrate 2 the feasibility of the proposed standards. 3 Staff was able to conduct seven tests using 4 these advanced catalysts which demonstrate that the Ford 5 Expedition can meet the proposed LEV II standards. The 6 average of the seven tests is compared to the proposed 7 LEV II standard in this slide. Staff could not modify 8 vehicle software so that the computer control of the fuel 9 and air matched the characteristics of the advanced 10 catalysts. Manufacturers will have over five years to 11 perform this optimization, and we believe this will result 12 in emissions well below the LEV II standards. 13 This list identifies some of the available 14 technologies that could be used by industry to lower 15 emissions further. They include use of individual cylinder 16 fuel control, retarded spark timing at startup, hydrocarbon 17 traps, and many others shown. Many of these are now in use 18 on selected models. 19 Based on our test results, staff concludes 20 that the proposed standards are feasible. This is 21 especially true given what expert automotive engineers can 22 achieve given their available resources and experience and 23 given that more than five years' lead time remains before 24 implementation begins. The flexible phase-in provisions we 25 have provided provide eight years before the more difficult 22 1 to control models must comply. Based on their successful 2 track record and meeting the tough standards this Board has 3 adopted, we have no doubt the auto manufacturers will be 4 able to comply. 5 Also, as a historical note, automobile 6 manufacturers testified they were uncertain they could meet 7 the LEV or ULEV standards when adopted by the Board in 8 1990; yet today, ULEV compliant models are being sold in 9 California. 10 Turning now to the proposed evap standards, 11 feasibility was demonstrated by vehicle modification and 12 testing by ARB staff and through information and data 13 gathered from automotive manufacturers. The ARB test 14 programs involved more than testing of 20 vehicles. Shown 15 here is a vehicle placed in our evaporative test facility 16 enclosure which is located directly behind the back wall of 17 this room. 18 When a vehicle is tested, the enclosure is 19 completely sealed so that the evaporative test is conducted 20 on the whole vehicle. This is important to note because 21 the measured evaporative emissions include both non-fuel 22 and fuel emissions. Examples of non-fuel sources include 23 paint, sealants, interior trim, adhesives, and tires; while 24 fuel evaporative emissions result from canister losses and 25 the permeation of hydrocarbon vapors through fuel hoses, 23 1 joints, and plastic fuel tanks. 2 One of our test programs was conducted to 3 investigate potential methods of reducing evaporative 4 emissions from fuel sources. Total vehicle evaporative 5 emissions were reduced to .3 grams per test on average, 6 well below the proposed passenger car standard of .5 grams 7 per test. The average fuel and non-fuel evaporative 8 emissions were estimated to be .1 and .2 respectively. As 9 you can see, the non-fuel emissions are a substantial 10 portion of the whole vehicle evaporative emissions. Thus, 11 appropriate allowances in the proposed standards are 12 provided for these emissions. 13 I would like to note that the modification 14 made on the vehicles to reduce the evaporative emissions 15 were not production-intended; however, they are analogous 16 to modifications that can be used by manufacturers on 17 production vehicles. For example, while our fuel hoses 18 were wrapped to reduce permeation vapors in the test 19 program, manufacturers could use low-permeation hoses or 20 reduce the length of the hoses to meet the standards. 21 To further illustrate the viability of fuel 22 source emission reductions, a '98 Toyota Camry was modified 23 with production low-permeation fuel hoses, better sealing 24 hose connections, and a low-permeation fuel pump gasket. 25 Other modifications included the addition of a hydrocarbon 24 1 filter to capture engine breathing losses and a better 2 sealed fuel cap. With these evaporative system 3 improvements, the vehicle tested at .23 grams per test. 4 This is less than half the proposed standard. 5 Beside the improved technologies used in the 6 Camry study, staff has also identified a number of other 7 improvements to the fuel and evaporative systems that can 8 be used to reduce evaportive emissions. Many of these 9 potential technologies are already being used in production 10 vehicles today, although they may not be used concurrently 11 on the same vehicle to achieve the lowest possible 12 evaporative emission levels as a system. The types of 13 technologies include improvements aimed at reducing 14 permeation emissions from the fuel tank, evaporative losses 15 from the canister, and design modifications to reduce the 16 number of permeation sources. 17 Although the evaporative feasibility 18 demonstration as published in the staff report is 19 considerably robust, manufacturers continue to have 20 concerns regarding the evaporative data used to set the 21 stringency level of the proposed standards. To address 22 these concerns, staff conducted additional testing after 23 the publication of the staff report. 24 First, the Toyota Camry study was conducted 25 to address industry's concern that we did not use 25 1 production-type components to demonstrate feasibility. In 2 that study, staff used production improvements to reduce 3 the evaporative emissions, and the vehicle evaporative 4 emissions were reduced sufficiently to comply with the 5 proposed standard with headroom. 6 A second industry concern was that there was 7 insufficient non-fuel data to represent the different 8 vehicle models. As mentioned earlier, non-fuel emissions 9 result from paint, interior trim, adhesives, and tires. 10 Since non-fuel emissions are measured as part of the whole 11 vehicle evaporative emissions, an allowance in the proposed 12 standard is given for these emissions. Staff tested six 13 additional vehicles, and the test results were consistent 14 with the existing data-set. Including industry 15 information, the non-fuel emission data-set covered 21 16 vehicle models and was used to ensure adequate non-fuel 17 allowance in the proposed standards. 18 Finally, industry continued to comment that 19 the evaporative emission variability is so high that it's 20 difficult to duplicate emission results from one vehicle to 21 another. In response, five Toyota Corollas were recently 22 brought in for testing. The Corolla model was chosen 23 because it already complies with the proposed standard. 24 The test results showed that variability from vehicle to 25 vehicle was relatively low, and the headroom allowed in the 26 1 proposed standard more than sufficiently accounts for this 2 variability. This and previously described test programs 3 demonstrated that the proposed evaporative standards are 4 technologically feasible, especially given the lead time of 5 more than five years. 6 I'd now like to discuss some of the special 7 features of our proposed SULEV standard. In the past few 8 years, the ZEF requirement has been successful in spawning 9 a large variety of extremely low-emission vehicle 10 technologies that are capable of achieving emissions very 11 close to the power plant emissions that occur from charging 12 battery-powered electric vehicles. 13 Staff believes that allowing these 14 exceptionally clean vehicles to fulfill a portion of the 15 ZEF requirement would promote the continued development and 16 commercialization of high-performance, battery-powered 17 electric and zero-emitting fuel cell vehicles while also 18 encouraging advanced technology vehicles with the potential 19 for extremely low-emission performance. 20 For this reason, staff is proposing that 21 SULEVs that meet certain additional criteria would be 22 eligible to receive a partial ZEF allowance. The proposal 23 before you today provides additional flexibility to vehicle 24 manufacturers in meeting the ZEF requirements and will also 25 encourage development of a variety of near zero-emission 27 1 technologies. It is important to note, however, that staff 2 is not proposing any revisions to the 10-percent ZEF 3 requirement. 4 In order to receive a partial ZEF allowance, 5 a manufacturer must meet a rigorous set of criteria which 6 are predicated on achieving equivalent emission performance 7 to a zero-emitting vehicle. Here are some examples of how 8 the calculation works. In the first row, the gasoline 9 powered SULEV that meets OBD, warranty, and emission 10 standards at 150,000 miles and has zero-evaporative 11 emissions but with no zero-emission vehicle range would 12 receive a partial ZEF allowance of .2. 13 A natural gas SULEV meeting the same 14 baseline requirements would receive an allowance of .4 15 because it uses a cleaner fuel. 16 The gasoline hybrid SULEV with a 20 mile 17 all-electric range capable of off-vehicle recharging would 18 receive a partial ZEF allowance of .6. 19 A fuel cell vehicle with an on-board 20 methanol reformer which has no NOx emissions could receive 21 a ZEV allowance of .7, while a stored hydrogen fuel cell 22 vehicle which is emission free could be eligible for the 23 full partial ZEF allowance of 1. 24 Finally, even though I've highlighted the 25 key elements of LEV II, there are several technical 28 1 amendments worthy of note. Staff has worked extensively 2 with industry to achieve consensus on these items. The 3 amendments include a substantial streamlining of the motor 4 vehicle certification process which reduces the 5 manufacturer's cost of compliance, a face lift to the smog 6 index label, protocol for vehicles utilizing direct ozone 7 reduction technologies, and updates to the test procedures 8 for ZEVs and hybrid electric vehicles. 9 One of the more unique modifications 10 concerns the protocol for direct ozone reduction 11 technologies. Staff is proposing to grant credits to 12 vehicles equipped with technologies that directly eliminate 13 atmospheric ozones. One such technology that would qualify 14 for credits consists of a catalyst coating applied to the 15 vehicle radiator -- this so-called "smog-eating radiator" 16 Premair. Under the proposed protocol, a vehicle system 17 that is shown to effectively reduce atmospheric ozone, is 18 durable, and can be monitored by the on-board diagnostic 19 system would be eligible to receive credit towards meeting 20 the hydrocarbon emission standards. 21 Now that I've discussed the technological 22 feasibility, I'd like to talk about the results of our cost 23 analysis. Our analysis includes our estimate of the 24 incremental retail cost per vehicle of the ULEV II exhaust 25 standards, the cost per vehicle of the evaporative 29 1 proposal, and finally the cost savings for CAP 2000. 2 Staff's cost methodology is the same as used 3 in other recent rule makings and includes variable, 4 support, investment, and dealership costs. Based on 5 staff's analysis, the average incremental cost of the ULEV 6 II compared to a ULEV I ranges from $71 for passenger cars 7 to $209 for a light heavy-duty truck just under 8,500 8 pounds GVW. Staff focused on the incremental cost of a 9 ULEV because we anticipate that declining fleet average 10 requirements will call for nearly all vehicles to be ULEVs 11 by 2010. 12 Comparisons of 1990 estimates for the LEV I 13 program with actual costs for a 1998 model complying with 14 the LEV II standard has shown our cost estimation 15 methodology to be reliable. 16 This same cost methodology was used to 17 determine the cost of compliance of the evaporative 18 standards. The retail cost for evaporative standards is 19 estimated to be $25 per vehicle. 20 Although I have only briefly mentioned this 21 proposal early in the presentation, it is worthy of note at 22 this time because of the potential cost savings to 23 manufacturers. Staff has been working closely with US EPA 24 and the automotive industry to develop a streamlined motor 25 vehicle certification process coupled with an enhanced 30 1 in-use compliance emission testing program commonly known 2 as CAP 2000. The goal of this program is to divert the 3 significant resources presently devoted to pre-sale 4 certification and redirect them toward in-use compliance in 5 order to provide greater assurance that the vehicles are 6 actually complying with the standards in use. 7 Based on staff's analysis, the potential 8 cost savings attributable to certification streamlining 9 range from a minimum of $36 million per year to a maximum 10 of approximately $57 million per year to the automotive 11 industry. With annual California sales in excess of 12 1.7 million vehicles, this amounts to an average reduction 13 of approximately $28 per vehicle. 14 Thus, the net cost impact of the proposed 15 ULEV II exhaust and evaporative standards minus the cost 16 savings for CAP 2000 would be about $107 per vehicle 17 averaged over a manufacturer's entire product line, 18 Finally, I'm going to discuss the air 19 quality benefits and cost effectiveness of the LEV II 20 proposal. 21 To estimate the emission benefits of LEV II, 22 staff used the emission inventory model EMFAC7G which was 23 approved by the Board earlier this year. The methodology 24 was performed for vehicles in the South Coast Air Basin 25 because this was the target for SIP Measure M2 and the 31 1 black box. 2 Based on our analysis, the total estimated 3 exhaust and evaporative emission reductions from LEV II for 4 passenger cars and light-duty trucks and medium-duty 5 vehicles are 7 tons per day ROG and 51 tons per day NOx in 6 the South Coast Air Basin in 2010. You can also see from 7 this chart that, as more of the vehicle fleet is turned 8 over, the benefits continue to increase to 20 tons per day 9 ROG and 130 tons per day NOx in 2020. 10 We are pleased to have developed a proposal 11 that exceeds the emission reduction commitment of SIP 12 Measure M2. As shown in the chart, we fall slightly short 13 of achieving the required ROG reductions shown in the blue 14 bar on the left but exceed the NOx emission reduction 15 commitment shown in the blue bar on the right. 16 The extra NOx emission reductions will help 17 make up shortfalls we have encountered in implementation of 18 other SIP measures and contribute to reducing the size of 19 the black box. Even with these reductions, we will still 20 have to search for additional reductions to meet our SIP 21 commitments. 22 Finally, staff estimates that the average 23 cost-effectiveness of the exhaust and evaporative proposal 24 including CAP 2000 savings is approximately $1.00 per pound 25 of ROG plus NOx reduced with the range being approximately 32 1 $.50 to $1.39. This is very cost effective. Industrial 2 measures, for example, typically are about $5.00 per pound 3 of emissions reduced. 4 This slide shows the cost-effectiveness of 5 LEV II compared to other mobile source measures adopted by 6 the Board. As you can see, the cost-effectiveness of 7 LEV II, shown on the right, compares very favorably to 8 other mobile source control measures. 9 There are several areas where staff was 10 unable to reach consensus with industry and other affected 11 interests. The main issues concern additional compliance 12 flexibility, the proposal for extended warranty 13 requirements, and the proposed evaporative standards. I 14 will discuss each of these concerns separately. 15 The auto manufacturers submitted an 16 alternative tailpipe proposal they maintain is more 17 feasible than the proposal before you today. This proposal 18 contains additional emission categories and less stringent 19 standards in almost every category, than those being 20 proposed by staff. In some cases, the standards proposed 21 by the auto industry are more than three times higher than 22 those proposed by staff, especially standards concerning 23 sport utility vehicles. 24 The automotive industry contends that their 25 proposal achieves the emission reduction goals of SIP 33 1 commitment Measure M2 and also contributes to the mobile 2 source emission reductions needed for the black box. 3 However, their proposal falls short of staff's proposal by 4 approximately 7 tons per day. This loss more than doubles 5 in 2020 as the fleet turns over. 6 Staff examined their proposal to determine 7 whether further modifications to our proposed emission 8 standards could be made that would accommodate the auto 9 industry's concerns while still maintaining the emission 10 reductions for LEV II. However, staff was unable to 11 further modify the LEV II proposal without seriously 12 impacting the emission reductions of LEV II. 13 A major reason for this is the flexibility 14 that is already built into the LEV II regulations. All of 15 the modifications considered by staff were affected by 16 these flexibilities and, if utilized, would further dilute 17 the emission reductions anticipated by our proposal. Based 18 on our demonstration of technological feasibility and 19 cost-effectiveness, it is staff's conclusion that, given 20 the large amount of emission reductions needed to 21 demonstrate attainment of the ozone air quality standards 22 and the importance of further reducing ambient 23 concentrations of fine particulates, acceptance of the auto 24 industry proposal would adversely impact our ability to 25 achieve our air quality goals. 34 1 Nonetheless, staff did respond to many of 2 the auto industry's requests by including a provision 3 allowing 4 percent of the heavier trucks to certify to 4 laxer standards, a 150,000 mile only TLEV standard that 5 allows diesel vehicles to continue to participate in the 6 program while they pursue improved emission reduction 7 technology, an additional year for phasing in the standards 8 combined with a more flexible means of calculating the 9 phase-in rate each year, a more gradual decline in the 10 fleet average NMOG for the truck category, and less 11 stringent in-use compliance standards for the first two 12 years that a vehicle meets the new standards. This reduces 13 the risks of recall. 14 We believe the availability of these 15 flexibilities makes the changes advocated by the auto 16 industry unnecessary. In addition, staff worked with 17 industry during the comment period and is proposing further 18 modifications which are set forth on the table in the back 19 of the room. 20 Another issue of concern to independent 21 vehicle repair facilities is the proposed 150,000 mile 22 warranty requirements for SULEVs eligible for a partial ZEV 23 allowance and the eight-year, 100,000 mile, high-cost parts 24 warranty for vehicles certifying to the optional 150,000 25 mile standards. The aftermarket parts industry is 35 1 concerned that an increase in warranty requirements would 2 shift business away from independent repair facilities 3 towards the dealership. 4 However, staff believes that any shift from 5 the independents to dealerships would be slight, although 6 we do share the concerns of these small business owners and 7 have committed to work with them over the next 18 months to 8 address these issues. Staff believes that society will 9 significantly benefit from increased warranty requirements 10 because vehicles will be more durable and the number of 11 vehicles with malfunctions that go unrepaired will be 12 substantially reduced. This will have a significant, 13 positive impact on cost to consumers and air quality. 14 In general, the automotive industry has 15 commented that the proposed evaporative standards are too 16 stringent and that numerically higher evaporative standards 17 would be more appropriate. Their argument focuses on three 18 main issues. 19 First, industry contends that the in-use 20 compliance risk of the proposed evaporative standards is 21 high. Evaporative emissions may occur at many point 22 sources in the fuel and evaporative system, which could 23 increase the likelihood of unanticipated problems in the 24 field. This may potentially result in the failure of the 25 evaporative standards in use. 36 1 Secondly, industry contends that existing 2 data on non-fuel evaporative emission levels are sparse and 3 do not comprehensively represent all the different types of 4 vehicle models. Since an allowance in the proposed 5 standards is given for these emissions, industry argues 6 that the sparse data-set does not allow an accurate 7 assessment of the non-fuel allowance. 8 Finally, industry contends that, because 9 many of the potential technologies to reduce fuel 10 evaporative emissions are already being used on production 11 vehicles, few improvements can be made to further reduce 12 evaporative emissions. 13 The ARB test program shows that the proposed 14 evaporative standards are technologically feasible by 15 modifying the vehicle to use the best evaporative emission 16 components. However, to alleviate manufacturer concerns of 17 in-use recall risk, it would be reasonable to provide 18 in-use recall flexibility that allows manufacturers to 19 correct minor unanticipated mistakes and failures that 20 could occur with new evaporative designs during the early 21 years of introduction. This would give the manufacturers 22 time to conduct accelerated field tests to verify that 23 their designs are durable. This modification is described 24 in the 15-day handout; however, staff will be making 25 further modifications to that language. 37 1 Secondly, the current non-fuel data set used 2 to determine the allowance in the proposed standards 3 consists of data from 21 vehicle models and represents 4 vehicles from the major manufacturers. Staff believes that 5 the data set is broad enough to give a representative 6 profile the majority of non-fuel emission levels expected 7 on the vehicles. 8 Thirdly, staff's research shows that 9 practically no single vehicle has all of the best available 10 technologies in the fuel and evaporative system; therefore, 11 further reductions of evaporative emissions are possible as 12 confirmed in staff's test programs. Furthermore, some 13 models already comply with the proposed evaporative 14 standards, and 20 percent of current model year cars have 15 certified emission levels below the standards. 16 Finally, a technology review of the proposed 17 standards in the year 2000 will resolve any remaining data 18 issues. 19 Since the public release of the staff 20 report, staff has been continually dialoging with industry 21 to find additional consensus on the proposal. In response 22 to comments from industry, staff is proposing the following 23 additional modifications to the original proposal which 24 will be released for a 15-day public comment period 25 following this hearing: 38 1 (1) To allow a .02 gram per mile NOx credit 2 for current clean sport utility vehicles and heavier trucks 3 that meet the LEV I PC standards before 2004. 4 (2) The adoption of a less stringent in-use 5 evaporative standard for the first three years of a 6 proposed standard. As I noted earlier, the text in the 7 handout will be further modified. 8 (3) To allow manufacturer to certify to a 9 lower partial ZEF SULEV exhaust standard to offset 10 evaporative emissions above the zero-evap standard. 11 (4) To sunset the optional TLEV NOx and PM 12 standards, and in 2007 replace them with lower standards. 13 Staff is also proposing several technical 14 and clarifying amendments based on comments received from 15 industry and others, subsequent to the release of the staff 16 report. 17 In conclusion, staff believes that the 18 proposal before you today is not only technologically 19 feasible, but it is the most cost-effective approach to 20 achieving our air quality goals. It reflects changes from 21 the original proposal to address many of industry's 22 concerns. Staff, therefore, recommends that the Board 23 adopt our proposal. 24 That concludes our presentation, and we'd 25 like to answer questions you have at this time. 39 1 CHAIRMAN DUNLAP: Okay. Thank you. I 2 particularly appreciate the fluid nature of the tailend of 3 the proposal. Mike, for you and Tom, getting back to us 4 about some of the changes that have been in that period. 5 What I think I'd like to do is ask 6 Mr. Schoning, Jim, would you please address the process 7 prior to today by which this item came before us and share 8 any concerns or comments you may have with the Board. 9 MR. SCHONING: Thank you, Mr. Chairman. I'd 10 be pleased to. As you heard from staff in some detail, 11 this measure stems from the fact that in 1990 California 12 adopted the most stringent emission and exhaust regulations 13 ever for light- and medium-duty vehicles in the 14 low-emission program. Several developments since then, 15 such as the increasing population growth in vehicle miles 16 traveled and particularly changes in consumer taste 17 available and emission control technology, staff has 18 reached the conclusion that it is time for more stringent 19 vehicle emission standards. 20 You'll hear many opinions from witnesses 21 today, both pro and con, on the feasibility and 22 cost-effectiveness of the proposal before you. The issues 23 are large, and they will have a comparable impact on the 24 future of California's air quality and its business 25 climate. My job here is to discuss how staff has worked 40 1 with stakeholders to bring the item. 2 A total of two workshops were conducted. 3 Staff aired their initial LEV II and CAP 2000 proposals in 4 a public workshop on December 9 and 10 of last year, 5 attended by more than 100 persons who listened to 6 presentations, in some cases made their own presentations 7 to ARB staff response to the initial proposal. 8 In attendance were the automobile 9 manufacturers -- Ford, General Motors, Chrysler, 10 Volkswagen, Isuzu, Volvo, Mazda, Honda, Mitsubishi, Toyota, 11 Nissan, Mercedes Benz, Suzuki, Rolls-Royce, Land Rover, 12 Porsche, BMW, and Subaru -- as well as their 13 associations -- the American Auto Manufacturers 14 Association, Association of International Automobile 15 Manufacturers, and Engine Manufacturers Association. 16 Other manufacturers present included Navstar 17 and Cummins. And other trade associations that sent 18 representatives were Manufacturers of Emission Control 19 Association, MECA, Western States Petroleum Association, 20 the Western Propane Gas Association, and the American 21 Petroleum Institution. 22 Research and development manufacturing and 23 consulting businesses were also represented by Inglehard 24 Corporation, Abacas Technologies, MCO Technology, Arcada 25 Southwest Research Institute, Methanex, Pureberg, and AC 41 1 Propulsion. 2 Environmental organizations in attendance 3 included the Natural Resource Defense Council, Coalition 4 for Clean Air and the Union of Concerned Science. 5 Since then -- and that initial workshop and 6 continuing until this very hearing today, staff has met 7 with individual manufacturers and related trade 8 associations on each of the major components of the 9 proposal solicited, additional details relevant to 10 technological feasibility, and cost-effectiveness. 11 Staff discussed the proposal many times with 12 the auto manufacturers and the trade associations just 13 mentioned as well as the Association of Industry and 14 Government for Emissions Research, Cummins, and with the 15 California Automotive Task Force comprised of the 16 after-market repair and auto parts industries, service 17 station, repair shop owners, equipment manufacturers, 18 automotive teachers, and parts wholesale. 19 Staff met with environmental organizations 20 often, including Natural Resources Defense Council, the 21 Coalition of Air of Concerned Scientist, and Sierra Club. 22 And members of the California Environmental Dialogue also 23 met with the staff. 24 In addition, staff held focused meetings on 25 components of the proposal. Public meetings specifically 42 1 on the CAP 2000 proposal was held last April 28. Staff 2 continued meeting with an informal working group which was 3 formed, which included the United States Environmental 4 Protection Agency and the auto manufacturers. 5 As you heard from staff, they worked closely 6 with the Society for Automotive Engineers to develop the 7 hybrid electric vehicle test procedures, held at least 13 8 conference calls with the related SAE subcommittee in 9 addition to meeting with Toyota, Honda, Subaru and Nissan. 10 Final focused area was the evaporative 11 emissions component, and staff again met with the auto 12 manufacturers and their associations, AAMA and AIAM. 13 Altogether from December of last year, at 14 present staff recorded over 65 separate meetings with 15 interested and involved stakeholders. 16 A second public workshop was held on July 22 17 of this year. More than 150 persons signed in. The 18 purpose of this workshop was to obtain input on changes 19 staff made in response to input they received from the 20 initial proposal previous December. While all of the 21 stakeholders who attended the December workshop attended 22 this workshop, and associations who were not recorded as 23 attending the December workshop included Fiat, Renault, 24 Lamberguini, ARCO, Chevron, Gilbarco Inc., Artech, 25 Specialty Equipment Manufacturers Association, CSMI, Arrow 43 1 Environment, researchers from the University of California, 2 Partnerships for a New Generation Vehicle, Basch, Swedish 3 Office of Science and Technology, California Trucking 4 Association, the Advanced Lead Acid Battery Consortium, Cal 5 Start, the Auto Parts and Service Alliance, Separate 6 Energy, Los Angeles Department of Water and Power, 7 San Diego Gas and Electric, Edison EV, California 8 Electrical Vehicle Transportation, Coalition Methanol 9 Institute, the Automobile Club of California, Pansonic, 10 Samsung, California Manufacturers Association, South Coast 11 Air Quality Management District, and the San Diego Air 12 Pollution Control District as well as the California State 13 Energy Commission. 14 Staff evaluated all comments, in particular 15 those regarding technological feasibility and 16 cost-effectiveness issues. Staff has continued to receive 17 and evaluate proposals following distribution of the staff 18 report. 19 Staff report itself was published 20 September 11, was mailed to more than a thousand 21 individuals, and was posted on our internet site. It was 22 downloaded more than 400 times at last count. And I would 23 share with you also what we received in the way of letters 24 and telephone calls. Our public information office has 25 logged some 847 calls with all but one supporting the 44 1 proposal. ARB has received a total of 4,394 letters of 2 support and some 238 letters of opposition. 3 As your ombudsman with a special charge in 4 federal statute to look to the interest of small business, 5 I would be remiss if I did not tell you that you will hear 6 the concerns today of the after-market repair and parts 7 industries as to the possible detrimental impact upon their 8 ability to continue as our partners, depending upon how the 9 warranty aspect of the measure affects them. I know you'll 10 hear further testimony in that regard. 11 But in conclusion, we find staff has 12 conducted extensive outreach and assured participation by 13 the full spectrum of affected and interested parties. 14 CHAIRMAN DUNLAP: Thank you, Mr. Schoning. 15 I appreciate that overview. 16 What I'd like to do at this point is ask my 17 Board member colleagues if they have any questions of this 18 staff relative to the presentation. We will remind them, 19 as well as the audience, that we have some 45 people that 20 have signed up to testify; so I would ask the Board to 21 focus the early questions on essential points, and I'll 22 allow you during the course of give-and-take with the 23 witnesses that you can develop your questions further 24 there. 25 So we will start with Mr. Calhoun. Joe? 45 1 MR. CALHOUN: I'd like to focus my question 2 on technological feasibility. Since the inception of the 3 emission control, as best as I can remember, always had 4 different standards for trucks. And so it's important to 5 focus on the -- I think, it's important to focus on the 6 technological feasibility. It's my understanding that you 7 chose a Ford truck primarily because it has the best 8 technology available; is that correct? 9 MR. CACKETTE: Yes. 10 MR. CALHOUN: You show an average of the 11 test results for seven vehicles. There were more testing, 12 obviously, than that, were there not? 13 MR. CACKETTE: Yes. 14 MR. CALHOUN: How many tests did you run 15 altogether? 16 CHAIRMAN DUNLAP: For the court reporter, 17 just introduce yourself. 18 STEVE ALBU: Steve Albu with the Air Board. 19 With the optimized system, we ran a total of 26 tests. 20 MR. CALHOUN: When you say the optimized 21 system, how many did you run altogether? 22 STEVE ALBU: That's a difficult question to 23 answer. I think something in the area of 180 tests, 24 developmental tests. 25 MR. CALHOUN: And you selected 7 tests out 46 1 of that 180? 2 STEVE ALBU: No, not at all. What we had to 3 do -- 4 MR. CALHOUN: Out of the optimized vehicles, 5 you select 7 tests; is that correct? 6 STEVE ALBU: Out of the 26 tests, we 7 selected 7 that represented the best fuel targeting that we 8 could achieve since we did not have the ability to modify 9 the fuel control to match the new catalyst. And I can 10 explain that later maybe as testimony goes forth. 11 MR. CALHOUN: And the average results as 12 presented in the chart -- now, did you take into 13 consideration the fact that the manufacturers will need a 14 design level so that as call for -- I'm not sure what you 15 call it. But a lot of the factors that were taken into 16 consideration -- drivability, fuel economy -- were those 17 things taken into consideration? How did you consider that 18 during the course of the testing? 19 STEVE ALBU: We definitely did. We targeted 20 about .035 NOx level which is what industry agreed was the 21 appropriate level to provide headroom to meet a .05 NOx 22 standard. And what we did was we performed the best tests 23 we could achieve in the about six-month time period we had 24 to develop this vehicle, and then we provided the air 25 injection system. We provided preconditioning procedures 47 1 that achieved the lowest emissions possible without better 2 fuel control. And then we also listed, on the slides you 3 saw in the presentation, another 12 or so technologies that 4 can still be used in the industry in the eight years 5 remaining for the toughest vehicles to actually meet the 6 standards. 7 In fact, this is the first time really that 8 staff has ever taken a component like a catalyst system and 9 aged it. Back in LEV I, for example, we used unaged 10 components that had no real durability development on 11 them. We projected much further as to what could be done. 12 In this instance, we have actually used aged 13 components, although we did not have a proper fuel system. 14 It was just somehow available to us. We still demonstrated 15 emissions at the standard, and we also provided additional 16 explanations of how industry could improve upon those 17 results. One of the most effective things they can do is 18 just simply have fuel control that we would have liked to 19 have had. 20 MR. CALHOUN: How soon after the 21 introduction will manufacturers have to meet the ULEV 22 standard, the vehicle we are talking about? In the next 23 year? 24 STEVE ALBU: The standards begin phasing in 25 2004, and we expect the industry will typically certify the 48 1 passenger cars in the "T2" category which are the trucks, 2 primarily, will do the minivans, compact pickups first. 3 And we would expect vehicles like the Ford Expedition, the 4 F150 pickups, they're probably done in 2007. 5 MR. CALHOUN: We will hear from the 6 manufacturers later on. 7 STEVE ALBU: Sure. 8 CHAIRMAN DUNLAP: Matter of fact, Joe, they 9 are in the first five witnesses or so. 10 STEVE ALBU: We will be happy to respond to 11 those comments when they come up. 12 CHAIRMAN DUNLAP: One of the things that the 13 Board is going to be looking for is for you to explain some 14 main arguments that we may have some selective test data, 15 and we want to clear that up and talk about what we've done 16 to make it so the people can see clearly the depth and 17 breadth of what you've tried to do relative to what you've 18 proposed today. 19 Any other Board member questions? 20 MS. EDGERTON: Yes, I'd like to ask 21 questions. 22 CHAIRMAN DUNLAP: Sure, Ms. Edgerton. 23 MS. EDGERTON: I'd like to confirm that my 24 understanding of some key points is correct because we have 25 a lot of letters here from Californians who are concerned 49 1 that they may not be able to have the kind of vehicles they 2 want starting in 2004. It's my understanding from your 3 report that the staff feels confident that there will be no 4 reduction in the variety and performance of sports utility 5 vehicles and light-duty trucks being offered in California 6 as a result of this proposal. 7 The only change will be that there will be 8 somewhere in the nature of $200 added to the cost of 9 producing the vehicle to pay for the catalyst, and that may 10 well be less because it doesn't happen until 2004; is that 11 correct? 12 STEVE ALBU: Well actually, you're correct. 13 There is virtually no reason -- there is absolutely no 14 reason why there should be any loss of vehicle types. 15 Every vehicle model currently being sold now should still 16 be available. All we did, as I say again, was replace the 17 catalyst with one that was the same size, same 18 configuration as currently on the Expedition. We improved 19 the air injection system. We added an air-injection 20 system, and then we outlined a number of other technologies 21 that could be added to the vehicle. 22 The catalyst increase in cost is around $50. 23 The rest of the components could go up to $200 when you 24 talk about adding in the cost of development, the 25 facilities and so forth, dealership costs. So no, there 50 1 should be no loss in vehicles. Ownership should be just 2 the same as it is today. 3 MS. EDGERTON: When you put it on the test 4 vehicles, the Ford Expedition, there is no loss in 5 performance? 6 STEVE ALBU: None at all. 7 MS. EDGERTON: Thank you. 8 MR. CACKETTE: I want to point out that that 9 car is sort of a worst-case vehicle. So if the potential 10 is shown on that vehicle, then it should be even easier on 11 the other ones. And I think you can see that. We have a 12 mid-size car out there, the Mitsubishi Galante, which meets 13 the 2004 standards right now in production. 14 CHAIRMAN DUNLAP: When you say worst-case, 15 you mean generally category because of weight and that kind 16 of thing, not that it's a bad vehicle or anything? 17 MR. CACKETTE: Right. It's actually the 18 best technology, but it's in the most difficult 19 compliance-type vehicle. 20 CHAIRMAN DUNLAP: We just -- 21 MR. CACKETTE: Thank you for correcting me. 22 I want to get out of here alive. 23 MS. EDGERTON: It is important to reassure 24 the public, particularly since we have so many people 25 relying on these vehicles, that they will still be 51 1 available and fully performing. Thank you. 2 CHAIRMAN DUNLAP: And I don't want to have 3 anymore back and forth on that right now because we are 4 going to hear from Ford themselves, and I don't want to 5 preempt their discussion. 6 If there is nothing else, I offer up that we 7 get another witness list. So what I'll do is -- where are 8 we having people cue up, Shelby? Over on this side? 9 Okay. We have 45 witnesses, and I'll ask them -- I'll call 10 off ten names or so. If you'll take your seat in the box 11 over there with Mr. Weiser. 12 Vic, raise your hand so they can see where 13 you are. There is Vic. Kelly Jensen, California Chamber 14 of Commerce. Vic Weiser, second up, from CCEEB. Mr. Till 15 Stoeckenius from Environ Corp. Kelly Brown from Ford. 16 Matt Kevnick from Toyota. Charlie Kitz from Chrysler. 17 Kevin Cullen from General Motors. Sam Leonard from General 18 Motors. 19 Sam, I'll let the two of you kind of tag 20 team together. I'll call you up at the same time. 21 Barbara Kiss from the American Automobile 22 Manufacturers Association. Greg Dana from the Association 23 of International Auto Manufacturers. Wolfgang Groth from 24 Volkswagen. Dick Shaw, Ram Products. Andy Frank, 25 Professor Frank from UC Davis. And Bruce Bertelsen. And 52 1 the last one will be Roland Hwang, Janet Hathaway, et 2 cetera. 3 So if I could get you all to move your way 4 towards that end of the room. Kelly, we will ask you to 5 come forward. Give me just a second for people to settle 6 down. The other witnesses, as seats open up, if you could 7 gravitate towards that side of the room, I would be 8 grateful. 9 I have a timer here that I used it, I think, 10 once in the four years I've been chairman. I prefer not to 11 use it today, but I'm going to ask witnesses to limit their 12 comments under five minutes. And if we get some people 13 droning on and if you're repetitive, I'm going to clip your 14 wings. So I don't want to hear the same argument over and 15 over. Suffice it to say, you can say, "As the previous 18 16 witnesses said, we feel this way," and leave it brief. 17 Kelly, you're up first. Welcome. 18 KELLY JENSEN: Thank you, Mr. Chairman and 19 Members. Kelly Jensen, representing the California Chamber 20 of Commerce and a new coalition called the Californians for 21 Realistic Vehicle Standards, a coalition with over 60 22 individuals who have engageed to write letters to the Board 23 and express their opposition to the LEV II staff proposal. 24 We believe that the staff proposal is 25 arbitrary and illogical and could have lasting impacts on 53 1 the economy. It's arbitrary because it requires standards 2 that go far beyond the Federal Clean Air Act. It's 3 illogical because it requires a full-size truck hauling 4 heavy equipment to meet the same standards as a passenger 5 car half its size. Because it is not possible to achieve 6 the standards proposed by the staff proposal without 7 reducing weight, pay load, and towing capacity, there will 8 be a reduction in full-size vehicles available to 9 consumers. 10 Fewer full-size vehicles mean consumers will 11 lose the ability to haul loads and tow boats or they could 12 be forced to purchase more expensive, larger vehicles that 13 are not subject to the new emission standards. The only 14 way for industry to meet the new standards would require 15 25 percent of vehicles sold in California to run on 16 alternative fuels at an increased cost of $7,000 per 17 vehicle. This would affect all consumers, not just 18 light-truck users. 19 In fact, the California Trade and Commerce 20 Agency estimates the cost of the staff proposal on 21 California business and individuals would equal 22 $1.87 billion over a five-year period. That's over 23 $350 million a year. The California Chamber and the 24 coalition support an industry alternative that preserves 25 the functionality of full-size vehicles and provides 54 1 90 percent of the desired emission reductions without the 2 cost to consumers. 3 Full-size utility vehicles are the 4 commercial workhorses of California economy. This 5 statement is illustrated by members of our coalition who 6 have opposed the staff proposal. They include the Heating 7 and Air Conditioning Contractors' Association, the 8 California Building Industries Association, the San Joaquin 9 Farm Bureau, auto makers, and many individual businesses. 10 One letter of opposition sent to the Board by the Berry 11 Petroleum Company speaks directly about the impact of the 12 staff proposal on their company. 13 Berry Petroleum has over 45 pickup trucks in 14 its operation. They state that any added cost to new 15 vehicles would require the company to keep their vehicles 16 longer because it would be more cost-effective to repair 17 rather than replace older vehicles. The letter concludes 18 with this comment, "The pickup is the lifeblood of 19 thousands of businesses, large and small, in California. 20 Boosting the price and forcing owners to keep their pickups 21 longer would only increase air emissions in California." 22 California is at an economic crossroads. 23 Taxpayers and businesses will be asked by the next 24 administration to invest in our schools and rebuild our 25 infrastructure. We welcome that challenge. But at the 55 1 same time, we are in an uncertain economic time. The 2 chamber believes that this staff proposal is the type of 3 rigid policy that will stifle economic growth and jobs. 4 Unless the economy continues to grow, there will be little 5 money to improve our schools and rebuild our 6 infrastructure. 7 Please keep that in mind as you thoughtfully 8 consider all the recommendations that you'll hear today. 9 And on a personal note, we just want to, from myself, I 10 want to congratulate the Chairman on his leadership 11 throughout the many years and look forward to working with 12 you in the future. 13 CHAIRMAN DUNLAP: If I could maybe ask a 14 question. One of the things -- and I think you know 15 this -- that we are concerned about is that you're 16 concerned. I mean, you're generally known throughout 17 before this Board unless their issue has really got our 18 attention. Having said that, I have a couple issues 19 relative to the statistics you cited. I just want to 20 understand their origin, and I've had a chance to read some 21 of the offhand pieces and other materials that you guys 22 have been putting out. 23 You talk about this 25-percent factor of the 24 larger sports utility vehicles being produced having to be 25 alternative fueled and the cost associated with that. I'm 56 1 a bit confused about that, and I kind of want to 2 understand. And I'm asking more for a dialect for you, 3 Tom, with Kelly on this point. 4 Kelly, where do those statistics come from? 5 What are your beliefs surrounding that? 6 KELLY JENSEN: I guess it comes from two 7 sources and sort of an overview of consumer choice. You 8 know, it's estimated and industry tells us that to produce 9 these vehicles is going to cost $7,000 more. It's clearly 10 not the consumer choice in California to drive an 11 alternative fuel vehicle. So we believe that anytime when 12 you take 25 percent of a product out of the supply or out 13 of the demand, you impact consumer choice which leads to 14 higher prices across the board. You have 25 percent of 15 your product sitting on the shelf that nobody wants to buy. 16 Clearly, there is going to be less supply which leads to 17 higher cost. 18 CHAIRMAN DUNLAP: I was in a very low 19 chair. Not that I needed to be towering above, I just was 20 lower. So excuse me. This is my last meeting. Indulge 21 me. 22 Tom, what is your feeling? Would we be, in 23 effect, voting for going off the fuel neutral position we 24 have and pushing people somewhere in the fleet that is 25 intentional? Is that where this is taking us? 57 1 MR. CACKETTE: No. We are absolutely 2 convinced there will be no model unavailability out of 3 this. If the statistic Mr. Jensen provides, that a quarter 4 of the vehicles or models would be unavailable, I guess I 5 would be the 61st member of his coalition. We don't see 6 it. We believe that the feasibility of the standards has 7 been proven on these larger trucks with gasoline, not with 8 alternative fuels. And I think it's important that, to my 9 knowledge, the issue of we can only do it with alternative 10 fuels, it would cost $7,000, has never come up in any of 11 the many workshops and interactions that Mr. Schoning 12 outlined for you. 13 CHAIRMAN DUNLAP: Is there something hidden 14 in the averaging scheme for the fleet and the breakdown 15 between what they do and what category that maybe we are 16 missing? 17 MR. CACKETTE: Well, I think the point would 18 be made if in fact one believed -- and I think some of the 19 testimony will lead to that, that it is infeasible to meet 20 these standards for certain kinds of vehicles. And if it 21 is infeasible, then I guess it wouldn't be available. We 22 just soundly disagree with that because we think we have 23 demonstrated that the standards can be met, especially 24 given there are eight years of compliance time left for the 25 hardest to control vehicles. 58 1 But we do have other provisions, 2 flexibilities in the rule, which allow -- you've got these 3 four categories of standards. And if you've got a tough to 4 control vehicle, then you tend to certify it in one of the 5 more lax categories and make one of the easier to control 6 ones in super-type categories. That kind of averaging 7 helps. The slow phase in we have helps, which means you 8 get the full eight years versus five years to make those 9 vehicles comply. 10 And I just point out in 1990, when this 11 Board heard the LEV I Program, that the manufacturers got 12 up and testified a little bit differently than I think they 13 are going to testify today, and that was basically they 14 could do the TLEVs. But they had no idea how they were 15 going to do a LEV or ULEV car, but they would give their 16 best effort at it. And what you see today is for $100 17 incremental price, we have LEVs and now some ULEVs being 18 sold commercially exactly eight years later after the Board 19 adopted that standard. 20 I think the burden of proof here there has 21 been more evidence presented as the feasibility than there 22 was eight years ago, and I would expect the manufacturers 23 will end up responding exactly the same way. 24 CHAIRMAN DUNLAP: Kelly, not to quibble with 25 you about statistics and areas of concern because I too 59 1 would share if we were pushing people to that high of a 2 price jump and we are going to limit choices. I would be 3 worried about that as well. So we will let you off the 4 hook as well. 5 KELLY JENSEN: Clearly, there is a 6 disconnect between what the staff is recommending on cost 7 and what the industry is telling me. I think it's your 8 responsibility to sort of remedy that. And whether or not 9 the technology is out there, it may or may not be 10 responsible to, you know, leap forward on something that 11 just isn't there. And it would impact the economy in such 12 a devastating way. 13 CHAIRMAN DUNLAP: We will take that cue and 14 get to that as we go through. Thank you. Any other 15 questions? 16 We will go to Vic. Vic, we want to 17 acknowledge your compliant behavior, being over there in 18 the box before anybody else. 19 VIC WEISSER: There were no other seats. 20 You're so popular, John. 21 CHAIRMAN DUNLAP: Welcome. Glad to have you 22 with us. 23 VIC WEISSER: Thank you, Mr. Chairman and 24 Members of the Board. This is an honor for me to be before 25 you, and this is an incredibly important issue and one that 60 1 will surely set the legacy of this Board and the state of 2 California in years to come. I'm Vic Weisser. I'm the 3 president of the California Council for Environmental and 4 Economic Balance, CCEEB. 5 CCEEB is a coalition of organized labor and 6 family owned businesses like Chevron, Disney, Lockheed. We 7 cover most of the major players in California. And I think 8 it's really important that we make a special 9 acknowledgement to the incredible advances that we have 10 seen in the emission reduction technology over the last two 11 decades. It's astounding what the auto manufacturers and 12 the petroleum providers have enabled us to do in terms of 13 attacking the emission control problem. 14 So you might ask well, why do you need to go 15 further? And the answer is what Willy Sutton said when 16 asked why he robs banks. And the answer is because that's 17 where they keep the money. Well, the answer -- the reason 18 why you have to go after these cars is that that's where 19 the emissions are. 50, 60, in some areas over 70 percent 20 of the emission pie is made up from mobile sources. 21 If we have any hope to achieve our emission 22 goals, we need to aggressively and smartly go after 23 reducing those sources. We still face an enormous problem, 24 particularly in the south coast area, in meeting existing 25 standards. And a vast majority of the state will face 61 1 enormous hurdles in meeting the new standards recently 2 established by the US EPA. 3 The truth is is that we have done as a 4 society virtually all the easy and less-expensive things, 5 and that the things that we pick now we really need to be 6 smart. We can't go after these things with a shotgun. We 7 really have to do rifle shots. We have to work and think 8 smarter. We also need to go after every ton because every 9 ton counts. We can't just say oh, it's a couple tons here 10 or a couple tons there because somewhere in society we need 11 to make up those tons. 12 And it's been CCEEB's perspective that each 13 source, each sector of industry and society including the 14 public, needs to bear a proportionate responsibility to 15 reduce their emissions. We think that you ought to be 16 going after those reductions in the most cost-effective 17 manner possible and, whenever possible, rely on market 18 forces to get there. But every part of California, every 19 part of this nation and ultimately the world is going to 20 have to take responsibility for those emissions that they 21 produce. 22 I presented you a letter from CCEEB that 23 outlines our position, which is supportive of the staff 24 proposal. We recognize and concur with the need of the 25 magnitude of reductions that the staff is proposing in this 62 1 rule making. We support reducing emissions from future 2 light-duty trucks and SUVs. It's been the phenomenal 3 success of the SUVs that has thrown our movement toward 4 achieving our goals in somewhat danger. 5 We need something to do to reduce emissions 6 from that very popular class of vehicles. We agree that 7 vehicles designed for personal transportation should meet 8 the same emission standards. We support your efforts to 9 improve the durability of vehicle emission systems by 10 extending the useful life definition for cars and trucks. 11 Frankly, many, many people think you should have gone 12 further than that which the staff has proposed, but we are 13 glad you're moving in the right direction. 14 We believe that the proposed super ULEV 15 standard will encourage and assist manufacturers to 16 introduce cleaner vehicles, and we support your efforts to 17 ensure that there is no net increase in particulate 18 emissions from vehicles put into the California fleet. 19 Lastly, we believe that it's important that 20 consumers be aware of the differences in emission 21 performance of all the new cars, and we urge you to try to 22 improve the sticker that now appears on cars in a variety 23 of mostly unintelligible fashions. 24 Lastly, I want to wave in front of you a 25 letter which you've also received in testimony, a letter 63 1 signed by well over 20 members of the California 2 Environmental Dialogue, a group Jim Schoning made reference 3 to. This is a group of business leaders and 4 environmentalists and government leaders that we got 5 started about two or three years ago in the silly belief 6 that environmentalists and businesses could actually sit 7 down and talk about something and agree on something. And 8 I think it's noteworthy that one of the two major issues 9 that this group decided was important enough to engage 10 their efforts are mobile source emission reductions. 11 And this group has come together with a 12 series of principles that we think might be helpful for you 13 in terms of, A, showing you our support of what you're 14 doing and, B, guiding the efforts. I'm going to conclude 15 by recognizing the heavy burden that the Chairman and 16 Members have in facing this. This is not an easy issue. 17 You're going to hear a lot of people with a lot of 18 different opinions, and I suspect some of the words that 19 you're going to hear will approach, if not exceed, what I 20 understand as rhetoric. 21 I would urge the Board to have their antenna 22 out when they hear buzz words. Buzz words like arbitrary, 23 unnecessary, negligible, costly. Arbitrary in terms of 24 staff proposal is a word that, to me, makes little sense. 25 Arbitrary means without standard, without reference point. 64 1 Hundreds of hours, thousands of hours, hundreds of pages, 2 thousands of pages -- this is not arbitrary. This is a 3 reasoned approach. You might not agree with it, but it's 4 certainly not an arbitrary approach. 5 Unnecessary? As I said, we need every pound 6 of cost-effective emission reductions that we can get. 7 Negligible? No. Six tons is not 8 negligible. Eight tons is not negligible. 9 And costly? Yes, it is costly. There is no 10 free lunch in reducing emissions, and every Californian and 11 every business doing business in California is going to 12 have to pay more to ensure that this golden state goes 13 forward with a future that we can actually see. 14 And with that, thank you very much. 15 CHAIRMAN DUNLAP: Thank you, Vic. Any 16 questions? All right. 17 Till Stoeckenius. 18 TILL STOECKENIUS: Thank you very much, 19 Mr. Chairman, for struggling with that. I'm a senior 20 meteorologist from Environ Corporation, and I came here 21 today at the request of the American Automobile 22 Manufacturers' Association to present to you the results of 23 some research we have recently completed for them, and I 24 have some overheads. What I want to talk to you today 25 about is -- I'm going to do this much more quickly than I 65 1 had intended -- some research we did examining comparison 2 of ozone concentrations in Southern California on weekends 3 versus weekdays. 4 And why this is important is that we have 5 different patterns of emissions on weekends and weekdays. 6 And in particular, we have lower morning NOx emissions on 7 weekends. So it's interesting to see what happens to ozone 8 on weekends. 9 Before I get into those results, let me just 10 give you a very quick background on the ozone formation 11 process. As you all know, it's combination of hydrocarbons 12 and NOx in the presence of sunlight which produces ozone. 13 This is not a simple first-order process. It's rather 14 complicated, and strange things can happen. In particular, 15 what's most important here is the hydrocarbon-to-NOx ratio. 16 At low ratios, reducing hydrocarbons will 17 reduce ozone, but reducing NOx will actually increase 18 ozone. This is well known from modeling theoretical 19 studies. On the other end at high ratios of hydrocarbons 20 to NOx, you see NOx will reduce ozone. This is illustrated 21 on the next slide where we have what is commonly referred 22 to as an ECMA diagram. 23 The curved lines here look like boomerangs, 24 represent lines of constant ozone concentrations, and they 25 are plotted against NO concentration on the left at the "Y" 66 1 axis on the left and hydrocarbon concentrations on the "X" 2 axis on the bottom. Ozone increases as you go up the plot 3 from the lower-left corner to the upper right. And what 4 you're seeing here is that at high hydrocarbon-to-NOx 5 ratios, such as in the Bay area and other locations in 6 California, when you decrease ozone -- I don't think we 7 have a pointer -- as you decrease the NOx concentration, 8 you can actually go to higher ozone concentrations. It's 9 not until you've gone over this line of maximum ozone 10 formation that the decreases in NOx will actually result in 11 decreases in ozone. 12 We go to the next slide now. What we have 13 done here is taken advantage of sort of an experiment of 14 opportunity. We are looking at the change in ozone in 15 response to the changes in emissions between weekdays and 16 weekends. And what characterizes weekends, on the next 17 slide, is the significantly lower morning NOx 18 concentrations. This is the result, of course, of the lack 19 of a commute on weekend mornings. So we see large NOx 20 reductions in the mornings on the order of 30 to 50 percent 21 in the ambient data. At the same time, we're seeing 22 hydrocarbon reductions but not as large, only on the order 23 of about 20 percent. 24 And what happens then is that the 25 hydrocarbon-to-NOx ratio increases significantly on 67 1 weekends as compared to weekdays. At the same time, we 2 find that the ozone concentrations, the peek concentrations 3 in the afternoon, actually increase on the weekends. And 4 this leads us to some speculation about where we are on 5 that ECMA diagram that I showed previously. 6 On the next slide, here is what is going on 7 by day of week -- Monday on the left, Sunday on the right. 8 The NOx concentrations -- that's the top line -- they build 9 up gradually but not significantly over the course of the 10 week. Then on Saturday, and especially so on Sunday, the 11 NOx decreases dramatically. 12 We go to the next slide. The result of this 13 reduction in NOx on weekend mornings is an increase in 14 weekend ozone concentrations. We've reduced NOx a lot on 15 weekend mornings. The hydrocarbons have come down only a 16 little bit. Ratio goes way up. 17 And on the next slide, you can see what 18 happens with ozone. Here we are in Azusa, a site with very 19 high ozone concentrations in the basin. This is 1986 on 20 the left; 1996 on the right. The top two lines are the 21 Saturday and Sunday concentrations of ozone, daily maximum 22 one-hour concentrations. Bottom two lines are Tuesdays and 23 Wednesdays. You see that, after 1989 at this site the 24 concentrations of ozone on average have been significantly 25 higher on weekends. We can go to the next slide. 68 1 CHAIRMAN DUNLAP: Sir, I want you to relate 2 this back to what we are considering. Do you like the 3 regulatory proposal staff has, or it's going to hurt your 4 scenario? What do you want? You want us to be smarter. I 5 respect that. What is the bottom line? 6 TILL STOECKENIUS: The bottom line here is 7 to show you what is happening in a real-world experiment 8 where you are reducing NOx. We know the LEV II standards 9 are very NOx heavy in terms of amount of emission 10 reductions that are occurring. Here is a case that we 11 experience every week, where we are reducing NOx 12 significantly, and look what is happening to ozone. This 13 is a correlation. It's not a cause-and-effect 14 relationship, but it is rather compelling. And that's why 15 I came here today to present it. 16 CHAIRMAN DUNLAP: What would you have us do 17 relative to this proposal? 18 TILL STOECKENIUS: I'm not here to suggest 19 one way or the other, sir, on what you would do here today. 20 CHAIRMAN DUNLAP: Just be aware of what is 21 happening, what we are pushing to the weekends, and perhaps 22 our regulatory actions are taking us somewhere that is 23 inadvertent. 24 TILL STOECKENIUS: That's correct. 25 CHAIRMAN DUNLAP: In conclusion, you wanted 69 1 us -- is that it? 2 TILL STOECKENIUS: That is my conclusion. I 3 think you made it very well. 4 CHAIRMAN DUNLAP: I appreciate your taking 5 the time. If you can leave this, I'll ask staff get copies 6 of this. If you don't mind, leave it with us and we will 7 have a chance to peruse it. Okay. 8 I guess this gentleman has come some 9 distance to be with us. Mr. Kenny, any message? Any 10 interpretive message relative to the regulatory proposal? 11 MR. KENNY: Well, I think what he's 12 basically trying to propose to the Board is that the 13 Board's present proposal is before the Board today from the 14 staff, which does have a fair amount of NOx reductions in 15 it is, in their view, inappropriate, and we would disagree. 16 Actually, if you'd like to have some discussion about the 17 science, we do have technical experts here who can provide 18 responses to that. 19 CHAIRMAN DUNLAP: We will come back. Tom, 20 I'll just ask you guys to facilitate on this presentation 21 toward the end of the witnesses. Mr. Calhoun? 22 MR. CALHOUN: Mr. Chairman, I've discussed 23 this extensively with Dr. Holmes and a few others, and 24 there are other reports out which intended to show the same 25 things. So what I've encouraged our staff to do -- I'm not 70 1 sure who is right or who is wrong here. There is a lot of 2 uncertainty, at least some questions. Let me put it that 3 way. So what I've encouraged our staff to do is get 4 together with the other interested stakeholders -- like 5 EPA, the environmentalists, and the auto people -- and take 6 a real good look at this. 7 NOx control is needed for other purposes. 8 What impact does the NOx control have on? If it adversely 9 effects ozone and you still need it for NOx, what is the 10 end game like? And I think this is something we need to 11 take a look at, and that's what I've encouraged our staff 12 to do. 13 CHAIRMAN DUNLAP: Joe, I think that the 14 Board certainly sat through -- I can remember three or four 15 times in the last four years we have had presentations 16 about transport, time of day, emissions, inventories, work 17 that's been going on that Supervisor Patrick worked on in 18 the San Joaquin Valley. So there is a lot of action here, 19 and it's positive. 20 We are learning more all the time. But 21 having said that, I mean, we have a regulatory proposal 22 before us that is reducing emissions, and it's going to do 23 that, we believe. That's why we are talking about it. At 24 the same time, if there are inadvertent or consequences 25 that we are not sure of, we need to get those on the table 71 1 and deal with them. So that's why I'm going to ask staff 2 at the end to talk about this a bit. But this should not 3 drive -- I don't want this kind of technical discussion to 4 drive deliberation today on the merits of this regulatory 5 proposal. Good point, Joe. We'll come back. 6 Kelly Brown from Ford, Matt Kevnick from 7 Toyota, and Charlie Kitz from Chrysler, and Sam Leonard and 8 his colleague Kevin Cullen I'll ask to come up. Kelly? 9 KELLY BROWN: You don't want us all up here 10 at once, I assume. It would be a cozy scene. 11 CHAIRMAN DUNLAP: By the way, I'll 12 acknowledge I've appreciated -- and I'll say the same to 13 Sam -- how seriously you all are taking this. I know this 14 is a big market for you, and I certainly will subscribe to 15 the best motives relative to your advocacy. I know you're 16 worried about this, and you've devoted a lot of time and 17 attention to that, and we respect that. 18 KELLY BROWN: Thank you. If somebody could 19 dim the lights, whoever the chief engineer of lighting is. 20 Mr. Chairman and Members of the Board, my 21 name is Kelly Brown. I'm director of vehicle environmental 22 engineering for Ford Motor Company. Ford is committed to a 23 role of providing continued reductions in emissions. And 24 before we go on to the rest of the discussions here this 25 afternoon, one of the unfortunate things that always 72 1 happens at a hearing is, when you still have problems with 2 the rule even though they may be minor compared to the 3 large number of areas you agree with the staff, you spend 4 all your time focusing on the negative. And I thought 5 before we do that, I'd spend a little time focusing on the 6 positive. 7 Ford was the first company to produce 8 vehicles that met California's super-ultra-low emission 9 vehicle standards. Shown here is a 1997 natural gas F250 10 pickup truck and also the Econolines, many of which are in 11 service in the state of California. Ford has been a leader 12 in sales of vehicles that operate on cleaner fuels, such as 13 CNG and also on ethanol. 14 Beginning with the 1999 model year, Ford 15 voluntarily made all of its sport utilities comply with the 16 low-emission vehicle standards, not only in the state of 17 California and the states that have adopted them, but 18 across the US and Canada. So trucks, like shown here the 19 Explorer, the Expedition the much touted Expedition -- the 20 staff did a really nice job on the tires on the ones out 21 there. I wish they would have gotten the ding out of the 22 bumper -- and the Navigator, all are low-emission vehicles 23 across the country. And as you've heard and you'll 24 probably continue to hear throughout the day, we have all 25 been flattered and have the dubious honor of the staff 73 1 picking our vehicles, because they are so much cleaner, as 2 their test bed for this rule making. And in fact, if I 3 didn't fear for my life, I'd probably say we are probably 4 the biggest cause of why we're here today. 5 Further, the 1999 Ford Windstar is certified 6 as a ULEV in California and also will be sold that way 7 across the US and Canada. Even though we produce some of 8 the cleanest vehicles available today, Ford continues to 9 look towards the challenges of doing even more in 10 California. And as I mentioned, we agree with the 11 overwhelming portion of what the staff has put forth and, 12 in some cases, we have even suggested going further from 13 the staff's suggestion. 14 However, since California vehicles have the 15 highest or the toughest emission standards in the world, 16 it's important, before setting those standards, that ARB 17 realizes what these technology levels are and evaluate the 18 amount of incremental benefits and risks where we are in an 19 unknown area. And you've also heard today we are going to 20 be dealing, and we are dealing, a lot in the area of 21 unknowns. Yes, the Ford Expedition is very clean. A few 22 years back, I don't think anybody, even the staff, would 23 have predicted that we would have gotten it down to those 24 low levels. We did so, by the way, without regulation. 25 Those are well -- they are certified at about a quarter of 74 1 the level required by the standards they're certified to. 2 To take on some of the concerns that we had, 3 we worked with some of our competitors to try and develop a 4 proposal. It was addressed by the staff in their staff 5 report and briefly here this morning. I'm not going to go 6 through all of these numbers, but this is a cleaned-up copy 7 of several literations. We have gone back and forth with 8 the staff as an industry to try and come to an area where 9 we felt comfortable that we wouldn't have product 10 disruptions and we wouldn't have severe consequences if we 11 failed to develop the needed technology to make up the 12 shortfalls from where we are today to where the staff would 13 like us to be. And I won't go through that. We can go 14 through it again if you want, but I think the staff 15 outlined their comments. 16 All I can say is we tried to make in this 17 latest document the fewest number of changes we could to 18 the staff proposal and still felt comfortable that, even 19 though there is a considerable unknown in some of these 20 numbers, that it was something we could go forward with. 21 CHAIRMAN DUNLAP: Kelly, could I offer a 22 suggestion? 23 KELLY BROWN: Sure. 24 CHAIRMAN DUNLAP: And I know you want to 25 paint a picture here, I'm sure, and talk about your 75 1 position. But I would be grateful if you would focus on 2 the three or four key issues that remain as you see it so 3 we can have a robust discussion about that. 4 But again, I don't want to shortchange you 5 relative to talking about a bigger vision. So if you can 6 focus on those key things, we will have a back and forth on 7 that, and I think it will be productive. 8 KELLY BROWN: I'll skip through these then 9 and highlight that we, even with the industry proposal, we 10 would achieve all of the requirements of the M2 box and 11 also 59 tons per day or a majority of what is required out 12 of the black box, and that was not just assigned to us but 13 assigned to everybody. 14 Also -- and I think this is a key point, 15 Mr. Chairman, that we agree that all of the passenger cars 16 in the white part of the pie, all of the trucks in the blue 17 part of the pie -- including our Expedition or, excuse me, 18 our Explorer, Mountaineer, our Villager, our Windstar, 19 minivans, Ranger pickup trucks -- agree with the staff and, 20 in fact, have suggested further tightening. 21 The area of concern I think with all the 22 manufacturers that operate is in the yellow area, and it 23 comprises about 15 percent of the total vehicles. And even 24 there, we are not saying do nothing. We are saying we 25 can't go quite as far quite as fast as what the staff has 76 1 said. 2 CHAIRMAN DUNLAP: Can I ask, Kelly, on that 3 point -- 4 KELLY BROWN: This isn't coming off my time, 5 is it? 6 CHAIRMAN DUNLAP: No. Talk to us about -- 7 and I think the staff, I would hope they are perceived as 8 fair on this -- the 15-percent number. Why do you think -- 9 obviously, I know that's the toughest nut to crack for you 10 guys, but why do you think it can't be done? Talk a bit 11 about some of the barriers that you're having in seeing 12 your way there. 13 KELLY BROWN: First of all, I've learned in 14 the years I've done this -- the first time I testified 15 before this Board, Barry Nichols had your job -- I've 16 learned to stop saying never. It's not in my vocabulary, 17 at least for the day. What I can tell you is today we have 18 very serious concerns about being able to meet the LEV, 19 ULEV, and certainly the super-ULEV, especially for the 20 larger trucks to the right that have the biggest trailing 21 tow capability which usually means you put a taller axle 22 and bigger engine and everything on it, more weight, plus 23 the engine operates at higher speeds through the catalyst. 24 Those are our biggest concerns, and it's 25 those features that cause us to drive that. Typically, the 77 1 debate between us and the staff is they say, "We understand 2 that, but people don't use them that way all the time." 3 And our response is, "But if we sell them the vehicle that 4 has that capability, when they do want to use it, it has to 5 perform to that capability." And I think that is where the 6 debate really focuses. 7 CHAIRMAN DUNLAP: So the argument they may 8 not tow the boat every day, but once a month when they do, 9 they need to be able to do it is your argument. 10 KELLY BROWN: Correct. Skip through that. 11 We really did it. This chart here talks -- the boxes in 12 the corner show where we would have to get for NOx and 13 hydrocarbons in order to comply. I'm trying to find the 14 arrow. For example, this is the LEV II hydrocarbon. This 15 is the LEV II NOx. In order to comply with that standard, 16 you have to get inside the box. In order to avoid a recall 17 or actually have them perform in use, that is what we have 18 to sign up to. 19 We have internal targets which are generally 20 about up on these kinds of numbers, roughly half of the 21 standard. So for development purposes for a Ford 22 calibrator to have to sign off, if you're signing off to 23 this standard, you wouldn't sign off if the test data were 24 right there. The test data has to be down in the small box 25 that I'll show you. 78 1 This is some of the data the CARB has. This 2 is the first CARB data. Then later data on one of our 3 Expeditions, we tried some using a similar catalyst. 4 Again, we are all around the outside of the box. 5 Eventually, the latest data that Mr. Calhoun and Steve Albu 6 were discussing, they got some. They got a few data points 7 down in the corner of the box here, which would give you 8 some comfort. But for a Ford calibrator, it's still not in 9 the area to have what we call sign-off level data, and it's 10 nowhere near the ULEV and SULEV. 11 So what would you say about that? You'd say 12 with some time, we probably have a chance on the Ford 13 vehicles of getting the data down into this part of the 14 box, but it's going to take some work and some effort and 15 there is risk, based on the timetable, that we may not make 16 that. 17 CHAIRMAN DUNLAP: On that point, one of the 18 things that I've been proud of the staff for recommending 19 the Board -- and we've embraced it -- are these technology 20 review processes, you know, that we go through -- we've 21 done it with ZEVs and other things -- where every couple 22 years we will take a hard look with you, you know, 23 arm-in-arm looking at the data, figuring out where we are. 24 How does that set with you, us adopting the 25 proposal like it is, agreeing to this technology review, 79 1 looking at the data with you, assessing where we are at. 2 And if things need to be changed, changing it down the 3 road, but setting a tough standard, which you yourself said 4 you don't say never. But you know what I'm saying, Kelly? 5 Is there a way for us -- 6 KELLY BROWN: It's a risk, Mr. Chairman. If 7 it was SULEV that's out a few years, I'd say yes. Put that 8 down as a research objective if that's what you want us to 9 shoot for. That gets us working in-house. This one here, 10 we are a little closer to being in the box at Ford now. 11 But the timetable, these are the ones you have to do 12 first. So it's a trade-off between how much work do you 13 have to do and how much time do you have to do it, and 14 that's what we tried to reflect in our proposal. 15 The balance between us and the staff, we try 16 to push it out a little further and give ourselves in the 17 early part a bigger margin, and we accepted in return a 18 tougher ultimate standard. 19 CHAIRMAN DUNLAP: Okay. 20 KELLY BROWN: Again, here is the example. 21 That is the CARB data where it is now. In the blue box in 22 the corner is where a Ford engineer has to get that in 23 order to get sign-off and release the calibration. 24 CHAIRMAN DUNLAP: On that sign-off, that's 25 typical practice within Ford. I mean, you guys want that 80 1 below the standard sufficiently so you're protected from 2 recall. 3 KELLY BROWN: We used to have a very bad 4 in-use track record, and I think the staff will admit we've 5 cleaned it up a lot, and that is how you do it. 6 CHAIRMAN DUNLAP: So the bottom line for you 7 there, just so I get it, is that you're concerned about 8 going along with this new standard because you can't 9 guarantee you can get there and you're going to put your 10 company at risk if you fail. That's the bottom line; 11 right? 12 KELLY BROWN: Yes. I can't come up here and 13 you'd never have enough data to prove you can't do 14 something. What you can say is we have got the best 15 technology available today sitting right out there with 16 those dirty jet skis behind it. 17 With that I think I'd stop before I get the 18 hook, and I'd like the opportunity to answer your 19 questions. 20 CHAIRMAN DUNLAP: Okay. All right. I have 21 a handle on what is at issue with your company, a big 22 ticket issue. 23 Ron, do you have a question? 24 SUPERVISOR ROBERTS: Just a quick question. 25 The problem with the largest trucks that you referred to, 81 1 you went through that quickly, and I'm unsure what will 2 those -- what are some examples of largest trucks you're 3 having problems with? 4 KELLY BROWN: The larger vehicles, not just 5 because they're large, because of the capabilities they 6 have like trailer tow. When people order trailer tow, they 7 get a heavier suspension. It adds weight to the vehicle. 8 They get a different rear-axle ratio so that you can tow 9 heavy loads so you can get the big trailer moving from a 10 dead stop. That causes the engine to operate at a higher 11 speed and put more exhaust flow through the catalyst. So 12 it's tougher to get the efficiency under that operation. 13 We also have to protect the catalyst from 14 temperature, and that's why we worry a little bit about 15 using the air strategy, the air injection strategy, that 16 the staff would use. I wouldn't say we'd rule it out, but 17 that would be our last resort because, when you put that in 18 too, you run the risk of aging the catalyst faster. In 19 order to achieve any of these standards, you have to keep 20 the catalyst at almost brand-new condition. When we age 21 it, we have to make sure that, when it's out at 120,000 22 miles, it's still almost as efficient as when it was new. 23 When we first put catalysts on vehicles, we 24 were happy if it was 80 percent at 50,000 miles. Now we 25 have to be in the high 90's or else we fail. So not 82 1 insulting the catalyst is the biggest risk we have. 2 CHAIRMAN DUNLAP: Mr. Parnell? 3 MR. PARNELL: Kelly, about the argument that 4 in the event you meet the standards that staff has proposed 5 on some vehicles, that will push the marketing into heavier 6 vehicles so that the job can actually be done -- do you 7 have any comment about that, whether it changes the dynamic 8 of what actually happens in the market and how that might 9 affect air quality? 10 KELLY BROWN: You mean if we don't offer the 11 types of vehicles like an Expedition, how many people would 12 go to a bigger vehicle? Is that the question? 13 MR. PARNELL: I'm not talking about not 14 offering, but I think it was suggested by Kelly earlier, or 15 who testified? I think it was the Chamber's testimony 16 that, in the event these cars had to meet the standard, it 17 could affect the performance and, therefore, you may push 18 people who might otherwise buy these cars into bigger 19 heavier vehicles and thus affect overpowering. 20 Do you have a sense of that? 21 KELLY BROWN: To me, we learned a lesson 22 about drivability. If it doesn't drive right, we just 23 won't release it. The bigger risk would be that you'd 24 limit trailer tow. If the full trailer tow package caused 25 you to put in, I think we put on 373 axle. If you couldn't 83 1 calibrate that and you drop the axle ratio down to do that, 2 you'd restrict the amount of trailer tow. And one of the 3 things that has happened through the years as we did that 4 on cars, people went to light trucks, as we called light 5 trucks used to be up to 6,000 pounds. Then it got moved to 6 8,500. 7 Some people, if you do take away an axle or 8 something that it's what they need to get their trailer 9 tow, you might move somebody out of an F150 or 250 into a 10 F350 or something like that, a much bigger truck. They 11 keep chasing it. That has happened. 12 CHAIRMAN DUNLAP: Dr. Friedman? 13 DR. FRIEDMAN: Mr. Brown, you showed us by 14 your overlays the progressive improvement that you're 15 achieving. I need to know about the time course between 16 what currently exists, a couple of points in the lower 17 optimal box, and the one before that? What is the duration 18 between those? 19 KELLY BROWN: Of the data set, most of these 20 were run pretty quickly. Probably in the last six to eight 21 months, Steve? 22 STEVE ALBU: About six to eight months. 23 DR. FRIEDMAN: So in the last six months, 24 improvement between the next to the last and the last? 25 KELLY BROWN: We didn't go through our full 84 1 development and all that and make sure it was okay and the 2 catalyst temperatures were all right. We were trying to 3 work with the staff. 4 CHAIRMAN DUNLAP: Supervisor Roberts? 5 SUPERVISOR ROBERTS: Kelly, one more 6 question. The Chamber made a statement that the vehicle 7 costs could increase by as much as $7,000 per year. Is 8 that something you would strongly associate yourself with? 9 That number, is that something that you're wondering where 10 they got it? 11 KELLY BROWN: I think and it's always risky 12 to guess what somebody elses number is -- 13 SUPERVISOR ROBERTS: I'm wondering if 14 somehow you would have made that same projection? 15 KELLY BROWN: I would hope if we got up to 16 $7,000 on gasoline-powered products, and I realize there 17 may be a different board when we have to come back and ask 18 them to fix some things that you might do today -- it 19 wasn't a shot. It's a risk. It's a fear in my mind. 20 CHAIRMAN DUNLAP: So how are we looking, 21 Kelly? 22 KELLY BROWN: I'll call you in a couple of 23 years. I lost my train of thought now. 24 SUPERVISOR ROBERTS: The question is how, 25 representing your company, do you associate yourself 85 1 strongly with that $7,000? 2 KELLY BROWN: The $7,000 would be a good 3 cost, not necessarily price, but a good cost for the 4 natural gas vehicles that I showed in there. It's mainly 5 tank cost. We are trying to promote those sales; so we 6 don't charge all that. We take some of that out of our 7 profit, but the natural gas SULEV pickup trucks, $6,000 to 8 $8,000 is probably a good tank price. 9 SUPERVISOR ROBERTS: I guess maybe as I 10 understand this, this was a suggestion as to what it might 11 cost us to not necessarily go to natural gas but to use a 12 regular gas. Would you expect that it's going to cost 13 $7,000 a unit? 14 KELLY BROWN: On gasoline? I don't know 15 what -- if I was going to spend $7,000 on gasoline, I think 16 I'd put it into something else. 17 SUPERVISOR ROBERTS: Okay. 18 CHAIRMAN DUNLAP: Okay. Kelly, I think 19 that's it. Thank you. I appreciate it. Sorry to make you 20 readjust there, but it helped us focus. 21 KELLY BROWN: Thank you and good luck on 22 your last hearing. 23 CHAIRMAN DUNLAP: Thank you. Matt Kevnick 24 from Toyota, and then I'm going to -- not that we are 25 dragging or anything, but we need to pick it up a little 86 1 bit. I've got a few witnesses that have got some time 2 pressure. I'm going to ask for some of the others to yield 3 to them. So I'm going to ask Manuel Cunha and I think 4 Peter Welch if they are around close to come up here. I'll 5 let them get up there because of time pressure. 6 MATT KEVNICK: Understood. I'll be brief, 7 Mr. Chairman. 8 CHAIRMAN DUNLAP: Okay. 9 MATT KEVNICK: My name is Matt Kevnick. I 10 am a certification regulatory manager for Toyota out of 11 Ann Arbor office, but I'm speaking on behalf of AMA and 12 AIM. And I'd like to address a few comments regarding the 13 LEV II evaporative emission proposal. 14 We appreciate the opportunity to continue to 15 work with staff through the development of this evap 16 proposal and would very much appreciate the opportunity to 17 continue to do that. And I'd also like to publicly thank 18 CARB with tongue-and-cheek also for giving Toyota the 19 recognition of having outstanding systems. 20 They have used, as we heard this morning, 21 the Camry and vehicles as part of their benchmarking study 22 for determining evap standards. But the message I'd like 23 to bring today, which is analogous to this picture, is that 24 while today's evap proposal affects more than just two or 25 three star performers, it affects our full product lineup 87 1 as well as the rest of the class, our competitors as well. 2 First a little background. And don't panic, 3 I'm not going to go through this chart. What I really 4 liked to point out is that Toyota approves their evap 5 system design from a systems approach, and fundamentally 6 all our systems are alike across our lineup. The main 7 thing I want to say here is that, from technology 8 standpoint, we employ what we feel is probably the best 9 technology capable for these systems. 10 So how good are our systems? This chart 11 here is a representation of the Toyota certification data 12 for 1998 model year. And if you could kind of focus on the 13 left side of the chart, for this is data for the current 14 2 gram enhanced evap system standard. And as is typical, 15 we employ a 50-percent compliance margin or headroom margin 16 and come up with a design target of the 1 gram. The 17 clustered dots you see below that is our actual data from 18 our certification vehicles, and a couple models are pointed 19 out -- the SC300 being the bad guy, I guess; and the star 20 performers shown below, the Camry and the Corolla. 21 If you then direct yourself to the right 22 side of the chart, the dark line is the .5 gram standard 23 that CARB is currently proposing. While if we approach it 24 as we do today, the design target is shown by the dotted 25 line. And what you're basically asking us to do is take 88 1 our range of product line of data and compress it into that 2 small area shown below the dotted line in the shaded bar 3 shown as background. And I might point out that the range 4 where if you took an electric vehicle and tested it, that's 5 where those vehicles would fall as well. 6 Some question is why do we have such a 7 difference among our product lineup? Well, the first row 8 identifies several vehicles that we had seen on the 9 previous chart, and second row is the actual numbers. The 10 Corolla and Camry, the star performers; and the bad guy in 11 the far right, the SC300. 12 You begin to look at parameters that might 13 affect evap performance. You start looking at what is 14 different. Well gee, there are some subtle differences, 15 but nothing really strikes us as being significant in terms 16 of things we might want to figure in order to get the bad 17 guys to perform like the star performers. What I really 18 want to say here is, at this point, we are really not sure 19 how to get the rest of our lineup to look at the star 20 performers. 21 But without ignoring the current work that 22 staff had done and throughout discussions, we admit that 23 their data we agree with. There are some potential 24 opportunities for improvement. And this chart kind of goes 25 through some of the things in terms of our systems, where 89 1 we think there may be some opportunity for improving our 2 system. Maybe the big ticket item at the moment that comes 3 out is a carbon impregnated air filter, something that ARB 4 staff had used in their studies. Some of the things we 5 have already adopted into our system, and quite frankly, 6 some of them we just don't see as production feasible. 7 So kind of in summary what I'd like to say 8 is we see ARB staff's work on evap as a good starting 9 point. We don't disagree with the results that have been 10 made public, but we don't think they present all the 11 answers, just as I'm here to say that we don't think we 12 have the answers yet. We don't feel, frankly, that picking 13 one or two star performers is a prudent way to develop 14 standards that will affect the rest of the industry. We 15 will learn more as we gain more experience with developing 16 our systems, and we recognize there are needs to continue 17 to improve our systems. 18 However, today we can't say how we are going 19 to get there. And if I had to venture a guess, trying to 20 fit our product lineup into that small region, as you saw 21 in the other chart, might even suggest we may be forced to 22 limit our vehicle model lineup to the California market. 23 Thank you very much. 24 BARBARA RIORDAN: Let me thank the speaker 25 particularly now of his mindfulness of the time. Are there 90 1 any questions by the Board of this particular speaker? 2 Seeing none -- 3 MR. CALHOUN: Are you aware of what the 4 staff did in order to meet and develop their evap standard? 5 MATT KEVNICK: You mean the work they had 6 done? 7 MR. CALHOUN: Yes. 8 MATT KEVNICK: We worked kind of closely 9 with them and exchanged information, trying to explain our 10 systems and technology. So we have had a pretty good 11 understanding. 12 MR. CALHOUN: And you agree with the numbers 13 they came up with? 14 MATT KEVNICK: We can accept the numbers. 15 It's a matter of integration, how to apply them to our 16 future product line. 17 MR. CALHOUN: But you're not sure whether or 18 not you can, in fact, meet that number that they propose? 19 MATT KEVNICK: Right. Some of the 20 technologies on the chart that we showed previously 21 suggested. Those bad actor is the kind of thing that staff 22 have employed in some other studies. 23 BARBARA RIORDAN: Mrs. Rakaw? 24 MS. RAKAW: Yes. Your statement regarding 25 the California market, can you tell me approximately what 91 1 percentage of the California market you have? Do you have 2 any idea? 3 MATT KEVNICK: 18 percent. 4 BARBARA RIORDAN: Mr. Roberts? 5 SUPERVISOR ROBERTS: Mr. Kevnick, did you 6 suggest a figure of $7,000 additional cost per each vehicle 7 for your company? 8 MATT KEVNICK: No. 9 SUPERVISOR ROBERTS: Did you come up with 10 anything like that? 11 MATT KEVNICK: Quite honestly, no. 12 SUPERVISOR ROBERTS: We will find who did 13 it. 14 BARBARA RIORDAN: Thank you very much. 15 MR. CACKETTE: Can the staff make one 16 comment on this? 17 BARBARA RIORDAN: Yes. 18 MR. CACKETTE: With that chart up there, 19 this data sort of bothered us when we first saw it, and we 20 have gone out and done this additional vehicle modification 21 and testing since the report came out. The two things I 22 want to point out is, where you see the arrow that says 23 Camry at roughly .4 and the one we tested was at .5, we 24 took the absolute best hosing systems and seals we could 25 find and put it on that Camry. It was at .5. And when we 92 1 were done testing, it was at .2. 2 Second thing is we went out and got -- just 3 recently last week, we went out and got a Lexus and brought 4 it in. And we were trying to figure out why did the 5 Lexus -- it's the same family as the one up there almost at 6 1 -- and we tested and it came at .3 without any 7 modifications. It looks like it's got a good system. So 8 why they have certification data which I think is what is 9 shown there that was the kind of high flyer did not agree 10 when we got a production model, a rental vehicle and 11 tested. It was much lower, much nearer the standard. 12 So I don't think -- there is still some 13 mystery as to why that specific data points so high, but I 14 don't think it is quite as mysterious as we had thought. 15 BARBARA RIORDAN: I appreciate that. Thank 16 you very much. We are going to go on to Mr. Charlie Kitz 17 from Chrysler. And in recognition of time issue, 18 Mr. Welch, you'll be next. 19 Would you like the lights on? 20 CHARLIE KITZ: No, that's fine. I want to 21 thank the Board for the opportunity to represent this very 22 critical issue, and can we have very comprehensive 23 testimony that has been prepared and provided to the 24 staff. I'm not going to go through that in the interest of 25 time today. It's here on the disk. We are going to have 93 1 to flip through quick, but I understand. 2 What is your team, first of all. Let me 3 just state broadly that Chrysler is supportive of the 4 California's air quality, as we understand that. We 5 further recognize the fact that the industry -- of Chrysler 6 in particular -- is going to have to be a major player in 7 terms of substantial part of clearing that path, and we 8 accept that responsibility willingly. 9 We do indicate, however, as it's been said, 10 that trucks should provide some greater emission reduction 11 and also that trucks should provide greater reduction in 12 the how soon to do that and how it's done. But in 13 principle, we support all of that. In addition, I just -- 14 I guess we are not there. 15 Let me just continue in the interest of time 16 that there are three things that Chrysler would like to 17 talk about specifically and not comments that are redundant 18 that were said before. First of all and most importantly 19 is that fuel quality must be improved concurrent with the 20 emission reductions. We are saying that for us to be 21 capable of achieving these low-emission standards, we have 22 to have the fuels at the same time. That's absolutely 23 critical. 24 We also recognize some flexibility has been 25 provided by the staff, but we believe more is required -- 94 1 specifically, that we be allowed plus NOx averaging as a 2 sum and also that the optional emission standard be 3 applicable at only 150,000 miles only, not the 50 and 120 4 categories and also to receive supplemental fleet average 5 and credits for those vehicles. 6 So let me just flip right on through to the 7 end of the fuel quality. I'll just do a very quick 8 summary. California has been the leader in the advance 9 fuels, and we recognize that. As we said, further 10 improvements in fuel quality are necessary to enable 11 compliance with either the ARB's proposal or the 12 manufacturers' alternative. Whatever proposal is adopted, 13 we believe fuels are necessary so that we request the Board 14 to fuel equality in aiding manufacturers to comply with the 15 LEV II standards. And also, as we said earlier, that these 16 standards precede or be concurrent with the availability of 17 the timeliness of new standards. 18 I'm going to pass through the rest of the 19 fuel comments. You only want what is very critical. What 20 I wanted to talk about is that cars themselves, that the 21 fuel requirements are the single most important thing in 22 terms of air quality that they've ever achieved. 23 3.5 million vehicles off the road, and we think further 24 improvements, therefore, are very, very critical. 25 They said there is no single measure in our 95 1 history reduced application, but a larger amount in such a 2 brief period of time going on now to a second item. That 3 is partial ZEF credits. As you know, the Air Resources 4 Board has proposed the credits for very low emission 5 technologies to provide flexibility for this ZEV mandate. 6 The proposal allows manufacturers to produce and sell 7 electric vehicle substitutes. 8 Now, we think these are laudable goals and 9 we appreciate the flexibility that they provide but, 10 nonetheless, we should have serious concerns. First of 11 all, the proposal continues sales mandates which requires 12 manufacturers to sell but does not require customers to buy 13 those vehicles. This is a fundamental principle on our 14 part. We cannot pose mandates in any form as this 15 interferes with the free market. 16 The second, none of the proposed vehicle 17 substitutes have any volume sales potential by the 2003 18 timetable that has been established. Specifically, here is 19 a chart that just summarizes will these things have sales 20 potential of a technically feasible and also do they have, 21 more importantly, buyer acceptance. Will people buy these 22 vehicles in the volumes that are projected, and I'm not 23 going to go through all the details. 24 Some people will put yes or no or maybe, but 25 fundamentally none of these are ready across the board that 96 1 are feasible and meet all customer requirements. That's 2 not saying that we don't strongly support encouraging 3 advanced technologies, but we are concerned about the 4 practicality or the required volumes in the proposed 5 timetable. 6 Let me show you what I mean. The proposal 7 will continue to have at least 4 percent real ZEVs which is 8 about 31,000 vehicles a year. All you notice on the 9 footnote, in the last three years nationwide there has only 10 been less than 23,000 vehicles sold. The other 6 percent 11 of the 10 percent can be made up in partial credits. They 12 can do the division for what the partial credits are for 13 that 6 percent. This says that we will need fuel cells at 14 9 percent of California volumes or around 68,000 units. 15 The hybrids would have to be available to 16 be sold to about 10 percent of the public at almost 80,000 17 units. And the SULEVS at 15 and 30 percent get up to 18 almost 250,000 units. And this is what our real concern 19 is, not that there is flexibility provided, but is it 20 realistic to expect people to buy these vehicles in that 21 time period. 22 And the most important thing, of course, if 23 these vehicle sales are not achieved, you do not receive 24 the air quality benefit. And regarding benefits, I'd like 25 to make one last point, and that is this graph shows the 97 1 increased benefit from the ZEF program as initially 2 conceived under LEV I. And over time, the reduction 3 becomes more and more, and that is why it was done. It's a 4 very laudable goal. 5 The interesting thing is, when you 6 superimpose the LEV II standards, the benefit from the ZEF 7 program comes down to 1.6 tons per day by 2010. The main 8 reason is you're substituting ZEVs with very, very low 9 SULEVS and other vehicles. In fact, SULEV vehicle, if it's 10 driven 100,000 miles, will emit one pound of hydrocarbons 11 which is equivalent to spilling a pint of gasoline. 12 Now, 100,000 miles, that's over eight years 13 of use, and you're only talking about one pound of 14 hydrocarbon. And that's why, if we get to those kinds of 15 levels that are proposed by staff, it gets very problematic 16 as to whether you need the ZEF program. So we are saying 17 we would remove the partial -- suggest they remove the 18 partial ZEF credits from LEV II and study this more 19 thoroughly. I don't think it's necessary to be part of the 20 LEV II. And if the Board should address air quality 21 standards, not sales mandates, we would suggest do it in 22 simple terms, is intensify some of these advanced vehicle 23 technologies underneath the end market by giving multiple 24 credits so you can have a fuel cell hybrid at five times a 25 SULEV, and it should go like two times and concentrate on 98 1 just the air quality and not the sales mandate. 2 CHAIRMAN DUNLAP: We will talk to staff and 3 wrap up about their idea of including that in the review. 4 CHARLIE KITZ: Very quickly passing, there 5 is something in the report about vehicles equipped with 6 ozone technology. We don't think this makes a lot of sense 7 on mobile. You make more sense on a stationary application 8 such as an air conditioner that is operating a fan all day 9 long on top of a building or something. But that concludes 10 my remarks. 11 CHAIRMAN DUNLAP: All right. Thank you. 12 Any questions of the witness? All right. Very good. 13 Thanks. I understand. 14 Peter Welch? Peter Welch with the 15 California Motor Car Dealers' Association. He's come all 16 the way from Sacramento to be with us today. 17 PETER WELCH: Thank you, Mr. Chairman, 18 Members. Peter Welch with the California Motor Car 19 Dealers' Association. It's a statewide trade association 20 that has all of 1,400 members. We collectively employ 21 about 125,000 Californians. Our members are the people 22 that stock, sell, and service new cars of all line makes. 23 There are currently over 30,000 franchisers that franchise 24 our members. 25 I'm going to keep my comments short. I'd 99 1 like to answer any questions. I'm here to talk about 2 market concerns. Nothing more, nothing less. We do not 3 obviously design, manufacture, or warrant these vehicles. 4 We put on our lots what people want, what Californians want 5 to buy, what they want to drive. 6 It's interesting to note, because a lot of 7 people don't understand the distribution chain, but we are 8 actually the sole purchasers of vehicles from the auto 9 manufacturers. We buy them. We put them on our lot. And 10 we only buy them and put them on our lots in number and 11 variations of what people want to buy. And last year, we 12 sold bumper our best year in the last ten. We sold over 13 1,582,000-something vehicles and yes, 43 percent of those 14 would fall under the category of trucks, light-duty sport 15 utility, and so on. 16 I think the Board has done a pretty 17 remarkable job over the years in creeping the technology 18 into the cars in kind of a seemless kind of really 19 non-transparent method for consumers have been able to go 20 out there. They haven't seen any noticeable change in what 21 a car looks like, what it performs like. And yes, the 22 price has creeped up 20, 30, 40, 50 bucks here. Consumers 23 have been able to. 24 Where we have hit the wall with the 25 consumers are, quite frankly, the alternative fuel and 100 1 alternative powered vehicles. Those who range natural gas 2 vehicles. Again, we talked about cost, and the 3 differential in those cars are in the $5,000 to $10,000 4 range. Electric vehicles haven't caught appeal primarily, 5 again, because of performance/utility and the consumers 6 perception price value. They have not counted out in 7 numbers. 8 We would like to see them buy this 9 technology. The fact of the matter is that internal 10 combustion engine seems to be the most price valued 11 personal transportation unit that is out there, and that is 12 what people go for. That is what they want and yes, they 13 are going for trucks these days. The bigger, the better. 14 I know that in many circumstances it's kind 15 of something that ought to be banned. They're polluters. 16 They are killing people in accidents. But that's what 17 consumers want. They want big, high-riding cars, heavy 18 mass, et cetera. We can point our fingers to fuel cost and 19 so on. I'm not here to do that. I'm telling you what 20 they're buying, what they want, and when they hit the wall 21 with respect to price. 22 Our biggest problem right now on the market 23 is, in fact, price sensitivity. The average price of the 24 car, average price of the car is just under $20,000 this 25 last year. We are hitting the price wall. Our biggest 101 1 problem in getting people into cars is qualifying them for 2 financing and keeping them in the car. 3 What we have seen in the last three or four 4 years is a phenomenon that I haven't seen in my 5 20-something years -- that is, manufacturers are starting 6 what we refer to as decontent the car. They're starting to 7 take equipment options to keep the car under $20,000. We 8 have seen some major vehicles with price reductions in the 9 last two or three years. 10 So we get very sensitive when it comes to 11 the price increase. I don't know what the price ultimately 12 is going to be. Your staff, over the years, have been 13 pretty good with their projections. You're in the $215 14 range average. I don't think it takes a rocket scientist 15 to figure out that a car that weighs 7,000 or 8,000 pounds 16 and has heavier engines and rear ratios, et cetera, et 17 cetera, is, using my math, going to cost twice as much to 18 certify as a car that only weighs 3,000 or 4,000 pounds. 19 It's a matter of physics with regard to it. 20 When we take a look at price sensitivity, 21 1-percent increase in price usually means a 1 percent 22 decrease in the volume of vehicles that are sold. 23 Likewise, if you reduce the price 1 percent, general rule 24 of thumb, there are a lot of other things that come to 25 play. We can see increases in them. $215 increase is 102 1 about 1-percent price increase. To put this into 2 proportion, I'm sure all of you read the newspaper about 3 our big stalemate budget fight this year where the big 4 budget issue this year was tax reduction, vehicle license 5 fee 25-percent reduction. 6 The whole battle this whole summer is 46 7 bucks a person is the average reduction we have seen there. 8 That's only 25 percent of what we are looking at just to 9 staff average here. This is a significant price increase 10 for consumers, and it's going to have some significant 11 ramifications in the marketplace. It is not a $15 or $20 12 bump. 13 CHAIRMAN DUNLAP: What year are these 14 numbers going to play, Tom? 15 MR. CACKETTE: Well, the standard goes into 16 play in 2004. I just want to point out a couple things. 17 Our economic analysis uses $215 number which is more of a 18 worse-case number, as the staff showed the number as $107 19 as the range. It gets into $200 for the bigger one. 20 You're right in terms of bigger ones will be -- 21 CHAIRMAN DUNLAP: It sound reasonable. 22 MR. CACKETTE: I'd also point out that 23 percentagewise, that percentages will be about the same; so 24 it will be 1 percent on that. 25 PETER WELCH: We think those are absorbable. 103 1 We think most of the cars are in the $90 range, and we 2 don't pay it every year. Let's be honest. But it's going 3 to be a pop. Our concern is the same as the 4 manufacturers'. That's the 6,000- to 8,000-pound range. 5 We think that, just intuitively, that it's going to be 500 6 bucks or something in that range. I don't know what it's 7 going to cost out in 2004 when you get it there, but it's 8 going to be more than a 1-percent increase. 9 What is that going to do? It's going to 10 drive people, we think, into bigger cars. If you own a 11 $30,000 boat and you need towing capacity to take it over 12 to the lake or ocean or wherever you put it in to go for a 13 ride, you're going to buy it. You're going to buy an older 14 car, an older truck. You're going to go out of the state 15 and get a car with over 7,500 miles and import it in. 16 These are going to have negative ramifications necessarily, 17 but we want you to be cognizant of those. 18 I think I know where the $7,000 figure comes 19 from, Mr. Roberts. When we look at the end-market average 20 and when you look at your own staff's chart which is, like, 21 on page Roman numeral II and if you look at the schedule 22 and they're flexible, you get out into the later years like 23 2010, you're going to see in those truck range 24 64 percent -- 10, 15 percent or 64 percent ULEV, 15 percent 25 SULEV. 104 1 Now on a fleet average, sure, that is going 2 to affect Suburbans. They are going to put natural gas in 3 those. Probably people aren't going to buy them. But in 4 order to buy SULEVS, some vehicles are going to be 5 certified. We can't sell them in any category right now, 6 and it does cost $7,000 difference in an electric vehicle 7 now. So if that is way out there -- and I'm not crying 8 wolf today -- but there are market concerns out there. And 9 that is the one that is most impacted and those are 15 10 percent of the cars or trucks, I should say, as a result 11 today. 12 Any questions? That is my point. 13 CHAIRMAN DUNLAP: Thank you, Mr. Welch. I 14 appreciate that. Any further questions. 15 Manuel Cunha? 16 MANUEL CUNHA: Thank you very much. Manuel 17 Cunha, president of the Nisei Farmers League. Also, 18 Mr. Chairman, I have Mr. Mike Wade here from Merced Farm 19 Bureau and if he could be a part, we could split our time 20 up. 21 CHAIRMAN DUNLAP: Is he signed up as well? 22 MANUEL CUNHA: Yes, he's signed up. He's 23 right here behind me on the chair. 24 CHAIRMAN DUNLAP: Come on up. We will do a 25 two-for-one. 105 1 MANUEL CUNHA: First, before I start, I do 2 want to thank Mr. Dunlap for your staff and this Board for 3 the tremendous amount of work that you've done in working 4 with agriculture in California and especially the staff -- 5 Mr. Mike Kenny, Mr. Jim Schoning of course, and Tom 6 Cackette, Peter and Bob Cross, and those folks. You have 7 definitely been and have made agriculture a part of your 8 program in working with us to better our industry in 9 cleaning up the air that we are involved with as well from 10 AMTAM as well as other operations that we have. So again, 11 Mr. Dunlap, I'd like to thank you personally, and we 12 appreciate that very much. 13 Okay. Let's get right to the details. 14 Right now before you, you should have several testimonies 15 that were being brought today for you. Those individuals 16 were not able to attend; so I'm representing them here, and 17 I'll just read the names off, and then I'll get right to my 18 three or four bullet points and let Mr. Wade come on board. 19 First, Nisei Farmers League, which is in the 20 San Joaquin Valley, Salinas Valley, and in the Santa Maria 21 Valley as well as down in the Imperial Valley. The second 22 is the California Growers and Processors throughout the 23 state. Third group is Fresno County Farmers. After 24 Wednesday or after Tuesday, I don't know what is going to 25 happen with it or if it's going to be there or not. 106 1 But Fresno County Farm Bureau which is the 2 largest farm bureau west of the Mississippi in the 3 San Joaquin Valley, Western United Dairy across California, 4 California Grape and Tree Fruit League which represents 5 growers across the state, the Raisin Bargaining Association 6 referred to as the RBA which is the largest single entity 7 for raisin production and, of course, 99.9 percent of the 8 raisins are in the San Joaquin Valley. 9 The other group that hasn't brought 10 testimony forward is Dennis Tristo with Boswell Corporation 11 out of corporate. The other group that doesn't have a 12 written testimony due to scheduling or whatever is that 13 California Growers Association. Their specific comments 14 for me to raise was that they are not opposed to the 15 staff's proposal by ARB. 16 The other groups I mentioned for you, we 17 look forward to the staff's proposal and look forward to it 18 moving forward because we saw some statistics that were out 19 there that we could not find $7,000. I asked every motor 20 company as well as the chamber where that information was, 21 and we couldn't find it. By contacting the staff, Steve 22 Albu, he presented to me actual information that showed 23 what their cost would be estimated. In fact, I mean in the 24 actual calculations. 25 I'm not an engineer. I wouldn't even be 107 1 able to understand this, any of those numbers, but I took 2 it to somebody that understands those things and explained 3 that cost is around that $200. I couldn't find $7,000 at 4 all. I even went to the web cite. I'm not a computer 5 individual, but maybe it was underneath the web system 6 somewhere. 7 But our agriculture industry does support 8 this because it deals with it across the board. Now, we 9 deal with vehicles, of all vehicles on road, vehicles 10 making the public, all of us, responsible for doing a 11 better job of cleaning up the air because, as Mr. Wade will 12 talk about in a few seconds, some of the things of why that 13 is important. This will not have an impact on agricultural 14 farmers. 15 The way our economy is going, if we have 16 another El Nino, I do know that many of you will be seeing 17 farmers back to the 1800's with horses and plows. We will 18 have a catch bag though for the material that was dropped 19 along the street with our buggies or whatever. So we don't 20 have a BM10 problem. But the economics or our industry 21 though is that farmers today keep their vehicles for a long 22 time because of the cost of our tractors. 23 Many of my farmers are small farmers, 24 anywhere from 2 acres up to 80 acres. I have a farmer that 25 has a tractor that is 35 years old and only has 4,000 hours 108 1 on it. That is not many hours. 8,000, hours you go to an 2 overhaul on a tractor. They keep their vehicles. And the 3 economics of this for me and my agriculture industry is we 4 are a part of what we need to do to clean up the air. We 5 are doing a lot of voluntary programs. They're positive 6 with the San Joaquin. 7 So that issue alone is that we are giving -- 8 and I look at it this way, when I say we, the state of 9 California is allowing the industry to come up with giving 10 flexibility of 4 percent so giving them some latitude. 11 Also, there is a federal thing coming down the line in the 12 future that what California does, we hope the federal 13 government follows. I understand they are. They want to 14 copy what California is doing with their fuels and their 15 vehicle costs, and I think that gives those manufacturers a 16 fair opportunity across the board. 17 So at this time, I would close and have 18 Mike Wade please come forward. We choose to support this. 19 The agriculture industry will not have an economic impact 20 at all. I want to make that clear. We saw some literature 21 out about the farmers were going to go into severe 22 bankruptcy problems, et cetera. Again, we couldn't find 23 where that came from, but it will not, that we can see at 24 this time at all. And $200 to me is a reasonable thing to 25 clean up vehicle emissions across this state, and it has to 109 1 be done. 2 Thank you. 3 CHAIRMAN DUNLAP: Thank you. Mr. Wade, from 4 Merced County Farm Bureau. 5 MIKE WADE: Thank you for your time 6 consideration. It's never easy to follow Manuel, but I'll 7 be brief. Merced County Farm Bureau represents the 8 collective interests of over 1,800 San Joaquin Valley farm 9 families and individuals. We are part of California's 10 immense agriculture industry. Our farm bureau, as does 11 Manuel's, supports the ARB LEV II proposal because we feel 12 it's a reasonable approach to the ongoing problem of poor 13 air quality in the San Joaquin Valley and other parts of 14 California. 15 Much has been accomplished in the Valley to 16 improve air quality through regulations that affect many 17 agricultural and non-agricultural businesses. The food 18 processing plants which are a vital part of our industry as 19 well as other businesses have made great strides over the 20 past 10 or 20 years in reducing stationary source 21 emissions. But we think more can be done, perhaps not with 22 that class of polluter, but with mobile sources. 23 Based on the influx of an estimated 24 9 million people coming in the next 20 years to the state, 25 we need to act now to further reduce tailpipe emissions 110 1 which are a major problem in the San Joaquin Valley and a 2 major source according to the San Joaquin Valley Unified 3 Air Pollution District. 4 LEV II is a fair and balanced approach, we 5 feel, in reducing the air pollution problem. It's going to 6 be effective, and we feel it's going to be affordable. 7 LEV II, as written, will begin implementation, as you know, 8 in 2004. And it will affect certain pickup trucks, sport 9 utility vehicles, and medium-duty trucks. 10 The improvement in tailpipe emissions can be 11 accomplished among these vehicles, again, for approximately 12 $200 or less, which we have heard testified to a number of 13 times already today. We feel that this can be accomplished 14 hopefully without compromising performance or fuel economy. 15 From the technology that has been derived from the 16 passenger automobile industry can be applied to, we hope 17 and believe, into this other class of vehicles and provide 18 an incremental common-sense approach to the further air 19 quality problems. 20 CHAIRMAN DUNLAP: So you like it and support 21 it? 22 MICHAEL WADE: We do like it, and we support 23 it. We don't feel it's going to be an economic burden, and 24 we think it's the one way that we can have a unified 25 approach statewide to improving air quality. 111 1 CHAIRMAN DUNLAP: That's great. Thank you 2 guys very much. I appreciate your coming. 3 SUPERVISOR PATRICK: I would just like to 4 ask either Manuel or Mike to talk a little bit about 5 performance because we've heard from the San Joaquin Farm 6 Bureau, Take Home Ranch and others, saying that they're 7 afraid this is going to affect the performance of their 8 work vehicles. Your comments have primarily addressed 9 economics. But could you talk a little bit about 10 agricultural's concern, if there is any, about performance 11 of the vehicles under the new standards? 12 MANUEL CUNHA: I think just a real quick 13 thing on that is that many of our farmers today, as I 14 mentioned, buy a larger vehicle because they use it for 15 more than just the one purpose; so they're going to buy a 16 bigger vehicle anyway. They're not going to go to a 17 vehicle that is going to be at the minimal to get you over 18 the hill. They're going to a bigger pickup truck because 19 they know farmers do something most of the time that, if it 20 says you only load it with two pounds, they will go six 21 pounds. That's the way we work. We have to get the 22 maximum across. 23 Today, my farmers especially, they don't get 24 into the smaller vehicles. They're going for a bigger 25 vehicle because their potential is they're going to do more 112 1 with it than just use it for towing the boat. They have 2 always gone for the larger system of saying they are going 3 to tow a trailer that is a 12,000-pound trailer. They're 4 going to put 11 ton on it, and it's that type of thing that 5 the farmers do. And anymore, many of my farmers are going 6 to diesel. 7 They want that ability of that torque and 8 that low-end drive and conserving on how many fuel tanks 9 they have in your facility because of the regulations that 10 they're going to diesel -- one fuel tank, one issue to deal 11 with versus having to deal with gas and diesel. So that's 12 my comment from our side. I've talked to farmers across on 13 many issues. 14 CHAIRMAN DUNLAP: Thank you, gentlemen. 15 Sam Leonard? You're against clustering, Sam? 16 KEVIN CULLEN: I'm going to try to make this 17 quick. I'll skip the opening commercial that some of my 18 friends have done as long as you don't take that time away 19 from me. 20 Supervisor Roberts, I don't know anything 21 about $7,000. I'm going to try to explain to you why there 22 has been a lot of talk about tech feasibility. That's 23 certainly a concern and issue. I want to talk about a 24 completely different aspect of this, which is the nature of 25 the proposal, the workload it presents us, and why if we 113 1 assume tech feasibility, we still have problems. 2 LEV II staff proposes the tailpipe rollout 3 from '04 to '07, produced for the industry an unprecedented 4 level of workload in design and release, development and 5 validation and search. And that impact is disproportionate 6 on us full-line manufacturers who have to deal with the 7 shift of medium-duty trucks and light-duty, and that is 8 really the core message I would like to get to here. 9 Many of the people in the room here, when 10 they go home today, will move on to other things. Those of 11 us from Detroit and other automotive centers will spend 12 time trying to make this happen, and the workload we're 13 presented with is really crushing. 14 CHAIRMAN DUNLAP: Will that be around the 15 clock you're working on this? 16 KEVIN CULLEN: Personally, no, sir. I do go 17 home in the evening. But yes, we have emission testing 24 18 hours a day for development. Key issues are what I call 19 the triple whammy of the shift from medium-duty vehicle to 20 light-duty trucks. And that's part of the trucks-to-car 21 initiative 2004 to 2007. Additionally, the severity of the 22 reduction, the ongoing shift from LEV to ULEV and beyond, 23 superimposed evap rollout and then the other shoes to 24 follow. 25 Just so we are clear on the categories, this 114 1 isn't a commercial. Current LEV II are the guys on top -- 2 the small sport utility, small pickups, and minivans. The 3 current MDVs under 8,500 are the full-size trucks, 4 full-size pickup, van, sport utilities. The MDVs over 5 8,500 are the heavy work trucks. 6 When we talk about the triple whammy, what 7 does that really mean? When you look at shifting vehicles 8 from the current MDV category that is 6,000 to 8,500 into 9 the new broader LDT II category, the obvious candidates to 10 do that are trucks that are going to be ULEVs as MDVs 11 because they are the most emissions capable. When you 12 remove those from MDV and send them to LDT II, you have to 13 re-balance your MDVs to get back to the proper split of 14 LEVs to ULEVs, and that means there is work to do on the 15 MDVs left behind to get more ULEVs back in to cover the 16 ones you removed. As well, the MDVs you send to LDT II are 17 the least capable in that population. 18 As data has shown -- our data, certainly the 19 staff's data -- the vehicles 6,000 to 8,500 are primarily 20 LEV II candidates. There is no data on the table I've seen 21 yet that says they're ULEV candidates. So that means the 22 balance of the LDT II population has to shift more 23 aggressively to ULEV in order to offset those entering 24 MDVs. 25 And maybe most importantly, when you look at 115 1 the total MDV population, the 6,000 to 8,500 are the 2 dominant volumes. Those are the configurations that are 3 sold in high volume. When you take one high volume MDV 4 between 6,000 to 8,500 away, it no longer offsets many 5 smaller volume configurations. And this speaks to 6 Ms. Edgerton's questions about availability -- will there 7 be a narrowing of features or a narrowing of offerings. 8 So we have a multiplied workload because we 9 now have to take many small-volume configurations to 10 replace a few large-volume configurations. 11 Tried to illustrate that with this plot. 12 This is GM's current mix of sub-configurations. A 13 sub-configuration is an engine, a transmission in a body 14 between 6,000 and 10,000 pounds. Each of the colored 15 sub-bars is one configuration. What you see when you look 16 at the 6,000 to 8,500 pound bar is there are four or five 17 large configurations that dominate the volume in these 18 categories and then lots of cats and dogs that are produced 19 in hundreds to thousands of vehicles per. 20 Those large volume configurations are the 21 ones that will be ULEVs in 2003. They will be the first 22 ones to move out to go to LDT II, and they will leave 23 behind that large pull of cats and dogs. Making each of 24 these into a LEV II is an equivalent amount of workload, 25 whether it's a 500-vehicle configuration or 50,000-vehicle 116 1 configuration. So you can see how the workload multiplies 2 as you lose those high-volume MDVs that currently carry 3 most of the higher emission performance in this category 4 today. 5 The 60-percent ULEV, we are showing there is 6 what is proposed for the MDV class post 2003, and you can 7 see that today we can cover that with about four 8 configurations. Once those high volumes go away, we are 9 going to have many configurations to cover that same 10 requirement. 11 I'm not going to spend much time on this, 12 but when we talk about the reduction staff has proposed, as 13 you step up into those larger vehicles, it is a much 14 tougher road to ho. The green bars are LEV I, LEVs to 15 ULEVs in each cagegory. The blue and red bars are the 16 comparable reductions in HC plus NOx to get to LEV II or 17 ULEV II. We are talking about very dramatic reductions in 18 emissions. 19 We are also going to more aggressive nexus. 20 What does that mean? More ULEVs, and they are ULEV IIs not 21 ULEV Is. 22 Next slide, Barbara. Superimposed on all 23 this is an aggressive evap rollout. In only three years, 24 we are going to change over to the new lower evap standard 25 on top of the tailpipe rollout. The last time we did this 117 1 enhanced evap one rollout in four years, '95 to '98, that 2 preceded the toughest years of the LEV I Program, which are 3 '99 and 2000. So those workloads were decoupled. We 4 weren't trying to do them at the same time. 5 That enhanced evap change will require us to 6 essentially recertify all of our vehicles for durability. 7 And as staff knows, the test is tough. It's tough to run. 8 It takes lots of time so that that recertification process 9 will be very labor intensive. 10 And there are other shoes to follow. What 11 does that mean? There are going to OBD impacts from the 12 LEV II proposal. Thresholds that are set relative to our 13 measuring standard will change, will have to be 14 recalibrated to the new tighter standard. I think staff is 15 already talking about the possibility of meeting a NOx 16 focus catalyst monitoring diagnostic as we move the NOx 17 levels down much further. The evap proposal may have OBD 18 impacts. And by the way, at the same time frame we are 19 phasing in the supplemental FTC requirements already 20 adopted by the Board, 2003 to '5 on the same MDVs, 6,000 to 21 8,500; and the 6,000 to 8,500 ORBR phase in at the same 22 time. 23 Last slide. So when we look at -- I'm 24 sorry. How does our proposal improve workload? The 25 biggest impact is by leaving the 6,000 to 8,500 as MDVs, 118 1 we avoid that triple hit that happens when migrating them 2 to LDT II. It moderates the impact on the PC and LDT II 3 under 6,000 LEVs by having a slightly higher LEV NOx level. 4 And what that says is these are vehicles that are going to 5 go away soon because of the planning and NMOG averages. 6 Why rework them for a short remaining life. It improves 7 our confidence that the standards are achievable, and it 8 extends the evap phase in by one year. 9 Next slide. While we have asked for some 10 moderate relief on standards, our stringency proposal is 11 still very aggressive. We are still asking for big 12 reductions at proportionately larger reductions on the 13 truck. 14 Next slide. Conclusion. The staff 15 proposals really comprise a functioning workload task for 16 all manufacturers. I'm not trying to whine. I'm just 17 telling you straight up. This is a lot of work, and it's a 18 particularly severe impact on the full-line manufacturers 19 who have to do the truck category shift. Our post-2004 20 product claims that volumes are still very fluid. I can't 21 come up and tell you precisely what the workload ratio is, 22 but a good estimate would be it's at least twice the worst 23 years '99 and 2000 for the LEV I proposal, and maybe as 24 large as three times the workload that we are doing right 25 now to get through 2000-2001. 119 1 One more comment I'd like to make. Staff 2 talked about five years of lead time on the LEV II 3 proposal. We are currently certifying 2000 model year 4 vehicles. We are nearing calibration freeze for 2001's. 5 The most charitable number I can come up for the real lead 6 time on the LEV II proposal is three, maybe a little under 7 three years. It isn't five years. We are in calendar year 8 1998, but we are in product 2000 to 2001. That's the end 9 of my story. 10 Questions? 11 CHAIRMAN DUNLAP: Any questions? 12 MR. CALHOUN: Kevin, you focused on 13 workload. 14 KEVIN CULLEN: Yes, sir. 15 MR. CALHOUN: What about the technology 16 itself? 17 KEVIN CULLEN: I tried to approach this, 18 Joe, with the technology as a given and saying technology 19 isn't the only problem. The problem is the resources to do 20 this. In terms of technology, is the technology there to 21 do either our reductions or the staff's? Certainly there 22 is technology to do much lower levels. I think the 23 question that I have is how do you do an MDV over 6,000 24 pounds to the proposed ULEV II level. 25 Nobody's data suggests that can be done, 120 1 particularly on NMOG, and the plan would require us to 2 start doing those as we get to the out years. 3 MR. CALHOUN: Do you see that as being a 4 major hurdle? 5 KEVIN CULLEN: Sure. Absolutely do. 6 CHAIRMAN DUNLAP: Okay. Thank you. 7 Sam, you're up. 8 SAM LEONARD: Sam Leonard with General 9 Motors Corporation. 10 As many of you know, I've been before this 11 Board many times before, including 1990 when historic 12 LEV I Program was passed. And at that time, GM supported 13 the LEV I Program, including the ZEF mandate for which I 14 have since had some discussions with my management about. 15 But the auto industry is contributing to 16 improved air quality through reduced emission reductions. 17 Barbara, just quick slides. And this is just a 18 continuation of progress we have seen over the last 20 19 years. This is the share of the auto statewide in 1996. 20 This is what it's going to be under the ARB proposal. This 21 is what it's going to be under the industry proposal. You 22 can see the dramatic reductions we are continuing to get in 23 the auto. You can also compare that to the other areas. 24 In fact, the auto proposal gets about 25 90 percent of the staff's proposal, and it covers all of 121 1 the M2 Program, as you know. All of the M2 commitment -- 2 and I still can't get the numbers straight whether M2 3 commitment is 25 or 16 and whether the black box is 75 or 4 64. 5 MR. KENNY: M2 commitment is 25, and black 6 box is 55. 7 SAM LEONARD: Then we cover about 40 percent 8 of the black box on the M2. 9 CHAIRMAN DUNLAP: Is that black box made of 10 rubber material, or is it really a box? 11 SAM LEONARD: Depends on which model you use 12 for it, I think. That's what's been the confusion. Can I 13 go back to the next slide for a minute because I want to 14 focus on something -- I'm sorry this is not as pretty as 15 Kelly's, but this is the one that Kelly's was taken from -- 16 and focus on the two things in the tailpipe area that the 17 industry is really looking for. This is the original staff 18 proposal on this side. 19 What we are looking at here in this chart is 20 just at the 0 to 6,000 pounds. The industry is willing to 21 bring less than 6,000-pound vehicles down to passenger car 22 standards. That covers for GM all our S-10 pickups, all of 23 our sub-compact sport utilities, the Blazers, the Jimmy's, 24 Bravados, covers all of the minivans such as the 25 Silhouette, the Lumina, the Montana, and most of the Astros 122 1 and Safaris. We are more than willing to bring those down. 2 What we are looking for in that category is 3 some relief on the NOx standard for LEV. We are willing to 4 pay for that relief with a more stringent NOx standard for 5 ULEV. That gets us through some of the transition 6 problems, some of the transition problems that Kevin is 7 talking about. That particular change is essentially 8 neutral on the emission tonage. 9 Second is that is a big issue to us because 10 of trying to do the transition, and it is a relatively 11 minor issue in air quality because LEVs are generally 12 phased out in that category by 2008 and just about gone 13 because you have to meet a ULEV average. 14 Second big area is the light-duty truck over 15 6,000. Next slide, please. 16 CHAIRMAN DUNLAP: What are the names of 17 those? 18 THE WITNESS: The GM names are the Silverado 19 pickup truck, and the GMC version; the Yukon, the Tahoe, 20 the Surburban; the Savanah van, which is the 21 eight-passenger van, full-size vans. These are the big 22 vehicles that people use to tow. If you're standing on a 23 Michigan highway on Friday, these are the vehicles you see 24 towing the trailers. Every one of them are going north for 25 the weekend, and you can see them coming back on Sunday on 123 1 the overpass. 2 This is the staff's proposal. We are not 3 opposed to making significant reductions in the emissions 4 of this category of vehicles. We think it can be done. We 5 just don't think that we can get all the way down. This is 6 a current MDV 3, LEV I level .6. The staff is asking us to 7 get down to .05 on that. We think a reasonable end point 8 for a ULEV II on average will be .1. These trucks do twice 9 as much work when they run the test site. 10 You talk about whether it's emission 11 equivalent control or not. If you measure it in grams per 12 mile, you make the argument it's not. If you measure it in 13 percentage reduction of uncontrolled emissions, what we are 14 proposing is equivalent control. They would both be 15 reduced from uncontrolled levels by 99 percent. 16 The hardware to do that is identical with a 17 passenger car and light-duty truck. They're even more to 18 get them on the light-duty truck. But it doesn't get them 19 down to the same gram per mile because they put out more 20 work over the cycle and in use. Nothing that I have seen 21 has shown any potential to reach the ULEV II proposal for 22 MD 3 and MD 2, the CARB staff has proposed. 23 GM sat here in LEV I Program and said, "Yes, 24 we are willing to take on the challenge. We don't know 25 exactly how we are going to do it. We don't know if it can 124 1 be done, but we think they're reasonable goals." 2 Can I back up one slide, please. We are 3 saying the same thing today about this category of 4 vehicles. We don't know how to do it all, but what the 5 staff has proposed for the under 6,000, we think are 6 reasonable goals; and the over 6,000 pounds, we can't stand 7 here and say that, and we cannot support it because we 8 don't think they're reasonable goals. 9 CHAIRMAN DUNLAP: Sam, on that point, you 10 just think it's taking you too far too fast even with the 11 time because we are talking about some significant time 12 here. Now, I know I heard you talk about the lead time you 13 need and all of that, but does it give you any warm 14 feelings, Sam, when we talk about technology reviews and 15 corroborating with you all, et cetera? 16 SAM LEONARD: Part of the problem I've got 17 going now is I'm trying as a corporate company to make the 18 electric vehicle a success. We are pouring millions of 19 dollars into that, probably with several digits beyond 20 millions. Spending hundreds of millions on fuel cell 21 program. I am very leery of going after another program in 22 which I have very little hope of success when I can go 23 after a program that I think that I can succeed at and 24 provide 90 to 93 percent of the benefit of the staff's 25 proposal. 125 1 CHAIRMAN DUNLAP: Is it possible? Let me 2 ask one other thing, and I mean no disrepect to your 3 company in that regard because I have -- is it possible in 4 that area, Sam, GM is a little depositioned or behind? Is 5 that possible? 6 SAM LEONARD: Absolutely not. 7 CHAIRMAN DUNLAP: Absolutely not? Okay. 8 Thanks. The reason why I ask that and again is, you know, 9 you guys are capable to catch up in a hurry when you put 10 your mind to it if you're ever behind or delayed in a way. 11 I mean, looking at this, we deal with you all the time, 12 Sam. 13 SAM LEONARD: We are capable of doing 14 what -- capable we are doing it here in this state. But if 15 you look at the technological feasibility data that has 16 been presented, what has been presented for the LEV II over 17 6,000 is similar to what has been presented for the 18 ULEV II for the passenger car and up to 6,000. I think 19 there is a feasibility potential there for LEV II on those 20 vehicles with a .1 NOx. I don't think there is any 21 feasibility for ULEV II that's been shown, nor do I have 22 any hope of getting there. 23 CHAIRMAN DUNLAP: One last question. Staff 24 has indicated that there are some off-the-shelf stuff that 25 need to be done, different kinds of catalysts to it, et 126 1 cetera, maybe change the size and dimensions or whatever. 2 And think you can get there or get close? 3 SAM LEONARD: They got close to LEV II not 4 ULEV. 5 CHAIRMAN DUNLAP: The question is to me -- 6 and I know we have a fine staff and I'm grateful for them 7 and the work they do, but you guys are, if not the biggest, 8 one of the bigest corporations in the world. And I know 9 when you put your mind to it, you can accomplish just about 10 anything. The thing that disconnects for me is how this 11 kind of David and Goliath thing is going on here, and I'm 12 just perplexed by it. 13 SAM LEONARD: The disconnect for me is that 14 we have your staff saying that it can be done, and every 15 automobile manufacturer in the world that produces those 16 types of vehicles saying it can't be done. 17 CHAIRMAN DUNLAP: Even with the time? 18 SAM LEONARD: Even with the time. Just to 19 summarize the three major issues the industry's concerned 20 about is the passenger car LEV NOx. We'd like the relief 21 on that from .05 to .1 on the over 6,000 pound trucks and 22 the evaporative standard. As you know, we have offered a 23 .95 in-use .8 cert. The staff has offered a .5 cert with a 24 .875 in-use or three years. 25 I pushed and stretched and threatened and 127 1 strangled my development engineers to get them to be able 2 to put .8 cert level into our proposal. They have -- 3 CHAIRMAN DUNLAP: Still don't see? 4 SAM LEONARD: Don't see. That's all. 5 CHAIRMAN DUNLAP: Okay. 6 MS. EDGERTON: I appreciate that, between 7 the time I spent with you and your colleagues and now, 8 there has been, well, there have been other meetings. When 9 you talk about your proposal, are you talking about the one 10 that you had several weeks ago, or are you still sticking 11 with that, or are you talking about a smaller one that just 12 has the items there? I'm a little confused with what we 13 are talking. 14 SAM LEONARD: Put it this way. You pick it. 15 You can have either one of them. 16 MS. EDGERTON: Well, thank you for that, and 17 I'll ask the staff to respond. Is there anything you think 18 you can clarify with respect to the proposal that, you 19 know, we saw several weeks ago and Mr. Langer's proposal 20 today how similar they are or dissimilar. 21 MR. CACKETTE: There has been -- 22 CHAIRMAN DUNLAP: In the political 23 vernacular, have they moved? 24 MR. CACKETTE: Very small amounts. There 25 has been three proposals, one from months ago, I guess; one 128 1 from early this week; and one from 11:00 last night. And 2 those proposals all fall roughly in the range of doing 85 3 to 90 percent of the reductions that the staff proposal 4 does. They all fall roughly 8 tons per day short in South 5 Coast compared to the staff proposal. 6 There has been changes that have moved that 7 up one, down one a ton or so but not anything that 8 substantially shrunk the difference between the two 9 proposals in terms of environmental. 10 MS. EDGERTON: I appreciate that, and all I 11 can say is is that these are very complex proposals, as you 12 know. And I know you appreciate it's very hard to try to 13 shoot from the hip. I mean it's impossible sitting up 14 here. I can't even really respond very well to that when 15 it's something that is changing. 16 SAM LEONARD: Basic difference is the 17 assessment of the feasibility of the over 6,000-pound 18 truck. And no matter how you squeeze the proposal, you 19 can't find the tonage to make that up because you've got 20 passenger cars at absolute technology forcing levels. 21 Things that we don't know how to do but we think are 22 reasonable goals, you can't sign up for much more than 23 that. We tried to sign up for a little more of that on 24 ULEV on the passenger car and under 6,000. 25 But as long as we are convinced that what 129 1 the staff considers feasible for the over 6,000 pounds, we 2 don't. There is going to be that gap, and there is no -- 3 with everything being at technology forcing levels, there 4 is no place to make it up. It's just a difference in 5 assessment of what is feasible in the market. 6 CHAIRMAN DUNLAP: Mr. Calhoun? 7 MR. CALHOUN: Mr. Leonard, correct me if I 8 mischaracterize your proposal. Essentially, what you have 9 proposed is to do more with the lighter vehicle passenger 10 cars and light trucks and for some break on the 6,000 to 11 8,000 vehicle; correct? 12 SAM LEONARD: Joe, on the passenger cars to 13 light trucks, it's basically what the relief we are 14 requesting on the LEV NOx is basically offset by the added 15 stringency we are offering on ULEV NOx in that range. And 16 the over 6,000, it's all shortfall because we have nothing 17 to give, nothing to offer, nothing to push forward on that 18 because of technology. 19 MR. CALHOUN: The staff has proposed to 20 compensate for the difficulties the vehicle has in meeting 21 the standards by allowing 4 percent of the vehicles to meet 22 a different standard, a more lenient standard. What 23 percentage of the 6,000 to 8,000 pound vehicles are -- 24 what percentage of your product in that range are ordered 25 with the heavy-duty trailing package? 130 1 SAM LEONARD: Excuse me just a second. Let 2 me do it by categorization. If I look at the three-quarter 3 ton SUVs -- Yukon, Tahoe, Suburbans -- over 90 percent of 4 those vehicles are ordered with a trailering package, and 5 that's not a cheap package. That's a $150 to $350 package. 6 People don't buy just to buy it. They buy it because 7 they're going to use it. On the three-quarter ton pickups, 8 we are over half ordered with these heavy-duty trailering 9 package. The one-ton pickups are a little bit lower. They 10 are down to 35 percent, and the farmers will tell you why 11 that is. They do fifth-wheel trailering packages on it in 12 the after market. We don't put those on our vehicles. 13 Concurrently, if you look at our passenger 14 cars today with what we have done with the towing 15 capability of the passenger cars by reducing emissions and 16 improving the fuel economy and removing the front-wheel 17 drive, we have virtually 0 percentage of our passenger cars 18 purchased with a trailering package. I can't find it on 19 the chart. These vehicles are 6,000- to 8,500-pound 20 vehicles are purchased with tow heavy loads. 21 That's what they have to be designed to do. 22 When you run them over a test cycle, they have to do twice 23 the work as our passenger cars. And that's why they have 24 about twice the emissions on a gram-per-mile basis. 25 DR. FRIEDMAN: I'm just a little confused. 131 1 Where is the towing package installed? Doesn't it come to 2 the dealer with the towing package in many, many instances? 3 SAM LEONARD: Many instances, it's factory 4 installed. 5 DR. FRIEDMAN: So when it gets to the 6 dealer, you buy it with the tow package because it's 7 installed. Are you telling me that you really think that 8 90 percent of those vehicles are in fact towing something? 9 SAM LEONARD: Yes, I do. 10 DR. FRIEDMAN: Not in my neighborhood. 11 SAM LEONARD: They are in mine. 12 CHAIRMAN DUNLAP: Sam, we may want you guys 13 and Kelly as well later. So stick around. Okay. Thanks, 14 gentlemen. 15 Mr. Innes? Mr. Innes, hello. You're a 16 citizen from the 909 area code. That could be 17 San Bernardino, Riverside area; is that right? 18 WILLIAM INNES: Well, the remark is now the 19 regulators have solved the smog problems. Why do they seem 20 to want to unsolve it? My name is Bill Innes. I'm a 21 physical scientist, speaking as a private citizen of the 22 Los Angeles basin. I'm living in the inland area where we 23 have the highest smog level. My comments are directed at 24 the NOx control measures. 25 These are about 80 percent of the 132 1 incremental emissions benefits claimed in the staff 2 report. Smog chamber in modeling seem to have shown that 3 controlling NOx is counterproductive with respect to ozone 4 levels. We heard a little bit about that already today. I 5 don't want to go in in any great detail. This particularly 6 applies to the South Coast Basin. At present, it's very 7 critical what the ratio is below one-tenth NOx becomes 8 important from the standpoint of being necessary for smog. 9 Above one tenth, it acts the other way and it decreases 10 ozone by a direct reaction of ozone with nitric oxide. 11 Right now the ozone is about .30, which is 12 three times higher than critical ratio; so we are 13 definitely on the side where any controls on NOx are 14 counterproductive. That's why I say it's going to get 15 worse with these measures rather than better. One of the 16 reasons is often given for NOx controls is a matter of 17 particulate. However, the ARB has failed to come up with 18 any proof of that, to my knowledge. I think it's based on 19 a common assumption that nitric oxide reacts rapidly in air 20 to become an NA2. 21 Well, that's a false idea. Of course 22 everybody has probably seen chemistry experiments if they 23 took chemistry in school. When you release NO on the 24 atmosphere, you see a ground color, and NO's converted to 25 NO2 you think. Well, that does happen. That's a tailpipe, 133 1 but it's very brief and never only about 10-percent 2 conversion. The reason it happens is because the reaction 3 of NO air and oxygen. Oxygen and air requires three 4 molecules. It requires two molecules of nitric oxide and 5 one for oxygen. And that happens very rare when you get 6 through diluted nano condition like we have now. Compared 7 to the reaction of NO with ozone, it's almost negligible. 8 That's where the conversion occurs, and 9 that's where actually nitric oxide helps. What is emitted 10 from cars essentially is about 90-percent nitric oxide, or 11 NO. 12 CHAIRMAN DUNLAP: Mr. Innes, what would you 13 have us do relative to this regulatory proposal? What 14 would you have us do? What do you want us to know? We are 15 talking about the regulatory proposal. Do you like it? Do 16 you think it's misguided? 17 MR. INNES: You want me to get to the 18 recommendations already? 19 CHAIRMAN DUNLAP: Yes, I'd like you to do 20 that, sir. 21 WILLIAM INNES: Recommend that you delay or 22 cancel action on the new LEV control, the current proposal 23 resulting from the EPA standards. And these are 24 scientifically unjustified and probably will be unchanged 25 because probably a new EPA administrator or because of a 134 1 legal challenge because they don't make scientific sense. 2 I hope the state of California will not be a party to such 3 a challenge. 4 Secondly, you should review when publishing 5 model studies involving higher NO hydrocarbon ratios versus 6 the proposed LEV controls. Then would be the time to 7 consider emission standard changes. The staff report 8 provides no assurance the new air standard will be met by 9 imposition of the LEV II regulations. 10 CHAIRMAN DUNLAP: Okay. 11 WILLIAM INNES: Since they would decrease 12 the NOx to AC ratio, they would be expected to increase 13 ozone levels. 14 Thirdly, we are not with hydrocarbon than 15 any future regulations that are in this because their 16 effects are entirely different. That's it. 17 CHAIRMAN DUNLAP: All right. Thank you. 18 I'm going to ask staff at the break, Tom, to get Mr. Innes 19 and share with him some modeling data. I don't know if we 20 can turn you around about scrapping this thing, but we want 21 you to know some of the assumptions going on. 22 Thank you for coming down today. I 23 appreciate it. We will take one more witness and break for 24 lunch. Anybody sitting over there in the bull pen willing 25 to be particularly brief? Come on down. Okay. Very 135 1 good. You are? 2 BARBARA KISS: Barbara Kiss. I'm the staff 3 engineer with the American Automobile Manufacturers 4 Association. I've got just a few very brief comments on 5 CAP 2000 portion of today's rule making. My comments today 6 on behalf of both AAMA and AIM. 7 Many people from EPA, CARB, and the industry 8 have worked very hard for several years on this initiative 9 to achieve effective regulatory streamlining of vehicle 10 compliance programs. In 1996, the automobile 11 manufacturers, EPA, and CARB agreed to work under the 12 auspices of the statement of principles with the goal to 13 improve future in-use emission controls performance of 14 light-duty vehicles and light-duty trucks while reducing 15 overall compliance. 16 We agree with the statement that, given the 17 mature state of emission control technology coupled with 18 in-use program, certification requirements may now be 19 streamlined substantially with greater emphasis placed on 20 in-use performance. These are very worthwhile goals, and 21 this rule making is a definitive step in that direction. 22 However, we believe that EPA and ARB missed 23 an important opportunity to accomplish greater reductions 24 in workload, testing documentation, and related staffing on 25 the certification part of the compliance process. 136 1 Recognizing that the proposed increase reliance on in-use 2 testing, a process more approaching self-certification, 3 could better achieve the stated goals of CAP 2000. 4 Overall, today's proposal will reduce 5 testing of certification and new production vehicles 6 significantly in some cases and will decrease the 7 unnecessary up-front paperwork. However, all manufacturers 8 are being required to conduct in-use testing on customer 9 vehicles as received and at the manufacturer's expense, 10 resulting in a new level of burden and compliance concerns. 11 On the whole, we agree that there are some 12 cost savings. The cost savings are not uniform throughout 13 the industry. In the aggregate, many manufacturers may 14 incur a net increase in costs. Though each manufacturer 15 will be affected differently by these changes, all are 16 supportive of EPA and CARB regulatory harmonization. 17 Automobile manufacturers have a critical need for common 18 certification and testing procedures between the agencies. 19 Today's rule making takes steps in that direction. 20 However, more effort in this direction is 21 required. Again, we will continue to work with the 22 agencies to address these issues and to reduce unnecessary 23 regulatory complexity. 24 CHAIRMAN DUNLAP: Okay. I'm going to ask 25 staff, would you make sure staff understands the testing 137 1 procedure that would be most efficient and then later at 2 the end when we do the wrap up, we'll have you talk about 3 why you can't do it their way or what the issues are or 4 whatever is on the table; so we will address that at the 5 right time. 6 Is Greg Dana here? Are you going to go next 7 because she said she was representing your organization as 8 well as -- 9 BARBARA KISS: Again, my comments were only 10 on the CAP 2000. 11 CHAIRMAN DUNLAP: Because we have two 12 minutes, I'll let you go. I'll hold you until after 13 lunch. It's your call. Last witness, and we will break 14 for lunch. 15 GREG DANA: My name is Greg Dana, vice 16 president and technical director of the Association of 17 International Auto Manuracturers. Our members have long 18 been leaders in development (unintelligible). 19 To name a few, Toyota has introduced the 20 first production hybrid vehicle in Japan which are soon to 21 be released into the market Honda has introduced the first 22 production gasoline ULEV. Mercedes Benz is the leader in 23 developing the fuel cell power for motor vehicles. 24 Mitsubishi has been developing gasoline (unintelligible) 25 sold in Japan, along with Toyota and Honda. Volvo has 138 1 introduced a system on (unintelligible) model year. 2 In light of this, we believe the proposed 3 LEV provision standards present a significant challenge for 4 our engineering community, given the significant changes to 5 the tailpipe evaporative standards as well as changes to 6 the structure of passenger cars and trucks and the 7 increased use of the light truck vehicles. 8 While it's impossible at this point to know 9 whether these new standards will be achievable across the 10 entire product line of vehicles produced by our members, 11 they are committed to doing their best to achieving 12 emission control proposed by staff. I guess this is Kelly 13 saying never say never. 14 We've already talked about evaporative 15 emissions. One of our members was talking about that. We 16 certainly support the industry (unintelligible) at this 17 point. One small item though regarding evaporative and 18 tailpipe together for the small volume manufacturers that 19 we represent, depending on how you look at the phase ins, 20 if in fact the phase ins have been 2006 and tailpipe 2007, 21 for the small volume people in particular, we'd like to try 22 and align that phase in so it will all happen in one year. 23 Proposal also suggests some changes to the 24 smog index label. While we continue to be skeptical of the 25 benefits of such labels, we support the changes proposed by 139 1 staff; however, we again ask the staff to remove the 2 requirement for the statutory low-emission vehicle label 3 required by the state. This is redundant of smog index 4 label. And I will support the changes of the phase in for 5 the .020 in leak protection as part of the OBD II 6 requirements. 7 The staff proposal is to go from 50-percent 8 phase in in the year 2000 to 20 percent and phasing in its 9 requirement over four years rather than three. This longer 10 and less front-loaded phase in will permit better 11 development of OBD systems, able to meet the stringent 12 requirement. We also appreciate the addition of in-use 13 compliance standards for the first years of implementation 14 of the LEV II Program. As we suggested at one of the 15 previous workshops (unintelligible) permit more time to 16 develop robust calibration while keeping the focus on the 17 long-term goal of meeting these stringent standards. 18 Another issue to be raised at the previous 19 workshop was the international OBD II standards. From 20 experimentation or data we have been trying to develop, we 21 think there is some need to change these threshholds that 22 we have on the OBD II system as we move into the SULEV 23 category. We don't believe that a (unintelligible) 24 threshold for OBD II can be measured in SULEV. 25 Finally, while it is not part of these 140 1 regulations, AMA would like to state for the record that 2 cleaner fuels will have to be part of the equation as new 3 standards are implemented. This includes further sulfur 4 reductions in both gasoline and diesel fuel. Fuel changes 5 to control combustion chamber deposits as well as other 6 fuels that may be needed with more advanced technologies. 7 And we look forward to working with staff on these issues. 8 Thank you. 9 CHAIRMAN DUNLAP: Thank you. Any questions 10 of the witness? Very good. For you and your colleagues at 11 AMA, I wish you guys well on that. 12 GREG DANA: So do we. 13 CHAIRMAN DUNLAP: All right. Why don't we 14 take a break. For those, again, we are one-third done with 15 the witness list. We will reconvene, 40, 45 minutes. 1:15. 16 (Lunch recess, 12:40. Return at 1:15.) 17 (Back on the record at 1:15.) 18 CHAIRMAN DUNLAP: Wolfgang, would you mind 19 coming forward. Now my apologies since all of the Board 20 members are not back, but it is piped into the back so they 21 can hear you. Dick Shaw. Is Dick Shaw here? 22 DICK SHAW: Right here. 23 CHAIRMAN DUNLAP: Dick, you're up next. So 24 I'm going to go around. Wolfgang, you get going. I had a 25 chance to meet with you. So I'm going to let Joe keep you 141 1 on track. 2 WOLFGANG GROTH: My name is Wolfgang Groth, 3 and I'm director of engineering environmental staff of 4 Volkswagen of America. My comments here are presented on 5 behalf of Volkswagen, Audi, and Rolls-Royce, and 6 Automobili, and Lamborghini. 7 One particular concern to Volkswagen is the 8 impact of the proposed standards, especially NOx, on 9 Volkswagen's capability to market lean burn technology 10 vehicles such as gasoline fuel direct injection and 11 diesel-power vehicles. There are definite environmental 12 advantages to these technologies. In the case of diesel 13 technologies, these advantages include inherently low and 14 mark admissions, CO, cold start, and evaporative emissions. 15 Another important feature of the 16 diesel-power vehicles is they are considerably more fuel 17 efficient than the gasoline counterpart. As such, they 18 emit much lower levels of CO2, an important reduction 19 component for global warming control strategy. Volkswagen 20 is the world's largest producer of small diesel engines and 21 the leader for development of advanced diesel technology 22 for small cars. We are actually pursuing the goal of 23 continuous improvement in diesel emission performance. 24 ARB proposed .5 gram per mile NOx standard 25 at 150,000 miles. Volkswagen accepts the challenge and 142 1 supports the standard. To achieve an even lower NOx 2 emission lean burn NOx emission standard, lean burn de-NOx 3 catalysts are required. However, low sulfur diesel fuel is 4 necessary to enable this technology. 5 As low sulfur diesel fuel and new diesel 6 emission control technology becomes available, the NOx 7 standard can be reduced to .3 gram per mile so the addition 8 of a new vehicle emission category. This category should 9 also include appropriate reduction in NMOG and CO 10 emissions. Since low-sulfur diesel fuel is not available 11 in California, Volkswagen recommends that ARB mandates the 12 sale of low-sulfur diesel fuel. I would like to add that 13 gasoline direct injection technology would also benefit 14 from the availability of low-sulfur gasoline. 15 Another point I have here says on partial 16 ZEF allowance. In Volkswagen's opinion, the proposed 17 partial ZEF allowance provisions do not represent a 18 reasonable alternative. We are investigating the 19 development of super low emission vehicles as alternatives 20 to the pure zero-emission vehicles to satisfy our 2003 21 model year ZEV sales requirement using SULEVS. We want to 22 have -- 50 percent of our California sales have to be 23 SULEV's, in that case, by the 2003 model year. First, this 24 will require the SULEV's to be introduced in advance of the 25 LEV II phase-in vehicles. 143 1 Second, the flexibility provided by the 2 phase-in of the LEV requirements would be eliminated by the 3 need to introduce 50 percent more SULEV's than 2003. This 4 clearly represents an unreasonable burden when considering 5 it would require development effort and cost. 6 Another thing of concern, Volkswagen is 7 particularly concerned about compliance with the zero-evap 8 requirement for this partial ZEF allowance and SULEV's. 9 This is clearly technologically not feasible in the 10 required time frame. You will hear later why not. 11 Volkswagen recommends that ARB establishes the same 12 evaporative emission standards for partial ZEF allowance 13 SULEVs as those applicable to all other categories of 14 LEV II vehicles. 15 The proposed evaporative emission standards 16 represent a level of non-fuel background emission from 17 vehicles. Therefore, we question the feasibility of the 18 proposed standards. The technology suggested by ARB to 19 reduce evaporative emissions, in many instances, already 20 been adopted. In other cases may not be feasible from mass 21 production or repairability standpoint. 22 Modification to existing fuel system 23 necessary to comply with the proposed evaporative emission 24 centers would require a major redesign of the vehicle and 25 could not be accomplished under required time frame. For 144 1 example, most stringent evaporative emission standard may 2 require the use of steel fuel tanks. Volkswagen and Audi 3 vehicles exclusively use plastic molded fuel tanks that 4 allows to maximize fuel tank volume with the confined space 5 available on today's vehicles. 6 Volkswagen recommends that ARB considers 7 evaporative emission standards that are reasonable and 8 achievable in the required time frame. That concludes my 9 remarks. 10 Do you have any question? 11 BARBARA RIORDAN: Thank you very much. Are 12 there any questions for our speaker? 13 MS. EDGERTON: Yes. I wonder if I 14 understood your last point. Are you saying that you 15 question whether plastic fuel tanks such as you use can 16 meet the evap standard proposed? 17 WOLFGANG GROTH: We know that they don't. 18 In our country, we have all plastic fuel tank because it is 19 technology to go with small cars. You can get much more 20 fuel in small cars, and it packages better. 21 We have here two problems. We have the evap 22 standards coming up. They are very low and currently not 23 achievable with plastic fuel tanks. So we actively have to 24 see do we have to change over our cars to steel fuel 25 tanks. That is a major redesign in the car. 145 1 The other thing is the 2003 evap standard. 2 These are zero-evap standards, and they certainly are not 3 achievable using steel or plastic fuel tanks, I think. So 4 we would, for these cars, we would have the same emission 5 standards like for the others. It's a little complex. The 6 whole regulation is a little complex, but the staff knows. 7 MS. EDGERTON: Thank you. I wanted to ask 8 if anybody on the staff wanted to make a comment in 9 response to this conversation about the evap standards? 10 BOB CROSS: We have talked to a number of 11 folks about the feasibility of using plastic tanks, and 12 they use the basic technology called barrier technology. 13 They impregnate another kind of plastic, like a Teflon or 14 something like that, in the layers of the tank to prevent 15 the tank from having its plastic permeation problems. 16 And sort of the current state of the art of 17 that technology is the tanks emit oh, maybe at the most, 18 two-tenths of a gram. So that does make their challenge 19 harder with the current state-of-the-art plastic tanks, but 20 there is also a lot of work being done on barrier 21 technologies which are better which will hopefully play out 22 in the time frame that we are talking and bring plastic 23 tanks down to where they're really not that big of a 24 problem. 25 But it's rapidly developing technology right 146 1 now, and I guess the staff's view is that the standards may 2 well be feasible with plastic tanks, but we are not sure. 3 We know steel works, but we think plastic will work, but 4 they have some work to do. 5 MS. EDGERTON: What does the Toyota Camry 6 have? 7 BOB CROSS: Steel. 8 BARBARA RIORDAN: Thank you very much. 9 Mr. Shaw from Ram Products. 10 DICK SHAW: Good afternoon. My name is 11 Dick Shaw. I'm a registered professional engineer, and I'm 12 the president of Ram Products. I appreciate the chance to 13 speak in front of the Board. 14 I'll get on to one of the items I'd like to 15 touch on very briefly. Somebody said there was no such 16 thing as a free lunch this morning. I'm touching on a 17 issue where I think there might be a free lunch available 18 if we just bear through with it. 19 I got into a situation where looking at 20 evaporative emissions from gas caps became a very 21 significant issue. The Board is asking for an 80-percent 22 reduction in gas caps the way it's currently used and 23 fabricated, and I support that specific issue. 24 But in studies that I had gotten involved in 25 through a series of business events, we ran into a 147 1 situation where the misuse of gas caps represented a 2 significantly bigger problem in emissions than the 3 emissions from gas caps themselves. It wasn't just the 4 very fact that you had emissions, but it got deeper into 5 the fact it was a very serious safety and environmental 6 issue of great degrees. 7 We feel that the design of the gas cap can 8 be handled, and we also feel that the proper use in 9 tightening the gas cap can be regulated. And if you bear 10 with us, you'll find that we not only are going to give the 11 industry a chance to correct a problem and it's going to 12 have a pay back, but we also complement the OBD II 13 regulations in relegating the control system related to the 14 fuel lines to actually detecting leaks not to consumer 15 response to a device that is supposed to be used properly. 16 What I'd like to do is just give an overview 17 of a study or an assortment of studies that you folks have 18 got a copy of so the audience knows basically what I'm 19 addressing. And insofar as this study is concerned, one of 20 the items I'd really like to do is thank the staff for 21 their Resources Board because they had a lot of data and 22 statistics, but I couldn't extend evaporative numbers or 23 some of the other critical data that is involved in this 24 study without their contributions, and it was fantastic. 25 I mean that. Hats off to these guys. 148 1 We ran into a situation where there is a 2 very significant community out there who, when they go to 3 fuel a car, cannot close a gas cap. One of the things I 4 submitted to the staff at the Resources Board was a video 5 tape that was aired by the Arthritis Foundation where they 6 had identified gas caps as one of the ten worst products a 7 consumer has to use. And then, as you started to check in 8 with medical clinics, you checked in with the VFW, seniors 9 groups, seniors homes, you find out there are 40 million 10 gas caps that are totally loose and unused because people 11 can't loosen them if they tighten them. 12 It's a very distinct ergonomic problem. I 13 started to follow up on the issue from a safety standpoint, 14 and I contacted the NITSA. I talked to the director of the 15 test labs out there, and he had stated that, when they do 16 testing on a vehicle, the most critical testing done on a 17 vehicle is related to fuel system because, if it's 18 compromised, it's the most dangerous part of the car. 19 A loose gas cap is a compromised fuel 20 system. The numbers of people that are being killed and 21 injured is quite bad. We won't discuss them out loud, but 22 the study, if you want to read them, they're not good. 23 CHAIRMAN DUNLAP: So the bottom line is 24 what? 25 DICK SHAW: The bottom line is that we'd 149 1 like to see the Resources Board consider specifying 2 standardization of gas caps, a standardization of the 3 materials used in the fabrication of gas caps. 4 CHAIRMAN DUNLAP: Would you work with us on 5 that? 6 DICK SHAW: If I had gotten the information 7 related to this meeting about six weeks earlier, I think I 8 could have come out with a gas cap that would have fit the 9 bill completely from the standpoint of using -- 10 CHAIRMAN DUNLAP: What I'll do, if my 11 colleagues support it, I'll direct staff to meet with you 12 later and see if there is ways for us to plug some holes 13 and work with you and take your ideas if you're willing to 14 part with them and see if we can tighten this thing up down 15 the road. 16 DICK SHAW: Controlling gas cap use in the 17 marketplace, which is very inclusive, and we think we can 18 pretty much tie the loop. If you're willing to give 19 consideration to it, I think we'd all benefit. Just from a 20 very conservative standpoint, loose gas caps -- and this 21 again is complemented with material from the Resources 22 Board -- are contributing alone in the US alone about 23 5 million tons of gasoline a year that is vaporized. So 24 it's a nasty issue. 25 CHAIRMAN DUNLAP: We will work with you on 150 1 that. 2 Tom, would you have a discussion with this 3 gentleman and maybe get back to us in a written memo to the 4 Board in 30 days what you learned and what we might do down 5 the road. Thank you. Thanks for your patience. Okay. 6 Andy Frank and then Bruce Bertelsen. 7 Dr. Frank, good to see you. 8 ANDY FRANK: Hello, Board. I'm 9 Professor Frank from the University of California, Davis. 10 And I'm here to lend support to the LEV II proposal and 11 especially the ZEF and the partial ZEF credit issues. 12 And by the way, this whole evap problem 13 becomes much simpler if you have a much smaller tank. 14 Instead of having a 10-gallon or 15-gallon tank if you only 15 have a 6- or 7-gallon tank, steel pressurized tank, the 16 sealed tank is entirely in the cards. It makes 17 manufacturing simpler, et cetera, et cetera. 18 So how do you get that smaller tank and 19 still have the range and still be able to tow your boat and 20 so on? What I've been working on is hybrid electric 21 vehicles, but hybrid electric vehicles different from what 22 the car companies are doing, different than what Toyota is 23 doing in Previas. Our goal is to increase fuel economy by 24 a factor of three. We are already at two times. Our goal 25 is to create a vehicle which will satisfy both the EMGV CO2 151 1 reductions as well as emissions reductions of California. 2 But of course want to do this in the same car. 3 So what we are doing is -- and also, we want 4 to satisfy the issue of an alternative fuel vehicle. All 5 our alternative fuel in this case will be electricity from 6 the grid, and this is the distinct difference between what 7 we are proposing and what we are demonstrating at the 8 University of California Davis as opposed to the rest of 9 the world. The rest of the world, they're talking about 10 hybrids which are gasoline fed, so to speak, totally 11 gasoline vehicles. 12 What we are talking about is hybrid 13 electrical vehicles in which you plug it in every night 14 just like you do an electric car. And I'll show you the 15 figures here in a few minutes. What this results in is a 16 vehicle which is essentially electric. It will result in a 17 vehicle where 97 -- for fleet of users, 97 percent of the 18 energy will come out of the wall plug, but you won't have 19 the limitations of an electric vehicle. 20 The vehicles we are putting together now on 21 one charge, because we don't charge our batteries with 22 gasoline, on one charge, however, you can go from 23 Sacramento to Los Angeles and return on the same charge. 24 It's over a thousand miles. So that will make the electric 25 vehicle practical. This has been the problem. The 152 1 electrical vehicle, as envisioned and as manufactured by 2 manufacturers, has not been practical because the range is 3 not good enough to satisfy customer expectations, and this 4 is a way to answer it. 5 So next slide. What is a hybrid vehicle? 6 There are two kinds as I just mentioned. There is a charge 7 sustaining. This is the Toyota Previa. This is the PNG 8 cars that are being proposed by the government and 9 industry. But then there is another kind that we are 10 talking about is the charge depletion. This charge 11 depletion, as I say, does not charge the energy source with 12 liquid fuel on board. It charges only off the wall plug. 13 That means you plug it in every night. So we are also 14 working on automated charger so that it is completely 15 seemless to the user. All you do is put gasoline in it, 16 but you only put gasoline once every three months and then 17 you only use six or seven gallons. Okay. 18 You've also heard that hybrid vehicles may 19 be series or parallel. We can forget about the series 20 because they are not efficient. We are building 21 mechanically parallel, mechanically coupled gasoline and 22 electric motors. So this is a picture of the diagram of 23 the power train. There is an internal combustion engine. 24 There is the electric motor. But I put that little red 25 line through it to indicate that the shaft goes right 153 1 through the electric motor so we get electrical energy from 2 the batteries up to the electric motor. 3 We also can have gasoline energy. The 4 important thing about this particular concept is this 5 engine is no longer that three liter for a 3,000 pound car 6 or the five liter for SUV. But rather, this is a .6 liter; 7 so it's been downsized by a factor of four. What this 8 means, of course, is that the emissions flow rate is much, 9 much lower. That means that all the emissions technology 10 that car guys have been saying is going to be so hard to 11 do, it's going to be much easier to do because it's a 12 smaller engine. And not only that, on the average this 13 engine is used only a very small portion of the time. 14 So on a fleet basis, this engine is only 15 used about 3 percent of the time, which means you don't 16 have to have very tight emissions control and still meet 17 SULEV. 18 Next one. This is a power train schematic 19 of a car that -- well, we are putting two cars together 20 right this moment with this power train, and in all 21 respects this power train feels like and drives just like 22 an electric power car. There is a little gas in the 23 engine, being only six-tenths of a liter. It comes on and 24 off, and you don't even know it. 25 The key to it all is how do you control it, 154 1 and this is completely automatic. There are only two 2 controls in this car -- gas pedal and brake pedal. And 3 there is, of course, a park and neutral. 4 By the way, with this kind of a system, 5 there is no reverse gear. Just reversed electric motor 6 because, if you notice from those previous slides, the 7 motor, it's connected directly to the wheel. So you can go 8 forward or reverse just by reversing electric motor. Okay. 9 The key here is that, until the batteries 10 are half discharged, the gasoline engine doesn't come on 11 until above 60 miles an hour. And after the batteries are 12 half discharged, then you start to bring the gasoline 13 engine on at the lower speed. But at 50 percent of the 14 discharge with the concept we are talking about, we have a 15 fairly large battery pack, almost two-thirds the size of an 16 electric car. You have covered 60 miles of range. And 17 that means 80 percent of the people who are driving this 18 car have done their commute and everything all 19 electrically. 20 Of course, you're always going to get some 21 guy who is going to want to go 250 miles a day of city 22 driving which, by the way, is 18 hours, and that guy will 23 use, of course, more gasoline. But he will have also 24 depleted his batteries. He's used as much battery as he 25 can. 155 1 CHAIRMAN DUNLAP: Professor Frank? 2 ANDY FRANK: Why don't we skip to the next 3 slide then. 4 CHAIRMAN DUNLAP: I'm impressed with your 5 commitment. I've known you for a while. I know how 6 committed you are to this, and I'm grateful to you for 7 coming and telling us your support where we are trying to 8 go and that's meaningful. Matter of fact, I'm so 9 impressed, I hope to send my son to study under you one 10 day. So you've got me with you. 11 What would you have us know different than 12 what we kind of already know about your feelings? What is 13 the key thing you want us to know today? 14 ANDY FRANK: I think this is the key here, 15 that if we stick with our partial ZEV credits for hybrid 16 vehicles and you encourage off-wall, I mean, off-board 17 charging out of the wall and you build it the way we are 18 talking about, we can talk about reducing the use of 19 gasoline fuel to 3 percent of a conventional car. And that 20 means 97 percent of the energy comes out of the wall plug. 21 In all respects, we have an electric car except we don't 22 have the range power. So this is really the bottom line. 23 CHAIRMAN DUNLAP: Great. And you like where 24 we are going with this package? Is that what I gather? 25 ANDY FRANK: Right. And I think the mandate 156 1 should be continued. Some people say mandates are just 2 from car guys, but mandate is important because this is 3 what spurs this kind of technology to advance. 4 CHAIRMAN DUNLAP: Thank you very much. And 5 I'm pleased that you're involved with this process. It's 6 important. Any questions? Very good. 7 Bruce, you're up next. We are going to 8 change the court reporter here. Can you go with one more? 9 Go ahead, Bruce. Welcome. Bruce Bertelsen, MECA. 10 BRUCE BERTELSEN: Good afternoon. MECA is 11 pleased to have the opportunity to testify today in support 12 of the proposed LEV II Program. We commend the Board for 13 your continuing efforts to implementing effective programs 14 to protect public health of the people who live in 15 California. We also want to take the opportunity to 16 compliment the staff on what we thought was an extremely 17 thorough analysis and evaluation of the technological 18 issues supporting this proposal. 19 Today the Board faces an important and 20 certainly challenging decision. And I think in that 21 regard, it's instructive to look back briefly to 1990 when 22 the LEV Program was first proposed. At the time, that 23 proposal was viewed by most as revolutionary, and I think 24 indeed it was. And from many, it was viewed as infeasible. 25 I went back and looked at our testimony that 157 1 we gave back in 1990, and MECA made several points. First, 2 that the LEV Program was technology forcing; but, second, 3 it would stimulate important technological advances; third, 4 there were significant challenges facing compliance with 5 that program, but we did express our optimism that those 6 challenges could be met. 7 Eight years later, that program is on or 8 ahead of schedule, certainly from the technological point 9 of view. The technologies that are being used to meet the 10 standards are less complex than I think anybody thought. 11 And the cost of those technologies are below what I think 12 anyone estimated. 13 Today, with this proposal, again, there are 14 significant challenges. But we think in this case actually 15 the technological pathway to meeting those challenges is 16 actually clearer than it was in 1990 where it looked like 17 we were going to need breakthrough technologies. 18 The state to which catalyst technology has 19 advanced and will continue to advance is extremely 20 promising and encouraging. I think there are a number of 21 engine and fuel control strategies that are beginning to be 22 introduced that can be applied to other vehicles. And it 23 seems clear to us today, just as clear today as it did in 24 1990, that if the Board implements this program, you will 25 stimulate important and significant technology 158 1 advancements. 2 With regard to the technological 3 feasibility, I think the staff report outlined a variety of 4 technical options that are available and presented some 5 test data. MECA conducted a test program of its own, 6 reevaluated three vehicles that met the tier one 7 standards -- not the LEV standard, not the ULEV standards. 8 But we took US Federal tier one vehicles, equipped them 9 with advanced catalyst systems, modified some of the 10 controls, aged the catalysts, and those vehicles -- one was 11 an eight-cylinder passenger car, a Ford Crown Vic; we had a 12 six-cylinder light-duty truck, a Toyota T100; and a six 13 cylinder passenger car, a Buick Le Sabre. And those 14 vehicles did achieve the LEV II ULEV 120,000 mile 15 standards. A copy of that report is included in the 16 testimony. 17 We think that the types of strategies that 18 are being used and introduced on passenger cars can be 19 applied to other categories of vehicles, the heavier weight 20 vehicles. Looking at the work that the staff did on the 21 Ford vehicle, I guess our perspective is a little bit 22 different. We think it's remarkable what was accomplished 23 by the staff in a relatively short period of time by a 24 group of individuals who are not auto manufacturers. 25 So from our perspective, the glass looks 159 1 half full or maybe even three-quarters full rather than 2 half empty. The types that we were pleased to provide 3 catalyst technology program. That catalyst technology is 4 reflective of what is available today. I'm very optimistic 5 that the catalyst technology of tomorrow is going to be 6 even better. And we see no reason why these types of 7 strategies cannot be applied to other vehicles. 8 One point that was brought up earlier 9 regarding temperature and that is an issue with heavier 10 vehicles. Heavier vehicles, particularly those who are 11 operating in a commercial mode, will generate higher 12 exhaust temperatures. I think it's important to point out, 13 however, at least with regard to the catalyst technology, 14 over the past five years there have been incredible 15 advances in the thermal durability of the catalyst 16 technology. So we don't see that as a barrier to applying 17 advanced catalyst technology to heavier vehicles. 18 I did just want to say a quick word about 19 diesel vehicles, and I'm sure you'll have some other 20 discussion later this afternoon. Our philosophy has always 21 been fuel neutral. We are prepared to provide technical 22 solutions to any type fuel, and that includes diesels. We 23 believe that the proposal that the staff has developed with 24 regard to diesel will provide flexibility to permit the 25 development and evolution of the diesel vehicle to a point 160 1 where it is extremely clean, and we support that proposal. 2 Our companies are working on a number of 3 technologies, exhaust control technologies for diesels. I 4 should point out though that some of these technologies, 5 like lean NOx catalysts, NOx absorbers, some types of 6 particulate filters will require a lower sulfur level than 7 is currently available and therefore we encourage the 8 Board, at a subsequent time, to begin to look at the issue 9 of lower sulfur fuel. I guess I'll wrap -- 10 CHAIRMAN DUNLAP: I think we are willing to 11 talk about and contribute. I mean, this Board has been 12 willing to tackle fuel issues, but we can't go there alone, 13 as you know. 14 BRUCE BERTELSEN: In closing, again, I don't 15 want to understate the fact that there are technology 16 changes, but I think the proposal, as it's crafted, offers 17 a lot of the flexibility and it also offers some safety 18 valves. And I think that, if the program is implemented, 19 you will see a significant stimulation in technical 20 effort. We think the end result will be vehicles, a wide 21 choice of vehicles that are fuel efficient, high 22 performance vehicles that are extremely clean, and I want 23 to state on behalf of our all members that, if the Board 24 adopts this program, we are prepared to do our part to make 25 LEV II the kind of success story that LEV I has been. 161 1 CHAIRMAN DUNLAP: Thank you. Any questions 2 for Mr. Bertelsen? All right. Good deal. 3 Roland, you're up. Now you want to be a 4 floor manager here; right? You've got two or three of your 5 colleagues you're going to. 6 ROLAND HWANG: That's correct. We have a 7 few of my environmentalists colleagues that also wanted to 8 emphasize the points, which I will provide -- 9 CHAIRMAN DUNLAP: You need a little more 10 time -- 11 ROLAND HWANG: Yes. I have overheads. 12 Hopefully we can move through this -- 13 CHAIRMAN DUNLAP: Which I'll give you. Who 14 else are you going to bring up with you? 15 ROLAND HWANG: I think Janet Hathaway is 16 coming up after me and then Bonnie Holmes. 17 CHAIRMAN DUNLAP: Okay. Where is Janet? 18 I'll give you the time, but I want you to manage it as 19 efficiently as you can. So Janet Hathaway, Bonnie Holmes, 20 when they get here will come up with you. After that, 21 we'll have Aaron Lowe, Tim Riley, Lynn Cardwell, Johan 22 Gallo. Well, does Joe Caves want to be part of your group? 23 Is Joe here? 24 ROLAND HWANG: Joe is going to go a little 25 bit later. 162 1 CHAIRMAN DUNLAP: Okay. Chris Walker, John 2 Valencia. So those folks can come over here and sit. 3 Go ahead, Roland. 4 ROLAND HWANG: Thank you, Mr. Dunlap. Union 5 of Concerned Scientists appreciates this opportunity to 6 provide comments to the Board and the Chairman on this 7 extremely important program for the future of California's 8 air quality. 9 I know that you folks have a lot of paper in 10 front of you; so I've provided my written comments and 11 overheads in this green covered report. I hope it stands 12 out a little bit from all the other piles of paper you have 13 in front of you. 14 I think I want to build actually on what 15 Bruce Bertelsen just said. We believe this program, as 16 proposed, we admit it's a very aggressive program, but we 17 do believe the staff has done an incredible amount of work, 18 very thorough work, and we believe the program is 19 technically sound. And like Bruce said, we believe the 20 program is not a whole lot different than what ARB 21 traditionally has done, especially as recently as 1990 with 22 the LEV Program. 23 This program is a combination of 24 off-the-shelf technology, which I hope that most the Board 25 members did get a chance to go outside and see those 163 1 Expeditions and see the catalysts. Nothing exotic. I 2 didn't see anything which had a $7,000 price tag on it. 3 This is off-the-shelf technology. It is a combination of 4 that, and it's a combination of technology forcing. 5 Traditionally, this is what the Air Board has done and has 6 done very well. So with that introduction, let me go to my 7 first slide. 8 And as an overview, we have delivered a 9 letter to the Board Chairman and staff with our number of 10 recommendations, and I wanted to go through the top three 11 recommendations which we wanted to present to you as a way 12 of strengthening the ARB proposal. Again, we believe the 13 ARB proposal, the bulk of it, is extremely sound. We do 14 have some concern about certain issues. And again, this 15 letter was signed by a number of different environmental 16 groups as listed above. 17 The first issue that we have raised is this 18 issue of diesel vehicles in our light-duty fleet. We are 19 concerned that introduction of these diesel vehicles, which 20 clearly the automobile companies have plans for and that's 21 exactly why AMA has proposed more relaxed standards for 22 PM10 in their counter proposal to the Board. Auto 23 companies clearly have plans for diesel introduction. 24 We are obviously concerned about 25 implications for the increase in the diesel exhaust 164 1 particulates, especially since the Board just two months 2 ago, I believe, identified diesel exhaust as a toxic air 3 contaminant. I don't really want to be making the problem 4 worse here. We need to be trying to address problem with 5 heavy-duty vehicles sector, obviously. 6 Second is that we all have concerns. We 7 have had long discussions with staff about this. We have 8 concerns about this ZEV Program being watered down too 9 much. We do believe the program should flex, but 10 shouldn't allow in some of the gasoline SULEVs which do not 11 have electric drive technology. We believe the hybrids and 12 fuel cell vehicles are appropriate to get partial ZEF 13 credit because they get us toward the true ZEV category. 14 Finally, we believe all 8,500 pound vehicles 15 staff has shown as demonstrated that technologically 16 feasible during all 8,500 pound, even the work trucks, to 17 the same standards as passenger cars. So we believe 18 actually that 4-percent work truck exemption, we question 19 the reason for why it should be there. 20 But also, we've heard a lot this morning 21 about the AAMA's proposal, their counter proposal. We want 22 to make it clear to the Board that we feel like this 23 proposal should be soundly rejected because it does not 24 meet the California air quality needs, does not provide the 25 equivalent pollution reductions. That's by the AAMA's own 165 1 admissions. And by the way, my understanding of the 2 trade-offs they're making with the vehicle categories less 3 than 6,000 pounds, where they are trading off some -- they 4 claim they're tightening the ULEV standard and trading off 5 or laxing the LEV standard for passenger cars. 6 That proposal actually loses 2 tons per 7 day. They're not offsetting that in the lower. So they 8 may claim that they are trying to offset more relaxed LEV 9 standards. My understanding from staff is they have not 10 fully offset it. The other reason, of course, that we want 11 you to reject AAMA's proposal is this question of diesel, 12 which I'll get into a little bit more. But it's a 13 potential for substantial increases in diesel as a toxic 14 air contaminant in our air. 15 Finally, the ARB proposal, from our 16 evaluation, is technically feasible and cost-effective. 17 California needs every ton of emission reductions you can 18 get. 19 * * * 20 21 22 23 24 25 166 1 2 STATE OF CALIFORNIA ) ) ss. 3 COUNTY OF LOS ANGELES ) 4 5 I, Lynne R. Rutledge, CSR 11091, a Certified 6 Shorthand Reporter in and for the State of California, do 7 hereby certify: 8 That the foregoing proceeding was taken down 9 by me in shorthand at the time and place named therein and 10 was thereafter reduced to typewriting under my supervision; 11 that this transcript is a true record of the testimony 12 given by the witnesses and contains a full, true and 13 correct record of the proceedings which took place at the 14 time and place set forth in the caption hereto as shown by 15 my original stenographic notes. 16 I further certify that I have no interest in 17 the event of the action. 18 EXECUTED this 17th day of November 1998. 19 20 _____________________________ 21 Lynne R. Rutledge, CSR #11091 22 23 24 25 1 CALIFORNIA AIR RESOURCES BOARD 2 3 4 5 6 PUBLIC HEARING TO CONSIDER THE "LEV II" ) AND "CAP 2000" AMENDMENTS TO THE ) 7 CALIFORNIA EXHAUST AND EVAPORATIVE ) EMISSION STANDARDS AND TEST PROCEDURES ) 8 FOR PASSENGER CARS, LIGHT-DUTY TRUCKS ) 98-12-1 AND MEDIUM-DUTY VEHICLES, AND TO THE ) 9 EVAPORATIVE EMISSION REQUIREMENTS FOR ) HEAVY-DUTY VEHICLES. ) 10 ___________________________________________) 11 12 TRANSCRIPT OF PROCEEDINGS 13 November 5, 1998 14 9530 Telstar Avenue 15 El Monte, California 16 17 18 19 20 21 22 23 REPORTED BY: 24 Terri L. Emery CSR No. 11598 25 Our File No.: 1-49953 1 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 APPEARANCES OF BOARD MEMBERS: 2 Chairman DunlapMr. Calhoun Supervisor DeSaulnier 3 Ms. Edgerton 4 Dr. Friedman Mr. Parnell 5 Supervisor Patrick Mrs. Rakow 6 Ms. Riordan 7 Supervisor Roberts Supervisor Silva 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 2 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 I N D E X 2 Public Comments PAGE Roland Hwang (continued) 167 3 Janet Hathaway 179 Bonnie Holmes-Gen 186 4 Patrick Pudell 201 Aaron Lowe 202 5 Tom Riley 205 Lynn Cardwell 206 6 Johan Gallo 208 Chris Walker 210 7 John Valencia 211 Bob Warden 215 8 Mike Villegas 216 Ellen Garvey 219 9 Chung Lui 222 Greg Vlasik 226 10 Cece Martin 227 Jennifer Jennings 233 11 ALABC Representative 235 Terence Poles 235 12 William Rosenberg 242 Jed Mandel 246 13 Pat Charboneau 248 Bob Jorgenson 250 14 Tim Carmichael 258 Joe Caves 262 15 Sumary of Letters Received by Board 267 16 Close of Record 271 17 Ex Parte Communications 271 18 Motion on Revised Proposed Resolution 291 19 Motion - Delete .2 Partial ZEV Credit/Gasoline 292 20 Result of Motion to Delete Partial Credit 297 21 Motion - Delete TLEV Standards in Staff Proposal 298 22 Result of Motion to Delete TLEV Standards 304 23 Result of Motion to Adopt LEV II with Exception of TLEV Standards 305 24 Open Comment Period 305 25 3 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 MR. HWANG: At U of C we agree that every 2 ton counts at this point. We need to make continued 3 progress on the 1994 ozone SIP obligations including M-2 4 and the black box. Even larger amounts of reductions are 5 necessary for PM2.5 attainment in the future. That will 6 come to, I believe, around the year 2003. We need to be 7 setting ourselves up now. That's going to require large 8 amounts of nitrogen oxide emission reductions. LEV II, I 9 would say, is vital, absolutely necessary, if we are going 10 to meet the 2.5 standards. 11 Finally, for 7 tons is not just 7 tons of 12 loss. The Air Board I know has been extremely diligent 13 about pursuing every possible measure as long as it's 14 technically feasible and cost effective. A variety of 15 measures were adopted in the 1974 ozone SIP. Five measures 16 I counted at less than 10 tons per day benefits and 17 fortunately the on-road motorcycle controls too, which is 18 probably a couple of tons. 19 I want to jump to my third point because I 20 think there's been a lot of discussion this morning about 21 the feasibility of the 6000-, 8500-pound vehicles to meet 22 the passenger car-type standards. We believe that in fact 23 not only is it feasible, but the 4 percent work truck 24 exemption is not necessary. 25 Our understanding is that CARB took the Ford 167 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 Expedition you see outside and gauge it over cycle which 2 simulated the towing drive cycle of a Ford pickup truck 3 that weighs 10,000 GVW that can tow 14,000 pounds. This is 4 the worst case scenario. This is a work truck-type 5 scenario. This is a work truck that goes beyond the 6 8500-pound cutoff, so it seems to us staff has really 7 demonstrated that this can be done for work trucks. 8 Furthermore, I think we've also talked about 9 the amount of lead time the automobile companies have, 10 whether it be 8 years or maybe -- Kevin from General 11 Motors, maybe it's 6 years, but the standards do not fully 12 roll into 2007, which means that there's quite a bit of 13 leeway. 14 And of course we talked about there's the 15 ability for the manufacturers for technicatalyst currently 16 allowed in regulations to protect the catalyst from towing 17 conditions by which they are fueled. Currently in the 18 regulations I understand staff continues, will continue 19 that provision. There doesn't appear to be any kind of 20 legitimate argument to make the catalyst to be burned out. 21 CHAIRMAN DUNLAP: Do you think we ought to 22 cut this out and take this out of the package and certainly 23 I'd go to 15. Okay. 24 MR. HWANG: That's right. That's right. 25 That's our recommendation. 168 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 CHAIRMAN DUNLAP: All right. 2 MR. HWANG: Again, one of the main points 3 you will see today I think from our fellow enviros is the 4 issue of diesel. Why should we allow diesel into our light 5 duty vehicle fleet, all be it there are fuel economy 6 benefits. 7 The Union of Concerned Scientists and other 8 environmentalists deeply care about cutting the issue of 9 emissions. However, we don't believe it's appropriate or 10 necessary for that fuel economy bench to come at the 11 expense of public health. We believe that the ARB TLEV 12 standards themselves are too weak. They should be 13 tightened to help protect the levels, the gasoline 14 equivalent levels, or the TLEV category should be phased 15 out completely. 16 Let me try to drive home a point here with 17 the next slide. This is the potential for diesel, 18 light-duty diesel vehicles to penetrate into our passenger 19 vehicle fleet under AAMA's proposal and under ARB's 20 proposals also, and as you can see there could be as high 21 as we estimate a 20-percent penetration with AAMA's 22 proposal which could lead to the next slide, a tremendous 23 increase in diesel exhaust particulates from on-road 24 vehicles. 25 This is a -- you know, this is not just us 169 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 crying wolf. This is a very real type of scenario of what 2 we could be seeing in the future. Manufacturers have 3 doubled the sales in the heavy and light trucks in the last 4 five years. We are fuel neutral. We are technology 5 neutral. However, we cannot trade off environmental goals 6 one for another, especially when technologies are available 7 to address both. 8 As I mentioned before, we are -- Union of 9 Concerned Scientists is supportive of allowing hybrids and 10 methanol fuel cells for partial ZEV credit, but we are 11 opposed to gasoline SULEVs. We had long discussions with 12 staff about this and I expect we will have continued 13 discussions, but we are recommending to drop that provision 14 of allowing the conventional gasoline SULEV to qualify to 15 receive credit. 16 CHAIRMAN DUNLAP: How does that square with 17 your fuel neutral policy that you just espoused a moment 18 ago? You're fuel neutral, but you don't want to give 19 gasolines credit even if they're cleaner than gasoline 20 powered SULEVs credit. 21 MR. HWANG: The ZEV program -- 22 CHAIRMAN DUNLAP: That's a neat trick. If I 23 could figure out how to do that in other areas, we could do 24 a lot of different things, but that doesn't feel right to 25 me. 170 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 MR. HWANG: It is our belief the ZEV program 2 is a program intended to commercialize true zero emitting 3 vehicles, battery-electric vehicles and hydrogen fuel cell 4 vehicles. That is the goal, and the 10-percent level is 5 the level to ensure a marketplace in which they can 6 compete. 7 CHAIRMAN DUNLAP: Also, we kind of squeaked 8 away the power plant emissions. There's some issues there, 9 too. It's not quite pure. It's not a big point with me, I 10 just kind of want to let you know where I'm coming from. 11 MR. HWANG: Our point is this. We agree 12 there should be some flexibility in the ZEV program as long 13 as it gets us towards those technologies which we need to 14 solve, not just our ozone problems but to solve the fine 15 particulates problem, our air toxics problems and our 16 climate change problems in the future. 17 A gasoline SULEV gives us air quality 18 benefits. However, it's not going to help us kick the oil 19 habit, it's not going to reduce the air toxics, it's not 20 going to help us with contamination. 21 CHAIRMAN DUNLAP: Okay. 22 MR. HWANG: Other recommendations that kind 23 of summarize our letter is that first of all, we believe 24 that we're supportive of ARB extending the durability 25 requirements. We think that is an extremely crucial 171 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 component of ensuring that vehicles are clean in use and 2 that the burden of cleaning up the vehicles does not 3 continue to fall upon drivers under the inspection and 4 maintenance programs. It's a very excellent program, but 5 very burdensome also. Some communities believe that. 6 Five is strengthen the CAP 2000. We would 7 like to discuss more with staff post this hearing about 8 that. 9 Six is that we want to make sure the ozone 10 eating technologies -- we are in favor of innovative 11 technologies. We want to make sure that the ozone eating 12 technology is fully evaluated before the methodology is 13 finalized. We would like the process for finalizing that 14 credit be a stakeholder open process. 15 Finally, separately from LEV II, we do 16 believe the ARB should consider strengthening the fuel 17 standards that are cost effective. 18 In conclusion, I think the Board today were 19 really looking and we support ratification of the LEV II 20 program. We believe in strengthening the proposal in the 21 three ways that we recommended. 22 Finally, we really implore you to reject 23 AAMA's proposal because it does not meet California's air 24 quality needs. You can't put 7 tons here when it certainly 25 won't be cost effective and will be difficult to find it 172 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 elsewhere, and we're very concerned about the increase in 2 diesel emissions. 3 CHAIRMAN DUNLAP: Okay. Very good. 4 Janet, are you up next? 5 MS. EDGERTON: Can I ask something? 6 CHAIRMAN DUNLAP: We can interject if you 7 want, but I kind of wanted to move through this. 8 MS. EDGERTON: I wanted to focus on two 9 areas that you specifically recommended. One is the point 10 that you made about not relaxing pollution standards for 11 diesel and indicating that the TLEV standards are nine 12 times higher for NOx and four times higher than PM10 at LEV 13 for standards at 120,000 miles. 14 What I want to ask the staff, this just 15 seems to make a lot of sense to me. I think we just got 16 $25 million, in fact, I know we just got $25 million -- 17 worked very hard to get that with the legislature and the 18 environmentalists and the Governor. That was appropriated 19 by the legislature to Air Resources Board to help to retire 20 dirty diesel vehicles from the road. And I know we're 21 going to need another $75 million over the next three years 22 to retire heavy-duty diesel, particularly heavy polluting 23 diesel vehicles from our roads. That happened over this 24 summer. 25 In addition, as you all know and as you 173 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 mentioned, nine years of study was concluded and finding 2 that diesel particulates is a toxic air contaminant. Why 3 would we have a measure in here which provides that 4 light-duty vehicles which are diesel get to be polluting 5 more starting in the year 2004, five years away? 6 MR. KENNY: The TLEV standard basically was 7 proposed as part of LEV I in order to essentially provide a 8 maximum level of flexibility to the manufacturers to meet 9 the average standard. The average standard continues as 10 part of LEV II to go down from 2004 to 2010. What we are 11 proposing with regard to the TLEV standard is that we 12 maintain it and that we maintain it through 2007 with 13 regard to the existing TLEV standard. That TLEV standard 14 would then phase out. 15 There is an alternative to the TLEV 16 standard, however, that would begin in 2004, and that TLEV 17 standard would then basically go forward through 2010 with 18 an incremental reduction in 2007. The benefit of all that 19 is we are trying to set up a scenario in which we are able 20 to address the heavy-duty sector and the need that we have 21 in the heavy-duty sector for the development of the NOx 22 catalysts are fairly high efficiency in order to get fairly 23 substantial reductions there because the NOx inventory for 24 that heavy-duty sector is so large. 25 We don't see the incentive in that 174 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 heavy-duty sector to develop that catalyst on its own. We 2 do think that in fact we can drive these types of numbers 3 down, and we are talking about the TLEV numbers going down 4 from where they currently are, that in fact we provide a 5 very good incentive to develop some level of catalystic 6 advancement that will allow us to then take that and 7 transfer it to the heavy-duty sector. 8 The benefit from an overall perspective is 9 that the market penetration in the light-duty sector is 10 fairly small, and yet if we can get those catalysts 11 developed, what we get in the heavy-duty sector is the 12 opportunity for very substantial emission reductions. So 13 that is our basic theory behind what we're trying to do 14 here. 15 MS. EDGERTON: I know these are very 16 difficult balls and strikes to call, and I appreciate that, 17 and you may be right. 18 I do make the comment that it seems like -- 19 it's overwhelmingly clear we're robbing Peter to pay Paul, 20 and it does not -- we're trying to do something in the 21 light-duty sector, light-duty vehicle area that will help 22 the heavy-duty vehicle area. 23 My question is why don't we just do it in 24 the heavy-duty sector and let the light-duty sector which 25 currently does not have significant diesel -- 175 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 MR. KENNY: I think the answer to that, if I 2 might, is what we're trying to do here is set a very 3 aggressive alternative TLEV standard. 4 When you look at it in the year 2007, it 5 really requires substantial advancement for compliance to 6 occur, and in fact that compliance does occur. The market 7 penetration even in the light-duty sector is still 8 relatively small, and yet if that advancement occurs, the 9 opportunities on the heavy-duty side where the incentive 10 does not really exist can't be taken advantage of, and we 11 will be able to transfer that technology over. 12 On the other hand, if in fact for some 13 reason manufacturers cannot get to the point where they can 14 meet the 2007 standards, then we have a safety valve there. 15 The safety valve is in fact they don't have that standard 16 essentially available to them in terms of light-duty 17 compliance because it guides you down to very low numbers, 18 low numbers in terms of hydrocarbon, low numbers in terms 19 of NOx and low numbers in terms of particulates from where 20 the current TLEV standard is. 21 MS. EDGERTON: Doesn't this increase the 22 number of diesel particulates from the light-duty sector 23 even if they achieve this goal? 24 MR. KENNY: Yes. 25 MS. EDGERTON: And they're toxic air 176 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 contaminants. 2 MR. KENNY: The answer is yes to that, but 3 the alternative is that when we look at this from a broader 4 picture, if in fact we can get that technology transferred 5 to the heavy-duty side, we'll get reductions eventually, 6 and those reductions are things that we need. We get the 7 reductions in NOx and we also have the potential for also 8 getting some PM reductions there, so the combination of 9 those two things from our perspective is worth this effort. 10 MS. EDGERTON: Mr. Kenny, I don't want to 11 take too much of your time, so I'll try to wrap up this 12 point here. 13 I have tremendous respect for your wisdom 14 and for your proposal there, and I think it might be right 15 and I expect it will probably prevail, but I do want to say 16 that from my own point of view, quite honestly -- and of 17 course we're lame ducks and so forth -- but I do believe 18 that the three things that in all of our policies do need 19 to move forward simultaneously addressing whether we're 20 advancing or rather reducing our emissions in terms of 21 toxic air contaminants and whether we're reducing emissions 22 in terms of gas emissions at the same time. 23 I know that's not yet in our official ARB 24 mandate from the California legislature, but it is in fact 25 in our real world life, and I think that's where we're 177 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 going. And this is a very difficult question for people 2 always because it's the means and the end in discussion. 3 However, in just one woman's judgment it's just a little 4 too convoluted for me, so I would prefer to not have that 5 there. 6 My second concern is we have -- 7 CHAIRMAN DUNLAP: Lynne, I'll let you go as 8 long as you want to, but I would prefer you wait because if 9 we're going to telegraph where we come down on each of 10 these points, we're going to be here a while. I'd rather 11 get to the witnesses and then you can talk and run through 12 this stuff. 13 MS. EDGERTON: I'll just say the other area 14 I have some concern about is what exactly the ZEV category 15 properly should be, whether it is the same issue that you 16 quite correctly, I thought, raised about the .2 for 17 gasoline vehicles there and whether that should be in this 18 particular proposal. 19 Now, I would like to ask a question and 20 think the testimony of witnesses can answer this. My 21 understanding is one of the benefits of having it in there 22 is that it will weaken attacks on the overall 10-percent 23 ZEV mandate. This is not a surprise to anybody. Everybody 24 knows that. 25 There's been a lot of talk about effort to 178 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 defeat it, weaken it, and one of the things that this does 2 is strengthen it because it provides participation from 3 gas. I was interested to see that you all -- I don't know 4 if all of you are in the same place, but you all seem to 5 think that's not worth doing. 6 CHAIRMAN DUNLAP: We can have a good 7 discussion at the end on that. I'm not at odds with that 8 per se. Okay. 9 Janet, and is Bonnie back there somewhere? 10 We'll have you two come up and I was generous with Roland. 11 I'll be equally generous with you guys, but after this I'm 12 going to have an auction. The auction is going to be 13 whoever can go in three minutes or less I'm letting up 14 early out of order, so witnesses get ready and I'll move 15 you over to the bull pen and get you going. 16 Janet, go ahead. 17 MS. HATHAWAY: I know people are impatient 18 to move on, but I think it's important to spend some more 19 time on the diesel issue. 20 MS. SHELBY: Would you please identify 21 yourself for the record? 22 MS. HATHAWAY: My name is Janet Hathaway. 23 I'm a senior attorney with the Natural Resources Defense 24 Counsel. 25 I wanted to second Roland's comments. His 179 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 comments are in fact shared with other environmentalists. 2 And on the point that Lynne just asked about, the reason 3 why we don't support giving gasoline vehicles partial ZEV 4 credits is even the fueling emissions associated with 5 gasoline vehicles are more than the total emissions that 6 are associated with powering the batteries for the 7 electric, so there is no equivalence. There is no way a 8 gasoline vehicle, even if it had no tailpipe emissions, 9 could come out equal. So that's -- our fundamental 10 principal is not in favor of one particular type of 11 technology, it's evaluate the total emissions that are 12 associated with ZEVs, and if you can get that then you 13 deserve partial ZEV credit. 14 But with gasoline, just the fueling side of 15 the emissions, the distribution of the gasoline, the 16 evaporation from gasoline tanks and so on, even before it 17 gets to the vehicle, exceed the ZEV emissions. So that's 18 the reason. 19 Now, I would like to just turn to the diesel 20 issue. I think it's important for us to think about this 21 in terms of sort of a paraphrase of the Hippocratic oath, 22 first do no harm. Right? 23 DR. FRIEDMAN: That's not the Hippocratic 24 oath. 25 MS. HATHAWAY: Well, it's a paraphrase. 180 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 It's what's commonly referred to. Do no harm is a good 2 principal even if it's not the Hippocratic oath. 3 DR. FRIEDMAN: Hippocrates never said that. 4 (Laughter) 5 MS. HATHAWAY: There's always somebody who 6 knows a lot more than me. So do no harm is an important 7 principal for ARB, and nine times out of ten when we come 8 before you as environmentalists, we're not arguing about 9 whether your proposal does harm at all. We're all talking 10 about doing more progress and faster, and that generally 11 has been our feeling about LEV II. It's a good proposal. 12 We'd like more and faster. 13 On the diesel issue, however, we're talking 14 about something that could literally do harm. Currently 15 there are very few diesels in the light-duty fleet, and 16 gasoline vehicles in the light-duty fleet have very little 17 particle emissions. Diesels, on the other hand, even if 18 they have the best technology that we know of for right now 19 would have almost an order of magnitude ten times higher 20 particle emissions, and your Board has just decided that 21 diesel is a toxic air contaminant. That is consistent with 22 all these other illustrative agencies throughout the world 23 that understand that diesel is in fact associated with 24 increased cancer risk. 25 So not only because of cancer hazards but 181 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 because of the particle hazard, allowing the introduction 2 of diesels into the light-duty fleet really seriously could 3 do some harm. It goes backwards. 4 The studies as you all reviewed them are 5 very consistent. There's really not a whole lot of 6 question about the cancer risk and I applaud you all for 7 listing diesel as a toxic air contaminant. 8 There's also evidence that diesel may 9 disrupt the immune system, may be associated with asthma 10 and other respiratory diseases, may actually aggravate our 11 air quality problems in ways that we haven't yet 12 quantified, and that's in addition to the lung cancer and 13 the particle risk. 14 So why are automakers pushing for light-duty 15 diesels? And that, I think, is the fundamental question. 16 The answer is simple. They are making tremendous profit on 17 the very heavy, light-duty vehicles, but they're getting 18 penalized from the federal government because their fuel 19 economy is not up to snuff. So what they want is a slight 20 improvement in fuel economy that will allow them to keep 21 selling these very big SUVs and making $10,000 per vehicle 22 profit on those vehicles. That's a tremendous incentive. 23 But does California need these diesels? I 24 don't think so, not unless there's something that nobody 25 has talked to us about that is behind these diesels. 182 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 Diesels are not a green machine. They're a slight 2 improvement in fuel economy. 3 Can diesels be made clean? Now, I mentioned 4 that the particles are about an order of magnitude higher 5 than comparable gasoline vehicles. So even though the 6 standard, the TLEV standard, doesn't look like it's all 7 that weak, the truth is current gasoline vehicles are 8 what's going to be replaced by these diesels, and they are 9 much dirtier. So the standard in the sense isn't really 10 the benchmark. The benchmark is today's air. 11 We don't have a lot of diesels in the 12 light-duty fleet. We're going to be introducing them 13 because it's profitable for the automakers to go that route 14 and enable them to meet the needs of the federal government 15 without in any way compromising the weight of these 16 vehicles and will enable them to get this profitability but 17 not clean up our air. And that's a very big problem. 18 So let's ask the question. Can diesels be 19 as clean as gasoline? Well, we don't know because we 20 haven't demanded this of manufacturers. They have never 21 put all the available equipment that could reduce the 22 particles and reduce the hydrocarbons on the diesels. They 23 have not been requested to do that. 24 This standard would not require oxydation 25 catalysts, a currently available technology, on our 183 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 light-duty vehicles. So the sequence is we have these very 2 fine particles that could be trapped. They're difficult to 3 trap, but they could be trapped. We have these gaseous 4 hydrocarbons that we know are carcinogens. Those could be 5 reduced by an oxydation catalyst, and if you set a standard 6 that says look, if you automakers want to bring diesels 7 into the market, at least make them as clean as gasoline, 8 suddenly they have an incentive to use that technology. 9 So I submit to you that the incentive is 10 there for the industry to come forward with some good 11 technology to clean diesel up at least to the gasoline 12 level so that at the very least we would be doing no harm. 13 So the risk assessment that you all 14 evaluated when you looked at diesel last month, in 15 August -- it was more than last month -- assumes that there 16 would be no increase in diesel in the light-duty fleet. 17 There were assumptions that there would continue to be some 18 increase in the heavy-duty fleet, but did not assume 19 light-duty, mainly introduction of diesels. That would 20 have to be reconsidered. Our risk from diesel even now is 21 unacceptably high in terms of the lung cancer risk. 22 You just convened a group, a series of 23 different committees to try to look at ways of reducing the 24 lung cancer risk from diesel. Why make that more 25 problematic? Why undermine the progress there by allowing 184 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 even more diesels on the road? 2 The bottom line is the light-duty diesels 3 aren't necessary, so if we're going to introduce them, 4 let's have them as clean. 5 Truly clean diesels, I don't know if they 6 can do it or not. They have an incentive to try, but 7 diesels are not the only way to reduce fuel consumption. 8 And if the goal on the part of the auto industry is to 9 reduce fuel consumption, they can do it by other means. It 10 might be somewhat requesting them to be inventive, but one 11 thing they can clearly do is reduce weight. Reducing 12 weight will save lives, save lives of pedestrians, save 13 lives of people in automobile accidents with these giant 14 SUVs, they smash them. 15 CHAIRMAN DUNLAP: I could lose a few pounds 16 too, Janet. 17 MS. HATHAWAY: A few pounds would be about 18 right -- aerodynamic. One more slide; okay? 19 CHAIRMAN DUNLAP: Okay. It's interesting -- 20 MS. HATHAWAY: Finally, we need the cleaner 21 cars. You're moving in the right direction with LEV II. 22 In this particular you're actually losing ground, and it 23 seems to me that putting on all this on the manufacturers 24 to actually use the best available catalyst on diesels is 25 something you can and you should do here. 185 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 CHAIRMAN DUNLAP: Okay. 2 MS. HATHAWAY: Finally, diesels should be at 3 least as clean as our gasoline vehicles if we're going to 4 introduce them. Thanks. 5 One other point. I think some of the 6 automakers made this point, but I want to underline that we 7 agree with it. The fuels and the vehicles should be looked 8 at as a system. Cleaner fuels are a way to ensure that our 9 vehicles stay clean over the lifetime and that the 10 catalysts don't degrade that rapidly, so I really 11 appreciate that and I hope that we can work with the Board 12 on that issue soon. 13 CHAIRMAN DUNLAP: Okay. Thank you, Janet. 14 Any questions for Ms. Hathaway? 15 Very good. Thank you. 16 Bonnie, you're up. 17 MS. HOLMES-GEN: Thank you for the 18 opportunity to speak, Mr. Chairman and members. I'm very 19 glad to be here today. 20 I'm going get to my bottom line so all of 21 our very well thought out but brief points on why we 22 believe this proposal -- 23 MS. SHELBY: Would you please identify 24 yourself for the record? 25 MS. HOLMES-GEN: Yes. My name is Bonnie 186 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 Holmes-Gen. I'm a senior lobbyist with Sierra Club, 2 California. 3 We believe the stakes are very high here 4 today, and the results of this rulemaking will determine in 5 large part whether we are going to be able to meet our 6 state air quality standards on time. We strongly support 7 the need to close loopholes in vehicle emission standards 8 and regulate sport utility vehicles, and we applaud 9 especially that portion of the proposal, but we do continue 10 to have major concerns that we're just not getting all of 11 the emissions reductions that we can achieve today. In 12 fact, we are alarmed that the proposal moves us backwards 13 in two areas. These have been mentioned so I'll go through 14 them quickly. 15 A road to zero emission program by giving 16 credit to low emitting gasoline vehicles and it encourages 17 the introduction of more diesels into California. And that 18 concerns us that at the same time we're talking about a 19 ground-breaking regulation of sports utilities, that we're 20 talking about eroding progress on zero emission vehicles. 21 That really concerns us. 22 We've talked about the need for every ton of 23 emission reduction and I want to emphasize that again. We 24 can do this. We can get every ton if we tighten up the 25 staff proposal and get rid of unnecessary emissions for 187 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 work trucks, get rid of credits for non-electric vehicles 2 and get rid of weaker standards for diesels. We cannot 3 assume that there will be other measures to plug the holes. 4 The AAMA proposal, we strongly oppose that 5 proposal and appreciate that your staff pointed out there's 6 at least 8 tons of reduction you would not get with the 7 AAMA proposal. We believe there's still tons you can get 8 by tightening up the staff proposal before you, and if we 9 don't tighten up and plug the holes, we're not sure where 10 you're going to get these other emission reductions to fill 11 the black box. 12 We know that vehicle emissions are at least 13 half of the air pollution problem. The most cost effective 14 way to reduce vehicle emissions is to build the cars right, 15 to build the vans correctly, to build the trucks correctly, 16 to get that technology on the trucks when they come out of 17 the factory. 18 The 2010 window is getting smaller and 19 closer and we still have not figured out a way to get all 20 of the emissions reductions for the black box. There's 21 also been shortfalls in regulations that have previously 22 been adopted by your Board. I would point out one of the 23 first proposals the Board adopted was 8 tons short, so we 24 need to be gaining speed here and not losing tons. 25 CHAIRMAN DUNLAP: This will take care of a 188 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 chunk of the black box as you know. 2 MS. HOLMES-GEN: I appreciate that, but not 3 all of it. 4 So number one point, after the general 5 testimony, we strongly oppose the relaxation of pollution 6 standards to accommodate diesel light-duty vehicles. 7 Very briefly, introduction of diesel 8 vehicles is contrary to our clean air goals. It's 9 especially inappropriate after the ARB listing in August. 10 And I would just point out, you know, you've already heard 11 about the nine times and the four times. We were very 12 strongly opposed to establishing a special category for 13 diesels, and I wanted to point out that in August when your 14 Board did adopt the diesel particulate listing, we 15 testified in strong support of your action and we said that 16 the next big challenge that you're going to face is that 17 you're going to be facing the challenge of those who want 18 to introduce more diesels into California and nationally 19 into the passenger car fleet under the guise of 20 environmental protection. 21 We need to resist those efforts, and here we 22 are facing -- I didn't quite realize we were facing quite 23 so quickly -- but we are facing the challenge today in this 24 rulemaking. We urge you to stand against special standards 25 for vehicles. 189 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 We also oppose allowing the non-electric 2 drive, gasoline powered SULEVs to qualify for the partial 3 ZEV credit. We need to be pushing, and we want you as a 4 Board to be pushing for development of true zero emission 5 vehicles, for battery and fuel cell vehicles, and we 6 believe that there's great support in this new 7 administration that has just elected to do that. There 8 will be a lot of effort going into the zero emission 9 program. We don't want to back down now, and we're very 10 concerned that approving these ZEV credits will take some 11 of the steam out of technology advancements for ZEVs and we 12 don't believe gasoline vehicles can ever be truly 13 equivalent. I think that point was made earlier. 14 A third major point, we do oppose the 15 relaxation of pollution standards for so-called work 16 trucks. We do believe ARB should adopt single passenger 17 car standards for all of the vehicles in the weight classes 18 that you're covering up to the 8500 pounds. We disagree 19 with the proposal to allow so-called work trucks to emit 40 20 percent more nitrogen oxide. We can't afford those tons. 21 We really want to stand behind the staff 22 that has done testing on this. They've expressed to you 23 the testing that was done covered work trucks, covered cars 24 and trucks that were carrying heavy loads, and based on 25 this testing there is no need for a special exemption for 190 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 work trucks. If you are going to be considering this and 2 we really don't believe you should, we think at a minimum 3 that your Board should place a sunset on this exemption, 4 maybe a two-year sunset, and take that as an opportunity to 5 study what is happening under that exemption and look at 6 what kinds of cars are receiving that exemption. 7 And right now in the proposal there's no 8 particular way to look at what are the cars getting this 9 exemption. Are they work trucks? How are they being used? 10 Is it necessary any longer? We don't think that exemption 11 should be going on for an eternity certainly. 12 We ask you to strongly consider some kind of 13 cutting back on that exemption. We, of course, would like 14 to eliminate it, but at least put a sunset on it and have a 15 study on it. 16 Fourth major point, we believe that you 17 should drop or at a minimum delay the proposal to allow the 18 Premiere ozone catalyst to qualify for smog reduction 19 credits, especially zero emission credits. We believe this 20 technology is premature. We've talked to Mr. Dunlap, 21 Chairman, about this. It needs additional testing and 22 should not be included in the proposal at this time. We 23 would ask to you remove that part of the proposal. 24 In summary, what we want you to do today is 25 say no to the automakers and others who are requesting 191 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 weakening the delay in the LEV II regulation. We want you 2 to say no to those who would push more diesels into 3 California in the light passenger fleet. We're urging you 4 not to accept the myths and exaggerations, the 5 misrepresentations and wrong assumptions that are being 6 cast out about the cost and the availability of cleaner 7 technologies. We're asking you to support the need for the 8 best emission standards that are technologically feasible 9 for sports utilities, and this means the ARB staff proposal 10 should be tightened even further than it is. 11 When you go to adopt a resolution today, we 12 hope that you will ask yourself, how can we get every ton 13 of emissions reductions possible out of this rulemaking to 14 achieve healthier air as quickly as possible? How can we 15 best promote true electrical technology? How can we reduce 16 diesel particulates and diesel NOx in this rulemaking? 17 If you do that, I believe the answers will 18 be to tighten up the regulation, to not trade zero emission 19 vehicles for diesels, to eliminate the transitional low 20 emission category -- and I forgot to specifically stress 21 that, but we do believe that category was an introductory 22 category and there's no need for it really at this point. 23 That was an introductory category and now we need to meet 24 the low emission vehicle standards that are more stringent. 25 We believe it would eliminate the Premiere 192 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 catalyst from the program and that you ensure that only 2 true zero emission vehicles qualify for ZEV credits. 3 CHAIRMAN DUNLAP: Thank you, Bonnie. Are 4 there any questions? 5 MS. EDGERTON: Ms. Holmes-Gen, in your 6 material here you indicate that in exchange for -- maybe 7 it's not in exchange for -- that with respect to the .2 8 SULEV partial ZEV credit, you oppose that. However, you 9 support providing additional flexibility between 2003 and 10 2005 to restore a ramp that was lost. You're looking at 11 me. Are you familiar with this? 12 MS. HOLMES-GEN: Well, I'm not sure. Is 13 this the letter that we submitted? 14 MS. EDGERTON: Section B of the green one 15 that you signed, this green one. 16 MS. HOLMES-GEN: Those are Roland's 17 comments. I'm sorry. I can have Roland answer that 18 question. 19 MS. EDGERTON: Oh, Roland can answer that 20 question. 21 MR. HWANG: I'm not sure I know exactly what 22 your question is. 23 MS. EDGERTON: Some flexibility in 2003 24 through 2005. 25 MR. HWANG: Right. Union of Concerned 193 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 Scientists does support allowing for partial ZEV credit for 2 hybrid electrical vehicles to have an electric range and 3 for methanol powered fuel cells, like that part of the 4 proposal. We also believe that flexibility helps 5 compliance with the program in the early years because in 6 2003 the manufacturers are responsible for 10-percent zero 7 emission vehicles. The original program as conceived 8 started at 2 percent in 1998 and ran up to 10 percent. 9 I think that if the manufacturers are saying 10 they can no longer meet at 10 percent, that's partly 11 because the Air Board is being very generous to the 12 manufacturers and rolling back the program from 1998 to 13 2003. And we admit there is some difficulty in trying to 14 ramp up production to the 10-percent level without having 15 some steps in between. That's why we support that 16 flexibility. 17 CHAIRMAN DUNLAP: That's the distinction. 18 MS. EDGERTON: So it seems there are two 19 things that come to mind. One would be that you're saying 20 more concrete it should be 8 percent in 2003 and 10 in 21 2005, or the other alternative is to keep it 10 percent but 22 let there be an aggregating possibility there, so that if 23 the company missed the 10 percent, in 2003 they can do -- 24 say they get a 5 percent in 2003 and they can have 15 25 percent in 2004, so that by the end of 2005 they would have 194 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 the equivalent of 10 percent for each of three years. Is 2 either one of those what that means? 3 MR. HWANG: Essentially. The merits between 4 those two different pathways, as you suggested that's two 5 different pathways. The merits between those two -- and 6 it's very difficult to assess at this point which is the 7 better pathway. I do agree, though, there's some 8 tremendous technologies coming out, Toyota's Acreas for 9 example, and many manufacturers are working on other hybrid 10 vehicles. 11 In fact, I just read Automotive News 12 yesterday. General Motors plans to bring a hybrid electric 13 vehicle to the marketplace, so I think that's appropriate 14 to flex the program, bring in and capture the benefits of 15 some of these technologies to get us towards that true zero 16 emission vehicle technology. 17 CHAIRMAN DUNLAP: I think we've got that. 18 Can we go on. Can I do my auction now? 19 MS. WALSH: Chairman Dunlap, if I could just 20 suggest here that given notice for the meeting today, this 21 is an issue that is outside the scope of that notice, and 22 while this is a significant issue and probably one that may 23 bear discussion in the future, it really is not something 24 that we would be able to do today given the notice. 25 MS. EDGERTON: Could the -- for example, if 195 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 the Board were to withdraw the .2 percent for the gasoline 2 vehicles, could the Board ask the staff then to look at the 3 possibility of some sort of averaging for the remaining ZEV 4 category between the years 2003, 2005, to wind us up in the 5 same place but give more flexibility there? 6 MS. WALSH: In the context of the regulation 7 as proposed -- 8 MR. KENNY: I think what I understood you to 9 say is if in fact the Board was to say no to the .2 for 10 SULEV vehicles, could the Board then give directions to 11 staff to put these people back on credit. We could do that 12 but not in the context of the current hearing today. 13 We would have to bring a different proposal 14 to the Board. The notice today was written in such a way 15 that the 10-percent requirement is not up for change today. 16 MS. EDGERTON: We could ask to you come back 17 and report that to the Board early next year? 18 MR. KENNY: Sure. 19 CHAIRMAN DUNLAP: Mike, I would like to give 20 Tom a chance to explain his body language during the 21 conversation, not the part where she said we're all excited 22 about the change in the administration. 23 (Laughter) 24 CHAIRMAN DUNLAP: The part where we're 25 talking about can we get diesel fuel cleaner and are we 196 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 automatically -- 2 MR. CACKETTE: -- Diesel vehicles cleaner. 3 CHAIRMAN DUNLAP: Right. Become dirtier by 4 this action. 5 MR. CACKETTE: Why I flinched at first was 6 the comment that what we seem to be implicit, if we're not 7 going to ban diesels from this program, then at least we 8 ought to make them have catalysts. And in fact the diesels 9 that are being sold under the existing LEV I rules which do 10 allow diesels -- and there are only two models right now, 11 Mercedes and Volkswagen -- those do both come with 12 oxidation catalysts on them. 13 The standards that we're talking about for 14 diesels in LEV II terminate the existing standards that 15 lets diesels come in and replace it with one that's about 16 40 percent tighter. And under that scenario we believe 17 that you'll not only end up with an oxidation catalyst, 18 that you'll end up with a reduction catalyst that takes NOx 19 and gets rid of it, as well as oxidation catalysts which 20 help get rid of some of the particulate. 21 And it's what Mr. Kenny said, that's what 22 we're looking for as a technology foreseen because the car 23 manufacturers have a strong incentive to improve fuel 24 economy and they want to do it through some diesels. 25 They have a strong economic driver to sell 197 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 more diesels. They're in kind of a stagnant market. If 2 they can make heavy-duty trucks and if they can introduce a 3 few into this market, it's significant to them. 4 That puts two economic drivers behind 5 getting this technology into place, and the return on the 6 benefit is what we're willing to gamble on because we're 7 talking about just a few percent of light-duty vehicles 8 that under this constrained end law average could actually 9 beat diesels, these TLEV diesels. 10 But if we get that technology, the return on 11 investment in terms of emission reductions is somewhere 12 between 10 and 15 to 1 by putting that technology on 13 18-wheel trucks. That's where the big NOx sources are that 14 are left, so we were kind of -- admittedly we were gambling 15 that the technology will be developed, but if it's not, 16 with the stringency of the standard, we propose there won't 17 be diesels in the light-duty sector. 18 Either the technology happens or Janet's, 19 the environmentalist viewpoint is realized, we don't have 20 any diesels, one of the two. We think it's a risk we're 21 taking. It may be a slight step backwards now, but it 22 could be a fairly giant leap forward for controlling diesel 23 truck emissions. 24 MS. EDGERTON: Wouldn't that also, once you 25 got there, put a lot of pressure to keep that category open 198 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 and expand? 2 CHAIRMAN DUNLAP: That depends on the will 3 of the Board to let the inventories tell us what kind of 4 progress we're making. I can tell you -- I think 5 everybody's been put on notice, the Board certainly, the 6 staff, the engine manufacturers, environmentalists, that 7 particulate emissions in particular are priority number one 8 for all of us to control better. So anything that would be 9 done to make that more difficult, that role to be more 10 difficult, would certainly be something that's going to be 11 problematic from a long-term policy standpoint, so I don't 12 think -- 13 MR. CACKETTE: Mr. Chairman, there's 14 safeguards, though, because the way we've designed this 15 program -- and somebody said it's complicated and I have to 16 admit that is very true. It's constrained on hydrocarbon 17 emissions to a fleet average for the manufacturer. At some 18 point the only way they can sell more diesels is because 19 they are given higher hydrocarbon emissions credit. 20 They're assigned a standard that's a high value. 21 The only way you can sell more diesels is to 22 ratchet them down and make them the next cleaner standard. 23 So if they want more, they have to make them cleaner than 24 the standards we are talking about. So it is somewhat 25 self-constraining, and I don't think there's a possibility 199 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 that under this rule the door can go open for more than the 2 sliver that it's open now. We can't open it wide up. 3 CHAIRMAN DUNLAP: Okay. We're going to move 4 along. Thank you. Nice job. 5 All right. Here's the auction part of the 6 program today. I've got 25 witnesses left, not even 7 halfway through. I've been generous with the time. The 8 witnesses who are remaining have also been patient. Is 9 there anyone here -- I want to see hands -- who can get up 10 and give us their remarks in three minutes or less? 11 (Laughter) 12 CHAIRMAN DUNLAP: Keep the hands up. Where 13 are they? 14 Pat, you come on up first. The rest of you 15 line up in the front row and we'll talk to you one at a 16 time. I'm sure you've all signed up with the clerk. Greg, 17 you had your hand up. Come on, let's go. Jerry Secundy, 18 did your hand go up? 19 MR. SECUNDY: Bob and I just worked it out. 20 He's going to speak for us. 21 CHAIRMAN DUNLAP: So you're off the list? 22 MR. SECUNDY: I'm off the list. 23 CHAIRMAN DUNLAP: All right. Jerry, you're 24 a fine man. 25 Front row, three minutes. Anybody longer is 200 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 in the back. Pat, good to see you. Welcome. 2 MR. PUDELL: Chairman Dunlap and members of 3 the Board, my name is Patrick Pudell. I am representing 4 the American Lung Association of California and its medical 5 arm, the California Thoracic Society. 6 We strongly support the LEV II proposal as a 7 reasoned, deliberate approach of California to achieve 8 federal one-hour ozone standard as contained in the ZEV. 9 Health risks of both short- and long-term exposure to the 10 ozone have been demonstrated in chamber and longitudinal 11 studies, additional health risks related to PM10 and PM2.5 12 in which the smallest particles have been documented by 13 studies showing premature death, increased hospital visits 14 and other serious health problems. 15 We echo and endorse the concerns regarding diesel 16 fuel as articulated by my colleagues in the environmental 17 community. We also oppose allowing gasoline SULEVs to 18 qualify for partial ZEV credit because such an allowance 19 would undermine the goal of the ZEV program to 20 commercialize vehicles with zero tailpipe emissions. 21 We urge your support of the regulation with 22 the exceptions as noted. Thank you. 23 CHAIRMAN DUNLAP: Thank you for taking the 24 time to join us. Okay. Who's next. Yes, sir. 25 MR. LOWE: My name is Aaron Lowe and I'm 201 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 Vice President for Regulatory Government Affairs of the 2 Automotive Parts and Accessories Association. In addition 3 to the APAA, I'm testifying on behalf of a broad range of 4 aftermarket groups that are listed in the testimony so I 5 won't repeat them. 6 These groups represent the independent 7 aftermarket comprised of manufacturers and manufacturer 8 representatives, rebuilders, distributors and retailers of 9 parts and services. Our industry is comprised of 10 competitive options of otherwise obtaining repairs and 11 parts strictly from franchise dealerships, and that keeps 12 vehicle maintenance prices the lowest in the world. 13 We oppose the warranty provisions of the 14 proposal, the staff proposal as it was written, a 15-year, 15 150,000-mile emissions warranty and credits on an 8-year, 16 100,000-mile warranty. 17 We don't oppose the durability part and 18 consider it otherwise. I want to make that clear. 19 Inclusion of the extended warranty requirement would do 20 nothing to increase vehicle durability and would actually 21 result as not a consumer benefit, and we think it will hurt 22 many of the small automotive repair businesses in this 23 state. 24 Our major contention is that warranties do 25 not serve to improve vehicle durability. The car always 202 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 has recall and durability testing to bring that about, and 2 we see there's also competition in the industry right now. 3 Durability has been increasing due to competition and 4 consumer expectation since the 80s, and we see that trend 5 continuing with or without this proposal. 6 If anything, warranties are a sales tool and 7 should remain that way, and CARB should not be involved in 8 that. We also do not believe that warranties will somehow 9 repel consumers to go into repair shops to get their cars 10 repaired because it will be free. We don't think consumers 11 react just because they get their repairs for free. 12 Convenience is also a major reason why they do not get 13 their cars repaired. 14 This provision will actually work against 15 that by making it more inconvenient, by forcing car owners 16 into dealerships which they have shown in surveys to not 17 prefer. We don't understand why CARB would want to send 18 the consumer back to places they prefer not to go. 19 Another factor why we don't think warranties 20 improve durability is most car owners don't know they have 21 a warranty by the time they get the car. CARB's own survey 22 in the late 80s found that 22 percent of the voters don't 23 think they have an emission warranty and 60 percent do not 24 know of the coverage. Therefore there's very little 25 incentive for maintenance in this proposal. 203 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 In truth, the maintenance, the warranties 2 also provide a false sense of security to the motorist, if 3 he knows about it, that that car is going to last for the 4 warranty period and therefore he has to do nothing to that 5 car but drive it around. We don't think that is in the 6 best interest of clean air. 7 CHAIRMAN DUNLAP: Mr. Lowe, in conclusion 8 you're going to provide me and my colleagues with some 9 language that you would have us use to change these rules, 10 for us to look at. Will you do that for me? 11 MR. LOWE: Yes. We've already done that. 12 CHAIRMAN DUNLAP: Send it up here anew and 13 let me take a look at it. Does that do it for you? 14 MR. LOWE: Well, we just want to make the 15 case that the warranty, there is no data since the 20 years 16 you've had emissions warranties. There's been no data to 17 support that it actually is a benefit at this time to 18 durability, that has shown to prove to be a benefit to 19 consumers, and yet the Board has gone ahead every year and 20 tried to -- in this case tried to increase the warranties. 21 Just looking at the other proposals that they've pushed, 22 there should be some data. 23 CHAIRMAN DUNLAP: Let me see the language, 24 would you? 25 MRS. RAKOW: Mr. Chairman. 204 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 CHAIRMAN DUNLAP: Yes. 2 MRS. RAKOW: Regarding the language, I think 3 the service station repair people will also be testifying 4 regarding their concern about the 150,000-mile warranty 5 unless Mr. Lowe was testifying for them, and I had talked 6 to staff about this and I know there have been meetings 7 with staff, and I think later on they will see proposed 8 language. 9 CHAIRMAN DUNLAP: All right. That's fine, 10 Mrs. Rakow. I want to make sure the language lines up and 11 we know what the problem is. 12 MR. RILEY: Mr. Chairman, my name is Tom 13 Riley representing the Automotive Service Councils of 14 California. We are 2700 small "mom and pop" garages 15 distributed throughout the state that are currently 16 involved in the smog check program. 17 We believe in what you're trying to do. We 18 think the staff has a very difficult task before them as 19 evidenced by the wide range of testimony today. One point 20 I wanted to make that has not yet been made is that our 21 preference -- we believe that the warranty provision of 22 this regulatory proposal will be devistating for our small 23 businesses. 24 We would prefer that the decision only on 25 the warranty provision be delayed for a period of time to 205 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 allow staff to sit down with us and work through this. If 2 that does not happen, we would like having this regulatory 3 proposal going out to have an 18-month period to work with 4 staff, and I believe that Mr. Cackette has that language 5 before him now. 6 I used the word "devastating". I recognize 7 that's a harsh word, and we have one of our members here 8 who is in the Rankin file of people out there in the 9 current smog check program. Her name is Lynn Cardwell. 10 MS. CARDWELL: Thank you for hearing my 11 testimony. I'll be very brief. I think I can do this in 12 three and a half minutes. 13 My name is Lynn Cardwell and I own an auto 14 repair shop in Sacramento, California. We are a smog check 15 facility. I have a lot of qualifications and I think I'll 16 shortcut through all that and tell you we know what we're 17 doing. We've worked in every smog program since the 18 inception of smog programs, so all of our technicians are 19 qualified. We have many specialists in various areas. We 20 -- I'm going to just bypass all of that. 21 I'm also an environmentalist, I suppose, 22 part-time. I'm very proud of the American Lung Association 23 that gave me the Clean Air Award last year. I believe in 24 what the Board is doing in cleaning up the air and I 25 support that. 206 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 My concern is -- and I will give one 2 specific reason for my concern. This regulation seems to 3 direct, by the 150,000-mile warranty, customers as captive 4 customers to the dealerships for their service, and the 5 reason is -- and I don't have a copy. Thankfully -- I 6 don't have a transparency, but the third page of the letter 7 that you have before you, I believe just the flow of data 8 between the various computer systems on a car, and you have 9 an ECM and BCM and IPC and SIR. And I can tell you all 10 those things and what they mean, but I don't care so much 11 as they are totally interdependent and the relationship is 12 inseparable. 13 You cannot send a customer to have their 14 emission system worked on. If you touch the car, you have 15 touched the emission system, so we would like to ask the 16 Board to address this in future months and talk with 17 industry and determine the impact on small businesses like 18 ourselves. Thank you. 19 CHAIRMAN DUNLAP: Appreciate that. We 20 certainly see you as a partner and we know that you take 21 your share of spears and arrows relative to smog check and 22 other programs. We know you're an important partner, so 23 that's not lost. It is not our position -- and I've talked 24 to staff about it several times -- to hurt you in any way. 25 MS. CARDWELL: But one of the things about 207 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 warranties you would expect us to do is look after the 2 consumer when we can, and we think in some cases these 3 manufacturers may be for significant periods of time taking 4 care of this problem. 5 CHAIRMAN DUNLAP: The motive is not to harm 6 you. I can assure you. 7 MS. CARDWELL: And I do believe that. I 8 think it would be -- 9 CHAIRMAN DUNLAP: I must say -- 10 MS. CARDWELL: -- an entirely unintentional 11 consequence of the -- 12 CHAIRMAN DUNLAP: And I'm convinced the 13 manufacturers want to make a durable product that works 14 well. We all want the same thing. It's how to coexist so 15 we don't step on each other. 16 MS. CARDWELL: There is a network of repair 17 shops that have had advanced training. We call ourselves 18 Gold Shield. We would like to participate as service 19 providers. 20 CHAIRMAN DUNLAP: Great. Thank you and 21 congratulations on that award. All right. 22 Yes, sir. You are -- 23 MR. GALLO: My name is Johan Gallo. 24 Mr. Chairman, members of the Board, I'm the President of 25 the Auto Repair Coalition. We represent over 10,000 repair 208 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 dealers in California that constitutes over 100,000 jobs 2 and about $5 billion in sales. 3 The main concern we have is the extended 4 warranty issue, as by a lot of people that went before me. 5 Our concern is we would like the opportunity to work with 6 staff in order to refine this and give us an opportunity to 7 stay in the repair business. There's no way the 1200 8 automotive dealers in California can begin to fix the 26 9 million vehicles in our fleet. That's the reality of it. 10 For to us help you keep the air clean by being in the smog 11 check program, by becoming Gold Shield shops and doing 12 things we need to do to clean up the air, we need an 13 opportunity to refine the extended warranty portion and be 14 given an opportunity to work with staff to do so. 15 As we look at the numbers and get to the 16 bottom line, as we surveyed some of our members, the 17 proposed warranty changes, in our business, currently 22 18 percent of our fleet that we work on fall within that 19 7-year plus, 70,000-mile plus warranty issue. What that 20 means for us in sales is in excess of $5 million which 21 impacts jobs, tax revenue, and the ability to stay in 22 business. 23 We want the opportunity to work with staff, 24 and for the sake of brevity we would like that opportunity 25 and hope the Board hears us. 209 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 CHAIRMAN DUNLAP: Okay. 2 MR. GALLO: Thank you. 3 CHAIRMAN DUNLAP: All right. Very good. 4 Thank you. 5 MR. WALKER: Good afternoon. I'm Chris 6 Walker from the California Service Station and Automotive 7 Repair Association. Thank you for the opportunity to speak 8 briefly. 9 I would like to begin by thanking Chairman 10 Dunlap, Executive Officer Mike Kenny, Deputy Executive 11 Officer Mr. Cackette, and Jim Schoning for the generous 12 time in the last few weeks working with us. 13 We cumulatively -- a quarter of a billion 14 dollars in the last 12 months to engage in the smog check 15 program as well as train their employees, become the elite 16 emissions task force if you will to reduce emissions in the 17 state of California. We would like to continue the war on 18 smog and do not want to see our business one day, 8 years, 19 10 years from now go on the way to dealerships, so we 20 appreciate the opportunity to work with you. 21 Again, the biggest point we disagreed with 22 staff is that we believe there has been an inadequate 23 economic analysis of the impact on industry and consumers. 24 I'm sorry to see that Supervisor Roberts is gone because I 25 was going to say our contention of warranties is not going 210 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 to cost $7,000 a car, but we do believe it's over $150 a 2 car. But in any event, we're working to come to a 3 conclusion on some language. 4 CHAIRMAN DUNLAP: Thank you. Mr. Valencia. 5 MR. VALENCIA: I am John Valencia. I 6 represent the California Automotive Task Force. 7 All of the good people before me are part of 8 the 16 organizations with 16,000 members and over 100,000 9 employees in California. They've asked me to ask you to 10 either defer or actually delete the warranty, extended 11 warranty emissions provision from this proposal, and it's 12 the only component of this proposal we care about for two 13 specific reasons. 14 One, it is illegally ineligible, and two, 15 there hasn't been adequate cost analysis assessment of the 16 impact on small business if you do adopt that component of 17 this overall proposal. The rest of the proposal we 18 allotted and we support. 19 As you know, we perform better than 70 20 percent of the automotive repairs in the aftermarket in 21 California, so we have a very big stake in clean air. 22 Here's what you create in the warranty. You 23 create a legal entitlement for manufacturers. That 24 entitlement is to sell vehicles in California which don't 25 meet the standards that they've spent all day telling you 211 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 are technologically infeasible, those vehicles won't meet 2 those standards. But if they agree to offer an extended 3 warranty for their vehicle, their vehicle line, they earn 4 artificial credits towards meeting those emission standards 5 they told you they can't meet anyway. And that's how this 6 component helps them get around limits that they say they 7 can't meet anyway. 8 You can't do that because the legislature 9 hasn't said you can do that. That's a transaction that 10 you, this Board, don't have the authority to do. 11 Here's what California law does require you 12 to do. It requires you to cite the specific statute of law 13 authorizing the adoption of a regulation. It also requires 14 to you refer to the specific authority under which you're 15 promulgating this regulation. 16 Here's what the staff report rests on. It 17 rests on Health and Safety Code, three sections, 43101, 18 43101.5 and 43205, all of which the legislature enacted 19 with limits and none of which authorize this particular 20 transaction or this particular component of the regulation 21 that you're reviewing. 22 In addition, the Administrative Procedure 23 Act requires any regulation -- and you've heard me appear 24 before this Board previously -- it requires a much better 25 assessment, much more detailed assessment of cost impact on 212 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 small business. 2 Now, here's what the staff report says at 3 page II 62. This about sums it up. There's not much more 4 to it than this brief quote. "Staff is not convinced, 5 however, there would be a net shift in business to 6 dealerships due to an extended warranty. Extended 7 warranties should result in emission-related components 8 much less likely to fail in the early years of a vehicle's 9 life, thus dealers compared with new merchants today 10 potentially providing an increase in independent repair 11 facility business for vehicle maintenance because of their 12 perceived advantages over dealerships." 13 That about sums it up. What the law 14 requires you to do, however, is much more specific. The 15 ARB has to put together facts, evidence, documents, 16 testimony that says that there won't be an impact. This 17 report tries to have it both ways. The report suggests on 18 the one hand there won't be an impact to the aftermarket, 19 but it also conceives there will be an aftermarket 20 automotive impact. You can't have it both ways in this 21 report because if you say there won't be an impact, you 22 have put in writing before you for adoption the facts and 23 evidence that suggest why there won't be an impact on the 24 aftermarket. If, however, as the report also does, if you 25 concede there's an impact on the automotive aftermarket, 213 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 then state law requires you -- and this is the California 2 Administrative Procedure Act -- requires you to identify 3 alternatives to that impact. 4 Well, here's what the Board staff says at 5 that same page. "Perhaps helping to offset the effects on 6 the repair industry, durability from extended emission 7 warranty could be an increase in repairs due to 8 proliferating comfort and convenience options on new 9 vehicles." 10 Staff sees our future in repairing vanity 11 mirrors and lights and leather seat butt warmers. That's 12 essentially what they're talking about. 13 MS. RIORDAN: I have a task which the 14 Chairman has given me to move this along. 15 MR. VALENCIA: I have concluded. In fact, 16 those are the two key elements. I've managed to submit 17 them to into the record, that we expect the Office of 18 Administrative Law to look at and ultimately reject this 19 component, but we would ask you to anticipate that's what 20 OAL would do and if not, delete it. Thank you. 21 MS. RIORDAN: The next person that has the 22 ability to stay within three minutes, come on up and would 23 you please state your name for the record? 24 MR. WARDEN: Bob Warden representing Western 25 States Petroleum Association, companies that produce most 214 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 of the transportation fuel used in California. 2 Fuel standards have come up several times 3 today, although the CARB staff has not proposed fuel 4 modifications as part of the LEV II program. In fact 5 Ms. Guerrero said this morning that the staff had 6 demonstrated that LEV II emission standards could be met 7 even for large sport utility vehicles using cleaner burning 8 gasoline, CBG-2. 9 Western States Petroleum Association agrees 10 the fuel standards should not be part of the LEV II 11 program. One manufacturer this morning requested 12 consideration of new fuel standards as part of the program. 13 If one is going to consider new or bona fide fuel standards 14 as part of the LEV II program, then one needs to examine 15 the need and cost and cost effectiveness of the entire 16 program, the fuel vehicle system including fuel-side costs. 17 Granting staff's conclusion that fuel 18 modifications are not required to meet LEV II emission 19 standards, any proposals to change fuel standards should be 20 studied independently, not as part of LEV II. The CARB 21 staff has started the study process for such fuel 22 specifications, standard changes in the deliberate process 23 for both gasoline and diesel fuel. Thank you. 24 MS. RIORDAN: Thank you. Just a moment for 25 this witness. Are there any questions for this gentleman? 215 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 Seeing none, I thank you. 2 The next gentleman can step forward and then 3 I'm going to move to Ellen Garvey. 4 MR. VILLEGAS: Members of the Air Resources 5 Board, I'm Mike Villegas of Air Pollution Control District. 6 I'm representing our Air Pollution Control Officer Richard 7 Baldwin who cannot be here today. I'll be providing 8 testimony on behalf of the Air Pollution Control Board to 9 convey their support for the proposal before you today. 10 You have before you one of the most 11 important emission reduction strategies and cleaner burning 12 fuel requirements. Our board urges you to adopt the 13 proposed regulation. A Copy of our proposal was provided 14 to you several weeks ago. 15 Ventura County has the nation's 16 nonattainment for the federal one-hour standard, and of 17 course we're going to be nonattainment for the 8-hour and 18 the new more stringent 61-percent of our ozone precursory 19 emission with on-road motor vehicles accounting for 49 20 percent of those emissions. 21 The District has already implemented for all 22 categories of stationary sources. Reduction and control of 23 emissions from motor vehicles is one of the most cost 24 effective strategies still available. Subsequently our 25 interest in what you're willing to do today is very high. 216 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 In 1990, your Board adopted for low emissions and clean 2 fuels. LEV I set increasingly more stringent standards for 3 light-duty cars and trucks to the model year 2003. An 4 important aspect of this regulation was the clean fuel 5 requirement, the introduction of clean fuels, especially 6 sulfuric acid, to not only meet the current standards but 7 allow them to meet even more stringent in the future. 8 The increased sales of full-sized pickup 9 trucks and the recent introduction of the popular SUV has 10 greatly altered the mix of light-duty trucks to cars. It 11 is now common of light trucks and SUVs to be used for 12 primary transportation. Once dominated by cars, it is 13 approaching a split between cars and light-duty trucks. 14 In 1990, over 80 percent of the vehicle 15 sales were cars. In 1997, we're looking at 54 percent, 16 with light trucks and SUVs climbing to 46 percent. The 17 trend has had a substantial impact on California's air 18 quality because although these vehicles are essentially 19 used as passenger cars, they're certified to less stringent 20 emission standards designed for commercial work trucks. 21 The reclassification in the LEV regulation 22 of the light-duty truck and medium-duty vehicle categories 23 will require them to meet more stringent standards. The 24 amendments are applicable to both gasoline and diesel 25 powered vehicles and are essential, necessary to meet our 217 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 state implementation plan goals for vehicles. 2 The emission reductions that will result 3 from the implementation of this regulation and the 4 reclassification of light-duty and medium-duty vehicles are 5 critical to Ventura County's efforts to meet the new 8-hour 6 federal standard and the more stringent state standard. 7 In addition to the other aspects of the 8 regulation, the new super low emission category and its use 9 in generating partial ZEV credits if provided with the 10 150,000-mile warranty will provide incentives for 11 automobile manufacturers to make greater contributions to 12 our emission reduction goals. 13 Gasoline powered vehicles currently have 14 broad public acceptance, much greater than current -- we 15 have electric vehicles, and offering the manufacturers an 16 incentive for decelerated introduction of a technology that 17 is transparent to the motoring public. It is not a win-win 18 situation for air quality and the manufacturers. 19 California has always been a leader in air 20 pollution control. This has been especially true for motor 21 vehicle emission control. The adoption of today's proposal 22 will provide for you an opportunity to continue this 23 leadership. This proposed regulation is achievable and 24 it's needed. Therefore on behalf of our Board, I urge you 25 adopt this regulation. 218 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 MS. RIORDAN: Thank you. Any questions for 2 the witness? Thank you. 3 Ellen Garvey, come forward, please. You're 4 going to represent both CAPCOA and Bay Area AQMD? 5 MS. GARVEY: Yes. Madam Chair and members 6 of the Board, good afternoon. My name is Ellen Garvey and 7 I am the Executive Officer at the Bay Area AQMD and wearing 8 two hats. 9 First I would like to speak on behalf of the 10 Bay Area District and secondly on behalf of CAPCOA. I am 11 here today to support your proposal for the new LEV II 12 standards and the new LEV II regulations. The San 13 Francisco Bay area has almost five million cars that 14 produce about half of the overall air pollution in the nine 15 bay area counties. While the state has done an admirable 16 job in the past years reducing emissions from the vehicles, 17 we still have problems with ozone as well as particulate 18 matter, and we still have opportunities to mitigate those 19 problems. The LEV II program is a very important step in 20 this process. 21 Adoption of the LEV II regulations is very 22 important for the long-term air quality prospects for the 23 bay area as well as for many other nonattainment areas 24 throughout the state. EPA's recent redesignation for 25 nonattainment with the national one-hour ozone standard has 219 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 triggered new attention and what we can do selectively to 2 help continue to reduce pollution emissions from those 3 sources. 4 We know that mobile sources represent the 5 largest sector of emissions in the bay area for ozone, and 6 they are also mainly contributors of nitrate and 7 particulate matter. To adopt new motor vehicle standards 8 as well as new motor vehicle regulations is a noteworthy 9 event. 10 We supported and have benefited from ARB's 11 prior actions to implement clean fuels and clean vehicle 12 programs, your goal in getting new as well as effective 13 emission control technologies on the road. We have seen 14 the successful introduction and customer acceptance of 15 ultra low emission vehicles as well as zero emission 16 vehicles, and in fact I have some personal experience with 17 both. Recently I purchased a new personal car, a Honda 18 Accord which meets the ULEV certifications, and I can 19 verify for you today it performs well, gets good gas 20 mileage, and all in all it's a great car. My agency has 21 also purchased two vehicles, a Toyota RAV 4 as well as an 22 EV-plus with great user satisfaction and sparked a lot of 23 public interest. They're comfortable, they're reliable and 24 fun to drive. So we feel very positive about the ability 25 of the manufacturers to develop and implement new as well 220 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 as cleaner technologies. 2 We also feel very positive about ARB's role 3 in the foster of such an implementation. You and your 4 staff play a vital role in expediting the research grants, 5 setting of certification and durability standards and 6 lastly through monitoring compliance. Your current 7 proposal gaps and strengthens some areas where levels of 8 control can be improved. These measures will ultimately be 9 of great benefit to the bay area as well as other 10 nonattainment areas throughout the state by achieving 11 additional emission reductions beyond those attainable with 12 the current LEV program. 13 LEV II will help ensure we attain and 14 maintain California's state standards for ozone and 15 particulate matter. 16 I bring with me today a resolution from my 17 Board. This resolution was brought yesterday before 18 Director DeSaulnier and members of my Board. I ask this be 19 made a part of the record. 20 In closing I would like to say it is 21 critical ARB adopt the new requirements as soon as possible 22 so we can get the process started and see the benefits in 23 the near future. 24 With the permission of the Chair, I would 25 like to indulge your Board for just a few more minutes and 221 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 speak on behalf of CAPCOA in support of LEV II, and I bring 2 with me today another resolution signed by the membership 3 of CAPCOA which occurred last week in Monterey, which the 4 Chairman also attended, and we appreciate your taking the 5 time. 6 The testimony I have just provided is 7 essentially the same as CAPCOA, so I'll not take the time 8 to repeat it. I will say California air districts 9 throughout California support LEV II. We ask you to adopt 10 these requirements so we can see the benefits of it in the 11 near future. 12 Thank you for your time today, and I will be 13 happy to answer any questions that you have. 14 CHAIRMAN DUNLAP: Any questions? Thank you. 15 I appreciate that. Always a pleasure to see you. 16 Greg, I know you're going to be speedy, but 17 before you go up there, is Bob Carr here from the San Luis 18 Obispo APC? Had he signed up? Chung, are you a 19 three-minute or less guy? 20 DR. LUI: I'll try. 21 CHAIRMAN DUNLAP: You do three minutes, and 22 Greg, you're up next. 23 DR. LUI: The important issue, I think, is 24 the need of good air quality in our basins. I do want to 25 say that Barry Waters, our acting Executive Officer Thomas, 222 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 and he sent me here to represent the District on these 2 issues, and I want to go back really fast on the air 3 quality issue. 4 CHAIRMAN DUNLAP: You've got to introduce 5 yourself to the court reporter. 6 DR. LUI: My name is Chung Lui for the 7 record. I am the Assistant Deputy Executive Officer for 8 the South Coast AQMD. 9 This chart I'm showing here is the reason we 10 are here mostly, and I can probably say that in the new 11 8-hour ozone standards we are making progress, even this 12 year, but we still have a long way to go. The reason is 13 that we still are over 10 days. We cannot meet the 14 standards in our basin. We have the worst quality air in 15 this basin, but I have to say that ARB's program in the 16 past two decades, probably in principal, is responsible for 17 the improvements. And I also want to say something about 18 this morning's use of control. We support LEV I. We see 19 progress. Not only on weekdays, but on weekends, and we 20 believe with LEV II, the progress to be made on weekdays 21 and weekends. Let's go to the next one. 22 We do have another air pollution problem. 23 It's the PM2.5 standards newly adopted by the EPA. As 24 these charts show, that PM2.5 is probably a more 25 discriminating pollutant in terms of our basins. 223 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 Everywhere you can see problems almost at the same levels. 2 Also I want to direct attention to the 3 parts, the yellow part and the pink part, the two biggest 4 components. One is the nitrate component, the yellow, and 5 the pink is ammonia. Ammonia nitrate is the single most 6 important component for PM2.5, which is a pollutant killing 7 our premature child here, and I want to emphasize with 8 control this is going to come a long way. So I really want 9 to put the case on this here, but we still want to say that 10 even PM10 would need improvements. 11 We have a long way to go. The 1997 AQMD 12 called for 68 percent of VOC reduction and 57 percent 13 reduction NOx. With the new standards of PM2.5 and 8-hour 14 ozone standards, we have even farther to go, and really 15 most of them, I would say 50 percent of the reduction, we 16 need to achieve clean air. We don't know what to do here. 17 If we know what to do with LEV II, let's do it. 18 And especially this morning I heard ARB's 19 stipulation one-dollar-per-pound cost effectiveness. I'm 20 saying in our basin nowadays, in south coast we are 21 stationary sources. We use a mainly 10 per ton. 22 We do have some input here and quickly spend 23 about one minute to summarize them all. We don't want to 24 provide a loophole for diesel. We don't want legislation 25 to become a starting point to bring diesel back as 224 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 passenger cars, and we all know here with one sports 2 vehicle coming to increase one passenger car. That's not 3 replacing work truck. We all know that. Let's face it. 4 If we want to bring something back with 5 higher emissions, we're going to have worse air quality. 6 We don't want that. We've got to have one standard for all 7 things over 8500 pounds. We also want to make sure the 8 four-part ZEV would be LEV, and we want to work with ARB 9 staff on this. 10 And number three, we believe the technology 11 here, if we push for two or three years ahead of schedule 12 for this hydrocarbon base, we can achieve air better and 13 sooner. 14 Number four and five quickly. We think, we 15 believe the ARB staff did an excellent job, that we want to 16 support on the emissions which we really lacked in the 17 past, and I think value is a good thing we strongly 18 support. 19 Lastly, the district pushed for the ozone so 20 hard, we want to eventually -- even with the defeat of 21 Proposition 7, we want this to be part of the program and 22 want to make sure it's qualifiable execution is real. With 23 that, I'm putting my presentation, and if there's any 24 questions. 25 CHAIRMAN DUNLAP: Thank you, Chung. Any 225 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 questions of the witness? Okay. Thank you. 2 Mr. Vlasek? 3 MR. VLASEK: Good afternoon, Chairman and 4 members. My name is Greg Vlasek. I represent the 5 California Natural Gas Vehicle Coalition. We are a 6 40-member industry association of Sacramento, California. 7 I have a single point. Our members, our 8 coalition supports the partial ZEV credit for CNG super LEV 9 vehicles. We are aware of the evidence that staff has 10 accumulated in making the decision to include that 11 provision. In some cases our members provided that 12 information to the staff and have been working on that for 13 a number of years, so we very much appreciate the 14 recognition of natural gas vehicles as continuing, as the 15 benchmark for what is achievable in terms of emissions from 16 IC engines, and our job now of our industry is to continue 17 to build the infrastructure in California, to increase the 18 demand for these vehicles and give customers assurance 19 there's plenty of fuel available so we can help get the 20 vehicle manufacturers' incremental cost down from that 21 dreaded $7,000. Thank you very much. 22 CHAIRMAN DUNLAP: Thank you. Let me run 23 through the list of folks who haven't testified yet. We 24 have two representatives from Engelhard, one Terence Poles. 25 Is your colleague with you? Bill, did you sign up? 226 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 MR. ROSENBERG: I did. 2 CHAIRMAN DUNLAP: You're not on my list 3 here, Bill. So we have Jed Mandel in the bull pen over 4 here, Pat Charboneau, Bob Jorgenson, Tim -- where's Tim 5 Carmichael? Tim in the bull pen, Jennifer Jennings, Bruce 6 Bykowski, Cece Martin, Wayne Nastri and Joe Caves. Is Joe 7 out there anywhere? Did Joe already go? Come on over 8 here, Joe. We have a rule in here today. Cece, you're up. 9 MS. MARTIN: Good afternoon, Chairman Dunlap 10 and members of the Board. My name is Cecille Martin. I'm 11 Deputy Executive Director of the California Electric 12 Transportation Coalition and I am speaking today for our 13 board of directors. 14 I believe you received letters from Sempra 15 Energy and SEV and Los Angeles Department of Water and 16 Power, and then my comments will supplement that and we'll 17 only be speaking today on the zero emissions vehicle 18 portion of LEV II. 19 Now, Chairman Dunlap, it's your last Board 20 meeting. 21 CHAIRMAN DUNLAP: It is? 22 MS. MARTIN: And I wanted to be really kind, 23 but I have to take a small issue with something that you 24 said earlier which possibly you didn't really mean the way 25 I took it. 227 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 CHAIRMAN DUNLAP: I probably didn't. 2 MS. MARTIN: That CARB has swept away 3 utility emissions, and in fact that's very much opposite is 4 the case. That in fact the bar, the lower bar for the 5 SULEV to meet with their tailpipe is the upper bar of 6 potentially what utility emissions could be if they weren't 7 as regulated as they are in this state. Utility emissions 8 are very clean, and it is also that statement that gets our 9 hackles up a little bit because we like to remind people 10 that every vehicle on the road has upstream emissions. 11 For us, they're power plants and they're 12 very clean, but as other witnesses have mentioned, they're 13 refueling, distributions and marketing as other fuels, and 14 we like to look at it as a whole package. 15 So I want to tell you today that we are in 16 general support of what you're doing. In fact there's only 17 one exception and that exception is that we don't believe 18 gasoline SULEVs have the ZEV characteristics described in 19 the report. We think it's theoretically inconsistent with 20 the way in which ZEV characteristics have been described. 21 I would leave it at that, but there are a 22 few other things I need to say because I understand that 23 some of the documents that the Board has received recently 24 said that ZEVs don't really have a big part of the future. 25 And I want to tell you that the EV market 228 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 has just begun. Ten years ago an EV market was your 2 Board's vision and today it's a reality. The Board has 3 changed the world's view of our transportation future by 4 making EVs a part of the transportation mix. 5 You have done an incredible thing. You've 6 created a legacy that holds the future and you haven't 7 stopped there. You've gone beyond regulation by 8 recognizing that help is needed to develop this new market, 9 to ensure its success and the continued commitment from all 10 of the stakeholders. 11 CARB has supported vehicle and 12 infrastructure incentives, infrastructure development, 13 safety training and now have a developing EV loader program 14 and more. We appreciate this. The market needs it. The 15 market needs your continuing support. 16 Now as we look to the future, we see that 17 the challenge that you face is to craft a mobile source 18 strategy to get the state to attainment in 2010 and 19 maintain that level of cleaner, healthier air in the years 20 beyond. The Board's successful strategies to technologies 21 have resulted in the most significant mobile emissions 22 reductions, and yet there is a shadow stalking this 23 success. 24 Predictions for California's growth turn 25 every mile gained into an inch. With population expected 229 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 to double in the next 30 or 40 years, California can expect 2 an accompanying doubling of cars and trucks. This growth 3 trend turns 26 million vehicles into 46 million. In the 4 interim, these emissions must still be multiplied by the 5 number of vehicles in the state and by the increasing 6 vehicle miles traveled. 7 It is within this perspective that CARB's 8 reasoning behind the gold standard becomes clear. True 9 ZEVs are a necessary part of mobile source strategy because 10 zero times 46 million is still zero. Cal. ATC is not 11 suggesting that EVs will make up 100 percent of 12 California's vehicles. We are suggesting, however, that 13 the unique characteristics of battery electric and other 14 vehicles that rely on electric drive systems like hybrid 15 electric, that accompanies growth by offering 100 percent 16 or some, for example there, of zero emission miles. 17 We believe that this perspective is an 18 important one to keep in mind today when considering 19 increasing flexibility to the 2003 10-percent ZEV 20 requirement. The zero emission miles that have become the 21 gold standard are also the less costly miles both in terms 22 of the environment and the fuel when they are derived from 23 California's clean electricity generation. 24 EVs and HEVs that plug into fuel capture 25 this benefit, and this benefit takes on more importance as 230 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 we move on to the next century. As more California 2 vehicles meet the new SULEV standard, the largest source of 3 fuel emissions will be the combination of evaporatives that 4 occur upstream of the vehicle. 5 Electric drive addresses the fuel cycle 6 issue. When fueled by electricity, electric drive offers 7 the lowest fuel cycle emissions of any fuel and completely 8 eliminates the emissions that occur from fuel. 9 California's power mix can be considered in the manner 10 staff is proposing that versions should be considered, that 11 is that they will be driven a certain portion of the time 12 as zero emission vehicles. 13 When considering the types of power 14 generation that serve California, a significant portion of 15 these sources deliver electricity emission free. This 16 emissions reduction opportunity is not available from any 17 other transportation fuel. 18 Cal. ATC has been asked how electricity 19 deregulation will effect the state's power generation. 20 Well, we don't use a crystal ball. Energy analysts have 21 said that deregulation will likely spur reductions as 22 utilities sell off power plants and new energy providers 23 power them cleaner over time, decreasing current and future 24 power plant regulation and technology advancement. 25 Best available retrofit control technology 231 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 will assure lower than current emission levels and level 2 the impacted areas like the South Coast Air Quality 3 Management District who have an emissions cap for power 4 plants over their entire basin, further encouraging this 5 downward trend. 6 Today we've heard a little bit about this 7 150,000-mile warranty, and we believe that deterioration is 8 another shadow that follows even the cleanest vehicle, 9 followed by an internal combustion engine over the life of 10 the conventional vehicle and will also continue to occur 11 although hopefully with on-board diagnostics. 12 Again looking to the future, Cal. ATC feels 13 it is important to know the longer vehicle lifetime 14 durability without any off-cycle emissions. Because they 15 have eliminated the need for a tailpipe, EVs stay clean 16 without smog check and with no possibility of equipment 17 failure. 18 CHAIRMAN DUNLAP: Cece, I have the letter. 19 You're doing good. 20 MS. MARTIN: I am not going to go through 21 the bottom part. I would like to do three more paragraphs. 22 CHAIRMAN DUNLAP: Okay. 23 MS. MARTIN: Okay. There are additional 24 electric drive benefits that although not directly part of 25 CARB ZEV program, remain an area of concern in the state 232 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 and the world. California EVs offer significant net 2 reductions of CO2 up to 70 percent. Vehicles with even 3 partial electric drive, as long as they are fueled in part 4 by electricity, will always offer CO2 benefits because 5 electric drives displace CO2 created by gasoline 6 combustion. 7 Overall reduction of CO2. Electric drive 8 can be two to three times more -- and EVs, electric drive 9 vehicles, for the portion they're on electric do not expose 10 the population to toxics, Benzene, and all known for their 11 effects on human health. 12 Now I'm going to skip through the rest of 13 this because I know you have my written testimony, but I 14 did want to end by saying that our organization has been to 15 many of these hearings and often our testimony is a small 16 part of the whole, and we want you to know we didn't 17 overlook the whole and we want to commend you for the hard 18 work that we've seen you do this year, 1998. We feel 19 you've taken on the challenge and that you've been very 20 consistent in passing the measures that are critical to 21 success, and we feel this program, if passed today, would 22 create a significant contribution towards the ZEV and 23 toward the reduction in mobile source emissions. We would 24 like to thank you for that in the broadest sense. 25 CHAIRMAN DUNLAP: Thank you. Any questions 233 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 of the witness? Okay. Very good. 2 Engelhard, you're up next. Is there any 3 other three-minute people in that group by chance? There's 4 two three-minute people. Would you yield, sir? The lady 5 in red in the back. Sorry. Hang on. We'll get to you and 6 there's -- 7 MS. JENNINGS: Thank you, Chair. My name is 8 Jennifer Jennings. I'm here on behalf of the Planning and 9 Conservation League and I forgot blue, gray and brown was 10 the color requirement for ARB hearings. 11 I submitted written comments and I don't 12 want to go over those. I want to support the comments made 13 by my colleagues on their three major points. 14 We oppose the credit for gasoline SULEVs 15 because they do not have the characteristics. Introduction 16 of diesels, I think that if you want advances in heavy-duty 17 diesel technology, you need to address that directly rather 18 than indirectly, and we applaud the restrictions on the 19 SUV, but we do not think the evidence supports the work 20 trucks. 21 I also want to say in addition to my written 22 comments that we do support the extended warranty control 23 system. I was not aware that was an issue so I didn't 24 include it in my letter, but I think it's a very important 25 proposal and we urge you to stick with it. 234 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 Thank you very much. 2 CHAIRMAN DUNLAP: Thank you. Thanks for 3 your patience. 4 By the way, I think we have eight witnesses 5 left. 6 ALABC REPRESENTATIVE: Thank you, Chairman 7 Dunlap. 8 My name is -- Advanced Lead Acid Battery 9 Consortium. We're here in support of the proposed LEV II 10 program. I think staff has done an excellent job. I think 11 it's only appropriate you're here in the South Coast Basin 12 as you consider adopting. The ALABC does have some ideas 13 in terms of increasing the flexibility with regard to the 14 ZEVs and we've had discussions with staff and they've 15 agreed to continue those discussions and move forward in 16 terms of additional range and addressing the fast recharge 17 capabilities. 18 So again, we urge you to adopt the LEV II 19 proposal. Thank you. 20 CHAIRMAN DUNLAP: Thank you. Any questions? 21 Terry, you're up. Thank you for your patience, too. 22 MR. POLES: Thank you. 23 CHAIRMAN DUNLAP: But I think you did 24 signify you were in the neighborhood of a three-minute job 25 I thought; is that right, Bill? 235 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 MR. POLES: Three, three and a half minutes 2 or so. 3 Chairman Dunlap and members of the Board, my 4 name is Terry Poles. I am the Director of New Ventures for 5 Engelhard, developer of the Premiere ozone catalyst system. 6 First of all I would like to thank the staff 7 for their cooperation over the last three years and really 8 putting together a full scientific study of this 9 technology. Premiere catalyst involves coating automotive 10 or truck radiators or other heaters as shown. This special 11 catalyst destroys between 17 and 19 percent of the ozone in 12 the air that passes through this coating. As far as CARB's 13 action, to introduce the Premiere catalyst in the program 14 will not only provide complying with the LEV requirements, 15 but it will also illustrate California's support for the 16 development of new technologies. These can reduce the 17 exposure of citizens to harmful pollutions. In this way 18 the Board can encourage the industry to continue its 19 research and development activities to bring forward new 20 innovative technologies that will be needed to meet the 21 needs of California citizens in the coming years. 22 An analogy of this technology can be drawn 23 back to the mid-1970s when Volvo Car Company first began 24 using innovative ideas. That was the three-way catalytic 25 converter which was being developed by Engelhard 236 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 Corporation. Today it continues to spend more than $50 2 million a year to develop new technologies like the 3 catalytic converter and Premiere catalyst system. 4 Volvo has again demonstrated its 5 technological leadership. It plans to install the catalyst 6 on its new line of SAT vehicles beginning next year. We 7 believe that Volvo's voluntary action like the events in 8 the mid-1970s will usher in a new technological innovation. 9 Recognition of the potential air quality 10 benefits from this approach will support the 11 commercialization of this and other innovative 12 technologies. The South Coast Air Quality Management 13 District and the CARB staff has recognized the potential 14 air quality benefits. The SCAQMD has concluded in its 1997 15 Air Quality Management Plan control measure programs to 16 reduce -- levels which prefers to the Premiere catalyst and 17 its use on air conditioning utilities. The Premiere 18 catalyst directly destroys ozone which is coated. It is 19 therefore a fuel neutral technology. 20 The primary applications of the technology 21 as shown in this slide are in automobiles, trucks, urban 22 bus radiators where it's already applied in some areas, and 23 residential and commercial air conditioning systems. 24 Application of the Premiere catalyst coating to an 25 automobile or truck radiator takes advantage of the 237 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 existing air flow being used for engine cooling and the 2 moderate temperatures associated with the air cooling 3 system. The radiator even on vehicles is currently 4 designed effectively and becomes an ozone scrubbing device. 5 Testing in California has shown that the 6 Premiere catalyst reduces ozone concentration in the air by 7 approximately 75 percent or more. Manufacturers also 8 suggested that enhancements to the radiator and cooling 9 system could increase the effectiveness of the Premiere 10 catalyst considerably. 11 The Premiere catalyst, unlike traditional 12 ozone control measures, directly destroys the ozone rather 13 than the OCs and NOx. To understand the potential quality 14 benefits from this approach and relate the benefits from 15 traditional ozone control strategists, we began working 16 almost four years ago with John Seinfeld at Cal Tech and 17 others recognized in atmospheric modeling, with CARB 18 modelists and from the AQMD. These provide the methodology 19 in the CARB staff proposal for assessing the air quality 20 benefits of the Premiere catalyst. 21 In summary, we appreciate the support that 22 we have received from CARB staff in evaluating the Premiere 23 catalyst and developing a reasonable approach for assessing 24 the value of this innovative technology in the LEV program. 25 We look forward to working with the staff to determine the 238 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 appropriate procedures, for demonstrating durability of the 2 catalyst and other specifications of the particular 3 catalyst applications. 4 We encourage the Board to approve the 5 staff's recommendation. Thank you. 6 I'll be glad to answer any questions. 7 MR. CALHOUN: Excuse me, Terence. This is a 8 relatively new technology as you know, and there's people 9 who couldn't understand the mechanisms of how it's taking 10 place. I was having a discussion with someone in the past 11 week or so and I was told that some of the ozone that is 12 initially converted is lost. By that, I mean some of it is 13 reconverted to ozone. Do you have any knowledge of that at 14 all? 15 MR. POLES: Mr. Calhoun, we have conducted 16 some chamber assessments at the University of North 17 Carolina and here in California which gets at the issue of 18 does this ozone reform after it's being destroyed. Almost 19 immeasurable quantities are reformed. Once the ozone is 20 destroyed, it stays destroyed. 21 MR. CALHOUN: I think that's important, 22 although the staff has tried to build into the proposal 23 certain amounts that you would have to accomplish, that you 24 would have to accomplish in order to get credit. I think 25 it's important you take those factors into consideration. 239 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 CHAIRMAN DUNLAP: Ms. Edgerton. 2 MS. EDGERTON: I wanted the staff to clarify 3 one point with respect to this catalyst, Premiere 4 ozone-eating catalyst. Is the one person -- that's 5 supposed to apply to any vehicle that has that technology 6 applied on it, or is it supposed to -- not the 1 percent, 7 the credit. Is that supposed to apply to any vehicle that 8 has this or is it supposed to apply only to vehicles which 9 otherwise qualify under the ZEV partial credit? 10 MR. CACKETTE: It can be used by any 11 vehicle. 12 MS. EDGERTON: The thing that confuses me, 13 if it's used by any vehicle it might be double benefit in 14 the sense that a car is motoring along and it's emitting a 15 certain amount of emissions which will produce ozone and 16 also eating up some of those, so it might have a net -- 17 your overall emissions factor for the car would already 18 have been reduced by the ozone-eating catalyst, wouldn't 19 it? 20 MR. CACKETTE: Well, the way it works is 21 return the ozone-eating capability of that into negative 22 grams per mile of hydrocarbons which then could be added to 23 the tailpipe emissions to determining compliance with the 24 standard, so that's how the scheme works. So it has to be 25 standard, but essentially get credit in negative grams per 240 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 mile of hydrocarbons for the ozone that it siphoned out and 2 removed. 3 MS. EDGERTON: So it gets the credit versus 4 the -- and gets the credit toward the ZEV standard. 5 MR. CACKETTE: Yes, that's true. SULEV 6 without a catalystic radiator, also. To gain the ZEV 7 credit, you have to have the SULEV standard, but then you 8 have to have the 150,000-mile warranty, you have to have 9 zero incentive, half a gram of -- you have to have OBD 10 compliance for 150,000 miles. You have to have all these 11 things that are a threshold before you get a ZEV credit. 12 CHAIRMAN DUNLAP: Thank you. Tom or Mike, 13 with this I'm not trying to be critical of this technology. 14 Are we talking about granting any credits here for nothing? 15 We are getting emission reduction; right? And they're 16 going to be credited accordingly; right? 17 MR. CACKETTE: We've looked at this very 18 carefully and there's no doubt it reduces. The only issues 19 remaining are things like durability issues, what happens 20 if you get in an accident, do you get one that's coated. 21 The uncertainty level in the chemistry that develops the 22 credit numbers is relatively small as the credits are 23 relatively small, so I don't think there's a lot of risk 24 associated with this device, and it's always going to be 25 positive. 241 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 CHAIRMAN DUNLAP: The briefings I've had is 2 these folks are willing to work with us to make sure that 3 it is durable and the credits are real, and that people 4 know it's having a positive effect. So I know there's 5 people that kicked it a little bit today. I'm just trying 6 to understand the rationale. Mr. Rosenberg. 7 DR. FRIEDMAN: I just want to add, the 8 cross-sectional area is a key determinant so the effect, if 9 I'm right, would be relatively greater in a big truck than 10 an automobile? 11 MR. ROSENBERG: That's absolutely right. 12 The benefit is proportional to the volume of air. So 13 that's the two things, the size of the radiator and how 14 quickly the air passes through. 15 CHAIRMAN DUNLAP: Great. 16 MR. ROSENBERG: Mr. Chairman, members, my 17 name is William Rosenberg. I'm president of AQ Ventures 18 and I serve as an advisor to Engelhard. In 1990 when you 19 passed the LEV I, I was the assistant administrator of the 20 EPA serving along with Jack Crammel and the Bush 21 administration, and it was great to work with you in that 22 capacity and I'm glad to be here today. 23 I put aside my prepared text to make a 24 couple of points. In my opinion I think this is one of the 25 most important potential pollution control technologies 242 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 that has come along in a long time. Because of the fact 2 that it's totally transparent, it goes -- it comes in the 3 form of a paint actually. It looks like a paint. It goes 4 on the radiator of a car or goes on the air conditioning 5 condenser coil in your backyard or goes on the air 6 conditioner of a bus or radiator of a bus. And yet even 7 these are all small negative sources. The modeling that 8 Tom Cackette talked about that had been reviewed by the 9 South Coast Air Quality Management District and by your 10 people with the benefit of SAI and other very, very good 11 people, shows if this were on all air conditioners, 12 theoretically it could be potentially as much as a 10, 15, 13 or 20 percent -- if you took 20 tons of VOV out of the air, 14 you get about the same ozone benefit as if you put this on 15 all the radiators. 16 We were very disappointed when Proposition 7 17 was defeated because this would be a way to make this 18 happen. The utilities could have put this on people's air 19 conditioners and had this paid for with the South Coast, 20 but this is a very important step forward. 21 I think the fact that they spent millions of 22 dollars of private money developing this is attributed to 23 the policies of this Board because you have set the 24 opportunity for people to come forward with new 25 technologies. This is really new. This is out of the box 243 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 in a real sense, although it will help in what you're 2 doing. 3 One of the issues I did want to address for 4 a moment and then I'll sit down, is that as the Chairman 5 mentioned, before any company -- whether it's Volvo or 6 anyone else -- gets any credits whatsoever, they're going 7 to have to bring their testing, their car and test it 8 before new certification tests under CARB staff direction 9 as to durability, as to impact of different environments, 10 they would have to meet the same warranties for this credit 11 as anybody else would have to meet. 12 There's an OBV II requirement that has to 13 get worked out, so the actual credits will be the function 14 of a car company coming forward two to three years from 15 now, request this on the radiator and saying we believe 16 under your rules and regulations with your testing we're 17 entitled to 0.1 grams-per-mile credit or something of that 18 sort. 19 This is not going to solve the problems, 20 but it is a step forward. It does enable car companies to 21 meet your stringent requirements, and if we're lucky and it 22 is on buses and trucks and on air conditioners and on cars, 23 besides them being very happy, I think the air quality in 24 this region will improve dramatically. 25 We really do appreciate you, and the staff 244 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 has given to bringing forward new technology, and it's a 2 lot harder on the outside to do that than it looked like in 3 the EPA, and you guys have really made it work. 4 Thank you very much. 5 CHAIRMAN DUNLAP: One comment I made when 6 Tom or Mike and I met with Bill Rosenberg -- and Bill, you 7 can tell this story better than I -- I was impressed with 8 your commentary about the rigorous nature of the staff 9 review of any new technology, in particular yours, really 10 putting us through the paces here. That impressed me, not 11 only in the diligence of the staff trying to get to the 12 bottom of how much value could be attributed to this, but 13 also to your and Engelhard's contribution to working 14 through this. It's not easy. 15 MR. ROSENBERG: They were outstanding, and 16 of course they have a lot of experience with Engelhard. 17 They did develop the three-way catalyst back in the 70s. 18 I'm sure some of the catalysts they were testing were 19 probably from them or it involved their technology. 20 The company views itself in the same 21 business that the Board is in, and although they very much 22 want to serve their customers, the car companies, to give 23 them cost effective solutions to these problems, but this 24 part of your LEV II proceeding I think will be one of the 25 finest moments of this Board and provide great dividends in 245 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 the future if these other potentials can occur. 2 CHAIRMAN DUNLAP: Thank you. Okay. Six 3 witnesses remaining. Jed Mandel, Pat Charboneau, Bob 4 Jorgenson, Tim Carmichael, Bruce Bykowski and Joe Caves. 5 We'll go in that order unless someone wants 6 to change. 7 MR. MANDEL: Good afternoon. I'm Jed Mandel 8 speaking on behalf of the Engine Manufacturers Association. 9 As you know from my frequent appearances before you this 10 year, EMA's members make a number of products regulated by 11 the California Air Resources Board. Today I am principally 12 addressing issues of concern of diesel engine 13 manufacturers. 14 As we have discussed with you and the staff 15 in this and other rules, diesel engine manufacturers have 16 achieved significant success in reducing the emissions of 17 NOx particulate matter and hydrocarbon from compression 18 engines, and also as we have discussed, we have submitted 19 today even greater reductions and even more might be 20 feasible. 21 The engine-out emission levels which have 22 been achieved from diesel engines have truly been 23 remarkable. We believe there's an opportunity to replicate 24 that success in applying aftertreatment technologies to 25 diesel engines. 246 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 However, there are significant technical 2 barriers which must be overcome. These include the fact 3 that compression ignition engines are lean burning. That 4 is, their exhaust is relatively cool, and the most 5 promising advanced technologies are very sensitive to fuel 6 sulfur. If these problems can be overcome, and we believe 7 that they can, there will be an opportunity to optimize 8 emissions performance, commercialize advanced technologies 9 and apply those technologies to a wide range of diesel 10 engine applications. That's the prize we must focus on. 11 The staff has proposed an unbelievably 12 challenging set of standards. The diesel engine 13 manufacturers will do their best to provide products which 14 can comply, and by so doing to give Californians the 15 opportunity to have a power choice that provides them the 16 performance, durability, high-torque pulling power and 17 outstanding fuel economy they want, all without adverse 18 emissions impacts and while maintaining the well recognized 19 low CO and low CO2 and essentially zero evaporated 20 emissions associated with diesel engines. 21 Because the standards are so challenging and 22 the availability of technological breakthroughs is still 23 uncertain, it is critical ARB continue to monitor and 24 report on progress being made as part of the technology 25 review process. We look forward to working with the staff 247 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 on that effort and sharing our knowledge and our expertise 2 with them and with you. 3 On a brief personal note, EMA has appeared 4 before this Board at almost every one of your hearings this 5 year. This has had two benefits. It has had assured full 6 employment for EMA staff and it has provided us an 7 opportunity to work with this Board and its Chairman. 8 One might not think that would be a positive 9 experience since you are the regulators and we are the 10 regulated industry. That has not been the case even though 11 we don't always agree. We thank you for your willingness 12 to work with us. 13 We wish the Chairman well in his future 14 endeavors. Two of EMA's members, Navistar and Cummins, are 15 going to follow me with specific comments. However if you 16 have any questions, as always we would be pleased to answer 17 them. 18 CHAIRMAN DUNLAP: Thank you. You want to 19 introduce them? Go ahead, Jed. 20 MR. MANDEL: Pat Charboneau. 21 MR. CHARBONEAU: Chairman Dunlap, members of 22 the Board and staff, my name is Pat Charboneau. I'm the 23 Vice President of Engine Engineering for Navistar. I 24 appreciate the opportunity to speak here today. 25 First I would like to say we really 248 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 appreciate the staff's willingness to listen carefully to 2 our concerns and to try to respond to these concerns, and 3 we will support the LEV II proposal as it moves forward. 4 Having said that, I want to make it clear 5 this proposal sets a tremendous technical challenge in 6 front of us. We cannot meet the standards with our current 7 technology, but Navistar has a history and will therefore 8 focus our advanced technologies on meeting the new 9 challenge. 10 Navistar was the first engine manufacturer 11 to demonstrate it was possible to meet the heavy-duty one, 12 the four-particulate standard five years ahead of time, and 13 we did this by coming out to California and providing a 14 demonstration. Last year we presented two demonstrations 15 to meet the 2004 emission standards, and one of those 16 demonstrations actually used a pass trap with a serum fuel 17 additive and came within gasoline level particulate 18 standards certified in California to the LEV standard. 19 To meet the emissions challenges, clean 20 diesel fuel will allow Navistar to leverage its advanced 21 technology, sulfur content down to 30 parts per million. 22 Navistar looks forward to working with the 23 Board and the staff to achieve nationwide low sulfur diesel 24 fuel standards that will propel further technological 25 breakthroughs. 249 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 We appreciate the opportunity to making 2 another contribution to cleaning California air by 3 impacting light- and heavy-duty diesel vehicles with 4 cleaner fuel. Thank you. 5 CHAIRMAN DUNLAP: Thank you. We'll hear 6 from your colleague now, Bob Jorgenson. Good to see you. 7 MR. JORGENSON: Thank you. Chairman Dunlap, 8 members of the Board, good afternoon. My name is Bob 9 Jorgenson. I'm the Director of Product Developmental 10 Management at Cummins Engine Company. 11 As many of you know, Cummins Engine Company 12 has manufactured diesels for on-highway, mobile off-highway 13 and stationary applications around the globe. We are in 14 the process of developing a family of smaller engines, one 15 target for which is light-duty trucks. 16 Compression ignition engines have a number 17 of attributes which we believe will make them attractive in 18 this market. For the purchasers of these vehicles, first 19 and foremost is the improved fuel economy. Direct 20 injection, compression engines offer 50 to 70 percent of 21 improvement over their spark-ignited counterparts. In 22 addition, their towing capacity will offer a much sought 23 after asset, but there are also significant environmental 24 attributes of compression ignition engines. 25 The great fuel economy I just mentioned 250 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 translate into much less CO2 emitted per mile traveled. 2 CO2, of course, has been implicated as a global warming or 3 greenhouse gas. Such a significant reduction in CO2 4 emitted by even a small segment of the light-duty vehicle 5 sector could go a long way in helping us meet the challenge 6 posed in the report. The high combustion temperatures and 7 pressures of the compression engine's cycle is inherently 8 very low CO and hydrocarbon exhaust emissions. In 9 addition, there are negligible evaporative emissions from 10 diesel fueled engines. 11 Furthermore, the production of diesel fuel 12 produces significantly less hydrocarbons than does the 13 reduction of the same amount of gasoline. 14 Unfortunately, on the other hand, the high 15 combustion temperatures and pressures of the diesel cycle, 16 again responsible for the good fuel economy and low CO 17 hydrocarbon emission do tend to produce higher NOx 18 emissions and the non-premix nature of the combustion of 19 diesel has a tendency to produce particulate emissions. In 20 the heavy-duty, on-highway arena where combustion ignitions 21 have been predominate for many years, and where we've had 22 significant very stringent emission standards, we've shown 23 the capability to reduce NOx 70 percent and particulate 90 24 percent of unregulated levels. 25 We're very proud of that achievement, but 251 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 the standards proposed by the staff today will necessitate 2 significant reductions in both NOx and PM well beyond these 3 levels and represent significant technological challenge. 4 Cummins is committed to making these further 5 reductions while maintaining the fuel economy advantage as 6 well as the advantages in CO, hydrocarbons and CO2 7 emissions. We believe that the most cost effective means 8 to do this will involve significant engine modifications 9 but will also necessitate fuel changes and continued 10 invention and development in the area of lien 11 aftertreatment. 12 Cummins is working with several fuel 13 providers to understand the impacts of various fuel changes 14 and has a number of research programs with aftertreatment 15 manufacturers and several national research laboratories. 16 We believe that this work will enable us to meet the 17 stringent proposed standards. 18 Thank you for the opportunity to present 19 these comments. And again, if there are any questions, I 20 would be happy to answer them. 21 MR. CALHOUN: I've been listening to your 22 testimony and that of the person preceding you very 23 carefully, and you make -- not issue, but you emphasize the 24 need for cleaner fuel, and are you saying that low sulfur 25 in the California diesel fuel is going to be necessary? 252 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 I know you talked about doing this 2 nationwide and having California become a partner, because 3 that's obvious to nationwide technology. But where are 4 you? 5 MR. JORGENSON: Yes. The -- as you've 6 heard, sulfur -- the reduction of sulfur is an enabler. 7 First of all, sulfur in the fuel become -- a significant 8 proportion of sulfur in the fuel become sulfate in the 9 exhaust. Sulfate is a particulate it in and of itself. To 10 reduce sulfur in the fuel is to reduce sulfur in the 11 atmosphere. But furthermore, probably as important or more 12 important is that the NOx, the lien NOx aftertreatment that 13 is unique for diesel because of the lien operating 14 conditions, is a very important characteristic. 15 We, though, are concerned about the fuel 16 cost for our customers. Fuel cost is a very important 17 element of technology, of their costs, and we want to make 18 sure that we're doing this in the most cost effective 19 manner possible. So the combination of engine changes 20 versus fuel changes, we're looking to see. We're trying to 21 make that again the most cost effective set of changes. 22 MR. CHARBONEAU: Also, once again, the very 23 low sulfur is an enabler. Will we have to have this in 24 order to achieve California objectives? We want to achieve 25 gas-like objectives. It's absolutely mandatory, but when 253 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 you do that, when you have 30 parts per million capability, 2 you now have the potential to take on this challenge. So 3 it's inherent. It's something we have to do, is something 4 we want to work with ARB Board members and the EPA to 5 achieve. 6 CHAIRMAN DUNLAP: If I might interject, I 7 appreciate the lack of finger-pointing on that answer, that 8 it's an enabler, it's a partnership meaning we're working 9 together with the fuel providers to make sure you get the 10 optimal arrangement, and I appreciate that. And I think 11 that kind of discussion has evolved. I heard some other 12 things earlier, not to make you bad guys, but there's been 13 a whole lot of back and forth finger-pointing, so I 14 appreciate that collaterally, that attitude. 15 MS. EDGERTON: This is a comment to Mr. 16 Charboneau and Mr. Jorgenson. Not personally, but I want 17 to be sure it's not a personal comment because it's a 18 comment about your industry, the diesel industry and the 19 engine manufacturers. 20 I feel differently about your statements 21 today than I might have felt a month ago. You say your 22 industry has a commitment to fuel economy and to engine 23 changes and fuel changes. That's just been the problem, 24 hasn't it. We've just had a $1 billion settlement against 25 your industry for setting your computers so that -- 254 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 MR. CHARBONEAU: Can I make a comment here? 2 The Navistar has provided information both to the EPA and 3 to CARB that they have not done anything in operation in 4 our engines, in our vehicles that goes over the standard. 5 We provided that information to the EPA and the combination 6 of agreement we have with both EPA and CARB says that that 7 is in fact the case. So from the Navistar perspective, we 8 are achieving the standards and continue to achieve the 9 standards. 10 We are the only manufacturer with 11 unconditional certificates by the EPA that say we are 100 12 percent legal. 13 MS. EDGERTON: Correction. I don't know 14 specifically except for what I have read which was that 15 most of the diesel engine manufacturers had been involved 16 in this effort to have their engines testes meeting our 17 standards, and then when they got out on the road in order 18 to achieve greater fuel efficiency, they programmed them so 19 they would be performing to a different standard. 20 And that is not impressive. That's not the 21 kind of thing that makes me take seriously what you all 22 say, and it's not a personal thing. It's hard to say to 23 anybody. You're standing here, and I appreciate your 24 saying Navistar didn't do it, but it's not something that 25 makes me want to make it more difficult for other 255 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 stationary sources in California. More of the emissions 2 are going to have to come from them in order to make it 3 possible for your company to get special allowances so that 4 diesel can continue along the route you want. 5 It's always a tradeoff, and I think what I 6 would suggest is that if you can come up with the 7 technologies that will be competitive -- and this is for 8 me -- if you can come up with them, I'm sure this Board 9 will consider them and we'll take that into account, but I 10 am not inclined at this point to include the TLEV diesel 11 issue as something I can support. 12 I did want to say for the record that a 13 factor has been my disappointment in the way that the 14 recent issue -- 15 CHAIRMAN DUNLAP: Well, just perhaps a word 16 of caution. Ms. Edgerton, if we were to apply that same 17 standard to everybody that's come before us today, various 18 points in their interaction with us where they've had a 19 compliance problem or with the environmental community who 20 may have disagreed with us ensued, or whatever it is, we 21 would be yelling at each other all the time. So I think 22 one of the things I learned perhaps too well is we need to 23 try to look past some of that and find common ground. 24 Mr. Kenny and I have had this conversation 25 and I've had it with Ms. Walsh. We expect the staff to 256 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 enforce the rules that we pass and be aggressive about it 2 and show no fear or favor and just do the job. As 3 policymakers, we need to at least be able to separate. 4 The issue before us today and another rule 5 problem or issue, or if we can't do that, we're not going 6 to have I think interaction that is going to be meaningful. 7 So I appreciate the concern you have and I share it too, 8 but again just want to remind you and others, We would be 9 yelling at Sam every time he showed up. At the same time 10 we would be giving him awards for the EV I because it was a 11 remarkable thing. Sorry, Sam. 12 (Laughter.) 13 CHAIRMAN DUNLAP: The point is we have to 14 look past those kinds of issues and there have been times 15 we've enacted rules and missed the mark and felt strongly 16 about it, but there needs to be a civil exchange. My point 17 is I tend to let that go under my bridge a little more. 18 Okay. Thank you, gentlemen. 19 I probably offended everyone in the room 20 with that comment. It was not my intention. 21 MS. EDGERTON: Anyone you didn't offend, I 22 offended. 23 CHAIRMAN DUNLAP: Two remaining witnesses, 24 both from the environmental community. Tim Carmichael and 25 Joe, I guess you're going to bat clean up today. 257 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 Is there anyone else who has not signed up 2 to testify that desires to? All right. Tim, welcome. 3 Thanks for your patience. 4 MR. CARMICHAEL: Thank you, Chairman Dunlap. 5 Tim Carmichael for Coalition for Clean Air. 6 I could start on just a lighter comment real 7 quickly. There have been changes at the coalition recently 8 and changes here, dynamic times. I wanted to let you know 9 that one of my recent executive decisions was to create a 10 new division at the coalition dedicated exclusively to 11 working on reducing emissions in the restaurant industry. 12 (Laughter.) 13 CHAIRMAN DUNLAP: I certainly have a lot of 14 well wishers. 15 Some of my colleagues indicated they're 16 going to be looking into that issue too. Thank you Tim. 17 MR. CARMICHAEL: With that said, I do have 18 serious comments. 19 I would like to cover just a couple of 20 points covered earlier today, step back from the details. 21 I have one detail that I want to focus on, but just take a 22 step back and look at the fundamentals of today's decision 23 from the environmental community's perspective, from my 24 perspective. 25 There are three challenges, three tests this 258 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 proposal needs to meet for your approval. One, are the 2 emission reductions necessary. I don't think there's 3 anybody in the room that's going to debate that issue. 4 Here in southern California, throughout this state, we've 5 got a long ways to go to get from where we are with regard 6 to clean air. Clearly the emission reductions are 7 necessary. 8 Two, is it technically feasible? There was 9 an exchange this morning which I found quite interesting 10 between the auto industry and your staff and there was a 11 challenge almost. Is the ARB staff as credible as the 12 automobile industry. From my perspective, the automobile 13 industry has a bit of a checkered past, and saying that 14 standards challenges can't be met -- and there are numerous 15 examples throughout the 70s, 80s and even into the 90s. 16 If I was going to pick a fight with the 17 staff or be critical of them, I would suggest that their 18 flaw is being too conservative. They don't push hard 19 enough. 20 If they come forward and say something can 21 be done, they have checked it and checked it and checked 22 it, I think there's one thing we can rely on, is that if 23 the staff says it can be done, it can be done. 24 And the third test that I think is critical 25 in today's decision process, is it cost effective. You 259 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 heard not only your own staff, but other representatives 2 from air agencies. Other individuals explained how 3 inexpensive these reductions are. I don't want to minimize 4 the fact that a lot of money is going to be spent to 5 achieve these standards, but relative to other control 6 programs that we have under way and will soon be adopted, 7 these are inexpensive and absolutely have to be adopted, 8 and we have to go after these emission reductions where we 9 have found them and know they can be achieved. 10 I do want to address one of the issues 11 specifically that's in the proposal that we have real 12 problems with, and I didn't have documents prepared in 13 advance and would just like to have these in front of you. 14 Just for clarity's sake, this is from the document that was 15 on the back table today. It's the staff's suggested 16 changes, and at page 2, the table that lists the standard 17 and I've highlighted -- I know this issue has been raised 18 already, but I want the Board to know exactly where we are 19 on this issue and see the numbers that have created such a 20 problem for the environmental community. 21 Specifically, the numbers for the TLEV 22 standard for oxides of nitrogen and particulates are 23 clearly much higher, much weaker than the standards 24 proposed for LEV. The only reason those standards are 25 higher is to accommodate a dirtier fuel. This agency for a 260 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 long time has professed a principal of fuel neutrality, and 2 yet here we are proposing standards to take effect five 3 years down the road that clearly make a distinction between 4 the standard and a dirtier fuel diesel. We have a real 5 problem with that and ask you to consider seriously 6 removing this piece of the proposal. It is not necessary. 7 This standard is not necessary for gasoline 8 vehicles. It only exists to accommodate diesel vehicles 9 and that is fundamentally contrary to the principals 10 professed by this agency, so we urge you to pull this piece 11 of the proposal. 12 I won't belabor the other points that have 13 been raised on warranty issues. Strongly support for the 14 strengthening the warranties. 15 We have the desire to continue to examine 16 the Premiere catalyst and make sure that it really is 17 achieving reductions before we give credit for it. 18 We have concerns about the relaxation of the 19 CAP 2000. The SULEV issue has been raised for many months 20 by organizations, but fundamentally this is, I think, the 21 biggest issue and the biggest problem with this proposal. 22 There are a lot of good things in this 23 proposal and we are here to support the proposal and want 24 to see it adopted, but it sets a double standard and it's a 25 double standard that shouldn't be set and we urge you to 261 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 pull this component and not accommodate a dirtier fuel. 2 Thank you very much. 3 CHAIRMAN DUNLAP: Tim, was there any -- the 4 whole idea about the work trucks and loads, and you 5 listened to all that today. Did any of that testimony, 6 commentary move you at all? I'm talking about from a 7 practical standpoint because you've got to understand. 8 Sitting up here -- and you and others from the community 9 may be here one day. That's one of the things we're 10 charged with doing, trying to find that balance. Did that 11 resonate with you in any way? 12 MR. CARMICHAEL: I understand why it's part 13 of the proposal, but I disagree with the reason for 14 including it. I think the staff has done an excellent job 15 of demonstrating the fact that all vehicles under 8500 16 pounds can meet the same standards in 2004, and we think 17 that should be the driving principal. 18 CHAIRMAN DUNLAP: Okay. All right. 19 Mr. Caves. 20 MR. CAVES: I'm not quite sure how I ended 21 up last. I'm going to try and be very brief. I know you 22 want to get out of here as much as I do. I did want to 23 stand up here, Mr. Chairman -- 24 My name is Joe Caves representing the Union 25 of Concerned Scientists. I did want an opportunity to 262 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 commend this Board and particularly you, Mr. Chairman, for 2 your leadership, particularly this year you have set 3 yourselves a very challenging task and a very aggressive 4 schedule of trying to adopt regulations to address a number 5 of the really critical, outstanding issues, and I think 6 this is well within the tradition of the leadership of CARB 7 and I think CARB's distributed leadership has been 8 demonstrated by being here today. 9 The reason we can have these debates is 10 because in 1990 that Board was willing to take a very bold, 11 even historic move and try to establish a new standard to 12 push automotive technology way beyond where anyone thought 13 it could be. They were willing to take that chance based 14 on really three things -- a technical staff that was able 15 to identify the possibilities and develop a program of 16 periodic review and lead time that enabled them to identify 17 a standard, to set a goal, and then to follow it up along a 18 reasonable path that made sure that their efforts were 19 going to be successful. Everything we're talking about 20 today is built on that foundation. 21 I think what you have before you is the 22 chance to make the next step, to set the new foundation for 23 the future Boards to address the air quality needs of the 24 state. We want to urge you to take a very close look at 25 that challenge, to think about what the problems are going 263 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 to be for the next Boards. 2 They're going to have to deal with the 3 additional emissions reductions that are necessary to close 4 the black box, but even more than that, they are going to 5 face a much greater challenge of dealing with new national 6 air quality standards that are setting very, very difficult 7 challenges on ozone and PM2.5 that are going to press in 8 every one of our sectors, press us to the limits. 9 We need to find every emission reduction we 10 can, and the decisions you make today are in many ways 11 going to determine whether they are going to be able to be 12 successful to meet the air quality needs for California's 13 future. 14 The second thing they're going to have to 15 deal with is they're going to have to deal with the problem 16 of air toxics. This Board took a very courageous action in 17 designating diesel particulate as an air toxic. Because 18 our entire economy is so dependent upon diesel today, the 19 challenge for the next Board is going to be tremendous to 20 try to adopt control measures to help reduce the public 21 health threat in this very serious problem without harming 22 our economy. This is not going to be an easy task. 23 You have set a very high bar for the next 24 Board they're going to have to meet. So we would ask 25 you -- and my colleagues have expressed we're supportive of 264 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 the plan here, what the staff has set out, but we have 2 drawn a couple of exceptions, a couple of points that I 3 want to hit very lightly. 4 Now, we've been talking about them for a 5 long time, but please keep in mind that because you're 6 setting the next foundation you have to look at this plan 7 in that context. Think back to what happened in 1990. One 8 of the biggest errors, if you will, omissions in that plan 9 was not foreseeing that sport utility vehicles would become 10 such a significant component of our inventory. It's easy 11 for us to look back on it now. At the time they didn't 12 have any way of anticipating, and yet the whole reason 13 we're here, the whole reason we're trying to address these 14 issues is because they have become such a large part of the 15 inventory. So we would ask you to take a look at this 16 proposal and just keep in mind those factors. 17 Please reject the AAMA proposal. We need 18 those tons. Not only do we need them now, but we 19 desperately need them for the future. 20 Two, with respect to the TLEV proposal, I 21 just want to reiterate what my colleagues have said. Our 22 fear is that this will become a gamble that goes against 23 us, this will become a loophole in this plan that future 24 Boards will look back on and say this was a mistake. 25 You've set the challenge for future Boards 265 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 to go up here and address diesel as a toxic air 2 contaminant. I just don't think we want to go down this 3 path now of encouraging the introduction of a larger number 4 of diesels into another sector. I think this is a mistake. 5 Finally I want to mention we're concerned 6 about a final mistake, and that is providing ZEV credit for 7 SULEVs. Mr. Chairman, you raised a very legitimate issue 8 of fuel neutrality. If something provides the same 9 emission benefits, shouldn't we give it the same credit? 10 The ZEV mandate has been a separate component in the LEV 11 program for a good reason. Its purpose was to give this 12 Board and future Boards other alternatives, alternatives 13 that would otherwise not be available, and I just contend 14 future Boards will need that even more with increased VMT 15 and increased population growth. One thing we're going to 16 need are true zero emission alternatives in transportation. 17 While you may not need it immediately, you may be able to 18 make the rationale that using gasoline powered vehicles, 19 even though there are upstream emissions, even though you 20 have potential for deterioration, even though some of them 21 when those warranties are over may be gross polluters and 22 contributing to the overrule inventory. Even though we may 23 be able to deal with that now, in the future we will need 24 those alternatives. 25 Our concern is giving SULEV's credit moves 266 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 you down a slippery slope that can undermine the 2 technology-forcing aspects in a way that we will truly 3 regret in 10 or 15 years. 4 With that I would just say, Mr. Chairman, 5 best wishes. I want to thank all the Board members for the 6 fine work this year. I would urge you to make the same 7 kind of courageous action today the Board took in 1990 by 8 passing this program. Thank you. 9 CHAIRMAN DUNLAP: Thank you. Okay. That 10 will conclude the public testimony on this Board item. 11 For the record, I would like to have staff 12 summarize the 4500 letters in all their diversity that the 13 Board has received. 14 MR. CARLSON: I raised my hand. I think I 15 can do it fairly expeditiously. 16 Mr. Schoning I think summarized probably -- 17 MS. SHELBY: Please identify yourself for 18 the record. 19 MR. CARLSON: Bob Carlson. As I said, 20 Mr. Schoning summarized most of the letters in his comments 21 this morning, and I think that the ones that I have here 22 are subsets of those letters. 23 I have letters from the Olive Growers 24 Council, Stock and District Kidney Bean, California 25 Business Properties Association, California Association of 267 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 Nurserymen, Connection Catering and California Poultry 2 Industry Federation, California Building Industry 3 Association, and all of them expressed the same concern 4 which is related to the medium-duty part of the proposal. 5 And they're concerned about work trucks and I think the 6 Board has had ample dialogue on that. Not much more needs 7 to be said. 8 Also we have a couple of letters from 9 Bicycle Coalition and California Humane Society, supporting 10 the option of the proposed amendments. 11 I have a couple of other quick 12 administrative details here. On the 15-day changes that 13 were put on the back table this morning, on page 6 there is 14 a minor change which we need to make at the bottom. It's 15 section B24, it's -- first, second third line strike out 16 the first "4", 2004 through, and put in "prior to the", and 17 "model years" becomes "year", and essentially then there's 18 language at the end, and basically all these changes do is 19 change it from a three-year fixed period of the -- for the 20 in-use compliance allowance of 1.75 on down, through a 21 rolling three years. This starts when an engine family is 22 certified, so in the time that engine family is certified 23 it has three years whether it be in the first, second or 24 third year. 25 CHAIRMAN DUNLAP: Can you say the page 268 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 again? 2 MR. CARLSON: I didn't finish reading the 3 language, but that's what the language does is changes a 4 static three-year to a running three-year. It's page 6 of 5 the 15-day changes at the bottom. 6 CHAIRMAN DUNLAP: Your job is to comfort us, 7 not confuse us. 8 MS. SHELBY: I think the changes he is 9 announcing are for those in the audience that have the 10 first version and you have the most recent version. 11 MR. CARLSON: Does your recent version have 12 handwriting on the bottom? 13 CHAIRMAN DUNLAP: Whatever he's talking 14 about, we have copies for the audience. Does the audience 15 have copies of the material? Where do they get it if they 16 don't have it? 17 MS. SHELBY: It's at the back table, but 18 there are people who picked ones up earlier. 19 CHAIRMAN DUNLAP: Three people with the 20 different rows, have them walk back so people. 21 MR. SCHONING: Chairman, this is the same 22 language that was released this morning on the back table 23 on the 15-day changes, so what Bob is doing is identifying 24 one change orally to the language that was put on the back 25 table and one of the things -- 269 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 CHAIRMAN DUNLAP: Does everybody in the 2 audience know what they're talking about? If you don't 3 know, raise your hand. Okay. Hi. Counsel will come find 4 and you explain it. This is serious. We've got 200 people 5 or whatever it is that stayed the whole time and we want 6 you to know what we're talking about. Mike, handle this. 7 MR. SCHONING: Very simply what it does is 8 treats the in-use compliance stays in for EVAP the exactly 9 the same as we were doing it for costs. 10 CHAIRMAN DUNLAP: That's fine. I want them 11 to have the exact language. Okay. 12 MR. CARLSON: One more. Hopefully this will 13 be easier. This is in the proposed resolution and it's on 14 page number 7 in the "whereas". You see "whereas the Board 15 further finds"? That first, second, third, the projected 16 costs to comply with the amendments provided here and are 17 expected to range from $100 to $200 per vehicle with an 18 average of about $100 and that's it. $100 to $200 and then 19 instead of $200 -- 20 MR. CALHOUN: That's as cockeyed as it was 21 before. If the range is $100 to $200, the average is going 22 to be somewhere between -- 23 MR. CACKETTE: $107. 24 DR. FRIEDMAN: Okay. 25 CHAIRMAN DUNLAP: Say it so everyone hears 270 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 it. 2 MR. CACKETTE: We did rounding there. The 3 lower numbers are $40-some I think, but I understand the 4 confusion. 5 CHAIRMAN DUNLAP: All right. So we've 6 summarized the written comments. I'm going to officially 7 close the record now. We'll come back. 8 The record will be reopened when 15-day 9 notice of public availability is issued. Written and oral 10 comments received after this hearing date before the 15-day 11 notice is issued will not be accepted as part of the 12 official record on this agenda either. When the record is 13 reopened for 15-day comment period, the public may submit 14 written comments on the proposed changes which may submit 15 written comments on the proposed changes which will be 16 considered and responded to in the final statement of 17 reasons for regulation. 18 We're going to go through ex parte 19 communications. Just a reminder to the Board members of 20 our policy concerning ex parte, how we may communicate off 21 the record with outside persons regarding rulemaking, we 22 must disclose the names of the contacts and the nature of 23 contacts on the record. This requirement applies 24 specifically to communications which take place after the 25 notice of the Board hearing has been published. 271 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 Are there any communications which we need 2 to disclose? We'll start with Supervisor Roberts. 3 SUPERVISOR ROBERTS: I haven't had any. 4 CHAIRMAN DUNLAP: Supervisor Patrick. 5 SUPERVISOR PATRICK: Yes. I had three 6 meetings one on October 8th with Pat Charboneau, Brian 7 Whalen, Tom Trueblood and Warren Slodowski of Navistar; on 8 October 14th with Reginald Modelin of Chrysler and Richard 9 Bell of Ford; and on October 22nd with Joe Caves of the 10 Union of Concerned Scientists, Roland Hwang, Union of 11 Concerned Scientists and Robert Lucas of CCEEB, and the 12 information that we discussed is essentially what's part of 13 the public record today. 14 CHAIRMAN DUNLAP: Thank you. Dr. Friedman. 15 DR. FRIEDMAN: I had a brief conversation 16 this morning with Mr. Rosenberg in which he presented some 17 of the same information that Mr. Poles presented to us this 18 afternoon. 19 CHAIRMAN DUNLAP: Very good. Mr. Calhoun. 20 MR. CALHOUN: I had conversation with 21 representatives from Navistar on October 18th, Pat 22 Charboneau, Mr. Slodowski, and their testimony, their 23 discussion or our discussion was essentially as to their 24 testimony here today. 25 CHAIRMAN DUNLAP: Okay. 272 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 MR. CALHOUN: On October the 13th I had a 2 meeting with Sam Leonard and his testimony concerned the 3 proposal. October 13th I met with -- I had a conversation 4 with Mr. Steve Douglas relative to the vehicles, that heavy 5 duty category ordered with the towing package. October the 6 25th I talked to Mr. Sam Leonard again about the standards, 7 and Roland Hwang on the 4th, which was yesterday, and 8 Mr. Brown, Kelly Brown from Forth Motor Company. 9 CHAIRMAN DUNLAP: Okay. On the 13th of 10 October I spoke with Jed Mandel and Bob Johannsen of EMA; 11 Thomas Trueblood, Manager Public Affairs International; Don 12 Ustien, Group VP General Manager, Engine and Foundry 13 Division; Pat Charboneau, Vice President, Engine 14 Engineering; Warren Slodowski, Manager Environmental Staff; 15 Brian Whalen, VP Public Affairs Navistar. That's the 13th. 16 On the 16th, Alan Zamberg, California 17 Chamber of Commerce; 19th Phil Rosenberg and Bob Teeter of 18 Ford. On the 2nd of November I spoke with Melanie Wagner 19 of Ford, Kelly Brown and Sam Leonard, also Bob Teeter via 20 conference call; on the 2nd of November Chris Walker, Tom 21 Riley and John Valencia; on the 3rd, Ford Motor Company, 22 Melanie Wagner, Kelly Brown and Sam Leonard from GM as well 23 as Peter Welch from the California Motor Car Dealers 24 Association, and I also spoke with Alan Zamberg of the 25 Chamber and that is it. All consistent with the testimony 273 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 and commentary today. 2 MS. RIORDAN: Mr. Chairman, those that I met 3 were also are consistent with the testimony that was 4 provided today. 5 On the 14th of October I met with Warren 6 Slodowski, Brian Whalen and Tom Trueblood from Navistar; on 7 October 13th I met with Steven Douglas, AAMA, Mr. Modelin 8 from Chrysler, Mr. McCann from General Motors, Mr. Leonard 9 from General Motors, Mr. Bell from Ford. 10 I met very briefly this morning with 11 Mr. Rosenberg, and then on October 26th I met with Mr. 12 Hwang from the Union of Concerned Scientists and Mr. Tim 13 Carmichael from the Coalition for Clean Air. 14 CHAIRMAN DUNLAP: Mr. Parnell. 15 MR. PARNELL: Mr. Chairman, I met with 16 several, and each of those conferences were via telephone 17 conference with the exception of one. The contents of 18 those conversation was consistent with the testimony that 19 we heard today. 20 I've met with Sam Leonard from GM; Kelly 21 Brown, Ford; Gene Kelly and Roland Hwang of the Union of 22 Concerned Scientists; Jed Mandel, Engine Manufacturers 23 Association; Navistar, Pat Charboneau, and Bill Rosenberg 24 personally this morning. We talked about the catalyst 25 issue. 274 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 CHAIRMAN DUNLAP: Thank you. Ms. Edgerton. 2 MS. EDGERTON: I met Barbara Wood-Davis and 3 Sam Leonard and Steve Douglas, and I think it was the 13th 4 of October that I met with Mr. Leonard, Mr. Douglas, 5 Mr. Bell, that same group; October 22nd I met with Roland 6 Hwang, Joe Caves and Bob Lucas from CCEEB. Sally was 7 there. October 13th I met with Navistar representatives 8 Brian Whalen, Warren Sodowski, Tom Trueblood, Patrick 9 Charboneau, and outside today I talked a little bit more 10 with Mr. Leonard and Mr. Kitz. 11 CHAIRMAN DUNLAP: Mrs. Rakow. 12 MRS. RAKOW: Yes. On October 14th I met 13 with Warren Sodowski, Thomas Trueblood and Brian Whalen 14 from Navistar; on the 8th of October I met with Steve 15 Douglas, AAMA, Kelly Brown from Ford, and Charlie Kitz from 16 Chrysler. On the 22nd of October I met with the Union of 17 Concerned Scientists, Roland Hwang and Joseph Caves, and 18 the CCEEB representative Bob Lucas. On the 20th I had a 19 telephone conversation with Christopher Walker, California 20 Service Station and Auto Repair Association. On the 30th I 21 met with Dennis Dakota, Executive Director of the 22 California Service Station and Automotive Repair 23 Association, and today I had a brief conversation with 24 Christopher Walker during the meeting, and this morning a 25 brief conversation with Mr. Rosenberg, all of which were 275 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 consistent with what we've heard today. 2 CHAIRMAN DUNLAP: Mark DeSaulnier. 3 SUPERVISOR DE SAULNIER: Mr. Chairman, I was 4 visited by Kelly M. Brown of Ford Motor Company, Charlie 5 Kitz of Chrysler and Steve Douglas of the AAMA on October 6 8th, and also I had a brief phone conversation with Don 7 Slolem representing the Citizens for Automotive Choice. If 8 I didn't say it, November 3rd. 9 All of the communications were consistent 10 with the testimony today and a letter submitted by Citizens 11 for Automotive Choice. 12 MS. EDGERTON: I forgot one person. I 13 received a call from Peter Hunter from Sempra indicating to 14 me that he thought that the Engelhard technology was 15 excellent. He was very glad it was included in the -- 16 CHAIRMAN DUNLAP: Do you remember the date? 17 MS. EDGERTON: The day before yesterday. 18 CHAIRMAN DUNLAP: It would be the 2nd. 19 MS. EDGERTON: November 2nd. 20 CHAIRMAN DUNLAP: Mr. Calhoun, I also was 21 remiss and was reached by Joseph Caves and Roland Hwang in 22 late October. My apologies for not remembering that date. 23 MR. CALHOUN: I was only brief. I had a 24 discussion with Roland Hwang on November the 2nd, and that 25 testimony was consistent with what he presented today. 276 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 CHAIRMAN DUNLAP: All right. Did we capture 2 it? All right. Very good. 3 Now for the moment we've all been waiting 4 for. I want to try to do this in a manner that is 5 recognizable to the group here. Mrs. Rakow, I'm going to 6 ask you to talk about the Service Station group's concerns 7 and how that was accommodated in the resolution. That's an 8 easy one. 9 MRS. RAKOW: Yes. 10 CHAIRMAN DUNLAP: That is an easy one. 11 MRS. RAKOW: That is an easy one because 12 everybody is in agreement that there should be some 13 accommodation to look into their concerns, and I thought 14 that we had to look, to see what we would do to provide 15 some flexibility and options to the independent automobile 16 owner in this state. We wish to do something about the 17 150,000-mile warranty that wasn't directly with the 18 dealership, and we don't know really whether there is or is 19 not a real adverse effect on the independent repair 20 station. 21 So the language that both the 22 representatives of the different independent repair 23 associations, the staff and our legal office has agreed to 24 is the first draft on the last page, page 8, which says, 25 "That be it further resolved that the ARB staff shall work 277 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 with representatives of the independent automobile service 2 and aftermarket parts industry and other interested parties 3 to assess the degree to which this industry may be 4 adversely impacted by the extended warranties and to report 5 back to the Board within 18 months with its findings and 6 proposal, and if appropriate to mitigate any adverse 7 impacts so the independent automotive service and 8 aftermarket parts industry may continue to contribute to 9 the State's efforts to reduce smog and to continue to 10 provide our state's 26 million vehicle owners with a 11 competitive automotive repair marketplace for their service 12 related needs," so that is an amendment that I strongly 13 suggest. 14 CHAIRMAN DUNLAP: All right. Does this 15 Board seem comfortable with that? I am. One of the things 16 I'm going to bring up and ask Mr. Kenny or the lawyers, Sam 17 and Kelly in particular made some very good points. One of 18 them was about -- I offered it up as a response to some of 19 that review. Tom, you guys have become masters of doing 20 technology reviews. Is that built into this package, this 21 resolution? 22 MR. CACKETTE: Yes, it is. 23 CHAIRMAN DUNLAP: Okay. 24 MR. SCHONING: The last "whereas" on page 7. 25 CHAIRMAN DUNLAP: Okay. Now, what we're 278 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 going to do -- when will we do this, Tom? When will staff 2 come back and do the collaborative review? 3 MR. CACKETTE: Well, we promised to do that 4 review biannually or we can come back at any frequency you 5 want, but that would be roughly the beginning of the year 6 2001. 7 CHAIRMAN DUNLAP: Okay. Which gives them 8 three more years, two and a half more years; correct? 9 MR. CACKETTE: Right. 10 CHAIRMAN DUNLAP: Is there any hesitation -- 11 I'm talking technical staff now -- if you guys find the 12 progress hasn't been made, that it truly is taking more 13 time, is there anybody here that has any hesitation about 14 being truthful to the Board about that and telling them we 15 need to make changes? Is there anybody here that feels 16 they can't do that? 17 Okay. That's a very important thing. It's 18 important to the Board. Not just the Board itself, but the 19 staff to have credibility. All right? So I'm seeing heads 20 bobbing and people are willing to do that in good 21 conscience. 22 MR. KENNY: Mr. Chairman, I think what 23 you're seeing from the staff is essentially a willingness 24 to always be very truthful and we'll be very factual. 25 CHAIRMAN DUNLAP: Okay. So we get the 279 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 two-year review or two years from now. All right. 2 There's been some concerns about -- Joe had 3 an issue or two. Take the easy one. 4 MR. CALHOUN: Mr. Chairman of the Board and 5 the audience, I have discussed the concern that I have 6 relative to the difference between the ozone levels during 7 the week, weekdays and weekends, and I've talked to 8 Dr. Holmes, I've talked to Mr. Kent, I've talked to Mike 9 Kenny, and I still -- recently I received several papers 10 regarding this, so I've suggested that there be a meeting 11 of the stakeholders and an investigation. I don't want to 12 just see a written memo that's disposing of the issue. 13 I would like to see us get together with the 14 other stakeholders and decide if we are headed down the 15 right road. I recognize that we need NOx control for 16 particulates and we need NOx control for ozone because of 17 the end game somewhere. I'm not sure what that is going to 18 look like, and I guess I'm suggesting that we, with the 19 other stakeholders, look into this. I'd like to get a 20 commitment from this Board, from the staff today to do 21 that. 22 MR. KENNY: I think what you're seeing from 23 the staff with regard to the issues, that this staff does 24 at least believe NOx control is important to control 25 strategies. We are willing to sit down with people and 280 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 listen to any evidence or any information that they have 2 and go through that with them, and try to understand what 3 they're saying and why they're saying it so we can provide 4 you with that commitment. In terms of a report back to the 5 Board, we can do that even. 6 CHAIRMAN DUNLAP: Okay. What form would you 7 like it, Mr. Calhoun, back to the Board? You said you want 8 a little memo. 9 MR. CALHOUN: I guess I would like to have 10 them have some discussion with the stakeholders first and 11 then have something in writing back. 12 CHAIRMAN DUNLAP: Okay. 13 MR. KENNY: We'd be happy to have a workshop 14 where we basically talk about this. 15 CHAIRMAN DUNLAP: Is the Board comfortable 16 with that? Okay. Let's -- you had another one, didn't 17 you. 18 MR. CALHOUN: I'm through. 19 CHAIRMAN DUNLAP: Premiere. There was some 20 environmentalists named who made a consistent plea that we 21 make sure that credit is given for performance and not for 22 something else. To my satisfaction staff answered the 23 concern that I think we all should have, which is does it 24 work and does the credit we're talking about in this 25 proposal reflect that and no more. And the response I got 281 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 back was yes, Chairman, it's reflective of that. I think 2 we heard from Engelhard in testimony today they're willing 3 to work with us and studies, you know, Joe had an issue he 4 heard about, that there's going to be some collaboration 5 and we're going to have some continued monitoring and 6 durability assurance; correct? 7 MR. KENNY: Correct. 8 CHAIRMAN DUNLAP: Is Engelhard here? 9 Mr. Rosenberg, that's your understanding? 10 MR. ROSENBERG: Yes. 11 CHAIRMAN DUNLAP: Okay. So with that 12 covered, the Chair feels comfortable with supporting the 13 Premiere credit. Anybody? 14 MR. CALHOUN: On the part of the actions by 15 the staff -- 16 CHAIRMAN DUNLAP: Understood, but I'm just 17 trying to disect the points at issue. People are 18 comfortable with that. Okay. 19 The diesel issue, and again the 20 environmentalists made a very consistent argument there 21 about the fact we identified diesel particulate as a toxic 22 air contaminant. They don't want to see any kind of 23 reversal, et cetera, or lose ground in any way. 24 One of the things that carried some weight 25 with me, despite Ms. Edgerton's concerns which I respect, 282 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 just relative to the engine manufacturers, the concern 2 there is that we feel staff feels and is recommending that 3 we go forward with this element in the program, largely 4 because we think that we can learn some things that will be 5 applicable, that provides for that duty cycle element that 6 people have clammered for. People have concerns, people 7 are worried -- Mr. Parnell for one, who has been paying 8 close attention to that. What's the Board's feeling about 9 the diesel element? 10 Yes, Ms. Edgerton. 11 MS. EDGERTON: Mr. Chairman, I'm going to 12 ask it be withdrawn from the proposal and I'm going to ask 13 for a second. I'll just make a couple of comments about -- 14 CHAIRMAN DUNLAP: You can do that. I just 15 want to have kind of a discussion ourselves before we get 16 to that. 17 MS. EDGERTON: I think -- 18 CHAIRMAN DUNLAP: I want to get out the 19 issues that people have reservations about. 20 MS. EDGERTON: I think this part is fraught 21 with downside, and I think this special lower standard for 22 diesel vehicles into the next century is a mistake. I 23 think it's well intentioned, but I do not believe that it's 24 appropriate in view of our having listed the toxic air 25 contaminant. I do not believe it's necessary. I don't 283 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 believe it's fuel neutral, and I would propose instead of 2 that, because I do respect the intentions of the staff and 3 the purpose behind the proposal, I would suggest that we 4 leave it to the next Board to consider. There may be other 5 ways to incentivize that by having a program to spend $10 6 million to provide one which would be a direct way of doing 7 it, and I think the people of California would understand 8 that better and it would make more sense than loading such 9 an inconsistent, public health damaging measure into this 10 superb proposal. 11 CHAIRMAN DUNLAP: Okay. 12 MS. EDGERTON: Also one other thing, sir. 13 What I would like to be able to do, if I could impose on 14 you when we do come up for a vote, I would like to ask you 15 to -- let's set it out of the way so I can have the 16 privilege of voting for LEV II but do not have to vote for 17 the two measures I cannot support. I would like those to 18 be separated out if we can. 19 CHAIRMAN DUNLAP: What's the other element 20 you can't support? 21 MS. EDGERTON: The gasoline, the .2 credit 22 for -- the partial ZEV credit for gasoline vehicles. I 23 believe that is a rear guard defensive measure to protect 24 the ZEV mandate, and I believe the next Board can handle it 25 very well if that's how they think that's the best way to 284 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 protect it. That's my opinion. 2 CHAIRMAN DUNLAP: Okay. All right. Does 3 the diesel argument as it's outlined resonate with any 4 other Board members? 5 SUPERVISOR ROBERTS: Mr. Chairman, I was 6 impressed by Mr. Cackette's explanation, but I wasn't 7 persuaded by it. I think I would associate myself very 8 strongly with the comments she's made on both ZEV and 9 gasoline. 10 CHAIRMAN DUNLAP: Anyone else? Mark. 11 SUPERVISOR DE SAULNIER: I have the same 12 concern, although I appreciate what Tom said. As Lynne 13 said, the intention is good, but I'm not sure as a lay 14 person sitting here that I'm wholly comforted even though 15 it came from you, Tom. 16 CHAIRMAN DUNLAP: Okay. So we have three, 17 four Board members that have concerns there. Lynne, we'll 18 get to that in the form of a motion. 19 Trucks. Help me out here, Joe. He was 20 doing so well with that one. What else is left on the 21 table? 22 MS. RIORDAN: Mr. Chairman, I think there's 23 a side bar which is not necessarily in the body of this but 24 is extremely important, and I don't believe it is. And I 25 don't recall each and every word, but that was the 285 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 testimony that we've really seriously got to undertake an 2 effort to clean diesel fuel, and it really isn't just 3 California that needs to do this. This needs to be 4 something that's done nationwide, and I think that's one of 5 the compelling things that this Board, constituted as we 6 are today or another Board in years to come, just really 7 needs to concentrate on. 8 I believe that very strongly because I know 9 as we watch the movement of freight through our state, much 10 of the fuel that's put into those big rigs that come across 11 our state, it's often bought outside of the state and they 12 can run it through and out again before we have an 13 opportunity to really benefit from our requirements versus 14 the requirements of other areas. It really needs to be a 15 nationwide effort, and I think that was something I keyed 16 in on and something that has been of concern to me and we 17 really need to work on this. 18 MS. EDGERTON: Mr. Chairman, I would like to 19 make another comment about the .2 -- 20 CHAIRMAN DUNLAP: One second. Does the 21 court reporter need a minute to change the paper? 22 (Interruption in the proceedings.) 23 CHAIRMAN DUNLAP: What other new issues are 24 left? What about it, Joe? 25 MR. CALHOUN: Mr. Chairman and members of 286 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 the Board and audience, my big concern is the testimony 2 we've heard from industry and the staff today about the 3 truck, and particularly the truck between 6,000 and 8,500. 4 Now, California has been in this emission 5 game since 1966, and I believe the first truck standards 6 that were required started with 1970 with the '70 model 7 year, and since that time to this day the trucks have 8 always had different standards from passenger cars, and the 9 reason for it is because the duty cycle is different, and I 10 don't think that has changed. 11 Now, admitted people use them for other 12 reasons other than they were intended, but the 13 manufacturers have to certify the vehicle with this -- I'll 14 call it adverse equipment on -- the manufacturers have to 15 meet the vehicle and test protocol is somewhat different, 16 and they have to -- these trucks have to work harder in 17 order to meet the standard, so it's difficult for me, 18 knowing what I know about it and knowing all these years it 19 hasn't been changed, my preference would have been that if 20 we want to get more emissions, tighten up on the car 21 standard, but that's not the issue before this Board today. 22 So I have trouble supporting the staff proposal for light 23 duty trucks or these trucks, and I would propose we 24 substitute the industry proposal for it. 25 CHAIRMAN DUNLAP: Okay. All right. Is 287 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 there anybody on the Board that we ought to bump from the 4 2 percent to the 15, that that resonates with them other than 3 Mr. Calhoun? 4 MR. PARNELL: John, I don't want to elongate 5 this meeting, but it is somewhat concerning to me, although 6 I heard the staff briefing. They were very articulate. I 7 heard what we heard from General Motors and Ford, and for 8 me there is a total disconnect in the information that you 9 say that we have off-the-shelf technology that was aged 10 that put on the cars and we can meet the standards, and 11 they said they can't meet the standards. I understand 12 headroom and I understand their concerns, but I also 13 understand that the appearance here is the total disconnect 14 between what you're saying. 15 Normally we get closer on these issues, but 16 having said that, I have to say that I'm compelled by the 17 argument that if we do biannual reviews, that the industry 18 has time to come in and make -- if in fact what they're 19 saying is absolutely true, that they can't meet these 20 emission standards -- that they'll have an opportunity to 21 talk to some other Board some other day and to the staff to 22 make that point. You know, I've never been as probably 23 confused in the past as I am today just because of that one 24 serious, serious disconnect, and I don't know if anyone can 25 shed any light on it. Perhaps there is no light to be 288 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 shed. 2 CHAIRMAN DUNLAP: That's the troubling part 3 of this. I think we kind of crossed a threshold a few 4 years ago with that issue relative to the industry. We 5 worked with them. We have a process whereby with this MOA 6 we're working with them, and I know that staff's done that 7 well and I know the relationship has been good, but I would 8 agree with Mr. Parnell. 9 In the four years I've been here, I've not 10 seen this effort going into finding a common ground and 11 people still not being there. I've told the industry and 12 I'll say again, the staff, while not perfect, has been 13 right more often than not, and when I have the staff 14 telling me that this can be done, they're showing the data 15 and they're willing to go toe-to-toe on some of these 16 arguments, it's difficult for me to say no, I'm going to 17 disregard all that and I'm going to go with some industry 18 points of view, because that leaves me nowhere, and so I'm 19 troubled by that too. I am comforted by the two-year 20 review. Okay. 21 Why don't we get down to the business of 22 moving this item. Has it been fair thus far that we've got 23 the most support things out there? 24 So the primary, there seems to be consensus 25 on all issues save the diesel issue, and what else am I 289 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 missing? 2 MS. EDGERTON: The .2 partial credit. 3 CHAIRMAN DUNLAP: Again the hybrid issue. 4 What do we call it? 5 MR. CACKETTE: Partial ZEV credit for 6 gasoline. 7 MS. EDGERTON: I wanted to again articulate 8 my concern. 9 CHAIRMAN DUNLAP: I want to find out if 10 there's anybody else on the Board that feels that way so we 11 can get a flavor for it. Anybody else concerned about the 12 partial ZEV credit? 13 SUPERVISOR ROBERTS: You're talking about 14 the gasoline, .2 or whatever? 15 CHAIRMAN DUNLAP: Yes. 16 SUPERVISOR ROBERTS: Yes. Both of those. 17 CHAIRMAN DUNLAP: So we have a couple other 18 members concerned about that. Okay. Why don't we -- well, 19 I think I'm willing to put that to a vote, so what I'm 20 going to try to do, Kathleen, if I can is isolate that 21 component and see if the Board wants to not give the 22 partial ZEV credit on gasoline vehicles. Can we do that? 23 MS. WALSH: What you might want to do is ask 24 if you have a motion for the revised resolution, second. 25 You can then take amendments, proposed amendments to the 290 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 resolution. 2 CHAIRMAN DUNLAP: Fine. Okay. I'm going to 3 take a motion on the resolution, so I'm going to look to 4 Mrs. Rakow who has clear thinking on this thing and put it 5 on your shoulders to capture as much of this as you can. 6 She's been keeping a list. 7 MRS. RAKOW: I was going to make it very 8 simple and say that I move that the Board accept the staff 9 proposal on California's Low Emission Vehicle program and 10 include the eight pages of the revised proposed amendments. 11 CHAIRMAN DUNLAP: Resolution. 12 MRS. RAKOW: Resolution. 13 CHAIRMAN DUNLAP: Okay. 14 MS. RIORDAN: I'll second the motion. 15 CHAIRMAN DUNLAP: We have a motion and a 16 second. Now, there -- 17 MS. WALSH: Might I just inquire? 18 So we don't have any confusion, there are 19 two proposed resolutions out. The one that includes the 20 language that Mrs. Rakow proposed earlier, that is the 21 resolution the motion refers to, says revised proposed 22 resolution? 23 MRS. RAKOW: Right. 24 CHAIRMAN DUNLAP: The second would agree? 25 MS. RIORDAN: I would agree. 291 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 CHAIRMAN DUNLAP: Now, amendments to that 2 motion, Ms. Edgerton, would be what? 3 MS. EDGERTON: Yes. I would like to do the 4 seriatim. I would like to first propose that the .2 5 partial ZEV credit for gasoline vehicles be deleted from 6 the partial ZEV credit. 7 CHAIRMAN DUNLAP: There's a motion to that 8 amendment. Is there a second? 9 SUPERVISOR ROBERTS: I'll second that, John. 10 CHAIRMAN DUNLAP: Any discussion we need to 11 have on that? 12 MS. EDGERTON: Yes. I would like to discuss 13 it as the maker of the motion. 14 CHAIRMAN DUNLAP: Okay. 15 MS. EDGERTON: I think what we've seen, and 16 this whole hearing began with the presentation from 17 Ballard. I think what we've seen are enormous advances in 18 the fuel cell area, and we've also seen tremendous advances 19 with battery powered electric vehicles that we've all been 20 driving. 21 I think that those advances are very 22 exciting and we don't know whether in this next time frame 23 of 2004 to 2010 whether it might not be possible for that 24 10 percent to be filled up with hybrid vehicles, hybrid 25 electric vehicles and more ZEVs if there are breakthroughs 292 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 in that technology. So my argument here is that are we 2 shooting ourselves in the foot? I do certainly respond 3 enthusiastically to Honda's and others' super ULEVs. I 4 think that's great. 5 However, I think we want to be sure that we 6 keep this category open to further those technologies that 7 are making so much progress and which are the silver bullet 8 or silver bullets for southern California, for your 9 children, my children and our grandchildren, and so with 10 respect, though I think -- and the second thing I think 11 that it is not clear. I believe the gasoline vehicles do 12 not belong here because part of the reason, I distinctly 13 recall the major part of the reason was to try to provide 14 for the upstream emissions measures, so I think that also 15 it torments the category. 16 CHAIRMAN DUNLAP: Mrs. Rakow, you're welcome 17 to say something. 18 MRS. RAKOW: Thank you. I'm very 19 understanding of your viewpoint because I'm very, 20 extremely, completely supportive of fuel cells and electric 21 vehicles. However, I looked on this as the ZEV credit, 22 where I normally would have been completely -- I look on it 23 as a building block to get to where we ultimately want to 24 be with electric vehicles in California, and so I think 25 this is part of building the support to get there, so -- 293 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 CHAIRMAN DUNLAP: One of the things that 2 Lynne not so much surprised me about your position is this. 3 I just remember you being very enthusiastic about hybrid 4 technology, about finding some way to get them into the 5 program, about getting them some credit. I remember you 6 encouraging me early in my tenure to come clean with what 7 was going on, and I remember us having some conversations 8 with staff about some exciting technology developments that 9 use the best of both kinds of elements of clean gasoline 10 engines and electric powered zero emission, so -- I think 11 we've put this issue off for a long time. 12 Tom, you and I have talked about this for 13 about two and a half, three years, so I don't see this so 14 much as a give-away or a bad thing on ZEVs, but I view it, 15 as Mrs. Rakow does, as kind of a step to recognize people 16 for coming up with a cleaner car and giving proportional 17 credit. 18 Now, I'll say -- and I think I've said it 19 before -- I support zero emission vehicles. I want them to 20 be successful. I want Sam to move that EV-1. I want 21 harmony. I want all these things out there, but we can 22 want it all day long, but if they're not getting out there, 23 A, the only benefits we're going to see is only going to be 24 on paper and expectation. So I think what we want to do is 25 nurture and support some things getting out there that 294 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 maybe don't do everything we like, but are certainly making 2 progress and are attractive to consumers, and if people are 3 perceiving it as a walk-away from the gold standard of 4 ZEVs, I think that's a false assumption, and I think we've 5 got a ways to go to get the consumers there. There's 6 pricing issues, there's performance issues, there's 7 technology barriers, so I'm not afraid either of the 8 symbolism or kind of where that leaves us consistently. 9 I'm just not worried about it that much yet. I think we 10 need this technology. 11 Supervisor Patrick, you're welcome to say 12 anything if you like. 13 SUPERVISOR PATRICK: Thank you, 14 Mr. Chairman. I would like to just say how much I agree 15 with your position on this. I think that the environmental 16 community has made some very compelling arguments for why 17 they want us to go in another direction, and we have heard 18 them and I think they are very compelling. 19 On the other hand, I think the industry 20 needs more flexibility, and I think this helps to encourage 21 the kind of commitment that we need to move towards 22 complete zero emission vehicles in the future, and I think 23 that we need to support that flexibility for industry. It 24 helps us get there, I think. 25 CHAIRMAN DUNLAP: Thank you. Ron, did you 295 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 want to -- and Ron, I know you've been a big booster of 2 this technology from the get-go. 3 SUPERVISOR ROBERTS: Yeah. And I guess I'm 4 not as convinced as you are -- 5 CHAIRMAN DUNLAP: Right. 6 SUPERVISOR ROBERTS: -- that this is moving 7 in a direction that -- I think we just have a strong 8 difference of opinion, John, and I was also persuaded by 9 the comments that I heard about looking at this as a 10 system, and it's not just the car and it's not just what's 11 coming out of the tailpipe, but it's a whole system of 12 things contributing to a problem. That by allowing this 13 option we're losing sight of a good portion of this, and I 14 just -- I don't feel comfortable, and I think it's 15 inappropriate and I don't see it as helping in the way that 16 you feel confident. 17 CHAIRMAN DUNLAP: Okay. All right. If 18 there's no other discussion, we'll vote on the amendment. 19 Lynne, would you restate it? 20 MS. EDGERTON: To delete from the partial 21 ZEV credit measure only the credit provision for gasoline 22 vehicles, which is the credit of .2. 23 CHAIRMAN DUNLAP: Okay. 24 MR. CACKETTE: I would like to clarify that 25 gasoline-only vehicles, because there are credits in there 296 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 for gasoline hybrid electric vehicles, for example. 2 MS. EDGERTON: I think gasoline-only, that 3 they only have gasoline, not for hybrids that have gasoline 4 and -- 5 SUPERVISOR ROBERTS: That's the .2? 6 MS. EDGERTON: Yes. 7 CHAIRMAN DUNLAP: All right. We'll proceed 8 with a voice vote, and we have a motion and second relative 9 to this amendment as it relates to gasoline-only hybrids 10 and SULEVs. All those in favor of the motion say "aye." 11 okay. Raise your hand. We have one, two, three, four. 12 Opposed? Raise your hand. Okay. 13 It appears that that motion, that amendment 14 is not made. Okay. What's the other amendment we have? 15 MS. EDGERTON: Mr. Roberts, do you want to 16 make it or do you want me to make it? 17 SUPERVISOR ROBERTS: Well, this would be 18 that as it pertains to the diesel -- 19 CHAIRMAN DUNLAP: Okay. 20 SUPERVISOR ROBERTS: -- exemption. 21 CHAIRMAN DUNLAP: Okay. 22 SUPERVISOR ROBERTS: I would move that we 23 would delete that. 24 DR. FRIEDMAN: Second. 25 CHAIRMAN DUNLAP: Okay. 297 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 MS. EDGERTON: Second. Who's the second? 2 CHAIRMAN DUNLAP: Okay. There's a motion by 3 Supervisor Roberts -- 4 MS. EDGERTON: I second. 5 CHAIRMAN DUNLAP: -- and a second by 6 Dr. Friedman. All right. Let's -- 7 MR. KENNY: Actually, I want -- for 8 clarification purposes, I think we need to make sure we 9 understand what the motion is. 10 CHAIRMAN DUNLAP: Okay. Very good. Ron, 11 restate it, and Tom, you're welcome to assist him to make 12 sure we cover what the intent is. 13 MR. KENNY: Is the motion to delete the TLEV 14 standard and the alt TLEV standard as proposed by staff? 15 And that is essentially the on-trade we discussed for 16 diesels. 17 SUPERVISOR ROBERTS: That's correct. 18 CHAIRMAN DUNLAP: Okay. We have a motion 19 and a second. 20 MR. CACKETTE: There was also a nuance item. 21 I'm not sure this came out, but we have a standard in 2004 22 which is a TLEV standard available to gasoline or diesel. 23 There's an optional standard as well for that, and in 2007 24 the staff proposed to tighten the standard down, so I just 25 want to point out there's a couple of time windows and 298 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 obviously the motion could be to eliminate all 2 TLEVs from day one in the LEV II program or only after 3 2007. There's various -- 4 MS. EDGERTON: My motion is to eliminate all 5 TLEVs -- 6 MR. CACKETTE: From the LEV II program. 7 MS. EDGERTON: -- from 2004 on. 8 CHAIRMAN DUNLAP: Okay. Is that okay with 9 -- Ron, you made that motion? 10 SUPERVISOR ROBERTS: Yes. 11 MS. EDGERTON: Oh, wait. 12 CHAIRMAN DUNLAP: Is that okay with the 13 second from Dr. Friedman? 14 DR. FRIEDMAN: Yes. 15 CHAIRMAN DUNLAP: Okay. 16 MS. EDGERTON: Is that wrong? 17 MR. KENNY: That's correct. 18 There are two TLEVs in 2004. There's the 19 standard TLEV which is essentially the carryover from LEV 20 I. There is an alt TLEV which is the proposal by the 21 staff, and there's an alternative to the LEV I, TLEV 22 proposal, and then there is a 2007 TLEV proposal. So as I 23 understand what the motion is, you're proposing to 24 eliminate TLEVs from 2004 on, so what would happen is that 25 there would not be any TLEVs in either 2004, there would 299 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 not be any alt TLEVs in 2004, and there would not be any 2 TLEVs in 2007, so all the TLEV references would be deleted. 3 CHAIRMAN DUNLAP: Okay. 4 MR. SCHONING: Mr. Chairman, if you look at 5 page 2 of the 15-day handout, you can see the standard 6 table and the four places where there are TLEV standards. 7 CHAIRMAN DUNLAP: Okay. Page 2? Okay. 8 We have a motion and a second to delete the 9 TLEV elements as outlined by our executive officer. 10 MS. EDGERTON: Point of information, I'd 11 like to ask the staff. Alternatively we could keep the 12 TLEV but at the lower level which you indicated to me it 13 could be made to gasoline and so it wouldn't be especially 14 for diesel; right? 15 MR. KENNY: It's not especially for diesel. 16 The TLEV standard as part of LEV I is the original TLEV 17 standard that is being utilized by both gasoline and 18 diesel. It does have a NOx standard which is more lenient, 19 diesel is able to take advantage of, so that TLEV standard 20 as part of LEV I would essentially on its own disappear by 21 2007 as part of LEV I. 22 What we're really talking about here is do 23 we have the original TLEV standard which the Board adopted 24 back in 1990 as part of LEV I continue out and run its 25 course or do we take that TLEV standard out beginning in 300 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 2004, then what the staff has proposed as part of LEV II as 2 an alternative to the TLEV standard in 2004, and then the 3 tighter TLEV standard in 2007. 4 MR. CACKETTE: If I could, maybe this might 5 help a little bit. I don't want to add confusion here. 6 CHAIRMAN DUNLAP: I forbid you to confuse 7 anyone. 8 (Laughter.) 9 MR. CACKETTE: Let me just say that the TLEV 10 standard was there for two purposes. It's been in there 11 LEV I and LEV II because we thought having a menu of 12 different standards from dirtier to super clean was a way 13 of providing flexibility to the auto industry. They make 14 some TLEVs, some super ULEVs, mostly LEVs and ULEVs. 15 That's kind of the way it's gone. Where the diesel aspect 16 comes in is it happens to be that the only standard is the 17 TLEV standard, so that's why you're focusing on TLEV. But 18 it was there for another purpose which is to provide some 19 flexibility for even gasoline powered cars, and obviously 20 we called it transitional because we had a vision of it 21 going away eventually. And the way it goes away is we have 22 this fleet average standard and it just cranks down and you 23 just can't make measure of these dirtier vehicles, gas or 24 diesel, so that's what its two purposes were. I just 25 wanted to tell you. 301 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 CHAIRMAN DUNLAP: Okay. 2 MS. EDGERTON: My understanding is that -- 3 CHAIRMAN DUNLAP: I want to call the 4 question. We think we know what we want here. How is it 5 -- the only clarification I think at this point is how is 6 it going to disadvantage or impact gasoline powered 7 vehicles, Tom? 8 MR. CACKETTE: The TLEV I, the current 9 standard, can be used to a limited extent to the year 2006, 10 then that program goes away in 2007. It's not available. 11 If you make this motion, it's not available to anybody. I 12 don't think it creates an impossible situation anywhere, 13 but it clearly takes away flexibility and it does in our 14 mind prevent any diesel vehicle we are aware of or can see 15 in the future from complying with the LEV standards. 16 MS. EDGERTON: So we'll just stay with 17 taking it out. 18 CHAIRMAN DUNLAP: Well, we have a motion and 19 a second. Any discussion we need to have? 20 I'm going to do a voice vote. Okay? So, 21 Ms. Shelby, why don't you call the question. 22 MS. SHELBY: Calhoun. 23 MR. CALHOUN: No. 24 MS. SHELBY: DeSaulnier. 25 SUPERVISOR DE SAULNIER: Aye. 302 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 MS. SHELBY: Is that yes? 2 SUPERVISOR DE SAULNIER: Yes. 3 MS. SHELBY: Edgerton. 4 MS. EDGERTON: Yes. 5 MS. SHELBY: Friedman. 6 DR. FRIEDMAN: Yes. 7 MS. SHELBY: Parnell. 8 MR. PARNELL: No. 9 MS. SHELBY: Patrick. 10 SUPERVISOR PATRICK: Yes. 11 MS. SHELBY: Rakow. 12 MRS. RAKOW: Yes. 13 MS. SHELBY: Riordan. 14 MS. RIORDAN: No. 15 MS. SHELBY: Roberts. 16 SUPERVISOR ROBERTS: Yes. 17 MS. SHELBY: Silva. 18 SUPERVISOR SILVA: Yes. 19 MS. SHELBY: Chairman Dunlap. 20 (Laughter.) 21 CHAIRMAN DUNLAP: Do I really have any power 22 to effect that one? I'll abstain on that one. I don't see 23 any purpose. 24 All right. That motion carries. TLEVs are 25 gone. 303 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 MS. SHELBY: Seven to three with the 2 Chairman abstaining. 3 CHAIRMAN DUNLAP: Okay. Now the whole 4 motion. What else do we have? We have the rest -- well, 5 unless I have an amendment, Joe. Do we have somebody that 6 wants to offer an amendment other than the one we just 7 voted on? 8 MR. CALHOUN: Yes. 9 CHAIRMAN DUNLAP: Okay. What's your 10 amendment? 11 MR. CALHOUN: Mr. Chairman of the Board, I 12 propose that we amend the resolution so far as it pertains 13 to the LEV II exhaust emission standards for new 2004 and 14 subsequent model years, LEVs, ULEVs and sub ULEVs, and 15 passenger car, light duty truck and medium duty vehicles -- 16 we've already eliminated TLEVs -- amended to accept the 17 industry proposal in lieu of the -- 18 CHAIRMAN DUNLAP: Okay. We kind of talked 19 about it. I was looking for consensus to that, Joe, and I 20 couldn't find any. Does anybody want to second that 21 motion? Okay. Joe, the motion dies. I appreciate the 22 effort. 23 Let's go to the main motion which we have 24 before us which proved the resolution, the revised 25 resolution with exception of the TLEV elements that have 304 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 been stripped out. Do we need to have any discussion on 2 that? Okay. 3 We'll proceed with a voice vote. All those 4 in favor say "aye". 5 ARB BOARD: Aye. 6 CHAIRMAN DUNLAP: Any opposed? Very good. 7 Thank you. It looks like we're done with LEV II. 8 What we're going to do -- first of all, I 9 want to thank everybody who participated and testified 10 today. It was a long day. 11 We have an open comment period. I'm going 12 to ask Supervisor Riordan to open up the open comment 13 period. We have five witnesses who have signed up. I'm 14 going to ask Supervisor Riordan to proceed to do that. 15 MS. RIORDAN: Thank you, Mr. Chairman. 16 Mr. Parnell, did you want to make a comment? 17 MR. PARNELL: I only wanted to take the 18 opportunity to say this, and I've worked at the highest 19 levels of federal government, the highest levels of state 20 government, and I have never in my whole experience ever 21 had the opportunity to work with a brighter, more diligent 22 young man that has probably one of the great futures ahead 23 of him. 24 I've never worked with anyone with more 25 integrity, anyone with more strength of character, anyone 305 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 with more singleness of purpose. This clean air is his 2 agenda and has been, so I just wanted to say publicly in 3 all of my experience across the board in government, this 4 man has meant an awful lot to me and will continue to meet 5 an awful lot to me because I think he is the absolute 6 epitome of leadership in America today, so thank you, John. 7 (Applause.) 8 CHAIRMAN DUNLAP: You guys have been hearing 9 from me all day, so I'll make it brief. 10 Jack, it's very kind. I've really, really 11 enjoyed my time with the Air Resources Board. It was a 12 great honor for the Governor to ask me to serve in this 13 way. I not only come to enjoy the work, which I kind of 14 was trained to do earlier in my career because I knew air 15 pollution, but I've really come to have great fondness and 16 affection not only of the members of this Board, but to the 17 staff. 18 Mike Kenny has just been terrific and the 19 staff is supremely competent and committed, and any way 20 that it looked favorably upon me or us is because of them 21 and you, and so I'll be always grateful for that and also 22 the stakeholders. You guys have kept everybody honest, and 23 I think that's important in the process, so thank you. I'm 24 embarrassed by the attention and we'll proceed with the 25 open comment period. Thank you. 306 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 MS. RIORDAN: And thank you, Mr. Chairman. 2 And we'll have another opportunity to honor our Chairman 3 and we look forward to that a little bit later in this 4 month. 5 This is an open comment period. Although 6 the Board can't take formal action, we are open to hearing 7 items that are in our jurisdiction, and so let me call on 8 Bob Warden from Western States Petroleum Association. 9 MR. WARDEN: Pass. 10 MS. RIORDAN: Pardon me? 11 MR. WARDEN: I'll pass. 12 MS. RIORDAN: You'll pass. 13 Don Gilson from Western States Petroleum 14 Association. 15 MR. GILSON: I'll pass, too. 16 MS. RIORDAN: You know we have a lot of work 17 to do, gentlemen, so we're delighted you're here, and I 18 think you heard the comments about partnership and working 19 with cleaner fuels. 20 Wolfgang Groth from Volkswagen of America. 21 Mr. Groth? 22 MR. GROTH: Pass. 23 MS. RIORDAN: Passing? You're saying 24 goodbye. Patrick Kudell from the American Lung 25 Association, are you still here? Mike McCormach from EEC, 307 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 pardon me, CEC, California Energy Commission. I guess they 2 left. 3 And so with that in mind, I am going to 4 adjourn the meeting and thank you all very much for coming. 5 * * * 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 308 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900 1 STATE OF CALIFORNIA ) 2 ) ss. 3 COUNTY OF SAN BERNARDINO ) 4 5 I, Terri L. Emery, CSR 11598, a Certified 6 Shorthand Reporter in and for the State of California, do 7 hereby certify: 8 That the foregoing proceeding was taken down 9 by me in shorthand at the time and place named therein and 10 was thereafter reduced to typewriting under my supervision; 11 that this transcript is a true record of the testimony 12 given by the witnesses and contains a full, true and 13 correct record of the proceedings which took place at the 14 time and place set forth in the caption hereto as shown by 15 my original stenographic notes. 16 I further certify that I have no interest in 17 the event of the action. 18 EXECUTED this 20th day of November, 1998. 19 20 21 22 ______________________________ 23 Terri L. Emery, CSR #11598 24 25 309 BARNEY, UNGERMANN & ASSOCIATES 1-888-326-5900