BEFORE THE

                             UNITED STATES

                    ENVIRONMENTAL PROTECTION AGENCY

     In the Matter of              )

                                   )

     CALIFORNIA STATE MOTOR        )    Docket No.

     VEHICLE POLLUTION CONTROL     )    EPA-HQ-OAR-2006-0173

     STANDARDS; REQUEST FOR        )

     WAIVER OF FEDERAL PREEMPTION. )

                                   )

                                   )

                            PUBLIC HEARING

              JOE SERNA JR. CAL/EPA HEADQUARTERS BUILDING

                 BYRON SHER AUDITORIUM - SECOND FLOOR

                             1001 I STREET

                        SACRAMENTO, CALIFORNIA

                        WEDNESDAY, MAY 30, 2007

                               9:00 A.M.

     Reported by:

     John Cota

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                              APPEARANCES

     UNITED STATES ENVIRONMENTAL PROTECTION AGENCY PANEL

     Christopher Grundler, Presiding Officer

     David Dickinson

     Robert Doyle

     Michael Horowitz

     Karl J. Simon

     Amy Zimpfer

     PANEL TESTIMONY

     Susan Kennedy, Chief of Staff, Office of the Governor, State

     of California

     Jerry Brown, Attorney General, State of California

     The Honorable Fabian Nu¤ez, Speaker, California Assembly

     Fran Pavley, Former Assembly Member

     Robert F. Sawyer, PhD, Board Chair, California Air Resources

     Board

     Catherine Witherspoon, Executive Director, California Air

     Resources Board

     Christine Kehoe, California State Senator

     Ira Ruskin, California Assembly Member

     Heather Fargo, Mayor, City of Sacramento

     Rocky Anderson, Mayor, City of Salt Lake City

     Christopher Cabaldon, Mayor, City of West Sacramento

     Steven P. Douglas, Alliance of Automobile Manufacturers

     Andrew Clubok, Alliance of Automobile Manufacturers

     Michael J. Murray, Sempra Energy

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     PANEL TESTIMONY

     John Busterud, Pacific Gas & Electric Company

     Bob Epstein, PhD, Environmental Entrepreneurs

     Mary Nichols, University of California, Los Angeles,

     Institute of the Environment

     Henry Hogo, South Coast Air Quality Management District

     Henry Hilken, Bay Area Air Quality Management District

     Barbara Lee, Northern Sonoma County Air Pollution Control

     District

     Mel Zeldin, California Air Pollution Control Officers

     Association

     Vandana Bali, Department of the Environment, City and County

     of San Francisco

     Henry T. Perea, Council President, City of Fresno and

     Governing Board Member, San Joaquin Valley Air Pollution

     Control District

     Brigette Tollstrup, Sacramento Metropolitan Air Quality

     Management District

     Ron Curry, Secretary, New Mexico Environment Department

     Erik Skelton, North East States for Coordinated Air Use

     Management

     Larry Greene, National Association of Clean Air Agencies and

     Sacramento Metropolitan Air Quality Management District

     Dr. Peter H. Gleick, Pacific Institute

     Dr. Roger Bales, University of California, Merced

     Dr. Margaret Torn, Lawrence Berkeley National Laboratory

     Dr. Mike Kleeman, University of California, Davis

     Dr. Louise Jackson, University of California, Davis

     Dr. Larry Dale, Lawrence Berkeley National Laboratory

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     PANEL TESTIMONY

     Russell Long, Bluewater Network & Friends of the Earth

     Tim Carmichael, Coalition for Clean Air

     Patricia Monahan, Union of Concerned Scientists

     Roland Hwang, Natural Resources Defense Council

     Derek Walker, Environmental Defense

     Michael Brune, Rainforest Action Network

     Bonnie Holmes-Gen, American Lung Association of California

     Donna Dorsey Fox, California Nurses Association

     Alex Kelter, MD, Volunteer, American Lung Association

     Kris Rosa, Silicon Valley Leadership Group

     Michael D. Jackson, TIAX LLC

     Bob Roberts, California Ski Industry Association

     Carl Zichella, Sierra Club

     Jason Barbose, Environment California Research & Policy

     Center

     Christopher B. Busch, PhD, Union of Concerned Scientists

     Mike Somers, Arizona PIRG Education Fund

     Buddy Burke, Republicans for Environmental Protection

     Matt Vander Sluis, Planning and Conservation League

     Thomas Cackette, Chief Deputy Executive Officer, California

     Air Resources Board

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                                 INDEX

                                                             Page

     Proceedings                                                1

     Introduction

     Introductory Remarks by Chris Grundler                     1

     Panel 1

          Susan Kennedy, Chief of Staff,

          Office of the Governor, State of California           4

          Jerry Brown, Attorney General, State of California    8

          Fabian Nu¤ez, Speaker, California Assembly           15

          Fran Pavley, Former Assembly Member                  17

          Dr. Robert Sawyer, Board Chair,

          California Air Resources Board                       22

          Catherine Witherspoon, Executive Director,

          California Air Resources Board                       22

     Panel 2

          Christine Kehoe, California State Senator            41

          Ira Ruskin, California Assembly Member               43

          Heather Fargo, Mayor, City of Sacramento             45

          Rocky Anderson, Mayor, City of Salt Lake City        48

          Christopher Cabaldon, Mayor,

          City of West Sacramento                              54

     Panel 3

          Steven Douglas,

          Alliance of Automobile Manufacturers                 56

          Andrew Clubok,

          Alliance of Automobile Manufacturers                 61

          Michael Murray, Sempra Energy                        81

          John Busterud, Pacific Gas & Electric Company        84

          Dr. Bob Epstein, Environmental Entrepreneurs         87

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                                 INDEX

                                                             Page

     Panel 4

          Mary Nichols,

          UCLA, Institute of the Environment                   92

          Henry Hogo,

          South Coast Air Quality Management District          96

          Henry Hilken,

          Bay Area Air Quality Management District            101

     Panel 5

          Barbara Lee,

          Northern Sonoma County

          Air Pollution Control District                      107

          Mel Zeldin,

          California Air Pollution

          Control Officers Association                        109

          Vandana Bali,

          Department of the Environment,

          City and County of San Francisco                    111

          Henry Perea, Council President,

          City of Fresno                                      115

          Brigette Tollstrup,

          Sacramento Metropolitan

          Air Quality Management District                     119

     Panel 6

          Ron Curry, Secretary,

          New Mexico Environment Department                   122

          Erik Skelton,

          North East States for

          Coordinated Air Use Management                      127

          Larry Greene,

          National Association of Clean Air Agencies          132

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                                 INDEX

                                                             Page

     Afternoon Session                                        139

     Panel 7

          Dr. Peter Gleick, Pacific Institute                 139

          Dr. Roger Bales, UC Merced                          145

          Dr. Margaret Torn, Lawrence Berkeley National Lab   149

          Dr. Mike Kleeman, UC Davis                          154

          Dr. Louise Jackson, UC Davis                        160

          Dr. Larry Dale, Lawrence Berkeley National Lab      166

     Panel 8

          Patricia Monahan, Union of Concerned Scientists     171

          Russell Long,

          Bluewater Network & Friends of the Earth            175

          Tim Carmichael, Coalition for Clean Air             179

          Roland Hwang, Natural Resources Defense Council     182

          Derek Walker, Environmental Defense                 189

          Michael Brune, Rainforest Action Network            199

     Panel 9

          Bonnie Holmes-Gen,

          American Lung Association of California             204

          Donna Dorsey Fox, California Nurses Association     209

          Alex Kelter, MD, Volunteer,

          American Lung Association                           210

     Panel 10

          Kris Rosa, Silicon Valley Leadership Group          214

          Michael Jackson, TIAX LLC                           217

          Bob Roberts, California Ski Industry Association    223

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                                 INDEX

                                                             Page

     Panel 11

          Carl Zichella, Sierra Club                          228

          Jason Barbose,

          Environment California Research & Policy Center     233

          Christopher B. Busch, PhD,

          Union of Concerned Scientists                       237

          Mike Somers, Arizona PIRG Education Fund            241

          Buddy Burke,

          Republicans for Environmental Protection            245

          Matt Vander Sluis, Planning and Conservation League 247

     Opportunity for Public Comment                           248

     Final Comments by the State of California

          Thomas Cackette, Chief Deputy Executive Officer,

          California Air Resources Board                      248

          Dr. Robert Sawyer, Chair,

          California Air Resources Board                      254

     Concluding Remarks by Chris Grundler                     255

     Adjournment                                              256

     Certificate of Reporter                                  257

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 1                            PROCEEDINGS

 2             ASSOCIATE DIRECTOR ZIMPFER:  Good morning.  My

 3   name is Amy Zimpfer, I am an associate director of the US

 4   EPA's office in San Francisco, the Region 9 Southwestern US

 5   EPA, and that covers Arizona, California, Nevada, Hawaii and

 6   the Pacific Islands.

 7             It is my honor today to welcome you all to the

 8   hearing and to welcome our colleagues from our headquarters

 9   Office of Transportation and Air Quality.

10             Before we get started I do want to say thank you

11   very much to the Air Resources Board and to Cal/EPA for

12   providing the hearing room today and all of the tremendous

13   logistical support.  It certainly makes our job easier to

14   have the support of our state colleagues.

15             So without further adieu I would like to introduce

16   Christopher Grundler.  He is the Deputy Director of the

17   Office of Transportation and Air Quality, he works out of

18   Ann Arbor.  And with him today are a number of folks from

19   our headquarters office in Washington DC.  And we are very

20   much looking forward to all the testimony and we will be

21   taking it all into consideration as we deliberate on the

22   waiver request.  Chris.

23             PRESIDING OFFICER GRUNDLER:  Let me add my welcome

24   to all of you to this public hearing on the California Air

25   Resources Board's request for a waiver of preemption for its

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 1   greenhouse gas emissions regulations.

 2             As Amy mentioned I am Chris Grundler, I will be

 3   the presiding officer for today's hearing.

 4             I want to just express at the outset how much we

 5   appreciate very much all of you taking the time out of your

 6   days to present testimony today.  I know many of you have

 7   traveled many miles to participate today.  My staff and I

 8   certainly recognize the significance of this request for the

 9   state of California.  In fact it has been many, many years

10   since we have actually convened a waiver hearing in the

11   state of California and that speaks to the significance that

12   we attach to this request.

13             We also recognize the importance of this

14   proceeding and this request by other states, by the general

15   public, by the environmental community, by the industry.

16   This is certainly a very serious undertaking and so I am

17   very pleased that we have such a wide representation from

18   the public today.

19             Joining me on the panel today are to my right,

20   Karl Simon.  He is our Executive Division Director of the

21   organization that will be evaluating all the information

22   that we are gathering through these proceedings.  To my left

23   is David Dickinson, an Attorney-Advisor in Karl's division,

24   and Michael Horowitz from our Office of General Counsel.

25             Today's hearing allows for interested parties to

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 1   provide comments in person.  However, there is also an

 2   opportunity for anyone to send in additional written

 3   comments.  The written comment period will close on June 15.

 4   Although I do want to add that we have a request for an

 5   extension of this comment period and that extension is

 6   currently still under review.

 7             We have a list of people who have signed up

 8   previously to provide testimony today.  That list is outside

 9   at the table.  If any other members of the audience who have

10   not signed up and do wish to provide testimony, I urge you

11   to go and add your name to that list.  We are prepared to

12   stay here as long as it takes so that everyone has an

13   opportunity to provide testimony.

14             Let me just describe how we will hold today's

15   hearing.  As noted in our April 30, 2007 and May 10, 2007

16   Federal Register Notices announcing this hearing we are

17   being guided by Section 209(b) of the Clean Air Act and we

18   are seeking comments on the questions raised in he April 30,

19   2007 Notice.

20             We are conducting this hearing informally and on

21   the record.  As presiding officer I am authorized to strike

22   from the record statements which are deemed to be irrelevant

23   or repetitious and to enforce reasonable limits on the

24   duration of statements of any witnesses.

25             Witnesses must state their name and affiliation

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 1   prior to making their statement.  And when a witness has

 2   finished his or her presentation, if you are using slides or

 3   other materials, please provide them to our court reporter

 4   here today.  And witnesses are reminded that any false

 5   statements or false responses to questions may be a

 6   violation of law.

 7             Finally, a court reporter is recording these

 8   proceedings.  If you would like a transcript of today's

 9   public hearing please see the court reporter to make those

10   arrangements.  We will place a copy of the transcript from

11   today's hearing in the docket for the rulemaking.  Also

12   California is webcasting today's proceedings and I'll be

13   reminding everyone periodically of that.

14             With that I would like to introduce our first

15   panel of witnesses.  From the State of California they are

16   Susan Kennedy, Chief of Staff to Governor Schwarzenegger;

17   Attorney General Jerry Brown; the Honorable Fabian Nu¤ez,

18   Speaker from the California Assembly; Former Assembly Member

19   Fran Pavley; and representatives from the California Air

20   Resources Board, Dr. Bob Sawyer, the Chair, and Catherine

21   Witherspoon, Executive Officer.

22             Welcome, everybody.  Ms. Kennedy, please proceed.

23             CHIEF OF STAFF KENNEDY:  Thank you very much.  On

24   behalf of Governor Schwarzenegger I want to thank you for

25   coming to California to conduct this hearing today.

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 1             We believe the EPA is legally obligated to grant

 2   our request under the Clean Air Act and the agency must take

 3   action without further delay.  It's the right thing to do,

 4   it's urgent and it's the law.

 5             EPA's obligation to approve California's waiver is

 6   unambiguous and specified in the Clean Air Act itself.

 7             From the inception of the Clean Air Act

 8   congressional authors recognized California's pioneering

 9   leadership on environmental issues.  In fact, Congress

10   specifically anticipated that California's standards would

11   be more stringent than federal standards.

12             When Congress adopted the 1977 amendments it

13   expressly ratified and strengthened California's waiver

14   provision, affirming the underlying intent of that provision

15   which was, and I quote, to afford California the broadest

16   possible discretion in selecting the best means to protect

17   the health of its citizens and the public welfare.

18             This provision of one of our nation's most

19   environmental protection laws sets in stone the central

20   tenet of our constitutional system, that when the federal

21   government fails to act the right of states to lead is

22   unequivocal.

23             Twelve states, including California, have already

24   adopted tailpipe emissions standards that would cut

25   greenhouse gas emissions from cars, light trucks and sport

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 1   utility vehicles by almost 400 million metric tons by the

 2   year 2020, the equivalent of taking 74 million cars off the

 3   road for an entire year.

 4             Seven other states have already committed or are

 5   considering to enacting the same standards upon approval of

 6   California's waiver by the EPA.

 7             That represents 143 million American citizens, or

 8   nearly half of the US population, taking matters into their

 9   own hands.

10             Yet for 16 months the EPA has failed to act on our

11   waiver.

12             With all due respect: The federal government has

13   failed to lead.  For the past 16 months it has refused to

14   follow and it is time now to get out of the way.

15             The Governor, the Legislature and the people of

16   California recognize the profound importance of addressing

17   climate change and the growing threat that it poses to our

18   environment and our economy.

19             The threat to our public health and safety from

20   climate change is now omnipresent: Scientists predict

21   California will lose up to 40 percent of its snowpack over

22   the next few decades, some say much higher, the primary

23   source of drinking water for two-thirds of Californians.

24   This is not theoretical science, it is already happening.

25             Higher snow lines and early runoff are causing

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 1   flood flows in our rivers earlier in the year that are now

 2   beginning to collide with more powerful winter storms,

 3   threatening our levees and flood barriers that were never

 4   designed for this level of battering.

 5             The heat wave last year that killed 150 people is

 6   predicted to be just the beginning of the hottest and driest

 7   years on record in the Western United States.

 8             Continued drought in the West threatens not only

 9   our water supply but our energy supplies from

10   hydroelectricity.

11             Warmer temperatures lead to concentrations of

12   ground level ozone, increasing smog and pollution that cause

13   asthma and heart disease.  For which, I might add, the

14   federal government is threatening to cut off federal

15   transportation dollars for failing to meet air quality

16   improvement goals.

17             There is no question that the need to address

18   climate change is compelling and extraordinary.

19             That is why the Governor signed historic

20   legislation authored by Assembly Speaker Fabian Nu¤ez to cap

21   carbon emissions and roll back California's greenhouse gas

22   emissions to 1990 levels by 2020 and another 80 percent

23   below 1990 levels by 2050.

24             But with 40 percent of greenhouse gas emissions

25   coming from the transportation sector, the only way to meet

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 1   these targets is to address auto emissions.  And to do so

 2   requires the EPA to approve our request for a waiver that is

 3   the subject of today's hearing.

 4             More than 40 similar waivers have been approved

 5   over the past three decades.

 6             In delaying this latest request as long as it has

 7   the federal government is blocking the will of 100 million

 8   Americans who are not willing to wait any longer for the

 9   federal government to act.

10             California supports a strong federal program that

11   aggressively reduces greenhouse gas emissions from motor

12   vehicles, and we will work with the EPA when it takes on

13   this task and the tasks announced by the White House.  But

14   the EPA must grant California's waiver.  There is simply no

15   legal justification to do anything else.  Thank you very

16   much.

17             PRESIDING OFFICER GRUNDLER:  Thank you,

18   Ms. Kennedy.

19             Mr. Attorney General.

20             ATTORNEY GENERAL BROWN:  Thank you.  I want to

21   address just a couple of very specific points.  First of all

22   the automobile companies and the opponents of what we are

23   trying to do here are saying that EPCA, the Energy Policy

24   Conservation Act, preempts California from this waiver

25   request.  I want to address myself to that.

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 1             That is completely false and has no justification

 2   in the law.  EPCA includes by it's very terms the provision

 3   that says in setting fuel efficiency standards, the CAFE

 4   standards, the Secretary of Transportation must consider

 5   other standards of government.  Other standards of

 6   government.  If a waiver is granted by EPA a standard of

 7   government is the emission standard that we are asking to be

 8   validated in this proceeding.

 9             So it is very clear that EPCA envisioned the

10   actions under the Clean Air Act.  The Clean Air Act

11   envisions California taking their own separate program and

12   putting it under effect.  The argument that EPCA preempts

13   California cannot be true because, number one, the language

14   envisions a consideration of the California standard, any

15   government standard, and preemption destroys the standard,

16   eliminates it, it becomes a nullity.  So just by the text

17   alone that argument has to fail.

18             Secondly, in the case of Massachusetts v. EPA the

19   Supreme Court expressly held that the two statutes, the

20   Clean Air Act and EPCA, need to be harmonized.  You

21   harmonize them not by destroying one but by giving both

22   their full operation.

23             The Clean Air Act aims at reducing pollutants,

24   emissions of substances that cause harm.  That cannot be

25   stopped by EPCA.  The fact that fuel efficiency is a

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 1   byproduct or a consequence does not negate the authority

 2   under the Clean Air Act.

 3             Under EPCA there is a balancing and EPCA can be

 4   fully realized and implemented by weighing and balancing

 5   many factors, one of which is the Clean Air Act standards

 6   themselves.  So the Supreme Court itself and the text both

 7   call for a harmonization and giving full effect to the Clean

 8   Air Act.  And in this case California has its own piece of

 9   that Clean Air Act under the law.

10             Now the second point I want to talk about is the

11   waiver itself.  Expressly in legislative history the word is

12   narrow grounds for EPA to deny the waiver.  It has to be

13   very extraordinary.  There has been talk about, are there

14   really compelling and extraordinary conditions.  The auto

15   companies want to say, well, California is no different than

16   the rest of the country, of the world.  That issue has

17   already been decided.  The fact that similar conditions

18   exist elsewhere does not negate California's authority under

19   the law.

20             If you go back to the legislative history I think

21   it's pretty interesting.  Right in the legislative history

22   itself it made this quote: "Senator Murphy convinced the

23   committee that California's unique problems and pioneering

24   efforts justified a waiver."  Now Senator Murphy was the

25   California senator.  He got into a legislative battle with

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 1   John Dingell.  Dingell was trying to restrict the ability of

 2   EPA to grant a waiver.  Senator Murphy wanted the broadest

 3   interpretation to make it as easy as possible for California

 4   to get a waiver.  He won.  It says so right here.

 5             Two points have to be, should be acknowledged.

 6   One is the unique conditions in California, compelling

 7   conditions.  The geography, the topology, the mountain

 8   ranges in Los Angeles that build up smog, the concentration

 9   of vehicles, the number of vehicles.  All those conditions

10   exist today.

11             The other aspect, number two because there's two

12   prongs here, pioneering efforts.  California is the pioneer,

13   was and is.  Legislative history talks about California

14   leading the way, setting the pace and thereby helping the

15   rest of the nation.  To me it is impossible to conclude that

16   a waiver can be denied under the legislative history, the

17   Supreme Court rulings and EPA's own decisions.

18             I want to make one final point.  It's kind of a

19   subtle one, I've had a bit of trouble grasping it myself.

20   The compelling and extraordinary condition does not refer to

21   the particular standard.  It doesn't refer to California's

22   emission greenhouse gas standards that are at issue in this

23   waiver.

24             In the key decision in 1984 on diesel particulates

25   Ruckelshaus, the administrator, said very clearly what is

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 1   required to be compelling and unique are the conditions in

 2   California that once found justify the program that is

 3   different and separate and more stringent.  So it is not --

 4             The findings here are not about the specific

 5   greenhouse gas standards, it's rather, does California

 6   continue in the state of its unique topology, its number of

 7   cars, their concentration.  Is that true?  And it certainly

 8   is true.  Is California still in the pioneering, the

 9   extraordinary role of pioneering new standards?  Yes.  If

10   you say yes to both of those then you've satisfied the

11   compelling and extraordinary circumstance.  And of course

12   the idea that this affects other people doesn't in any way

13   negate or undermine that it's affecting California.

14             One final point in support of this.  In 1977, two

15   years after EPCA was passed, Congress added the provision

16   that other states could follow California's law,

17   California's standard.  Once you grant that waiver because

18   of the continuing, compelling and extraordinary circumstance

19   then not only California can impose the regulation but all

20   the other states.  Which in this case are already 11 signed

21   up.  Those 11 states don't have to show you any

22   extraordinary, any compelling need. They don't have to show

23   you anything, it's automatic.

24             And that really goes to the point that what is at

25   issue in the law here is the unique historic situation in

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 1   California.  Which once established continues to justify the

 2   waiver unless there is some radical change in circumstances,

 3   which hasn't happened.  It's just continuing exacerbation of

 4   the problem.  And even to get specific, global warming will

 5   make worse all the criteria of pollutants.  So on every

 6   ground California is justified.  And as Susan Kennedy has

 7   said, this is a legally required waiver.

 8             And I would just end by general statement.  We

 9   have been told in the press that the national government

10   will stand alone and reject all the other nations, the G8

11   countries, all the major developed countries of the world

12   gathered in Germany next week.  America will stand alone

13   fighting any timetable or target.

14             I think in that context it is particularly

15   compelling, if not extraordinary, for the EPA following the

16   law, not the politics, not the person who appoints the

17   administrator, but rather the law serving the people, to

18   allow California and the 11 other states and many more to

19   follow actually to join the other nations of the G8

20   countries and take a stand for timetables and targets.

21             It's well thought out, it's scientifically and

22   technologically based.  This is a great opportunity for the

23   EPA to reinvigorate its role as a champion in the protection

24   of our environment.  Thank you.

25             PANELIST DICKINSON:  Attorney General Jerry Brown,

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 1   appreciate your testimony today.  You did take part of it to

 2   discuss the EPCA statute and I invite you or your Air

 3   Resources Board colleagues to, in your written comments

 4   perhaps to provide a clarification as to whether you think

 5   EPCA is relevant to EPA's waiver review or not.  And then if

 6   it were relevant how that would play out.

 7             ATTORNEY GENERAL BROWN:  Well I have to say,

 8   again, that it is not relevant.  Number one because that is

 9   a judicial decision.  And by the precedence of EPA you are

10   not allowed to consider issues like preemption from another

11   statute.  You can only consider your precedence.

12             Number two, in fact it is not preempted because

13   EPCA itself envisions taking into account regulations that

14   are standards of the government.  If you grant the waiver

15   then these are standards of the government.  Therefore by

16   the very language of the 1975 EPCA Act you have to take it

17   into consideration, not ignore it, which preemption would

18   require.

19             I'll be glad to commit that to writing but to me

20   it's crystal clear.

21             PANELIST DICKINSON:  Thank you.

22             PRESIDING OFFICER GRUNDLER:  Thank you for your

23   testimony, Mr. Brown.

24             Mr. Speaker, welcome.

25             ASSEMBLY SPEAKER NU¥EZ:  Thank you very much,

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 1   Mr. Grundler and ladies and gentlemen of the committee.  We

 2   want to thank you first of all for making the pilgrimage to

 3   Sacramento to consider this waiver.

 4             As you know climate change that has been brought

 5   upon by manmade emissions of greenhouse gases has become the

 6   environmental crisis of our time.  Climate change is a very

 7   serious threat to our sustainability.  And as you know, here

 8   in California you have the opportunity to help make our

 9   state take a vital step in showing this crisis and

10   combatting this crisis by granting us a waiver that would

11   allow for tailpipe emission standards of global warming

12   causing greenhouse gases to be stopped.

13             A little background on this issue.  In 2002

14   Assembly Member Fran Pavley, who sits to my right, authored

15   Assembly Bill 1493.  Landmark legislation that requires

16   tailpipe emission standards to reduce greenhouse gas

17   emissions.

18             Last year I joined Ms. Pavley in authoring

19   Assembly Bill 32, the Global Warming Solutions Act of 2006.

20   Yet another California first, which requires California to

21   reduce greenhouse gas emissions by 25 percent by the year

22   2020.  With the transportation sector as California's

23   largest emitter of greenhouse gases reductions in this

24   sector are absolutely critical.  AB 32 will not succeed

25   without major reductions from the transportation sector.

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 1             The regulations being considered here at today's

 2   hearing will achieve about 17 percent of the reductions we

 3   want to achieve through Assembly Bill 32.  In order to meet

 4   our goal and address the leading environmental issue facing

 5   our state and our country today California needs to be

 6   granted a waiver by the United States Environmental

 7   Protection Agency.  A waiver, I might add, that was

 8   requested 18 months ago.  We think that it's time for the

 9   Environmental Protection Agency to act to allow California

10   to move forward.

11             I know that the Environmental Protection Agency

12   has granted many requests.  In fact in California alone we

13   have seen over 50 requests that have been granted in the

14   last four decades.  Each time the EPA has found that

15   California has met the requirements under the Clean Air Act.

16   We believe there is no basis for the EPA to treat this

17   request any differently.

18             The standards we are proposing are workable with

19   technology already in the market, which will save vehicle

20   owners in lower maintenance and operating costs over the

21   lifetime of the vehicle.  The standards give auto makers the

22   flexibility to apply any technology they choose to reduce

23   the vehicles' emissions of greenhouse gases, including

24   production of vehicles that use lower carbon fuels.  The

25   standards were developed over four years.  Four years

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 1   through careful and measured technical review, and I might

 2   add, vast public input.

 3             We here in California are working very hard to

 4   protect our children from a changing environment.  The Bush

 5   Administration has a choice.  Will it support that right

 6   that the Clean Air Act gives us or will it continue to slow

 7   or stop any real action to global warming.

 8             On December 1, 2005 the Air Resources Board

 9   officially requested this waiver.  It is now 18 months

10   almost to the day.  The later -- We are finally getting our

11   chance here today to show the Board the national base of

12   support that we have for California's waiver.  And we would

13   respectfully ask you on behalf, not only of California, but

14   the mission of the Environmental Protection Agency, which in

15   its very core by its own definition is to protect the

16   environment.  We want to ask for your help to help us here

17   in California protect our environment.  Thank you very much.

18             PRESIDING OFFICER GRUNDLER:  Thank you,

19   Mr. Speaker.

20             Ms. Pavley, welcome.

21             FORMER ASSEMBLY MEMBER PAVLEY:  Good morning.

22   Thank you very much for coming to California.  A few of you

23   I saw just last week in Washington DC.  It's a pleasure for

24   me to be here today as the author of this bill and sitting

25   alongside Speaker Nu¤ez as the author of AB 32 because this

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 1   is a very important component in our broader, more

 2   comprehensive policy to do our fair share here in California

 3   to reduce greenhouse gas emissions.

 4             Forty-one percent of California's greenhouse gas

 5   emissions come from automobiles and light duty trucks.  We

 6   have 25 million cars and light duty trucks on the road in

 7   California today.  It's important that we attack this very

 8   critical problem.

 9             The Clean Air Act, as you know, allows California

10   to adopt more stringent air emissions standards and over the

11   last three to four decades, as Speaker Nu¤ez said, the EPA

12   has approved nearly 50 waivers in a row, none denied.

13             The arguments I heard last week in Washington DC

14   and just a little while ago at a press conference in the

15   room adjacent to this by the automobile manufacturers

16   sounded vaguely familiar to me, not only through our hearing

17   processes here in California but the same arguments that

18   came up when California passed laws relating to unleaded gas

19   that the EPA approved, laws relating to catalytic

20   converters, which the EPA approved through the waiver

21   process, and most recently a law I authored which allowed

22   single occupant hybrid drivers to access HOV lanes, also

23   opposed in California by the automobile manufacturing

24   associations.

25             The recent Supreme Court decision said that the

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 1   Environmental Protection Agency indeed has the authority

 2   under the Clean Air Act to regulate greenhouse gas emissions

 3   as air pollutants.

 4             We have demonstrated unequivocally, compelling and

 5   extraordinary reasons for this waiver.  Our topography,

 6   dwindling snowpack, the availability and supply to our

 7   agricultural and urban water users.

 8             In particular I am very concerned about air

 9   quality impacts.  Warmer temperatures will make ozone levels

10   worse, a prime ingredient of smog.  We have asthma and

11   respiratory problems in the LA area and a growing number in

12   our Central Valley with children.

13             We're having continuous problems now with weather

14   extremes, particularly in relation to wildfires.  Where our

15   wildfire season is not just September and October anymore

16   but is year-round and that has health implications in

17   particulate matter affecting respiratory problems, fire

18   fighters as well as our citizens here in California.

19             There is a long list of compelling and

20   extraordinary reasons to grant this, also in regards to our

21   1100 miles of coastline and sea level rise.  And one of our

22   largest insurance carriers, Allstate, is talking about not

23   granting any more new homeowner policies because of weather

24   extremes, weather patterns and rising costs associated with

25   climate change.

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 1             One of the arguments made by the automobile

 2   manufacturers last week in Washington DC is, what's the

 3   point, California is just one state, one state out of 50.

 4   Well they brought that argument to our attention when we

 5   passed the bill back in 2001 and 2002.

 6             Now as you know California under the Clean Air Act

 7   can pass more stringent air emission standards and other

 8   states have two options and only two options only.  Adopt

 9   California standards or federal government standards.

10   California standards only if they are more stringent than

11   the federal government standards.  Well that's not really a

12   patchwork quilt, that's two choices.

13             Well 11 other states have now adopted California

14   clean car standards.  The governors of New Mexico and

15   Arizona have indicated through executive order they will

16   also add to this.  We know, like in the case of unleaded gas

17   or catalytic convertors that other states across the country

18   will soon become places where cleaner, more efficient cars

19   will be sold.  That's the pattern that's been demonstrated

20   time and time again.

21             And I have also seen on a firsthand level that

22   when California sets a standard, whether it is unleaded gas

23   or catalytic converters, it is not just limited here, it

24   spreads to other states and indeed other countries.

25             Several years ago I went to Canada and they have

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 1   adopted a voluntary memorandum of understanding with the

 2   Canadian automobile manufacturers.  Interestingly enough the

 3   same automobile manufacturers that are represented here in

 4   this room, Ford, GM and Chrysler, et cetera, and the

 5   international alliance.  They adopted a voluntary MOU

 6   standard to reduce tailpipe emissions through almost the

 7   identical strategies that our Air Resources Board envisioned

 8   when they adopted the regulations required in 1493.

 9             That's cost-effective, maximum feasible,

10   technologies that are readily available on cars today.

11   Canada has done that.  They just issued and they sent to me

12   just yesterday a regulatory framework for air emissions and

13   they talk about there's currently a memorandum of

14   understanding between the auto industry and the government

15   with a target of 5.3 megatons of greenhouse gas emission

16   reductions by 2010.

17             We're talking about the automobile market in the

18   United States now with the 11 states plus Arizona and New

19   Mexico plus Canada.  We're tipping over 40 percent of all

20   the automobiles sold.  That is not a patchwork quilt, that

21   is responsible legislation in response to the most

22   threatening global and economic problem of the 21st century.

23   I ask for your waiver.  Thank you.

24             PRESIDING OFFICER GRUNDLER:  Thank you very much,

25   Ms. Pavley.

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 1             Dr. Sawyer from the Air Resources Board, nice to

 2   see you again.

 3             AIR RESOURCES BOARD CHAIR SAWYER:  Thank you.

 4             PRESIDING OFFICER GRUNDLER:  Please proceed.

 5             AIR RESOURCES BOARD CHAIR SAWYER:  Thank you and

 6   welcome to California.

 7             PRESIDING OFFICER GRUNDLER:  It's great to be

 8   here.

 9             AIR RESOURCES BOARD CHAIR SAWYER:  Our

10   presentation will be much shorter than last week's in

11   Washington DC.  We will focus on issues that were of

12   interest to last week's hearing panel.  We will also attempt

13   to bring some clarity to the rather vague issues raised by

14   the single automotive manufacturer representative who last

15   week presented industry concerns to the panel and audience.

16             This week Catherine Witherspoon, the Air Resources

17   Board Executive Officer will make the primary presentation.

18   She is joined by Tom Cackette, Chief Deputy Executive

19   Officer, Steve Albu and Paul Hughes of our Mobile Source

20   Control Division, Bart Croes, chief of our Research

21   Division, Reza Mahdavi of our Economics Branch, and Tom

22   Jennings and Aron Livingston of our Legal Office.

23   Catherine.

24             AIR RESOURCES BOARD EXECUTIVE OFFICER WITHERSPOON:

25   Thank you Dr. Sawyer, and good morning.

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 1             I am going to start with a very brief review of

 2   the motor vehicle greenhouse gas emission standards that are

 3   the subject of this proceeding.  While you may hear again

 4   today from manufacturers that this is a CO2-only regulation,

 5   the simple fact is that the regulations control all of the

 6   pollutants shown here and provide substantial credit to

 7   those manufacturers reducing highly potent refrigerant

 8   emissions and to those introducing alternatively-fueled

 9   vehicles.

10             As in our EPA-approved LEV II regulations, the

11   greenhouse gas regulations establish two categories, one for

12   passenger cars and smaller light trucks, another for larger

13   trucks, SUVs and medium-duty vehicles.  Pure commercial work

14   trucks are exempt.

15             We used the results of a technical study initiated

16   by the Northeast States Center for a Clean Air Future and

17   applied staff's expertise and engineering judgment to arrive

18   at packages of potential technologies that could be applied

19   in the 2009 to 2016 time period.  The standards flowed from

20   that projection, setting increasingly stringent fleet-

21   average greenhouse gas emissions standards in grams per

22   mile.

23             As you can see the near-term standards start with

24   the 2009 model year and achieve a 22 percent reduction in

25   2012.  The mid-term standards start with the 2013 model year

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 1   and will achieve a 30 percent reduction in 2016.

 2             The regulation also provides flexibility,

 3   including a delay of regulatory requirements until 2016 for

 4   small and intermediate volume manufacturers.

 5             Now just to remind everyone of the three key

 6   principles in waiver proceedings.  The first is that EPA's

 7   review is limited in scope to three issues: protectiveness,

 8   California conditions justifying our motor vehicle emissions

 9   standards, and consistency with the technological

10   feasibility and lead time provisions in the Clean Air Act.

11             Second, and contrary to what the manufacturers'

12   representative asserted last week, the burden is on waiver

13   opponents to demonstrate why California's waiver should not

14   be granted; the regulations come to you with a presumption

15   of regularity.  This burden will be difficult indeed, and we

16   think insurmountable, though to date in this proceeding we

17   and the public have had little opportunity to evaluate the

18   waiver opponents' arguments and evidence, despite the burden

19   that they have.  Finally, waiver law and history counsels

20   EPA to give substantial deference to California's judgments.

21             This slide covers the finding regarding the

22   protectiveness determination the Board made in its September

23   2004 Resolution approving these regulations.  The Board

24   reached its  determination in a public process, and easily

25   found that the standards were more protective in the

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 1   aggregate than federal standards because our program remains

 2   more protective for other pollutants and also addresses

 3   greenhouse gases.

 4             Last week the auto manufacturers' representative

 5   hinted that California was obligated to do more.  That is,

 6   to compare our greenhouse gas standards to other federal

 7   standards not adopted by EPA.  The text of Section 209(b) is

 8   not amenable to such contortions.  It states that we must

 9   determine that our standards will be, in the aggregate, at

10   least as protective of public health and welfare as

11   applicable federal standards.  Clearly this simple language

12   is no license for EPA to look beyond its own, and in this

13   case non-existent, standards.

14             EPA has never required California to compare its

15   standards to any other standard other than EPA's own, and

16   for good reason.  The repetition of the phrase applicable

17   standards in Section 209(b) clearly applies in each case to

18   just one set of federal standards, EPA's.  One reason for

19   the protectiveness requirement is that once the waiver is

20   granted, compliance with California's standards is treated

21   as compliance with EPA's standards, something that would be

22   inappropriate if EPA standards were more protective.  Any

23   vehicle standards of other federal agencies will apply

24   alongside California's.

25             Even if EPA unwisely chooses to go beyond the text

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 1   of 209(b) to consider standards like those under EPCA or

 2   CAFE, it's clear that our standards were more protective at

 3   adoption and remain so today.  As Mr. Doniger pointed out

 4   last week, it is likely our standards will remain more

 5   protective into the future given potential federal

 6   rulemaking timetables.

 7             Obviously, if our standards weren't more

 8   protective and required lower greenhouse gas emissions than

 9   under EPCA/CAFE, the manufacturers would not have hired a

10   legion of lawyers to challenge them across this country.

11   Plaintiffs in those actions have taken great pains to argue

12   how much more difficult it will be as a technological matter

13   to meet our standards than to meet EPCA/CAFE.  In effect

14   they have demonstrated for us the greater protectiveness of

15   California's standards.

16             The second issue before EPA is whether California

17   needs its state motor vehicle standards to address

18   extraordinary and compelling conditions in our state.  As

19   you heard last week, California easily meets this test.  In

20   fact, the only question for EPA to address is whether the

21   conditions in California are such that we still need our

22   motor vehicle program as a whole to address air pollution in

23   our state.

24             Again this slide shows how nothing has changed in

25   these conditions.  California continues to truly stand alone

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 1   in its ozone problem.  That is the end of the story as a

 2   legal matter.

 3             But last week we heard questions that sounded like

 4   EPA was considering rejecting established waiver law and

 5   history on this point.  Should EPA choose this path it would

 6   still arrive at the same destination, as California clearly

 7   does need our greenhouse gas standards to meet extraordinary

 8   and compelling conditions.  This was demonstrated by the

 9   overwhelming evidence presented by Dr. Schneider, ARB, and

10   others last week.  I will briefly recap that evidence here.

11             It is beyond question that California continues to

12   need ozone reduction strategies to address extraordinary and

13   compelling conditions in our state.  This chart shows how

14   higher temperatures that we can expect from global warming

15   will increase ozone concentrations.

16             Even at the low to mid-range projections for

17   global warming temperature increases California faces dozens

18   of extra unhealthy days conducive to ozone formation, shown

19   here for the South Coast and San Joaquin Valley.  Since

20   greenhouse gas emissions indirectly exacerbate ozone

21   concentrations, California's need to regulate emissions of

22   hydrocarbons and oxides of nitrogen in order to address

23   ozone concentrations also applies here to regulating

24   greenhouse gases.

25             We also spoke last week about the current higher

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 1   wildfire incidence and the projections as shown here.

 2   Again, if increased wildfires weren't an extraordinary

 3   condition in their own right, particulates and other

 4   emissions from increasing wildfires will further exacerbate

 5   the health impacts from increased smog projected from higher

 6   temperatures.

 7             We also mentioned these projected impacts from

 8   global warming that should likewise be considered

 9   extraordinary and compelling conditions.  We identified

10   eight experts whose reports on the particular effects of

11   global warming in California will be entered in the record.

12   Some of those we listed are here today to speak on separate

13   panels and will be joined by other experts in their

14   respective fields.

15             Last week a question was raised as to whether

16   California must show a temperature impact in California

17   resulting solely from its greenhouse gas reduction

18   regulations.  The answer is no, for three reasons.  First,

19   EPA cannot second-guess California's judgment on the

20   effectiveness or need for any particular California

21   standard.

22             Administrator Train addressed this point when he

23   stated that neither costly controls nor marginal

24   improvements in air quality were pertinent to his decision.

25   EPA has accepted this principle numerous times since.  So

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 1   the manufacturers' argument last week that ARB cannot prove

 2   a temperature change and air quality benefit from these

 3   regulations is not pertinent to this proceeding.  It is

 4   enough that such standards address the problem in some way.

 5             Second, the manufacturers' argument that we must

 6   show modeled temperature decreases proves too much.  As we

 7   pointed out in our December 2005 waiver submittal, an

 8   appropriate analogy here is to ozone attainment

 9   demonstrations.  We cannot demonstrate that a particular

10   emission standard requiring small ozone precursor emission

11   reductions directly causes a specific parts per million

12   ambient ozone reduction in a particular air basin.  Yet EPA

13   has in the past approved waiver requests for marginal

14   adjustments to our motor vehicle emission standards even

15   though we presented no modeling demonstrating a measurable

16   reduction in ozone.

17             Similarly, no regional climate change models can

18   show a temperature impact in a particular area from measures

19   of this magnitude.  In fact, it takes the accumulation of

20   several countries' emission reductions to show a change in

21   temperature, or a temperature change avoided.  For global

22   climate change, the relevant modeling exercise is the IPPC

23   scenarios.

24             Yet as Dr. James Hansen's expert report in the

25   Central Valley case makes clear, and as Dr. Schneider

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 1   pointed out last week, there is a direct relationship

 2   between incremental reductions in greenhouse gas emissions

 3   and reduced radiative forcing.  The Hansen report is one of

 4   the reports we will be submitting for the record.

 5             Last week Mr. Tripp described the measures that

 6   automobile manufacturers and others are taking to rein in

 7   their greenhouse gas emissions.  GM is to be commended for

 8   recently joining the United States Climate Action

 9   Partnership, but EPA should not countenance its trade

10   group's attempts to minimize those emission reductions or

11   these --

12             Finally, this argument runs counter to the

13   rationale the Supreme Court gave in rejecting one of EPA's

14   reasons not to regulate.  That is, that regulating won't

15   make much difference given other sectors' and nations'

16   emissions.  In fact, that is precisely why both California

17   and EPA must regulate, because global warming must be

18   attacked incrementally, with many measures.  The

19   Massachusetts decision counsels us not to cower in despair

20   as worldwide emissions continue to go up but to attack that

21   increase in every possible way.

22             The third reason we need not show a temperature

23   impact is because the manufacturers' argument misreads the

24   text of 209(b)(1)(B).  The statute asks only whether

25   California needs such state standards to meet extraordinary

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 1   and compelling conditions in California.  The answer is

 2   clearly yes.  We need these standards.  We need other

 3   standards to be established under our AB 32, the Global

 4   Warming Solutions Act.

 5             We need the federal government to act.  We need

 6   other nations to act.  Because we need all these things to

 7   occur to even have a chance at avoiding some of the worst

 8   extraordinary and compelling impacts that have been

 9   identified.  Each particular regulation in isolation is by

10   definition needed.

11             To further illustrate, as Dr. Schneider conveyed

12   last week, the difference between the potentially

13   devastating high or medium-high scenarios and the lower

14   emissions scenario pictured here will reflect a combination

15   of many greenhouse gas reduction measures.  In the context

16   of all these measures our AB 1493 motor vehicle standards

17   will undoubtedly be among the more important.  What kind of

18   signal would EPA be sending if it concludes that California

19   does not need these major greenhouse gas emission standards

20   to meet extraordinary and compelling conditions?

21             Due to rapid global warming over the past 30 years

22   the earth's temperature is reaching levels not experienced

23   in 10,000 years.  An increase in just one degree centigrade

24   will lead to temperatures not seen in a million years.  And

25   if emissions of CO2 continue with the business as usual

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 1   scenario, increasing by two percent per year, we can expect

 2   an additional warming of two to three degrees centigrade

 3   this century.  If that happens we and our children and

 4   grandchildren will all be living on a different planet.

 5             Research conducted by Hansen, et al, has estimated

 6   that to avoid this two degree centigrade increase, heat

 7   trapping gases need to be stabilized so that their net

 8   climate change effect is less than 450 parts per million CO2

 9   equivalent.

10             If the United States and other industrial nations

11   would cut current emissions by 60 to 80 percent this goal

12   would be achievable.  Governor Schwarzenegger's Executive

13   Order S-3-05 calls for an 80 percent reduction of greenhouse

14   gas emissions from 1990 levels by 2050.  If the

15   industrialized world were to follow in California's

16   footsteps the most severe climate change impacts could be

17   avoided.

18             Again, showing projected end of century

19   temperature increases it matters whether California takes

20   this step, with others, towards reining in greenhouse gas

21   emissions.

22             The groundbreaking report by Pacala and Socolow in

23   2004 showed how incremental emissions reductions matter.

24   This slide graphically demonstrates how actions in a variety

25   of sectors can in combination have a profound effect.  The

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 1   US can immediately begin to make very significant reductions

 2   in carbon emissions with the implementation of existing

 3   technologies and strategies such as end-use efficiency,

 4   passenger vehicle efficiency, renewable resources, and

 5   carbon capture and storage.

 6             This green wedge shown here represents the

 7   cumulative reductions needed from the US transportation

 8   sector to stabilize atmospheric greenhouse gas

 9   concentrations below 550 parts per million.  EPA estimates

10   that a cumulative 21,500 million metric tons of CO2

11   equivalent gases is needed from light-duty vehicles to

12   achieve this goal.  Greenhouse gas reductions from

13   California and the 177 states that have adopted our

14   standards achieves 3800 million metric tons, 18 percent of

15   the estimated reductions needed from light-duty vehicles.

16              It's clear that we have only begun to address

17   reducing greenhouse gas emissions from motor vehicles if we

18   are to avoid the consequences of global warming.

19             This slide shows why it is critical to achieve the

20   wedges from the previous slide as soon as possible and not

21   wait for a federal solution to reducing motor vehicle

22   greenhouse gases.  Heat-trapping emissions are cumulative

23   and have a very long lifetime in the atmosphere.  The

24   emissions already in the atmosphere mean that the world will

25   continue to see increased warming over the next century.  We

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 1   need to take strong and immediate action to prevent that

 2   warming from becoming catastrophic.  Delaying the decision

 3   to reduce emissions will only make the task of solving it

 4   that much more difficult.

 5             As the blue curve in this graph shows, if national

 6   emission reductions start soon we can stay on the

 7   stabilizing heat-trapping gases path at 450 parts per

 8   million with an annual emission reduction rate that

 9   gradually ramps to 3.2 percent per year.  But if we delay a

10   serious start and allow continued emissions growth at nearly

11   the business as usual rate, the annual mission reduction

12   rate required to stay on the path jumps to 8.2 percent per

13   year, as shown on the red curve.

14             Finally, we have heard arguments that the impacts

15   to California from global warming must be worse or unique in

16   order for California to address them.  This becomes relevant

17   only if EPA repudiates the principle it has followed for the

18   last 23 years that the pertinent question is California's

19   need for its own motor vehicle emissions program, not for

20   the specific standards under review.

21             But focusing on greenhouse gases alone, if

22   Congress in 1967 had known what we know now about the

23   potentially catastrophic impacts of global warming, would it

24   have said that the compelling and extraordinary threat to

25   California only justifies California standards if the threat

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 1   is more compelling and extraordinary in California than in

 2   any other state?  We think not.  At the existence of Clean

 3   Air Act Section 177, allowing other states to adopt

 4   California's standards as their own, shows that conditions

 5   in more than just our state may justify the California

 6   standards we adopt.

 7             Although our impacts may not be unique or more

 8   severe, impacts in California are arguably unique and more

 9   severe.  We are uniquely positioned to feel the brunt of

10   global warming's exacerbation of existing ozone problems.

11   We are uniquely positioned for wildfire impacts to make air

12   quality impacts even worse.  Our dependence on the Sierra

13   snowpack to provide year-round water in the nation's most

14   populous state, seasonal irrigation in the nation's number

15   one agricultural production area, and to mitigate the

16   dangers of flooding is unique.

17             Global warming could cause this snowpack to shrink

18   as much as 80 percent.  As Dr. Schneider put it, we are not

19   happy to be in this vulnerable position but the fact is that

20   we are.  Again, you will hear more about the severity of

21   these impacts vis-…-vis other states later today from

22   science panelists.

23             And now to briefly discuss the technological

24   feasibility of our regulations -- Excuse me, a little script

25   correction.

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 1             The third issue before EPA is the consistency of

 2   the standards with Clean Air Act Section 202(a).  Previous

 3   waiver decisions make it clear that this issue primarily

 4   relates to whether the standards are feasible in the lead

 5   time provided, giving appropriate consideration to the cost

 6   of compliance in that time period.  We have demonstrated the

 7   technologies that can be used to comply with our greenhouse

 8   gas standards, and most are commercially available right

 9   now.  For those that are not, ample lead time is provided.

10             In addition, the state and federal test procedures

11   need to be sufficiently consistent that one set of tests can

12   be used to determine compliance with both the state and

13   federal standards.  We don't expect this to be an issue

14   since there can be no conflict with non-existent EPA

15   greenhouse gas test procedures.

16             We made a comprehensive demonstration of the

17   technological feasibility of our standards at the May 22

18   hearing in Washington DC so I will only touch on a few

19   elements here.

20             This is a list of the technology packages ARB

21   selected to set the near-term greenhouse gas emission

22   standards, which requires an overall 22 percent reduction in

23   greenhouse gases by 2012.  All of the technologies listed

24   here have already been commercialized by one or more vehicle

25   manufacturers.  Note we did not consider diesels or hybrids

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 1   in setting the near-term greenhouse gas standards, even

 2   though these technologies will be sold in California during

 3   the near-term standard phase-in.

 4             It's important to note here that the greenhouse

 5   gas emissions standards are performance standards that do

 6   not require manufacturers to use these particular

 7   technologies or packages so long as they ultimately meet the

 8   requirements on a fleet-wide basis.  Clearly we were, as any

 9   agency would be, constrained in evaluating all possible

10   technology combinations available to the manufacturers.  The

11   manufacturers have demonstrated innovative approaches to

12   meeting the requirements of the LEV program.  We expect them

13   to do the same in meeting the greenhouse gas requirements.

14             The mid-term technology packages include three

15   emerging technologies.  The integrated starter/generator has

16   already been commercialized.  Homogenous charge compression

17   ignition, HCCI, is now close to commercialization, and

18   camless valve actuation, which one supplier has said will be

19   in vehicles by 2009 or, excuse me, 2010.

20             What you don't see in either the near-term and

21   mid-term packages are hybrid electric vehicles or HEVs.

22   There is a growing market for HEVs and manufacturers have

23   announced plans to introduce HEV technology across all

24   vehicle classes.  To the extent that manufacturers include

25   hybrids in their vehicle mix, then the burden of compliance

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 1   with the standards will be less.

 2             This slide presents our conclusions on

 3   technological feasibility.  The technologies we projected

 4   would be available to meet the near-term standards are being

 5   used by more manufacturers.  Other technologies, such as

 6   E85, are also being introduced in greater numbers.  Today

 7   the technology choices to reduce greenhouse gas emissions

 8   are greater than they were in 2004.

 9             The industry's criticism of our modeling is

10   rapidly becoming irrelevant as the technologies they raise

11   doubt about are used in cars being sold today.  Our cost

12   estimates remain sound.  Lead time is adequate and the

13   safety issues industry raises remain specious.

14             We conclude with great certainty that the

15   regulations remain feasible, cost-effective and are

16   necessary to address global warming.

17             Before I conclude I want to further address one of

18   the three supplemental questions raised in the Notice, the

19   question of whether the Energy Policy and Conservation Act,

20   or EPCA, fuel economy provisions are relevant to EPA's

21   consideration of this petition or to CARB's authority to

22   implement its vehicle greenhouse gas regulations.

23             Regarding whether the EPCA/CAFE provisions are

24   relevant to our authority, as we explained last week, those

25   provisions do not preempt our standards.  Emission controls

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 1   and fuel efficiency have always overlapped but emissions

 2   standards come first, as NHTSA decisions, EPCA itself, and

 3   now the Supreme Court have all determined.  EPCA/CAFE is no

 4   barrier to California exercising Clean Air Act authority.

 5             Is the potential effect of the EPCA/CAFE fuel

 6   economy provisions on California's authority at least

 7   relevant to EPA's consideration of the California waiver

 8   request?  The answer is clearly, no.  The effect of

 9   EPCA/CAFE on California's authority, like constitutional and

10   other statutory questions not identified in Section 209(b),

11   is not relevant to EPA's waiver decision.  The waiver

12   decision must be made solely on criteria in Section 209(b),

13   as reinforced by the Massachusetts decision.  The authority

14   issue is relevant to this proceeding only in the sense that

15   EPA asked the question and ARB has accordingly responded.

16             The EPCA/CAFE fuel economy provisions can,

17   however, be relevant to the question of technological

18   feasibility since it is one of the issues identified in

19   Section 209(b).  We believe that compliance with the

20   President's proposed annual four percent fuel economy

21   improvement would make compliance with California's

22   greenhouse gas emissions standards, which come first,

23   relatively simple.

24             In conclusion, AB 1493 vehicles will look, cost

25   and perform like today's vehicles.  California's request

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 1   meets the three permissible prongs of EPA's waiver analysis.

 2   Neither the Supplemental Issues EPA noticed nor

 3   Constitutional concerns change that analysis.  The

 4   Massachusetts v. EPA decision strengthens California's

 5   position and provides no excuse for EPA to delay acting on

 6   this request.  Waiver law and policy require more, not less,

 7   defence to California to regulate vehicle climate change

 8   emissions.  Therefore, US EPA must grant California's

 9   request, and must do so by October 25, 2007.

10             One final note.  In separate letters the Alliance

11   requested both a 30 day extension of the written comment

12   deadline and afterwards a second 45 day period to respond to

13   comments submitted.  ARB wrote opposing these extensions for

14   numerous reasons, most notably that the opponents, who have

15   the burden of proof in this proceeding, are not entitled to

16   hide the ball as they did in our 2004 rulemaking and await

17   others' comments.  The supporting materials ARB is relying

18   on in this proceeding are for the most part publicly

19   available, and like waiver opponents, ARB is not precluded

20   from entering new information into the docket by the June

21   20, excuse me, June 15 deadline.

22             We are happy to answer the panel's questions at

23   this time and at any time throughout the day, and we welcome

24   the opportunity later today to briefly address principal

25   opposition arguments you may hear.  Thank you.

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 1             PRESIDING OFFICER GRUNDLER:  Thank you,

 2   Ms. Witherspoon, and thank you for addressing some of the

 3   questions that came up at our first hearing.

 4             Any further questions from the panel?  Thank you

 5   again for your time.

 6             Our next panel is comprised of public officials

 7   from the state of California and the state of Utah.  Senator

 8   Christine Kehoe from California, Assembly Member Ira Ruskin

 9   from the state of California, Mayor Heather Fargo from

10   Sacramento and Mayor Rocky Anderson from Salt Lake City.  I

11   would also like to invite or ask if there are any other

12   public officials in the audience who would like to present

13   testimony at this time?  If so please join the panel.

14             Thank you very much.  Senator Kehoe, please

15   proceed.

16             SENATOR KEHOE:  Good morning.  Good morning.  Is

17   that better?  Thank you for the opportunity to testify

18   today.  I am Christine Kehoe.  I represent most of the city

19   of San Diego and I chair the Senate Energy Utilities and

20   Communication Committee.

21             And I'm here to express my strong support for

22   California's request for a waiver of the federal Clean Air

23   Act preemption provisions so that California can implement

24   and enforce its greenhouse gas tailpipe standards for new

25   cars and light duty trucks.

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 1             Even with the cleanest cars and the toughest clean

 2   air standards in the country, California still suffers from

 3   some of the worst air pollution and largest greenhouse gas

 4   emissions of any state.

 5             Over 41 percent of the climate emissions produced

 6   in the state come from transportation sources such as cars

 7   and trucks.  California wants to exercise its option under

 8   the Clean Air Act to adopt its own motor vehicle greenhouse

 9   gas emission standards.  As the largest state in the country

10   by population and vehicle fleet, California has a vital

11   interest in reducing global warming emissions from vehicles

12   and other sources.

13             To put the extent of the emissions problem in

14   perspective, there are over 36 million people living in

15   California.  Los Angeles County, with some of the worst air

16   quality in the nation, has a population of at least 10

17   million people.  Compared to the rest of the nation, there

18   are about 40 other states with less population than one

19   county here in California, that is Los Angeles.

20             Our Governor, the State Legislature and the

21   citizens stand united in their commitment to reduce

22   greenhouse gas emissions from the largest single source of

23   those emissions, automobiles.

24             The need for action is no longer in dispute.  Both

25   the world's scientific community, and now the US Supreme

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 1   Court, have confirmed the perils caused by global warming

 2   and the legal authority of the US EPA to act to reduce

 3   greenhouse gases.

 4             The request has been pending for over 17 months.

 5   It was originally filed on December 21, 2005 along with a

 6   solid demonstration that the state's greenhouse gas emission

 7   standards meet relevant criteria, waiver criteria.

 8             Therefore, in addition to supporting California's

 9   waiver request I strongly support the Air Resources Board's

10   recent letter notifying the US EPA of its intent to file an

11   unreasonable delay lawsuit if US EPA fails to take final

12   agency action during that time period.

13             I hope that the agency will see that the law,

14   science and sound environmental policy all argue strongly

15   for the immediate adoption of this waiver, and urge your

16   agency to do so as soon as possible.

17             Thank you very much for the opportunity to testify

18   this morning.

19             PRESIDING OFFICER GRUNDLER:  Thank you, Senator.

20             Assembly Member Ruskin, please.

21             ASSEMBLY MEMBER RUSKIN:  Thank you.  Thank you to

22   all for being here and the opportunity to testify on this

23   critical issue.  I represent in the California State

24   Assembly a portion of Silicon Valley and I am Chair of the

25   Budget Subcommittee on Natural Resources.

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 1             AB 1493 is landmark legislation and has been held

 2   up for much too long.

 3             Today you will hear from some people that these

 4   regulations, for example, are too expensive.  The auto

 5   industry says they can't meet these standards because they

 6   don't have the technology or because the technology is cost

 7   prohibitive.  They do have the technology.  And existing

 8   research clearly indicates that technology which can reduce

 9   vehicular emissions is available and is cost-effective.

10             Opponents say these regulations shouldn't be

11   implemented because they are federally preempted by CAFE

12   standards under the Energy Policy and Conservation Act.  But

13   AB 1493 states clearly that fuel standards are not an option

14   available to the California Air Resources Board in order to

15   meet the requirements of the bill.  These regulations and

16   the spirit of the law are not in conflict with the concept

17   of CAFE.

18             Some may say it is unwise to have a California-

19   only standard.  But in fact 12 other states are waiting to

20   adopt these standards.  We are at a critical juncture, as I

21   think you will be able to sense from all of the testimony

22   requesting the waiver today.  And every year implementation

23   is delayed is a year that we lose the chance to reduce

24   emissions.  The regulations are supported by research that

25   is feasible to implement.

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 1             Much is in your hands.  Your decision is quite

 2   vital to us and to the nation and I urge the EPA to give us

 3   this opportunity.  I believe that it is fair and within the

 4   law and a vital necessity to our constituents.  Thank you

 5   for the opportunity to meet with you today.

 6             PRESIDING OFFICER GRUNDLER:  Thank you,

 7   Mr. Ruskin.

 8             Mayor Fargo.  Your Honor, welcome.

 9             MAYOR FARGO:  Thank you and good morning and

10   welcome to you.  Welcome to Sacramento as well as to

11   California.

12             We have a very simple request for you today and

13   that is that we are asking for a waiver and you are the

14   people who can grant it.  We are asking for the waiver

15   because we in California would like to do more.  We are

16   willing to pay for it, we are willing to do it, we are

17   willing to make it happen.

18             There is no disagreement in this state about

19   global warming and about our need to step up and deal with

20   the emissions from vehicles.  It is very clear in our state

21   that that is one of the major causes not only of greenhouse

22   gas emissions but of air quality.  In Sacramento we are in

23   the top ten in the nation for bad air quality.  It is not

24   the kind of list we want to be on and it is not the kind of

25   list we want to stay on.

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 1             People in my city take this very seriously.  They

 2   would like the state to do more and they would like the

 3   federal government to do more.  We as a city are joined by

 4   many other cities around California and around the nation in

 5   taking global warming seriously, in developing our

 6   sustainability plans, in changing our fleets and doing

 7   anything that we can do to be better environmental stewards.

 8             But dealing with the emissions from vehicles is

 9   not something that cities can do.  We might be doing it if

10   we could.  But we are -- That is not one of our jobs, it's

11   one of your jobs.  And we in California have a long history

12   of asking and receiving waivers such as this so that we can

13   step up and do more, not only for ourselves but for the rest

14   of the nation.  After all our air flows across the rest of

15   the nation after we're done with it.  So we think there is a

16   compelling reason for the waiver to be granted.

17             We are joined by many other cities, as I say,

18   throughout California and throughout the nation.  Last year

19   for the first time ever we had to open up warming centers

20   during our winter because we had such a long stretch of

21   below-freezing weather here in Sacramento.  And last summer

22   we had to open up cooling centers because we had over a two

23   week stretch of temperatures that didn't drop below 85

24   degrees at night.  So it is very real to us and it is very

25   compelling to us and it is very urgent to us.

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 1             So what we are asking you to do is to allow us to

 2   help ourselves to do more, to clean up our air, to reduce

 3   our flood risks, to improve the health of our communities.

 4   We have an inordinate number of asthma cases and people who

 5   are dealing with respiratory problems, not only in

 6   Sacramento and the rest of the Valley but throughout

 7   California.

 8             So I am joined by the US Conference of Mayors,

 9   which is very involved in climate change and in a number of

10   efforts to try to reduce greenhouse gas emissions and slow

11   global warming and by the California League of Cities as

12   well as the National League of Cities as we try to step

13   forward and do what we can do as mayors and as cities.  And

14   people are willing to do that.  And you will hear from Rocky

15   Anderson next about all that they are doing.

16             But we need the federal government to give us this

17   waiver.  And that is what the request is really all about

18   today, it's really very simple.  And if you could agree

19   sooner in the day than later we could probably all stop

20   talking at you.  But we really urge you to take this request

21   seriously.

22             And I hope that you get a break at some point

23   during the day.  Kitty-corner across the street is Cesar

24   Chavez Plaza.  Every Wednesday we have Farmers Market in the

25   Plaza and today is Wednesday and you're welcome to join us

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 1   there.  I hope you go and look at the fresh fruits and

 2   vegetables that are grown in this region that are at risk

 3   because of global warming.

 4             But thank you for coming to Sacramento and for

 5   taking this issue seriously and I urge you to grant the

 6   waiver that the Air Resources Board has requested.  Thank

 7   you.

 8             PRESIDING OFFICER GRUNDLER:  Thank you, Mayor.

 9             Mayor Anderson, proceed.

10             MAYOR ANDERSON:  Thank you.  It's a pleasure to be

11   with you today.

12             As a nation we face serious challenges from the

13   alarming warming of our planet, due in large part to the

14   burning of fossil fuels.  Droughts, heat waves, hurricanes,

15   floods and other extreme weather events are projected, in

16   fact virtually certain, to become more frequent and severe

17   due to global warming.  Rising sea levels will threaten

18   major coastal populations around the world, creating

19   millions of environmental refugees.

20             Sir Nicholas Stern, the former chief economist at

21   the World Bank, concluded in a 2006 report that inaction on

22   climate change would lead to a 20 percent reduction in

23   global gross domestic product.  According to a 2004 Pentagon

24   report, abrupt climate change will exacerbate tensions

25   between nations as supplies of food and water dwindle.  And

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 1   refusing to enhance fuel-efficiency standards will deepen

 2   our nation's abject reliance on dangerous, authoritarian

 3   petro-states and subject our economy to continued de-

 4   stabilizing fuel price fluctuations.

 5             Continuing our present level of fossil fuel

 6   dependence and failing to combat the effects of global

 7   warming will engender economic and social de-stabilization

 8   on a colossal scale, in the United Stats and especially in

 9   many poorer countries throughout the world that are far less

10   able to adapt to changing climate patterns.  The challenges

11   we face compel us to take rapid, decisive action, at all

12   levels of government, in the private sector and in our

13   individual lives to enhance efficiencies and curb global

14   warming pollution.  Efforts to reduce global warming

15   pollution are particularly compelled in the US

16   transportation sector, which by itself is responsible for

17   more greenhouse gas emissions than the entire economies of

18   all other nations except China.

19             Unfortunately, Americans have learned that we

20   cannot fully depend on federal regulation to meet our

21   pressing energy and sustainability needs.  Fuel economy

22   standards for cars have not risen since 1990, and the

23   average fuel economy for new passenger vehicles is lower

24   today than it was in 1987, 20 years ago.

25             Although we know that many on the EPA staff,

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 1   especially long-time staff members, recognize how vital it

 2   is that we act urgently and effectively to combat global

 3   warming, as evidenced by the fact that I was honored a few

 4   years ago to receive the EPA climate protection award, to

 5   even have the EPA consider regulation of global warming

 6   pollution now required a lengthy legal battle and a ruling

 7   by the United States Supreme Court.

 8             Efforts by California and 11 other states, and I

 9   suspect there would be more on board if the EPA took the

10   correct action that's requested today, these efforts by

11   these states to regulate global warming pollution to a

12   stricter standard than those required now by the federal

13   government deserve praise and celebration.  Not, as has been

14   the case, obstruction, condemnation, and more legal action.

15             The 12 states attempting to implement the standard

16   under the Clean Cars Program collectively represent 40

17   percent of the United States automobile market.  The EPA

18   should allow these states to improve sustainability, air

19   quality and reduce global warming pollution within their

20   borders, which will have a salutary effect on fuel

21   efficiency standards nationwide and help our nation meet the

22   tremendous challenges posed by global warming.

23             We have heard before about supposed deleterious

24   effects projected to occur in implementing stricter

25   regulations on auto emissions.  History has judged these

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 1   claims as unfounded.  When the catalytic converter was

 2   introduced in the late 1970s, many in the auto industry

 3   predicted that mandating the inclusion of a catalytic

 4   converter would significantly reduce the performance and

 5   increase the price of automobiles.  Today, every car sold in

 6   the United States has a catalytic converter, reducing

 7   nitrogen dioxide and carbon monoxide emissions by more than

 8   half per vehicle mile traveled.  Meanwhile, vehicle

 9   performance has increased.

10             States and cities serve as important laboratories

11   for innovation.  In Salt Lake City we have turned the

12   challenges of global warming and sustainability into

13   enormous opportunities.  In 2002 I committed Salt Lake City,

14   in its municipal operations, to abide by at least the Kyoto

15   goals in reducing carbon dioxide emissions by at least 21

16   percent below our 2001 baseline by 2012.  By 2005, three

17   years later, we had far surpassed that goal, reducing global

18   warming pollution by 31 percent several years before the

19   2012 target date, with significant cost savings to

20   taxpayers.

21             There are hundreds of mayors across this country

22   in large cities and small alike, tremendous geographic

23   diversity, that have joined together in working with

24   organizations like ICLEI, the International Council for

25   Local Environmental Initiatives, the US Conference of

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 1   Mayors.  Mayor Fargo came and joined us.  In two years we

 2   have had about 70 mayors from around the country join us at

 3   Sundance Summit to learn the science, learn best practices,

 4   take the kind of measures we can at a local level.  We know

 5   what an enormous difference can be made if local and state

 6   officials are given the freedom to enact these effective

 7   measures.

 8             Utah Governor Jon Huntsman, Jr., has also

 9   recognized the importance of and opportunities attendant

10   upon combatting global warming.  The State of Utah recently

11   became a charter member of the Climate Registry, a multi-

12   state and tribe collaboration designed to establish a common

13   greenhouse gas emissions reporting system.

14             Utah also just over a week ago signed on with the

15   Western Regional Climate Action Initiative with six other

16   states including California, and much of this is due

17   certainly to Governor Schwarzenegger's leadership and

18   leadership of the Legislature here in California, to develop

19   a regional market-based program to achieve significant

20   reductions in global warming pollution.  But to meet these

21   goals we need to be able to implement these standards that

22   are being sought today.

23             Salt Lake City and the State of Utah recognize the

24   need for proactive efforts to achieve significant reductions

25   in global warming pollution, including the regulation of

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 1   emissions from automobiles, which are responsible for 50

 2   percent of our local air pollution.

 3             In the next 100 years, average temperatures in

 4   Utah could increase by three to four degrees Fahrenheit in

 5   summer and five to six degrees Fahrenheit in winter.

 6   Precipitation in summer is projected to decrease by ten

 7   percent.  Since 90 percent of water use in our region comes

 8   from surface water, 75 percent of which is produced by

 9   melting snow, reduced snow pack resulting from higher

10   temperatures will lower stream flows and lake levels,

11   effects we are already beginning to observe.  The ski

12   industry, which contributes enormously to the economy of our

13   state, would also be dramatically impacted as ski seasons

14   are shortened and base villages are cut off from ski runs.

15             To avoid the disastrous consequences projected to

16   occur from global warming, and to protect the health and

17   welfare of their citizens, Utah, California and other states

18   must be allowed to pursue the effective standards on

19   greenhouse gas emissions laid out in the Clean Car Program.

20   Fostering local and state efforts to meet our sustainability

21   and energy challenges will improve quality of life, have

22   tremendous economic benefits, and pave the way to a much

23   brighter energy future.  Thank you.

24             PRESIDING OFFICER GRUNDLER:  Thank you, Mayor.

25   And thank you for traveling all the way here to present your

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 1   views.

 2             MAYOR ANDERSON:  My pleasure, thank you.

 3             PRESIDING OFFICER GRUNDLER:  Sir, could you

 4   present your name and your constituency.

 5             MAYOR CABALDON:  I'm Christopher Cabaldon, I am

 6   the Mayor of the City of West Sacramento.  I wanted to join

 7   my big city colleagues.  We have been much in the news

 8   because we were just visited by two humpback whales who were

 9   scouting future territory in the Central Valley in areas

10   where they know, with sea level rise, there will be

11   additional habitat opening up which today is occupied by

12   people and infrastructure in California's great valley.

13             You know, I am from a small town, not a big city,

14   but I do know that the impacts are going to be extraordinary

15   on our little town.  Whether it's more severe and

16   extraordinary than it will be in Boise, I don't know.  I do

17   know that our levees are not designed to withstand the

18   changes in the variability of the snowpack and that we would

19   be under 20 feet of water if those levees were to fail.

20             We are, along with Sacramento, the most endangered

21   region in the country in our levee system.  And all of the

22   effects, the combined effects of sea level rise and the

23   snowpack change, make that an impossible situation for us to

24   manage.  No amount of levee investment can protect us from

25   the combined effects of sea level rise and snowpack

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 1   variation.  So the effects here are going to be severe and

 2   extraordinary and we will feel them directly.

 3             And I can tell my constituents that we can

 4   regulate leaf blowers for PM10 and for PM2.5 but we cannot

 5   protect them against the greatest potential catastrophe that

 6   could wipe out our entire community.

 7             I'm from an ag county, not from the big coastal

 8   regions or from the giant metropolis here across the river.

 9   But all we're asking is if you can't help get the heck out

10   of the way and let us do our part, do what we can to protect

11   the lives and livelihood of the people of our communities

12   and this state.  Thank you.

13             PRESIDING OFFICER GRUNDLER:  Thank you.  I'm glad

14   to see your visitors have found their way back to the bay at

15   least.  Thank you, ladies and gentlemen for your testimony

16   and your time today.

17             I would like to invite Panel number 3 up,

18   representatives from the Alliance of Automobile

19   Manufacturers, Sempra Energy, Pacific Gas and Electric and

20   Energy and Transportation Technologies.

21             Also Mr. Bob Epstein from Environmental Enterprise

22   from Panel 10 can join this panel so you can catch your

23   flight.  Environmental Entrepreneurs.

24             Mr. Douglas, when you're ready.

25             MR. DOUGLAS:  Okay, thank you.  I'm Steven

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 1   Douglas, I am with the Alliance of Automobile Manufacturers.

 2   And we had a PowerPoint presentation, I think they are

 3   trying to put that up now.  But let me get started just with

 4   a brief introduction.  There it is.

 5             Again, I am Steven Douglas, I am the Director of

 6   Environmental Affairs for the Alliance of Automobile

 7   Manufacturers.  The Alliance is a trade association

 8   representing BMW, DaimlerChrysler, Ford, General Motors,

 9   Mazda, Mitsubishi, Porsche, Toyota and Volkswagen.

10             And I'd like to thank you for the opportunity to

11   testify again today.  Last week I talked about the advances

12   that manufacturers have made both in emissions and in fuel

13   efficiency and we stated our support for improving fuel

14   efficiency to the maximum feasible level.

15             Today I'd like to just take a couple of minutes to

16   point out some of the technologies that manufacturers are

17   developing and investigating.  These are more than just

18   concepts too.  These technologies are in the dealerships and

19   they're on the roads.  In, in fact, 10.5 million of these

20   vehicles to be exact.

21             Turning now -- Just to be clear, there is really

22   no organization on the planet, not the state of California,

23   not even the federal government, who is pursuing

24   alternatives to the gasoline internal combustion engine with

25   more zeal, more enthusiasm or more resources than the

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 1   automobile manufacturers.

 2             Just looking at the technologies briefly.

 3   Hydrogen.  Manufacturers see great promise in a hydrogen

 4   future.  Some manufacturers are working on hydrogen fuel

 5   cell vehicles, others are working on the hydrogen internal

 6   combustion engines that are virtually zero emitting.  And

 7   still others are working on both.

 8             Biofuels.  Again, most manufacturers are pursuing

 9   some form of renewable biofuel and they see a lot of promise

10   in that.  All vehicles today operate on E10 and many models

11   are available that operate on both E85 and gasoline or on

12   biodiesel.

13             Turning to hybrids.  Many large manufacturers, in

14   fact most of them, have introduced hybrid technology and

15   some are developing plug-in hybrid vehicles and electric

16   vehicles that pull energy from the electric grid.

17             And finally manufacturers will introduce a number

18   of light duty, highly efficient clean diesel vehicles this

19   coming year or this year.

20             In every single case manufacturers, and each

21   manufacturer, is working on a diverse array of technologies.

22   They're working on more than just one of these.  However,

23   the fundamental change to personal transportation is going

24   to require more than just auto makers, it requires a

25   partnership.  A partnership between auto makers, government,

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 1   energy suppliers, and most importantly, consumers.

 2             As I said last week, a patchwork quilt of state

 3   regulations, as California is now proposing, is entirely

 4   inappropriate and it is patently counterproductive.

 5             With that I would like to turn now to California's

 6   waiver request.  Our position last week and our position

 7   today is that EPA should deny the waiver.  In at least two

 8   critical areas California has failed to meet its obligations

 9   under the Clean Air Act.  And specifically California has

10   failed to demonstrate that one, its standards in the

11   aggregate are as protective of human health as the federal

12   standard.  In fact, California hasn't even submitted or

13   analyzed, to my knowledge, let alone demonstrated whether

14   their standards in the aggregate are as protective of human

15   health as the federal standards.

16             Two, they have failed to demonstrate that it needs

17   these standards to meet compelling and extraordinary

18   conditions.  In fact, these regulations have no impact on

19   any of the conditions that have been identified by the Air

20   Resources Board or that have been identified today.

21             So I'll talk briefly about the protectiveness

22   claim and I'll ask my colleague, Andrew Clubok, to address

23   the extraordinary and compelling issue.

24             California's program, its vehicle emission program

25   can be divided into three categories.  Those being the

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 1   emissions, these are the LEV II standards, the ZEV mandate.

 2   These two combine to effect smog or ozone.  And then the

 3   last one is the CO2 or the fuel economy standards.  And I'll

 4   just quickly look at each one of these in turn.

 5             Looking first at the emission standard and

 6   comparing federal with California.  The federal program was

 7   adopted in 2000, it's the Tier 2 program, and the California

 8   program was adopted in 1998, the LEV II program.  They both

 9   apply the same standards to cars and to trucks, they began

10   in 2004, they're both fully implemented at around 2007.

11   They both rely on a fleet average to reduce overall

12   emissions.  Where the federal uses a NOx the California

13   standard uses a hydrocarbon average.

14             And finally the federal program and the California

15   program have different emission certification categories.

16   The federal has nine and the California has four.  The

17   actual standards and the emission reductions associated with

18   each are about the same.  And I'll show you -- this next

19   slide shows the emission reductions associated with the

20   federal program and the California program.  And as you can

21   see there is very little difference between the two

22   programs.  And this is if California implemented the federal

23   program beginning in 2009.

24             Turning now to the ZEV mandate.  The ZEV mandate

25   provides minimal air quality benefit.  It does so at an

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 1   extraordinary cost.  The values you see show a range of

 2   costs associated with each one of the ZEV mandate

 3   technologies, PZEVs, which are partial zero emission

 4   vehicles, advanced technology PZEVs, and then finally LEV.

 5   I've used the latest information from the ARB's expert panel

 6   report on that and this is generally with high volume

 7   production.

 8             Finally there is the CO2 element.  The CO2

 9   requirements, they don't even have a theoretical health-

10   based benefit.  And to be fair, they are not intended to

11   have any smog/ozone health-based benefit.  However, again

12   this regulation comes at a great cost.

13             So just to summarize each of the programs in

14   California.  You have the emissions, similar benefit,

15   similar cost to the federal and California.  The ZEV

16   mandate, it has very high cost and small and negligible

17   benefits.  And then the CO2 mandate, which has extraordinary

18   costs and no benefits.

19             So what does all this mean?  There are really two

20   problems with California's program.  The first is what we

21   termed the jalopy effect and that's that as you increase the

22   cost, as you continue to pile costly regulation on top of

23   costly regulation you increase the cost of vehicles and it

24   causes people to keep their vehicles longer.  And these are

25   older, higher emitting vehicles.

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 1             Second, the CO2 mandate aims to, in part at least,

 2   to reduce the cost of driving.  And that will result in

 3   consumers driving more and this is something that the Air

 4   Resources Board has acknowledged as well.  But since the

 5   emissions are on a per mile basis more driving means more

 6   pollution.  The result, the combination of these is that the

 7   California program results in higher, not lower, emissions.

 8             Just to conclude, we do not believe that

 9   California has even analyzed, let alone demonstrated that

10   their program in the aggregate is more protective of human

11   health.  And on that basis EPA should deny the waiver.

12             With that I would like to turn it over to my

13   colleague, Andrew Clubok.  Thank you.

14             MR. CLUBOK:  Thank you.  My name is Andrew Clubok

15   and I am also here on behalf of the Alliance of Automobile

16   Manufacturers.  And we do appreciate the opportunity to

17   present evidence in this proceeding.

18             Now some of the participants in these hearings,

19   both here in Sacramento and in Washington, including the

20   representatives of the State of California, have claimed

21   that the EPA should simply approve this waiver request

22   without allowing enough time for public comment.  They have

23   also claimed that the scope of the EPA's waiver -- I'm

24   sorry, the scope of the EPA's review of the waiver request

25   should be extremely narrow.

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 1             Because time is limited here today I am going to

 2   focus our presentation on evidence we have gathered that

 3   goes right to the heart of what even the Air Resources Board

 4   acknowledges must be considered under Section 209(b) and

 5   therefore is indisputably at issue here and that is whether

 6   or not the proposed regulation is needed to meet compelling

 7   and extraordinary conditions of this state.

 8             If we focus on that question, and even if we

 9   consider the potential impact of this regulation if adopted

10   nationwide or worldwide, what we quickly find is that this

11   regulation will never have any measurable impact whatsoever

12   on global climate change.  Let me repeat that so I am clear.

13   This regulation will never have any measurable impact

14   whatsoever on global climate change, even if adopted

15   nationwide or worldwide, thus it cannot possibly be

16   necessary to meet compelling and extraordinary conditions of

17   the state.

18             Now what is very important about what I just said

19   is that the basis for that factual statement does not come

20   from the automobile industry but rather it comes from the

21   sworn testimony of the regulators themselves who devised

22   this regulation and the experts they hired or retained.

23             When the regulators and their experts testified

24   under oath in the ongoing federal court proceedings they

25   admitted that they do not predict the regulation will have

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 1   any measurable impact whatsoever on global warming or on any

 2   consequence of global warming such as increased sea level,

 3   reduced snowpack, delayed spring blooms, et cetera.

 4             They admitted that they have not identified any

 5   such effect even if this regulation were adopted nationwide

 6   or worldwide, even if it were adopted tomorrow, and even if

 7   the effects were measured through the year 2100.  I daresay

 8   this is different from any other regulation that has

 9   probably ever been presented to the EPA.  That even if

10   adopted nationwide and ultimately worldwide, projecting 100

11   years into the future it will never have a measurable

12   impact.

13             Now contrary to those facts one of California's

14   representatives at last week's hearing before the EPA in

15   Arlington, Virginia stated as follows, quote:

16                  "Although opponents may argue that

17             California cannot show a temperature

18             decrease in California due to these

19             regulations, waiver opponents are unable

20             to produce any evidence that these

21             regulations are not one of the many

22             measures nationwide and worldwide that

23             are needed to meet extraordinary and

24             compelling conditions global warming

25             poses for California."

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 1   That was the EPA transcript at page 70, lines 10 through 16.

 2             Now first of all it's important to note that this

 3   statement effectively concedes that California cannot show

 4   that its regulations will cause any temperature decrease

 5   within its own state. But more importantly what it shows is

 6   that, and what we will show today, is that California

 7   regulators and their experts themselves have conceded

 8   elsewhere that the regulations will never have any

 9   measurable impact even if adopted nationwide or worldwide.

10             As you listen to the regulators' own words on the

11   subject, and I'm hopeful that the technology we have here

12   will allow that, we have video clips from the sworn

13   testimony of the regulators who testified under oath.  When

14   you listen to their own words on the subject it is important

15   to listen not only to he explanation of what they did but

16   perhaps more importantly what they did not do in connection

17   with this regulation.  That is, they did not even try to

18   identify any positive environmental benefit that flows from

19   this regulation, again, even if adopted nationwide or

20   worldwide.

21             Their top experts, they did bring in top experts

22   and they do have top experts who talk about negative

23   consequences from global warming, things you've heard about

24   like the snowpack and sea level et cetera.

25             And one of those experts I believe referred to

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 1   earlier today, Dr. James Hansen, he said that it would be

 2   relatively easy to calculate the impact of this particular

 3   regulation, even if adopted nationwide or worldwide.  And

 4   when he was required to do so during his deposition he was

 5   able to do it in about ten minutes, sort of a back of the

 6   envelope calculation, that confirmed the regulation will

 7   never have any meaningful impact.  Basically in his words,

 8   it was so low that it could never be measured without use of

 9   a microscope.

10             But he said that he has never performed the formal

11   analysis that would confirm this result, even though he says

12   he has one of the best computer models in the world and he

13   could do so fairly easily.  What he says, and you'll see his

14   words in a moment, is that it wasn't worth his computer time

15   to even bother to model the impact of this regulation even

16   if adopted on a nationwide or worldwide scale.  Now think

17   about that and put that into context.  The regulation is not

18   worth a couple hours of his computer time because the

19   impacts are so, predicted to be so low.

20             Now this answer that is readily apparent to anyone

21   who considers the regulation with the models available for a

22   short period of time, that probably explains why the state

23   regulators here have not engaged in this exercise either.

24   Because to do so, to actually calculate the projected impact

25   of this regulation, would prove what, if we're honest,

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 1   everyone already knows.

 2             And that is that this regulation, unfortunately,

 3   will never have any beneficial impact on any living organism

 4   on this planet, whether human, plant or animal, even if

 5   adopted nationwide or worldwide.  Again, those are not my

 6   words.  You will hear those are the words of the staff of

 7   the Air Resources Board who were asked to testify about it

 8   under oath.

 9             What is perhaps even more important, however, is

10   not just that this regulation will have no beneficial impact

11   on global warming.  But in fact it will certainly have a

12   negative impact on health-based pollution.  That is, smog-

13   forming pollution will increase as a direct result of this

14   regulation due to the predicted increase in vehicle miles

15   traveled and the slower rate of fleet turnover.

16             Now ironically the regulators have dismissed those

17   health-based pollution increases as being relatively small.

18   A few percentage points they say.  But regardless of how

19   small those health-based pollution increases may be, that

20   predicted increase in smog-forming pollution will dwarf the

21   immeasurably microscopic predicted of this regulation on

22   global warming.

23             As a result California is turning on its head its

24   appropriate and traditional mission under the Clean Air Act,

25   which is to regulate motor vehicle emissions as needed to

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 1   address compelling and extraordinary conditions of this

 2   state.  To fulfill that mission California has been

 3   entrusted with a special role in regulating air quality.

 4   And as you will see from the testimony, they have now

 5   sacrificed that mission and that trust in favor of a purely

 6   symbolic gesture, unfortunately with no regard for the

 7   harmful consequences.

 8             Now I'd like to just turn to, as I said, and

 9   hopefully we'll see if this technology works, the words of

10   the regulators that we asked under oath whether or not there

11   would be any impact of this regulation, even if adopted

12   worldwide.

13             (A video clip of Thomas Cackette was

14             played.)

15             MR. CLUBOK:  We have the text of Mr. Cackette's

16   comments also here, they just repeat what he just said.

17             We asked other regulators from other states who

18   have adopted the regulation, for example the chief regulator

19   responsible for Vermont's adoption of the AB 1493 regulation

20   if he had any different information.  This is what he said:

21             (A video clip of Thomas Moye was

22             played.)

23             MR. CLUBOK:  That was Thomas Moye from the Vermont

24   ANR.

25             We asked the same question to the regulator from

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 1   New York.  Let's see.  Well, we'll get a few technical

 2   glitches here.  Mr. Flint from New York said essentially the

 3   same thing, no estimate of any measurable impact on the

 4   temperature even if adopted, even if all the states that

 5   adopted it were measured.

 6             By the way, we also asked the NRDC, the Sierra

 7   Club and the Environmental Defense, all who have intervened

 8   into the litigation that's pending.  We asked them under a

 9   process called Request for Admission, in which you are

10   obligated to respond truthfully if possible.  In response to

11   one of the requests the environmental organizations said, or

12   admitted that, quote:

13                  "Defendants are not aware of any

14             credible scientific evidence to support

15             the theory that CO2 emissions reductions

16             resulting from the adoption of the

17             Regulation in all 50 states in the

18             United States would change average

19             ambient temperatures in any place by a

20             measurable amount."

21   That was in response to RFA 111 in the pending matter in

22   federal court in Vermont.

23             One thing you could say is, well gee, they just

24   haven't done the work yet, they haven't done the studies.

25   Maybe if they did the work the studies would show something

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 1   different.  So again we turned to Dr. Hansen who testified

 2   that he had one of the best computer models in the world

 3   that could do this analysis.  So we asked him:

 4             "Q   Have you modeled the CO2 emission

 5             savings that would result if Vermont and

 6             New York --"

 7   They were the two defendants in that particular matter.

 8                  "-- were to implement the AB 1493

 9             regulation?"

10             "A   I haven't modeled that.  It would

11             not be difficult to do it."

12   So we said, well why didn't you do it then?  And he said:

13                  "Well, I wouldn't run a model with

14             such a very small change, because then

15             you're wasting computer time, because

16             you do have the problem of finding a

17             signal when compared to the natural

18             variability of the climate."

19   In other words, the effect is so small it can't even be

20   detected from the normal fluctuations day to day of the

21   temperature.

22             We said to Dr. Hansen, well okay.

23                  "Let's move past Vermont and New

24             York.  Let's say that it's all 11

25             states.  Have you modeled that?  Have

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 1             you found the computer time or the time

 2             to model the total CO2 emission savings

 3             in all the states that adopted the

 4             regulation --"

 5   This was actually trial testimony.  That's why we don't have

 6   a video, because this is Dr. Hansen's testimony in federal

 7   court.  He said:

 8                  "No.  Because we try to do useful

 9             things."

10             We talked a little bit further and he explained,

11   well, the difference in temperature between 2.8 degrees,

12   which is the current prediction of the United Nations, the

13   IPCC, the best estimate of the temperature increase by the

14   year 2100, as contrasted with their previous estimate of 3

15   degrees.  He said, well that difference is insignificant.

16   In other words, two-tenths of a degree change is

17   insignificant.

18             He said: "The uncertainties are larger than .2."

19   In other words, on a day to day basis fluctuations of two-

20   or three- or four-tenths of degree make trying to measure

21   even two-tenths of a degree over 100 years really fruitless

22   because the uncertainties are larger.  Now keep in mind

23   that's two-tenths of a degree that Dr. Hansen said would be

24   insignificant and not worth even measuring.

25             This is the predicted impact of the regulation

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 1   when you actually run the computer model.  It only took a

 2   couple of hours I think of computer time to do it.  Our

 3   expert did it instead of theirs but everyone agreed.  He

 4   used the Wigley equation, the common tool that's used by the

 5   United Nations, the IPCC.  And using the commonly accepted

 6   method he concluded, or it was concluded, that the effect of

 7   the temperature --

 8             If you assume that motor vehicles continue to

 9   operate for 100 years and you assume this regulation were

10   adopted in the entire country tomorrow, and you assumed that

11   all of the effects possible of potential benefits from this

12   regulation, which of course assumes we keep driving the

13   kinds of vehicles we drive today with just better fuel

14   economy, the predicted impact of the regulation by the year

15   2100 would be about one-hundredth of a degree.  This was

16   about the same amount that Dr. Hansen got with his back of

17   the envelope calculation that he performed in deposition.

18             Now to put that in context, this chart here shows

19   the current, quote, best estimate of the predicted increase

20   in temperature due to global warming as set forth by the

21   IPCC in their 2007 recent publication.  This is the so-

22   called A1B scenario, one of the business-as-usual scenarios.

23   And the best estimate is that the temperature is going to

24   increase by 2.8 degrees absent some very drastic change.  So

25   the question is, what should the change be?

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 1             And the issue is, well, this particular

 2   regulation, if this were to go into effect and it were just

 3   to be, if we were focusing just on California, this is the

 4   difference.  This is what the world looks like with the

 5   California regulation as compared with what the United

 6   Nations says is their best estimate in the absence of the

 7   regulation.  Now both of those lines are on the screen at

 8   the same time.  You can't see the difference because it is

 9   too small to measure.  This is what Dr. Hansen said would be

10   microscopic.  The red line that you can no longer see is the

11   world without the regulation, the orange line is the world

12   with California's regulation.

13             Well what if we add the Northeast?  We still there

14   is still no measurable change.  What if we add the whole

15   country?  Again no measurable change.  The lines all

16   basically look alike.  And again, if you assume the world

17   looks as it does today 100 years from now, which of course

18   doesn't make much sense, there's got to be a different,

19   better path to get onto to address global warming.  It's

20   clearly not this regulation according to their experts.

21             So we asked Dr. Hansen if he accepted these

22   numbers and agreed.  And we said well gee, if these are

23   accurate then what does that mean about the impact of the

24   regulation.  And he said:

25                  "[The impact] would be smaller than

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 1             the -- than the unforced variability of

 2             the system."

 3             "Q   You would need a microscope to see

 4             the impact put into that context; isn't

 5             that true, sir?

 6             "A   Yes.  Put into that context, yes."

 7   That's what we have to take into account when considering

 8   this regulation.  Now that's the impact on temperature.

 9             You've heard both in Arlington, Virginia and a

10   little bit today and I'm sure more today about things like

11   -- that everyone cares about.  Everyone cares about the sea