24 Some people will put yes or no or maybe, but 25 fundamentally none of these are ready across the board that 96 1 are feasible and meet all customer requirements. That's 2 not saying that we don't strongly support encouraging 3 advanced technologies, but we are concerned about the 4 practicality or the required volumes in the proposed 5 timetable.

6 Let me show you what I mean. The proposal 7 will continue to have at least 4 percent real ZEVs which is 8 about 31,000 vehicles a year. All you notice on the 9 footnote, in the last three years nationwide there has only 10 been less than 23,000 vehicles sold. The other 6 percent 11 of the 10 percent can be made up in partial credits. They 12 can do the division for what the partial credits are for 13 that 6 percent. This says that we will need fuel cells at 14 9 percent of California volumes or around 68,000 units.

15 The hybrids would have to be available to 16 be sold to about 10 percent of the public at almost 80,000 17 units. And the SULEVS at 15 and 30 percent get up to 18 almost 250,000 units. And this is what our real concern 19 is, not that there is flexibility provided, but is it 20 realistic to expect people to buy these vehicles in that 21 time period.

22 And the most important thing, of course, if 23 these vehicle sales are not achieved, you do not receive 24 the air quality benefit. And regarding benefits, I'd like 25 to make one last point, and that is this graph shows the 97 1 increased benefit from the ZEF program as initially 2 conceived under LEV I. And over time, the reduction 3 becomes more and more, and that is why it was done. It's a 4 very laudable goal.

5 The interesting thing is, when you 6 superimpose the LEV II standards, the benefit from the ZEF 7 program comes down to 1.6 tons per day by 2010. The main 8 reason is you're substituting ZEVs with very, very low 9 SULEVS and other vehicles. In fact, SULEV vehicle, if it's 10 driven 100,000 miles, will emit one pound of hydrocarbons 11 which is equivalent to spilling a pint of gasoline.

12 Now, 100,000 miles, that's over eight years 13 of use, and you're only talking about one pound of 14 hydrocarbon. And that's why, if we get to those kinds of 15 levels that are proposed by staff, it gets very problematic 16 as to whether you need the ZEF program. So we are saying 17 we would remove the partial  suggest they remove the 18 partial ZEF credits from LEV II and study this more 19 thoroughly. I don't think it's necessary to be part of the 20 LEV II. And if the Board should address air quality 21 standards, not sales mandates, we would suggest do it in 22 simple terms, is intensify some of these advanced vehicle 23 technologies underneath the end market by giving multiple 24 credits so you can have a fuel cell hybrid at five times a 25 SULEV, and it should go like two times and concentrate on 98 1 just the air quality and not the sales mandate.

2 CHAIRMAN DUNLAP: We will talk to staff and 3 wrap up about their idea of including that in the review.

4 CHARLIE KITZ: Very quickly passing, there 5 is something in the report about vehicles equipped with 6 ozone technology. We don't think this makes a lot of sense 7 on mobile. You make more sense on a stationary application 8 such as an air conditioner that is operating a fan all day 9 long on top of a building or something. But that concludes 10 my remarks.

11 CHAIRMAN DUNLAP: All right. Thank you.

12 Any questions of the witness? All right. Very good.

13 Thanks. I understand.

14 Peter Welch? Peter Welch with the 15 California Motor Car Dealers' Association. He's come all 16 the way from Sacramento to be with us today.

17 PETER WELCH: Thank you, Mr. Chairman,

18 Members. Peter Welch with the California Motor Car 19 Dealers' Association. It's a statewide trade association 20 that has all of 1,400 members. We collectively employ 21 about 125,000 Californians. Our members are the people 22 that stock, sell, and service new cars of all line makes.

23 There are currently over 30,000 franchisers that franchise 24 our members.

25 I'm going to keep my comments short. I'd 99 1 like to answer any questions. I'm here to talk about 2 market concerns. Nothing more, nothing less. We do not 3 obviously design, manufacture, or warrant these vehicles.

4 We put on our lots what people want, what Californians want 5 to buy, what they want to drive.

6 It's interesting to note, because a lot of 7 people don't understand the distribution chain, but we are 8 actually the sole purchasers of vehicles from the auto 9 manufacturers. We buy them. We put them on our lot. And 10 we only buy them and put them on our lots in number and 11 variations of what people want to buy. And last year, we 12 sold bumper our best year in the last ten. We sold over 13 1,582,000 something vehicles and yes, 43 percent of those 14 would fall under the category of trucks, light duty sport 15 utility, and so on.

16 I think the Board has done a pretty 17 remarkable job over the years in creeping the technology 18 into the cars in kind of a seemless kind of really 19 non transparent method for consumers have been able to go 20 out there. They haven't seen any noticeable change in what 21 a car looks like, what it performs like. And yes, the 22 price has creeped up 20, 30, 40, 50 bucks here. Consumers 23 have been able to.

24 Where we have hit the wall with the 25 consumers are, quite frankly, the alternative fuel and 100 1 alternative powered vehicles. Those who range natural gas 2 vehicles. Again, we talked about cost, and the 3 differential in those cars are in the $ 5,000 to $ 10,000 4 range. Electric vehicles haven't caught appeal primarily,

5 again, because of performance/ utility and the consumers 6 perception price value. They have not counted out in 7 numbers.

8 We would like to see them buy this 9 technology. The fact of the matter is that internal 10 combustion engine seems to be the most price valued 11 personal transportation unit that is out there, and that is 12 what people go for. That is what they want and yes, they 13 are going for trucks these days. The bigger, the better.

14 I know that in many circumstances it's kind 15 of something that ought to be banned. They're polluters.

16 They are killing people in accidents. But that's what 17 consumers want. They want big, high riding cars, heavy 18 mass, et cetera. We can point our fingers to fuel cost and 19 so on. I'm not here to do that. I'm telling you what 20 they're buying, what they want, and when they hit the wall 21 with respect to price.

22 Our biggest problem right now on the market 23 is, in fact, price sensitivity. The average price of the 24 car, average price of the car is just under $ 20,000 this 25 last year. We are hitting the price wall. Our biggest 101 1 problem in getting people into cars is qualifying them for 2 financing and keeping them in the car.

3 What we have seen in the last three or four 4 years is a phenomenon that I haven't seen in my 5 20 something years  that is, manufacturers are starting 6 what we refer to as decontent the car. They're starting to 7 take equipment options to keep the car under $ 20,000. We 8 have seen some major vehicles with price reductions in the 9 last two or three years.

10 So we get very sensitive when it comes to 11 the price increase. I don't know what the price ultimately 12 is going to be. Your staff, over the years, have been 13 pretty good with their projections. You're in the $ 215 14 range average. I don't think it takes a rocket scientist 15 to figure out that a car that weighs 7,000 or 8,000 pounds 16 and has heavier engines and rear ratios, et cetera, et 17 cetera, is, using my math, going to cost twice as much to 18 certify as a car that only weighs 3,000 or 4,000 pounds.

19 It's a matter of physics with regard to it.

20 When we take a look at price sensitivity,

21 1 percent increase in price usually means a 1 percent 22 decrease in the volume of vehicles that are sold.

23 Likewise, if you reduce the price 1 percent, general rule 24 of thumb, there are a lot of other things that come to 25 play. We can see increases in them. $ 215 increase is 102 1 about 1 percent price increase. To put this into 2 proportion, I'm sure all of you read the newspaper about 3 our big stalemate budget fight this year where the big 4 budget issue this year was tax reduction, vehicle license 5 fee 25 percent reduction.

6 The whole battle this whole summer is 46 7 bucks a person is the average reduction we have seen there.

8 That's only 25 percent of what we are looking at just to 9 staff average here. This is a significant price increase 10 for consumers, and it's going to have some significant 11 ramifications in the marketplace. It is not a $ 15 or $ 20 12 bump.

13 CHAIRMAN DUNLAP: What year are these 14 numbers going to play, Tom?

15 MR. CACKETTE: Well, the standard goes into 16 play in 2004. I just want to point out a couple things.

17 Our economic analysis uses $ 215 number which is more of a 18 worse case number, as the staff showed the number as $ 107 19 as the range. It gets into $ 200 for the bigger one.

20 You're right in terms of bigger ones will be

21 CHAIRMAN DUNLAP: It sound reasonable.

22 MR. CACKETTE: I'd also point out that 23 percentagewise, that percentages will be about the same; so 24 it will be 1 percent on that.

25 PETER WELCH: We think those are absorbable.

103 1 We think most of the cars are in the $ 90 range, and we 2 don't pay it every year. Let's be honest. But it's going 3 to be a pop. Our concern is the same as the 4 manufacturers'. That's the 6,000 to 8,000 pound range.

5 We think that, just intuitively, that it's going to be 500 6 bucks or something in that range. I don't know what it's 7 going to cost out in 2004 when you get it there, but it's 8 going to be more than a 1 percent increase.

9 What is that going to do? It's going to 10 drive people, we think, into bigger cars. If you own a 11 $ 30,000 boat and you need towing capacity to take it over 12 to the lake or ocean or wherever you put it in to go for a 13 ride, you're going to buy it. You're going to buy an older 14 car, an older truck. You're going to go out of the state 15 and get a car with over 7,500 miles and import it in.

16 These are going to have negative ramifications necessarily,

17 but we want you to be cognizant of those.

18 I think I know where the $ 7,000 figure comes 19 from, Mr. Roberts. When we look at the end market average 20 and when you look at your own staff's chart which is, like,

21 on page Roman numeral II and if you look at the schedule 22 and they're flexible, you get out into the later years like 23 2010, you're going to see in those truck range 24 64 percent  10, 15 percent or 64 percent ULEV, 15 percent 25 SULEV.

104 1 Now on a fleet average, sure, that is going 2 to affect Suburbans. They are going to put natural gas in 3 those. Probably people aren't going to buy them. But in 4 order to buy SULEVS, some vehicles are going to be 5 certified. We can't sell them in any category right now,

6 and it does cost $ 7,000 difference in an electric vehicle 7 now. So if that is way out there  and I'm not crying 8 wolf today  but there are market concerns out there. And 9 that is the one that is most impacted and those are 15 10 percent of the cars or trucks, I should say, as a result 11 today.

12 Any questions? That is my point.

13 CHAIRMAN DUNLAP: Thank you, Mr. Welch. I 14 appreciate that. Any further questions.

15 Manuel Cunha?

16 MANUEL CUNHA: Thank you very much. Manuel 17 Cunha, president of the Nisei Farmers League. Also,

18 Mr. Chairman, I have Mr. Mike Wade here from Merced Farm 19 Bureau and if he could be a part, we could split our time 20 up.

21 CHAIRMAN DUNLAP: Is he signed up as well?

22 MANUEL CUNHA: Yes, he's signed up. He's 23 right here behind me on the chair.

24 CHAIRMAN DUNLAP: Come on up. We will do a 25 two for one.

105 1 MANUEL CUNHA: First, before I start, I do 2 want to thank Mr. Dunlap for your staff and this Board for 3 the tremendous amount of work that you've done in working 4 with agriculture in California and especially the staff

5 Mr. Mike Kenny, Mr. Jim Schoning of course, and Tom 6 Cackette, Peter and Bob Cross, and those folks. You have 7 definitely been and have made agriculture a part of your 8 program in working with us to better our industry in 9 cleaning up the air that we are involved with as well from 10 AMTAM as well as other operations that we have. So again,

11 Mr. Dunlap, I'd like to thank you personally, and we 12 appreciate that very much.

13 Okay. Let's get right to the details.

14 Right now before you, you should have several testimonies 15 that were being brought today for you. Those individuals 16 were not able to attend; so I'm representing them here, and 17 I'll just read the names off, and then I'll get right to my 18 three or four bullet points and let Mr. Wade come on board.

19 First, Nisei Farmers League, which is in the 20 San Joaquin Valley, Salinas Valley, and in the Santa Maria 21 Valley as well as down in the Imperial Valley. The second 22 is the California Growers and Processors throughout the 23 state. Third group is Fresno County Farmers. After 24 Wednesday or after Tuesday, I don't know what is going to 25 happen with it or if it's going to be there or not.

106 1 But Fresno County Farm Bureau which is the 2 largest farm bureau west of the Mississippi in the 3 San Joaquin Valley, Western United Dairy across California,

4 California Grape and Tree Fruit League which represents 5 growers across the state, the Raisin Bargaining Association 6 referred to as the RBA which is the largest single entity 7 for raisin production and, of course, 99.9 percent of the 8 raisins are in the San Joaquin Valley.

9 The other group that hasn't brought 10 testimony forward is Dennis Tristo with Boswell Corporation 11 out of corporate. The other group that doesn't have a 12 written testimony due to scheduling or whatever is that 13 California Growers Association. Their specific comments 14 for me to raise was that they are not opposed to the 15 staff's proposal by ARB.

16 The other groups I mentioned for you, we 17 look forward to the staff's proposal and look forward to it 18 moving forward because we saw some statistics that were out 19 there that we could not find $ 7,000. I asked every motor 20 company as well as the chamber where that information was,

21 and we couldn't find it. By contacting the staff, Steve 22 Albu, he presented to me actual information that showed 23 what their cost would be estimated. In fact, I mean in the 24 actual calculations.

25 I'm not an engineer. I wouldn't even be 107 1 able to understand this, any of those numbers, but I took 2 it to somebody that understands those things and explained 3 that cost is around that $ 200. I couldn't find $ 7,000 at 4 all. I even went to the web cite. I'm not a computer 5 individual, but maybe it was underneath the web system 6 somewhere.

7 But our agriculture industry does support 8 this because it deals with it across the board. Now, we 9 deal with vehicles, of all vehicles on road, vehicles 10 making the public, all of us, responsible for doing a 11 better job of cleaning up the air because, as Mr. Wade will 12 talk about in a few seconds, some of the things of why that 13 is important. This will not have an impact on agricultural 14 farmers.

15 The way our economy is going, if we have 16 another El Nino, I do know that many of you will be seeing 17 farmers back to the 1800' s with horses and plows. We will 18 have a catch bag though for the material that was dropped 19 along the street with our buggies or whatever. So we don't 20 have a BM10 problem. But the economics or our industry 21 though is that farmers today keep their vehicles for a long 22 time because of the cost of our tractors.

23 Many of my farmers are small farmers,

24 anywhere from 2 acres up to 80 acres. I have a farmer that 25 has a tractor that is 35 years old and only has 4,000 hours 108 1 on it. That is not many hours. 8,000, hours you go to an 2 overhaul on a tractor. They keep their vehicles. And the 3 economics of this for me and my agriculture industry is we 4 are a part of what we need to do to clean up the air. We 5 are doing a lot of voluntary programs. They're positive 6 with the San Joaquin.

7 So that issue alone is that we are giving

8 and I look at it this way, when I say we, the state of 9 California is allowing the industry to come up with giving 10 flexibility of 4 percent so giving them some latitude.

11 Also, there is a federal thing coming down the line in the 12 future that what California does, we hope the federal 13 government follows. I understand they are. They want to 14 copy what California is doing with their fuels and their 15 vehicle costs, and I think that gives those manufacturers a 16 fair opportunity across the board.

17 So at this time, I would close and have 18 Mike Wade please come forward. We choose to support this.

19 The agriculture industry will not have an economic impact 20 at all. I want to make that clear. We saw some literature 21 out about the farmers were going to go into severe 22 bankruptcy problems, et cetera. Again, we couldn't find 23 where that came from, but it will not, that we can see at 24 this time at all. And $ 200 to me is a reasonable thing to 25 clean up vehicle emissions across this state, and it has to 109 1 be done.

2 Thank you.

3 CHAIRMAN DUNLAP: Thank you. Mr. Wade, from 4 Merced County Farm Bureau.

5 MIKE WADE: Thank you for your time 6 consideration. It's never easy to follow Manuel, but I'll 7 be brief. Merced County Farm Bureau represents the 8 collective interests of over 1,800 San Joaquin Valley farm 9 families and individuals. We are part of California's 10 immense agriculture industry. Our farm bureau, as does 11 Manuel's, supports the ARB LEV II proposal because we feel 12 it's a reasonable approach to the ongoing problem of poor 13 air quality in the San Joaquin Valley and other parts of 14 California.

15 Much has been accomplished in the Valley to 16 improve air quality through regulations that affect many 17 agricultural and non agricultural businesses. The food 18 processing plants which are a vital part of our industry as 19 well as other businesses have made great strides over the 20 past 10 or 20 years in reducing stationary source 21 emissions. But we think more can be done, perhaps not with 22 that class of polluter, but with mobile sources.

23 Based on the influx of an estimated 24 9 million people coming in the next 20 years to the state,

25 we need to act now to further reduce tailpipe emissions 110 1 which are a major problem in the San Joaquin Valley and a 2 major source according to the San Joaquin Valley Unified 3 Air Pollution District.

4 LEV II is a fair and balanced approach, we 5 feel, in reducing the air pollution problem. It's going to 6 be effective, and we feel it's going to be affordable.

7 LEV II, as written, will begin implementation, as you know,

8 in 2004. And it will affect certain pickup trucks, sport 9 utility vehicles, and medium duty trucks.

10 The improvement in tailpipe emissions can be 11 accomplished among these vehicles, again, for approximately 12 $ 200 or less, which we have heard testified to a number of 13 times already today. We feel that this can be accomplished 14 hopefully without compromising performance or fuel economy.

15 From the technology that has been derived from the 16 passenger automobile industry can be applied to, we hope 17 and believe, into this other class of vehicles and provide 18 an incremental common sense approach to the further air 19 quality problems.

20 CHAIRMAN DUNLAP: So you like it and support 21 it?

22 MICHAEL WADE: We do like it, and we support 23 it. We don't feel it's going to be an economic burden, and 24 we think it's the one way that we can have a unified 25 approach statewide to improving air quality.

111 1 CHAIRMAN DUNLAP: That's great. Thank you 2 guys very much. I appreciate your coming.

3 SUPERVISOR PATRICK: I would just like to 4 ask either Manuel or Mike to talk a little bit about 5 performance because we've heard from the San Joaquin Farm 6 Bureau, Take Home Ranch and others, saying that they're 7 afraid this is going to affect the performance of their 8 work vehicles. Your comments have primarily addressed 9 economics. But could you talk a little bit about 10 agricultural's concern, if there is any, about performance 11 of the vehicles under the new standards?

12 MANUEL CUNHA: I think just a real quick 13 thing on that is that many of our farmers today, as I 14 mentioned, buy a larger vehicle because they use it for 15 more than just the one purpose; so they're going to buy a 16 bigger vehicle anyway. They're not going to go to a 17 vehicle that is going to be at the minimal to get you over 18 the hill. They're going to a bigger pickup truck because 19 they know farmers do something most of the time that, if it 20 says you only load it with two pounds, they will go six 21 pounds. That's the way we work. We have to get the 22 maximum across.

23 Today, my farmers especially, they don't get 24 into the smaller vehicles. They're going for a bigger 25 vehicle because their potential is they're going to do more 112 1 with it than just use it for towing the boat. They have 2 always gone for the larger system of saying they are going 3 to tow a trailer that is a 12,000 pound trailer. They're 4 going to put 11 ton on it, and it's that type of thing that 5 the farmers do. And anymore, many of my farmers are going 6 to diesel.

7 They want that ability of that torque and 8 that low end drive and conserving on how many fuel tanks 9 they have in your facility because of the regulations that 10 they're going to diesel  one fuel tank, one issue to deal 11 with versus having to deal with gas and diesel. So that's 12 my comment from our side. I've talked to farmers across on 13 many issues.

14 CHAIRMAN DUNLAP: Thank you, gentlemen.

15 Sam Leonard? You're against clustering, Sam?

16 KEVIN CULLEN: I'm going to try to make this 17 quick. I'll skip the opening commercial that some of my 18 friends have done as long as you don't take that time away 19 from me.

20 Supervisor Roberts, I don't know anything 21 about $ 7,000. I'm going to try to explain to you why there 22 has been a lot of talk about tech feasibility. That's 23 certainly a concern and issue. I want to talk about a 24 completely different aspect of this, which is the nature of 25 the proposal, the workload it presents us, and why if we 113 1 assume tech feasibility, we still have problems.

2 LEV II staff proposes the tailpipe rollout 3 from ' 04 to ' 07, produced for the industry an unprecedented 4 level of workload in design and release, development and 5 validation and search. And that impact is disproportionate 6 on us full line manufacturers who have to deal with the 7 shift of medium duty trucks and light duty, and that is 8 really the core message I would like to get to here.

9 Many of the people in the room here, when 10 they go home today, will move on to other things. Those of 11 us from Detroit and other automotive centers will spend 12 time trying to make this happen, and the workload we're 13 presented with is really crushing.

14 CHAIRMAN DUNLAP: Will that be around the 15 clock you're working on this?

16 KEVIN CULLEN: Personally, no, sir. I do go 17 home in the evening. But yes, we have emission testing 24 18 hours a day for development. Key issues are what I call 19 the triple whammy of the shift from medium duty vehicle to 20 light duty trucks. And that's part of the trucks to car 21 initiative 2004 to 2007. Additionally, the severity of the 22 reduction, the ongoing shift from LEV to ULEV and beyond,

23 superimposed evap rollout and then the other shoes to 24 follow.

25 Just so we are clear on the categories, this 114 1 isn't a commercial. Current LEV II are the guys on top

2 the small sport utility, small pickups, and minivans. The 3 current MDVs under 8,500 are the full size trucks,

4 full size pickup, van, sport utilities. The MDVs over 5 8,500 are the heavy work trucks.

6 When we talk about the triple whammy, what 7 does that really mean? When you look at shifting vehicles 8 from the current MDV category that is 6,000 to 8,500 into 9 the new broader LDT II category, the obvious candidates to 10 do that are trucks that are going to be ULEVs as MDVs 11 because they are the most emissions capable. When you 12 remove those from MDV and send them to LDT II, you have to 13 re balance your MDVs to get back to the proper split of 14 LEVs to ULEVs, and that means there is work to do on the 15 MDVs left behind to get more ULEVs back in to cover the 16 ones you removed. As well, the MDVs you send to LDT II are 17 the least capable in that population.

18 As data has shown  our data, certainly the 19 staff's data  the vehicles 6,000 to 8,500 are primarily 20 LEV II candidates. There is no data on the table I've seen 21 yet that says they're ULEV candidates. So that means the 22 balance of the LDT II population has to shift more 23 aggressively to ULEV in order to offset those entering 24 MDVs.

25 And maybe most importantly, when you look at 115 1 the total MDV population, the 6,000 to 8,500 are the 2 dominant volumes. Those are the configurations that are 3 sold in high volume. When you take one high volume MDV 4 between 6,000 to 8,500 away, it no longer offsets many 5 smaller volume configurations. And this speaks to 6 Ms. Edgerton's questions about availability  will there 7 be a narrowing of features or a narrowing of offerings.

8 So we have a multiplied workload because we 9 now have to take many small volume configurations to 10 replace a few large volume configurations.

11 Tried to illustrate that with this plot.

12 This is GM's current mix of sub configurations. A 13 sub configuration is an engine, a transmission in a body 14 between 6,000 and 10,000 pounds. Each of the colored 15 sub bars is one configuration. What you see when you look 16 at the 6,000 to 8,500 pound bar is there are four or five 17 large configurations that dominate the volume in these 18 categories and then lots of cats and dogs that are produced 19 in hundreds to thousands of vehicles per.

20 Those large volume configurations are the 21 ones that will be ULEVs in 2003. They will be the first 22 ones to move out to go to LDT II, and they will leave 23 behind that large pull of cats and dogs. Making each of 24 these into a LEV II is an equivalent amount of workload,

25 whether it's a 500 vehicle configuration or 50,000 vehicle 116 1 configuration. So you can see how the workload multiplies 2 as you lose those high volume MDVs that currently carry 3 most of the higher emission performance in this category 4 today.

5 The 60 percent ULEV, we are showing there is 6 what is proposed for the MDV class post 2003, and you can 7 see that today we can cover that with about four 8 configurations. Once those high volumes go away, we are 9 going to have many configurations to cover that same 10 requirement.

11 I'm not going to spend much time on this,

12 but when we talk about the reduction staff has proposed, as 13 you step up into those larger vehicles, it is a much 14 tougher road to ho. The green bars are LEV I, LEVs to 15 ULEVs in each cagegory. The blue and red bars are the 16 comparable reductions in HC plus NOx to get to LEV II or 17 ULEV II. We are talking about very dramatic reductions in 18 emissions.

19 We are also going to more aggressive nexus.

20 What does that mean? More ULEVs, and they are ULEV IIs not 21 ULEV Is.

22 Next slide, Barbara. Superimposed on all 23 this is an aggressive evap rollout. In only three years,

24 we are going to change over to the new lower evap standard 25 on top of the tailpipe rollout. The last time we did this 117 1 enhanced evap one rollout in four years, ' 95 to ' 98, that 2 preceded the toughest years of the LEV I Program, which are 3 ' 99 and 2000. So those workloads were decoupled. We 4 weren't trying to do them at the same time.

5 That enhanced evap change will require us to 6 essentially recertify all of our vehicles for durability.

7 And as staff knows, the test is tough. It's tough to run.

8 It takes lots of time so that that recertification process 9 will be very labor intensive.

10 And there are other shoes to follow. What 11 does that mean? There are going to OBD impacts from the 12 LEV II proposal. Thresholds that are set relative to our 13 measuring standard will change, will have to be 14 recalibrated to the new tighter standard. I think staff is 15 already talking about the possibility of meeting a NOx 16 focus catalyst monitoring diagnostic as we move the NOx 17 levels down much further. The evap proposal may have OBD 18 impacts. And by the way, at the same time frame we are 19 phasing in the supplemental FTC requirements already 20 adopted by the Board, 2003 to ' 5 on the same MDVs, 6,000 to 21 8,500; and the 6,000 to 8,500 ORBR phase in at the same 22 time.

23 Last slide. So when we look at  I'm 24 sorry. How does our proposal improve workload? The 25 biggest impact is by leaving the 6,000 to 8,500 as MDVs,

118 1 we avoid that triple hit that happens when migrating them 2 to LDT II. It moderates the impact on the PC and LDT II 3 under 6,000 LEVs by having a slightly higher LEV NOx level.

4 And what that says is these are vehicles that are going to 5 go away soon because of the planning and NMOG averages.

6 Why rework them for a short remaining life. It improves 7 our confidence that the standards are achievable, and it 8 extends the evap phase in by one year.

9 Next slide. While we have asked for some 10 moderate relief on standards, our stringency proposal is 11 still very aggressive. We are still asking for big 12 reductions at proportionately larger reductions on the 13 truck.

14 Next slide. Conclusion. The staff 15 proposals really comprise a functioning workload task for 16 all manufacturers. I'm not trying to whine. I'm just 17 telling you straight up. This is a lot of work, and it's a 18 particularly severe impact on the full line manufacturers 19 who have to do the truck category shift. Our post 2004 20 product claims that volumes are still very fluid. I can't 21 come up and tell you precisely what the workload ratio is,

22 but a good estimate would be it's at least twice the worst 23 years ' 99 and 2000 for the LEV I proposal, and maybe as 24 large as three times the workload that we are doing right 25 now to get through 2000 2001.

119 1 One more comment I'd like to make. Staff 2 talked about five years of lead time on the LEV II 3 proposal. We are currently certifying 2000 model year 4 vehicles. We are nearing calibration freeze for 2001' s.

5 The most charitable number I can come up for the real lead 6 time on the LEV II proposal is three, maybe a little under 7 three years. It isn't five years. We are in calendar year 8 1998, but we are in product 2000 to 2001. That's the end 9 of my story.

10 Questions?

11 CHAIRMAN DUNLAP: Any questions?

12 MR. CALHOUN: Kevin, you focused on 13 workload.

14 KEVIN CULLEN: Yes, sir.

15 MR. CALHOUN: What about the technology 16 itself?

17 KEVIN CULLEN: I tried to approach this,

18 Joe, with the technology as a given and saying technology 19 isn't the only problem. The problem is the resources to do 20 this. In terms of technology, is the technology there to 21 do either our reductions or the staff's? Certainly there 22 is technology to do much lower levels. I think the 23 question that I have is how do you do an MDV over 6,000 24 pounds to the proposed ULEV II level.

25 Nobody's data suggests that can be done,

120 1 particularly on NMOG, and the plan would require us to 2 start doing those as we get to the out years.

3 MR. CALHOUN: Do you see that as being a 4 major hurdle?

5 KEVIN CULLEN: Sure. Absolutely do.

6 CHAIRMAN DUNLAP: Okay. Thank you.

7 Sam, you're up.

8 SAM LEONARD: Sam Leonard with General 9 Motors Corporation.

10 As many of you know, I've been before this 11 Board many times before, including 1990 when historic 12 LEV I Program was passed. And at that time, GM supported 13 the LEV I Program, including the ZEF mandate for which I 14 have since had some discussions with my management about.

15 But the auto industry is contributing to 16 improved air quality through reduced emission reductions.

17 Barbara, just quick slides. And this is just a 18 continuation of progress we have seen over the last 20 19 years. This is the share of the auto statewide in 1996.

20 This is what it's going to be under the ARB proposal. This 21 is what it's going to be under the industry proposal. You 22 can see the dramatic reductions we are continuing to get in 23 the auto. You can also compare that to the other areas.

24 In fact, the auto proposal gets about 25 90 percent of the staff's proposal, and it covers all of 121 1 the M2 Program, as you know. All of the M2 commitment

2 and I still can't get the numbers straight whether M2 3 commitment is 25 or 16 and whether the black box is 75 or 4 64.

5 MR. KENNY: M2 commitment is 25, and black 6 box is 55.

7 SAM LEONARD: Then we cover about 40 percent 8 of the black box on the M2.

9 CHAIRMAN DUNLAP: Is that black box made of 10 rubber material, or is it really a box?

11 SAM LEONARD: Depends on which model you use 12 for it, I think. That's what's been the confusion. Can I 13 go back to the next slide for a minute because I want to 14 focus on something  I'm sorry this is not as pretty as 15 Kelly's, but this is the one that Kelly's was taken from

16 and focus on the two things in the tailpipe area that the 17 industry is really looking for. This is the original staff 18 proposal on this side.

19 What we are looking at here in this chart is 20 just at the 0 to 6,000 pounds. The industry is willing to 21 bring less than 6,000 pound vehicles down to passenger car 22 standards. That covers for GM all our S 10 pickups, all of 23 our sub compact sport utilities, the Blazers, the Jimmy's,

24 Bravados, covers all of the minivans such as the 25 Silhouette, the Lumina, the Montana, and most of the Astros 122 1 and Safaris. We are more than willing to bring those down.

2 What we are looking for in that category is 3 some relief on the NOx standard for LEV. We are willing to 4 pay for that relief with a more stringent NOx standard for 5 ULEV. That gets us through some of the transition 6 problems, some of the transition problems that Kevin is 7 talking about. That particular change is essentially 8 neutral on the emission tonage.

9 Second is that is a big issue to us because 10 of trying to do the transition, and it is a relatively 11 minor issue in air quality because LEVs are generally 12 phased out in that category by 2008 and just about gone 13 because you have to meet a ULEV average.

14 Second big area is the light duty truck over 15 6,000. Next slide, please.

16 CHAIRMAN DUNLAP: What are the names of 17 those?

18 THE WITNESS: The GM names are the Silverado 19 pickup truck, and the GMC version; the Yukon, the Tahoe,

20 the Surburban; the Savanah van, which is the 21 eight passenger van, full size vans. These are the big 22 vehicles that people use to tow. If you're standing on a 23 Michigan highway on Friday, these are the vehicles you see 24 towing the trailers. Every one of them are going north for 25 the weekend, and you can see them coming back on Sunday on 123 1 the overpass.

2 This is the staff's proposal. We are not 3 opposed to making significant reductions in the emissions 4 of this category of vehicles. We think it can be done. We 5 just don't think that we can get all the way down. This is 6 a current MDV 3, LEV I level .6. The staff is asking us to 7 get down to .05 on that. We think a reasonable end point 8 for a ULEV II on average will be .1. These trucks do twice 9 as much work when they run the test site.

10 You talk about whether it's emission 11 equivalent control or not. If you measure it in grams per 12 mile, you make the argument it's not. If you measure it in 13 percentage reduction of uncontrolled emissions, what we are 14 proposing is equivalent control. They would both be 15 reduced from uncontrolled levels by 99 percent.

16 The hardware to do that is identical with a 17 passenger car and light duty truck. They're even more to 18 get them on the light duty truck. But it doesn't get them 19 down to the same gram per mile because they put out more 20 work over the cycle and in use. Nothing that I have seen 21 has shown any potential to reach the ULEV II proposal for 22 MD 3 and MD 2, the CARB staff has proposed.

23 GM sat here in LEV I Program and said, " Yes,

24 we are willing to take on the challenge. We don't know 25 exactly how we are going to do it. We don't know if it can 124 1 be done, but we think they're reasonable goals."

2 Can I back up one slide, please. We are 3 saying the same thing today about this category of 4 vehicles. We don't know how to do it all, but what the 5 staff has proposed for the under 6,000, we think are 6 reasonable goals; and the over 6,000 pounds, we can't stand 7 here and say that, and we cannot support it because we 8 don't think they're reasonable goals.

9 CHAIRMAN DUNLAP: Sam, on that point, you 10 just think it's taking you too far too fast even with the 11 time because we are talking about some significant time 12 here. Now, I know I heard you talk about the lead time you 13 need and all of that, but does it give you any warm 14 feelings, Sam, when we talk about technology reviews and 15 corroborating with you all, et cetera?

16 SAM LEONARD: Part of the problem I've got 17 going now is I'm trying as a corporate company to make the 18 electric vehicle a success. We are pouring millions of 19 dollars into that, probably with several digits beyond 20 millions. Spending hundreds of millions on fuel cell 21 program. I am very leery of going after another program in 22 which I have very little hope of success when I can go 23 after a program that I think that I can succeed at and 24 provide 90 to 93 percent of the benefit of the staff's 25 proposal.

125 1 CHAIRMAN DUNLAP: Is it possible? Let me 2 ask one other thing, and I mean no disrepect to your 3 company in that regard because I have  is it possible in 4 that area, Sam, GM is a little depositioned or behind? Is 5 that possible?

6 SAM LEONARD: Absolutely not.

7 CHAIRMAN DUNLAP: Absolutely not? Okay.

8 Thanks. The reason why I ask that and again is, you know,

9 you guys are capable to catch up in a hurry when you put 10 your mind to it if you're ever behind or delayed in a way.

11 I mean, looking at this, we deal with you all the time,

12 Sam.

13 SAM LEONARD: We are capable of doing 14 what  capable we are doing it here in this state. But if 15 you look at the technological feasibility data that has 16 been presented, what has been presented for the LEV II over 17 6,000 is similar to what has been presented for the 18 ULEV II for the passenger car and up to 6,000. I think 19 there is a feasibility potential there for LEV II on those 20 vehicles with a .1 NOx. I don't think there is any 21 feasibility for ULEV II that's been shown, nor do I have 22 any hope of getting there.

23 CHAIRMAN DUNLAP: One last question. Staff 24 has indicated that there are some off the shelf stuff that 25 need to be done, different kinds of catalysts to it, et 126 1 cetera, maybe change the size and dimensions or whatever.

2 And think you can get there or get close?

3 SAM LEONARD: They got close to LEV II not 4 ULEV.

5 CHAIRMAN DUNLAP: The question is to me

6 and I know we have a fine staff and I'm grateful for them 7 and the work they do, but you guys are, if not the biggest,

8 one of the bigest corporations in the world. And I know 9 when you put your mind to it, you can accomplish just about 10 anything. The thing that disconnects for me is how this 11 kind of David and Goliath thing is going on here, and I'm 12 just perplexed by it.

13 SAM LEONARD: The disconnect for me is that 14 we have your staff saying that it can be done, and every 15 automobile manufacturer in the world that produces those 16 types of vehicles saying it can't be done.

17 CHAIRMAN DUNLAP: Even with the time?

18 SAM LEONARD: Even with the time. Just to 19 summarize the three major issues the industry's concerned 20 about is the passenger car LEV NOx. We'd like the relief 21 on that from .05 to .1 on the over 6,000 pound trucks and 22 the evaporative standard. As you know, we have offered a 23 .95 in use .8 cert. The staff has offered a .5 cert with a 24 .875 in use or three years.

25 I pushed and stretched and threatened and 127 1 strangled my development engineers to get them to be able 2 to put .8 cert level into our proposal. They have

3 CHAIRMAN DUNLAP: Still don't see?

4 SAM LEONARD: Don't see. That's all.

5 CHAIRMAN DUNLAP: Okay.

6 MS. EDGERTON: I appreciate that, between 7 the time I spent with you and your colleagues and now,

8 there has been, well, there have been other meetings. When 9 you talk about your proposal, are you talking about the one 10 that you had several weeks ago, or are you still sticking 11 with that, or are you talking about a smaller one that just 12 has the items there? I'm a little confused with what we 13 are talking.

14 SAM LEONARD: Put it this way. You pick it.

15 You can have either one of them.

16 MS. EDGERTON: Well, thank you for that, and 17 I'll ask the staff to respond. Is there anything you think 18 you can clarify with respect to the proposal that, you 19 know, we saw several weeks ago and Mr. Langer's proposal 20 today how similar they are or dissimilar.

21 MR. CACKETTE: There has been

22 CHAIRMAN DUNLAP: In the political 23 vernacular, have they moved?

24 MR. CACKETTE: Very small amounts. There 25 has been three proposals, one from months ago, I guess; one 128 1 from early this week; and one from 11: 00 last night. And 2 those proposals all fall roughly in the range of doing 85 3 to 90 percent of the reductions that the staff proposal 4 does. They all fall roughly 8 tons per day short in South 5 Coast compared to the staff proposal.

6 There has been changes that have moved that 7 up one, down one a ton or so but not anything that 8 substantially shrunk the difference between the two 9 proposals in terms of environmental.

10 MS. EDGERTON: I appreciate that, and all I 11 can say is is that these are very complex proposals, as you 12 know. And I know you appreciate it's very hard to try to 13 shoot from the hip. I mean it's impossible sitting up 14 here. I can't even really respond very well to that when 15 it's something that is changing.

16 SAM LEONARD: Basic difference is the 17 assessment of the feasibility of the over 6,000 pound 18 truck. And no matter how you squeeze the proposal, you 19 can't find the tonage to make that up because you've got 20 passenger cars at absolute technology forcing levels.

21 Things that we don't know how to do but we think are 22 reasonable goals, you can't sign up for much more than 23 that. We tried to sign up for a little more of that on 24 ULEV on the passenger car and under 6,000.

25 But as long as we are convinced that what 129 1 the staff considers feasible for the over 6,000 pounds, we 2 don't. There is going to be that gap, and there is no

3 with everything being at technology forcing levels, there 4 is no place to make it up. It's just a difference in 5 assessment of what is feasible in the market.

6 CHAIRMAN DUNLAP: Mr. Calhoun?

7 MR. CALHOUN: Mr. Leonard, correct me if I 8 mischaracterize your proposal. Essentially, what you have 9 proposed is to do more with the lighter vehicle passenger 10 cars and light trucks and for some break on the 6,000 to 11 8,000 vehicle; correct?

12 SAM LEONARD: Joe, on the passenger cars to 13 light trucks, it's basically what the relief we are 14 requesting on the LEV NOx is basically offset by the added 15 stringency we are offering on ULEV NOx in that range. And 16 the over 6,000, it's all shortfall because we have nothing 17 to give, nothing to offer, nothing to push forward on that 18 because of technology.

19 MR. CALHOUN: The staff has proposed to 20 compensate for the difficulties the vehicle has in meeting 21 the standards by allowing 4 percent of the vehicles to meet 22 a different standard, a more lenient standard. What 23 percentage of the 6,000 to 8,000 pound vehicles are

24 what percentage of your product in that range are ordered 25 with the heavy duty trailing package?

130 1 SAM LEONARD: Excuse me just a second. Let 2 me do it by categorization. If I look at the three quarter 3 ton SUVs  Yukon, Tahoe, Suburbans  over 90 percent of 4 those vehicles are ordered with a trailering package, and 5 that's not a cheap package. That's a $ 150 to $ 350 package.

6 People don't buy just to buy it. They buy it because 7 they're going to use it. On the three quarter ton pickups,

8 we are over half ordered with these heavy duty trailering 9 package. The one ton pickups are a little bit lower. They 10 are down to 35 percent, and the farmers will tell you why 11 that is. They do fifth wheel trailering packages on it in 12 the after market. We don't put those on our vehicles.

13 Concurrently, if you look at our passenger 14 cars today with what we have done with the towing 15 capability of the passenger cars by reducing emissions and 16 improving the fuel economy and removing the front wheel 17 drive, we have virtually 0 percentage of our passenger cars 18 purchased with a trailering package. I can't find it on 19 the chart. These vehicles are 6,000 to 8,500 pound 20 vehicles are purchased with tow heavy loads.

21 That's what they have to be designed to do.

22 When you run them over a test cycle, they have to do twice 23 the work as our passenger cars. And that's why they have 24 about twice the emissions on a gram per mile basis.

25 DR. FRIEDMAN: I'm just a little confused.

131 1 Where is the towing package installed? Doesn't it come to 2 the dealer with the towing package in many, many instances?

3 SAM LEONARD: Many instances, it's factory 4 installed.

5 DR. FRIEDMAN: So when it gets to the 6 dealer, you buy it with the tow package because it's 7 installed. Are you telling me that you really think that 8 90 percent of those vehicles are in fact towing something?

9 SAM LEONARD: Yes, I do.

10 DR. FRIEDMAN: Not in my neighborhood.

11 SAM LEONARD: They are in mine.

12 CHAIRMAN DUNLAP: Sam, we may want you guys 13 and Kelly as well later. So stick around. Okay. Thanks,

14 gentlemen.

15 Mr. Innes? Mr. Innes, hello. You're a 16 citizen from the 909 area code. That could be 17 San Bernardino, Riverside area; is that right?

18 WILLIAM INNES: Well, the remark is now the 19 regulators have solved the smog problems. Why do they seem 20 to want to unsolve it? My name is Bill Innes. I'm a 21 physical scientist, speaking as a private citizen of the 22 Los Angeles basin. I'm living in the inland area where we 23 have the highest smog level. My comments are directed at 24 the NOx control measures.

25 These are about 80 percent of the 132 1 incremental emissions benefits claimed in the staff 2 report. Smog chamber in modeling seem to have shown that 3 controlling NOx is counterproductive with respect to ozone 4 levels. We heard a little bit about that already today. I 5 don't want to go in in any great detail. This particularly 6 applies to the South Coast Basin. At present, it's very 7 critical what the ratio is below one tenth NOx becomes 8 important from the standpoint of being necessary for smog.

9 Above one tenth, it acts the other way and it decreases 10 ozone by a direct reaction of ozone with nitric oxide.

11 Right now the ozone is about .30, which is 12 three times higher than critical ratio; so we are 13 definitely on the side where any controls on NOx are 14 counterproductive. That's why I say it's going to get 15 worse with these measures rather than better. One of the 16 reasons is often given for NOx controls is a matter of 17 particulate. However, the ARB has failed to come up with 18 any proof of that, to my knowledge. I think it's based on 19 a common assumption that nitric oxide reacts rapidly in air 20 to become an NA2.

21 Well, that's a false idea. Of course 22 everybody has probably seen chemistry experiments if they 23 took chemistry in school. When you release NO on the 24 atmosphere, you see a ground color, and NO's converted to 25 NO2 you think. Well, that does happen. That's a tailpipe,

133 1 but it's very brief and never only about 10 percent 2 conversion. The reason it happens is because the reaction 3 of NO air and oxygen. Oxygen and air requires three 4 molecules. It requires two molecules of nitric oxide and 5 one for oxygen. And that happens very rare when you get 6 through diluted nano condition like we have now. Compared 7 to the reaction of NO with ozone, it's almost negligible.

8 That's where the conversion occurs, and 9 that's where actually nitric oxide helps. What is emitted 10 from cars essentially is about 90 percent nitric oxide, or 11 NO.

12 CHAIRMAN DUNLAP: Mr. Innes, what would you 13 have us do relative to this regulatory proposal? What 14 would you have us do? What do you want us to know? We are 15 talking about the regulatory proposal. Do you like it? Do 16 you think it's misguided?

17 MR. INNES: You want me to get to the 18 recommendations already?

19 CHAIRMAN DUNLAP: Yes, I'd like you to do 20 that, sir.

21 WILLIAM INNES: Recommend that you delay or 22 cancel action on the new LEV control, the current proposal 23 resulting from the EPA standards. And these are 24 scientifically unjustified and probably will be unchanged 25 because probably a new EPA administrator or because of a 134 1 legal challenge because they don't make scientific sense.

2 I hope the state of California will not be a party to such 3 a challenge.

4 Secondly, you should review when publishing 5 model studies involving higher NO hydrocarbon ratios versus 6 the proposed LEV controls. Then would be the time to 7 consider emission standard changes. The staff report 8 provides no assurance the new air standard will be met by 9 imposition of the LEV II regulations.

10 CHAIRMAN DUNLAP: Okay.

11 WILLIAM INNES: Since they would decrease 12 the NOx to AC ratio, they would be expected to increase 13 ozone levels.

14 Thirdly, we are not with hydrocarbon than 15 any future regulations that are in this because their 16 effects are entirely different. That's it.

17 CHAIRMAN DUNLAP: All right. Thank you.

18 I'm going to ask staff at the break, Tom, to get Mr. Innes 19 and share with him some modeling data. I don't know if we 20 can turn you around about scrapping this thing, but we want 21 you to know some of the assumptions going on.

22 Thank you for coming down today. I 23 appreciate it. We will take one more witness and break for 24 lunch. Anybody sitting over there in the bull pen willing 25 to be particularly brief? Come on down. Okay. Very 135 1 good. You are?

2 BARBARA KISS: Barbara Kiss. I'm the staff 3 engineer with the American Automobile Manufacturers 4 Association. I've got just a few very brief comments on 5 CAP 2000 portion of today's rule making. My comments today 6 on behalf of both AAMA and AIM.

7 Many people from EPA, CARB, and the industry 8 have worked very hard for several years on this initiative 9 to achieve effective regulatory streamlining of vehicle 10 compliance programs. In 1996, the automobile 11 manufacturers, EPA, and CARB agreed to work under the 12 auspices of the statement of principles with the goal to 13 improve future in use emission controls performance of 14 light duty vehicles and light duty trucks while reducing 15 overall compliance.

16 We agree with the statement that, given the 17 mature state of emission control technology coupled with 18 in use program, certification requirements may now be 19 streamlined substantially with greater emphasis placed on 20 in use performance. These are very worthwhile goals, and 21 this rule making is a definitive step in that direction.

22 However, we believe that EPA and ARB missed 23 an important opportunity to accomplish greater reductions 24 in workload, testing documentation, and related staffing on 25 the certification part of the compliance process.

136 1 Recognizing that the proposed increase reliance on in use 2 testing, a process more approaching self certification,

3 could better achieve the stated goals of CAP 2000.

4 Overall, today's proposal will reduce 5 testing of certification and new production vehicles 6 significantly in some cases and will decrease the 7 unnecessary up front paperwork. However, all manufacturers 8 are being required to conduct in use testing on customer 9 vehicles as received and at the manufacturer's expense,

10 resulting in a new level of burden and compliance concerns.

11 On the whole, we agree that there are some 12 cost savings. The cost savings are not uniform throughout 13 the industry. In the aggregate, many manufacturers may 14 incur a net increase in costs. Though each manufacturer 15 will be affected differently by these changes, all are 16 supportive of EPA and CARB regulatory harmonization.

17 Automobile manufacturers have a critical need for common 18 certification and testing procedures between the agencies.

19 Today's rule making takes steps in that direction.

20 However, more effort in this direction is 21 required. Again, we will continue to work with the 22 agencies to address these issues and to reduce unnecessary 23 regulatory complexity.

24 CHAIRMAN DUNLAP: Okay. I'm going to ask 25 staff, would you make sure staff understands the testing 137 1 procedure that would be most efficient and then later at 2 the end when we do the wrap up, we'll have you talk about 3 why you can't do it their way or what the issues are or 4 whatever is on the table; so we will address that at the 5 right time.

6 Is Greg Dana here? Are you going to go next 7 because she said she was representing your organization as 8 well as

9 BARBARA KISS: Again, my comments were only 10 on the CAP 2000.

11 CHAIRMAN DUNLAP: Because we have two 12 minutes, I'll let you go. I'll hold you until after 13 lunch. It's your call. Last witness, and we will break 14 for lunch.

15 GREG DANA: My name is Greg Dana, vice 16 president and technical director of the Association of 17 International Auto Manuracturers. Our members have long 18 been leaders in development ( unintelligible).

19 To name a few, Toyota has introduced the 20 first production hybrid vehicle in Japan which are soon to 21 be released into the market Honda has introduced the first 22 production gasoline ULEV. Mercedes Benz is the leader in 23 developing the fuel cell power for motor vehicles.

24 Mitsubishi has been developing gasoline ( unintelligible)

25 sold in Japan, along with Toyota and Honda. Volvo has 138 1 introduced a system on ( unintelligible) model year.

2 In light of this, we believe the proposed 3 LEV provision standards present a significant challenge for 4 our engineering community, given the significant changes to 5 the tailpipe evaporative standards as well as changes to 6 the structure of passenger cars and trucks and the 7 increased use of the light truck vehicles.

8 While it's impossible at this point to know 9 whether these new standards will be achievable across the 10 entire product line of vehicles produced by our members,

11 they are committed to doing their best to achieving 12 emission control proposed by staff. I guess this is Kelly 13 saying never say never.

14 We've already talked about evaporative 15 emissions. One of our members was talking about that. We 16 certainly support the industry ( unintelligible) at this 17 point. One small item though regarding evaporative and 18 tailpipe together for the small volume manufacturers that 19 we represent, depending on how you look at the phase ins,

20 if in fact the phase ins have been 2006 and tailpipe 2007,

21 for the small volume people in particular, we'd like to try 22 and align that phase in so it will all happen in one year.

23 Proposal also suggests some changes to the 24 smog index label. While we continue to be skeptical of the 25 benefits of such labels, we support the changes proposed by 139 1 staff; however, we again ask the staff to remove the 2 requirement for the statutory low emission vehicle label 3 required by the state. This is redundant of smog index 4 label. And I will support the changes of the phase in for 5 the .020 in leak protection as part of the OBD II 6 requirements.

7 The staff proposal is to go from 50 percent 8 phase in in the year 2000 to 20 percent and phasing in its 9 requirement over four years rather than three. This longer 10 and less front loaded phase in will permit better 11 development of OBD systems, able to meet the stringent 12 requirement. We also appreciate the addition of in use 13 compliance standards for the first years of implementation 14 of the LEV II Program. As we suggested at one of the 15 previous workshops ( unintelligible) permit more time to 16 develop robust calibration while keeping the focus on the 17 long term goal of meeting these stringent standards.

18 Another issue to be raised at the previous 19 workshop was the international OBD II standards. From 20 experimentation or data we have been trying to develop, we 21 think there is some need to change these threshholds that 22 we have on the OBD II system as we move into the SULEV 23 category. We don't believe that a ( unintelligible)

24 threshold for OBD II can be measured in SULEV.

25 Finally, while it is not part of these 140 1 regulations, AMA would like to state for the record that 2 cleaner fuels will have to be part of the equation as new 3 standards are implemented. This includes further sulfur 4 reductions in both gasoline and diesel fuel. Fuel changes 5 to control combustion chamber deposits as well as other 6 fuels that may be needed with more advanced technologies.

7 And we look forward to working with staff on these issues.

8 Thank you.

9 CHAIRMAN DUNLAP: Thank you. Any questions 10 of the witness? Very good. For you and your colleagues at 11 AMA, I wish you guys well on that.

12 GREG DANA: So do we.

13 CHAIRMAN DUNLAP: All right. Why don't we 14 take a break. For those, again, we are one third done with 15 the witness list. We will reconvene, 40, 45 minutes. 1: 15.

16 ( Lunch recess, 12: 40. Return at 1: 15.)

17 ( Back on the record at 1: 15.)

18 CHAIRMAN DUNLAP: Wolfgang, would you mind 19 coming forward. Now my apologies since all of the Board 20 members are not back, but it is piped into the back so they 21 can hear you. Dick Shaw. Is Dick Shaw here?

22 DICK SHAW: Right here.

23 CHAIRMAN DUNLAP: Dick, you're up next. So 24 I'm going to go around. Wolfgang, you get going. I had a 25 chance to meet with you. So I'm going to let Joe keep you 141 1 on track.

2 WOLFGANG GROTH: My name is Wolfgang Groth,

3 and I'm director of engineering environmental staff of 4 Volkswagen of America. My comments here are presented on 5 behalf of Volkswagen, Audi, and Rolls Royce, and 6 Automobili, and Lamborghini.

7 One particular concern to Volkswagen is the 8 impact of the proposed standards, especially NOx, on 9 Volkswagen's capability to market lean burn technology 10 vehicles such as gasoline fuel direct injection and 11 diesel power vehicles. There are definite environmental 12 advantages to these technologies. In the case of diesel 13 technologies, these advantages include inherently low and 14 mark admissions, CO, cold start, and evaporative emissions.

15 Another important feature of the 16 diesel power vehicles is they are considerably more fuel 17 efficient than the gasoline counterpart. As such, they 18 emit much lower levels of CO2, an important reduction 19 component for global warming control strategy. Volkswagen 20 is the world's largest producer of small diesel engines and 21 the leader for development of advanced diesel technology 22 for small cars. We are actually pursuing the goal of 23 continuous improvement in diesel emission performance.

24 ARB proposed .5 gram per mile NOx standard 25 at 150,000 miles. Volkswagen accepts the challenge and 142 1 supports the standard. To achieve an even lower NOx 2 emission lean burn NOx emission standard, lean burn de NOx 3 catalysts are required. However, low sulfur diesel fuel is 4 necessary to enable this technology.

5 As low sulfur diesel fuel and new diesel 6 emission control technology becomes available, the NOx 7 standard can be reduced to .3 gram per mile so the addition 8 of a new vehicle emission category. This category should 9 also include appropriate reduction in NMOG and CO 10 emissions. Since low sulfur diesel fuel is not available 11 in California, Volkswagen recommends that ARB mandates the 12 sale of low sulfur diesel fuel. I would like to add that 13 gasoline direct injection technology would also benefit 14 from the availability of low sulfur gasoline.

15 Another point I have here says on partial 16 ZEF allowance. In Volkswagen's opinion, the proposed 17 partial ZEF allowance provisions do not represent a 18 reasonable alternative. We are investigating the 19 development of super low emission vehicles as alternatives 20 to the pure zero emission vehicles to satisfy our 2003 21 model year ZEV sales requirement using SULEVS. We want to 22 have  50 percent of our California sales have to be 23 SULEV's, in that case, by the 2003 model year. First, this 24 will require the SULEV's to be introduced in advance of the 25 LEV II phase in vehicles.

143 1 Second, the flexibility provided by the 2 phase in of the LEV requirements would be eliminated by the 3 need to introduce 50 percent more SULEV's than 2003. This 4 clearly represents an unreasonable burden when considering 5 it would require development effort and cost.

6 Another thing of concern, Volkswagen is 7 particularly concerned about compliance with the zero evap 8 requirement for this partial ZEF allowance and SULEV's.

9 This is clearly technologically not feasible in the 10 required time frame. You will hear later why not.

11 Volkswagen recommends that ARB establishes the same 12 evaporative emission standards for partial ZEF allowance 13 SULEVs as those applicable to all other categories of 14 LEV II vehicles.

15 The proposed evaporative emission standards 16 represent a level of non fuel background emission from 17 vehicles. Therefore, we question the feasibility of the 18 proposed standards. The technology suggested by ARB to 19 reduce evaporative emissions, in many instances, already 20 been adopted. In other cases may not be feasible from mass 21 production or repairability standpoint.

22 Modification to existing fuel system 23 necessary to comply with the proposed evaporative emission 24 centers would require a major redesign of the vehicle and 25 could not be accomplished under required time frame. For 144 1 example, most stringent evaporative emission standard may 2 require the use of steel fuel tanks. Volkswagen and Audi 3 vehicles exclusively use plastic molded fuel tanks that 4 allows to maximize fuel tank volume with the confined space 5 available on today's vehicles.

6 Volkswagen recommends that ARB considers 7 evaporative emission standards that are reasonable and 8 achievable in the required time frame. That concludes my 9 remarks.

10 Do you have any question?

11 BARBARA RIORDAN: Thank you very much. Are 12 there any questions for our speaker?

13 MS. EDGERTON: Yes. I wonder if I 14 understood your last point. Are you saying that you 15 question whether plastic fuel tanks such as you use can 16 meet the evap standard proposed?

17 WOLFGANG GROTH: We know that they don't.

18 In our country, we have all plastic fuel tank because it is 19 technology to go with small cars. You can get much more 20 fuel in small cars, and it packages better.

21 We have here two problems. We have the evap 22 standards coming up. They are very low and currently not 23 achievable with plastic fuel tanks. So we actively have to 24 see do we have to change over our cars to steel fuel 25 tanks. That is a major redesign in the car.

145 1 The other thing is the 2003 evap standard.

2 These are zero evap standards, and they certainly are not 3 achievable using steel or plastic fuel tanks, I think. So 4 we would, for these cars, we would have the same emission 5 standards like for the others. It's a little complex. The 6 whole regulation is a little complex, but the staff knows.

7 MS. EDGERTON: Thank you. I wanted to ask 8 if anybody on the staff wanted to make a comment in 9 response to this conversation about the evap standards?

10 BOB CROSS: We have talked to a number of 11 folks about the feasibility of using plastic tanks, and 12 they use the basic technology called barrier technology.

13 They impregnate another kind of plastic, like a Teflon or 14 something like that, in the layers of the tank to prevent 15 the tank from having its plastic permeation problems.

16 And sort of the current state of the art of 17 that technology is the tanks emit oh, maybe at the most,

18 two tenths of a gram. So that does make their challenge 19 harder with the current state of the art plastic tanks, but 20 there is also a lot of work being done on barrier 21 technologies which are better which will hopefully play out 22 in the time frame that we are talking and bring plastic 23 tanks down to where they're really not that big of a 24 problem.

25 But it's rapidly developing technology right 146 1 now, and I guess the staff's view is that the standards may 2 well be feasible with plastic tanks, but we are not sure.

3 We know steel works, but we think plastic will work, but 4 they have some work to do.

5 MS. EDGERTON: What does the Toyota Camry 6 have?

7 BOB CROSS: Steel.

8 BARBARA RIORDAN: Thank you very much.

9 Mr. Shaw from Ram Products.

10 DICK SHAW: Good afternoon. My name is 11 Dick Shaw. I'm a registered professional engineer, and I'm 12 the president of Ram Products. I appreciate the chance to 13 speak in front of the Board.

14 I'll get on to one of the items I'd like to 15 touch on very briefly. Somebody said there was no such 16 thing as a free lunch this morning. I'm touching on a 17 issue where I think there might be a free lunch available 18 if we just bear through with it.

19 I got into a situation where looking at 20 evaporative emissions from gas caps became a very 21 significant issue. The Board is asking for an 80 percent 22 reduction in gas caps the way it's currently used and 23 fabricated, and I support that specific issue.

24 But in studies that I had gotten involved in 25 through a series of business events, we ran into a 147 1 situation where the misuse of gas caps represented a 2 significantly bigger problem in emissions than the 3 emissions from gas caps themselves. It wasn't just the 4 very fact that you had emissions, but it got deeper into 5 the fact it was a very serious safety and environmental 6 issue of great degrees.

7 We feel that the design of the gas cap can 8 be handled, and we also feel that the proper use in 9 tightening the gas cap can be regulated. And if you bear 10 with us, you'll find that we not only are going to give the 11 industry a chance to correct a problem and it's going to 12 have a pay back, but we also complement the OBD II 13 regulations in relegating the control system related to the 14 fuel lines to actually detecting leaks not to consumer 15 response to a device that is supposed to be used properly.

16 What I'd like to do is just give an overview 17 of a study or an assortment of studies that you folks have 18 got a copy of so the audience knows basically what I'm 19 addressing. And insofar as this study is concerned, one of 20 the items I'd really like to do is thank the staff for 21 their Resources Board because they had a lot of data and 22 statistics, but I couldn't extend evaporative numbers or 23 some of the other critical data that is involved in this 24 study without their contributions, and it was fantastic.

25 I mean that. Hats off to these guys.

148 1 We ran into a situation where there is a 2 very significant community out there who, when they go to 3 fuel a car, cannot close a gas cap. One of the things I 4 submitted to the staff at the Resources Board was a video 5 tape that was aired by the Arthritis Foundation where they 6 had identified gas caps as one of the ten worst products a 7 consumer has to use. And then, as you started to check in 8 with medical clinics, you checked in with the VFW, seniors 9 groups, seniors homes, you find out there are 40 million 10 gas caps that are totally loose and unused because people 11 can't loosen them if they tighten them.

12 It's a very distinct ergonomic problem. I 13 started to follow up on the issue from a safety standpoint,

14 and I contacted the NITSA. I talked to the director of the 15 test labs out there, and he had stated that, when they do 16 testing on a vehicle, the most critical testing done on a 17 vehicle is related to fuel system because, if it's 18 compromised, it's the most dangerous part of the car.

19 A loose gas cap is a compromised fuel 20 system. The numbers of people that are being killed and 21 injured is quite bad. We won't discuss them out loud, but 22 the study, if you want to read them, they're not good.

23 CHAIRMAN DUNLAP: So the bottom line is 24 what?

25 DICK SHAW: The bottom line is that we'd 149 1 like to see the Resources Board consider specifying 2 standardization of gas caps, a standardization of the 3 materials used in the fabrication of gas caps.

4 CHAIRMAN DUNLAP: Would you work with us on 5 that?

6 DICK SHAW: If I had gotten the information 7 related to this meeting about six weeks earlier, I think I 8 could have come out with a gas cap that would have fit the 9 bill completely from the standpoint of using

10 CHAIRMAN DUNLAP: What I'll do, if my 11 colleagues support it, I'll direct staff to meet with you 12 later and see if there is ways for us to plug some holes 13 and work with you and take your ideas if you're willing to 14 part with them and see if we can tighten this thing up down 15 the road.

16 DICK SHAW: Controlling gas cap use in the 17 marketplace, which is very inclusive, and we think we can 18 pretty much tie the loop. If you're willing to give 19 consideration to it, I think we'd all benefit. Just from a 20 very conservative standpoint, loose gas caps  and this 21 again is complemented with material from the Resources 22 Board  are contributing alone in the US alone about 23 5 million tons of gasoline a year that is vaporized. So 24 it's a nasty issue.

25 CHAIRMAN DUNLAP: We will work with you on 150 1 that.

2 Tom, would you have a discussion with this 3 gentleman and maybe get back to us in a written memo to the 4 Board in 30 days what you learned and what we might do down 5 the road. Thank you. Thanks for your patience. Okay.

6 Andy Frank and then Bruce Bertelsen.

7 Dr. Frank, good to see you.

8 ANDY FRANK: Hello, Board. I'm 9 Professor Frank from the University of California, Davis.

10 And I'm here to lend support to the LEV II proposal and 11 especially the ZEF and the partial ZEF credit issues.

12 And by the way, this whole evap problem 13 becomes much simpler if you have a much smaller tank.

14 Instead of having a 10 gallon or 15 gallon tank if you only 15 have a 6 or 7 gallon tank, steel pressurized tank, the 16 sealed tank is entirely in the cards. It makes 17 manufacturing simpler, et cetera, et cetera.

18 So how do you get that smaller tank and 19 still have the range and still be able to tow your boat and 20 so on? What I've been working on is hybrid electric 21 vehicles, but hybrid electric vehicles different from what 22 the car companies are doing, different than what Toyota is 23 doing in Previas. Our goal is to increase fuel economy by 24 a factor of three. We are already at two times. Our goal 25 is to create a vehicle which will satisfy both the EMGV CO2 151 1 reductions as well as emissions reductions of California.

2 But of course want to do this in the same car.

3 So what we are doing is  and also, we want 4 to satisfy the issue of an alternative fuel vehicle. All 5 our alternative fuel in this case will be electricity from 6 the grid, and this is the distinct difference between what 7 we are proposing and what we are demonstrating at the 8 University of California Davis as opposed to the rest of 9 the world. The rest of the world, they're talking about 10 hybrids which are gasoline fed, so to speak, totally 11 gasoline vehicles.

12 What we are talking about is hybrid 13 electrical vehicles in which you plug it in every night 14 just like you do an electric car. And I'll show you the 15 figures here in a few minutes. What this results in is a 16 vehicle which is essentially electric. It will result in a 17 vehicle where 97  for fleet of users, 97 percent of the 18 energy will come out of the wall plug, but you won't have 19 the limitations of an electric vehicle.

20 The vehicles we are putting together now on 21 one charge, because we don't charge our batteries with 22 gasoline, on one charge, however, you can go from 23 Sacramento to Los Angeles and return on the same charge.

24 It's over a thousand miles. So that will make the electric 25 vehicle practical. This has been the problem. The 152 1 electrical vehicle, as envisioned and as manufactured by 2 manufacturers, has not been practical because the range is 3 not good enough to satisfy customer expectations, and this 4 is a way to answer it.

5 So next slide. What is a hybrid vehicle?

6 There are two kinds as I just mentioned. There is a charge 7 sustaining. This is the Toyota Previa. This is the PNG 8 cars that are being proposed by the government and 9 industry. But then there is another kind that we are 10 talking about is the charge depletion. This charge 11 depletion, as I say, does not charge the energy source with 12 liquid fuel on board. It charges only off the wall plug.

13 That means you plug it in every night. So we are also 14 working on automated charger so that it is completely 15 seemless to the user. All you do is put gasoline in it,

16 but you only put gasoline once every three months and then 17 you only use six or seven gallons. Okay.

18 You've also heard that hybrid vehicles may 19 be series or parallel. We can forget about the series 20 because they are not efficient. We are building 21 mechanically parallel, mechanically coupled gasoline and 22 electric motors. So this is a picture of the diagram of 23 the power train. There is an internal combustion engine.

24 There is the electric motor. But I put that little red 25 line through it to indicate that the shaft goes right 153 1 through the electric motor so we get electrical energy from 2 the batteries up to the electric motor.

3 We also can have gasoline energy. The 4 important thing about this particular concept is this 5 engine is no longer that three liter for a 3,000 pound car 6 or the five liter for SUV. But rather, this is a .6 liter;

7 so it's been downsized by a factor of four. What this 8 means, of course, is that the emissions flow rate is much,

9 much lower. That means that all the emissions technology 10 that car guys have been saying is going to be so hard to 11 do, it's going to be much easier to do because it's a 12 smaller engine. And not only that, on the average this 13 engine is used only a very small portion of the time.

14 So on a fleet basis, this engine is only 15 used about 3 percent of the time, which means you don't 16 have to have very tight emissions control and still meet 17 SULEV.

18 Next one. This is a power train schematic 19 of a car that  well, we are putting two cars together 20 right this moment with this power train, and in all 21 respects this power train feels like and drives just like 22 an electric power car. There is a little gas in the 23 engine, being only six tenths of a liter. It comes on and 24 off, and you don't even know it.

25 The key to it all is how do you control it,

154 1 and this is completely automatic. There are only two 2 controls in this car  gas pedal and brake pedal. And 3 there is, of course, a park and neutral.

4 By the way, with this kind of a system,

5 there is no reverse gear. Just reversed electric motor 6 because, if you notice from those previous slides, the 7 motor, it's connected directly to the wheel. So you can go 8 forward or reverse just by reversing electric motor. Okay.

9 The key here is that, until the batteries 10 are half discharged, the gasoline engine doesn't come on 11 until above 60 miles an hour. And after the batteries are 12 half discharged, then you start to bring the gasoline 13 engine on at the lower speed. But at 50 percent of the 14 discharge with the concept we are talking about, we have a 15 fairly large battery pack, almost two thirds the size of an 16 electric car. You have covered 60 miles of range. And 17 that means 80 percent of the people who are driving this 18 car have done their commute and everything all 19 electrically.

20 Of course, you're always going to get some 21 guy who is going to want to go 250 miles a day of city 22 driving which, by the way, is 18 hours, and that guy will 23 use, of course, more gasoline. But he will have also 24 depleted his batteries. He's used as much battery as he 25 can.

155 1 CHAIRMAN DUNLAP: Professor Frank?

2 ANDY FRANK: Why don't we skip to the next 3 slide then.

4 CHAIRMAN DUNLAP: I'm impressed with your 5 commitment. I've known you for a while. I know how 6 committed you are to this, and I'm grateful to you for 7 coming and telling us your support where we are trying to 8 go and that's meaningful. Matter of fact, I'm so 9 impressed, I hope to send my son to study under you one 10 day. So you've got me with you.

11 What would you have us know different than 12 what we kind of already know about your feelings? What is 13 the key thing you want us to know today?

14 ANDY FRANK: I think this is the key here,

15 that if we stick with our partial ZEV credits for hybrid 16 vehicles and you encourage off wall, I mean, off board 17 charging out of the wall and you build it the way we are 18 talking about, we can talk about reducing the use of 19 gasoline fuel to 3 percent of a conventional car. And that 20 means 97 percent of the energy comes out of the wall plug.

21 In all respects, we have an electric car except we don't 22 have the range power. So this is really the bottom line.

23 CHAIRMAN DUNLAP: Great. And you like where 24 we are going with this package? Is that what I gather?

25 ANDY FRANK: Right. And I think the mandate 156 1 should be continued. Some people say mandates are just 2 from car guys, but mandate is important because this is 3 what spurs this kind of technology to advance.

4 CHAIRMAN DUNLAP: Thank you very much. And 5 I'm pleased that you're involved with this process. It's 6 important. Any questions? Very good.

7 Bruce, you're up next. We are going to 8 change the court reporter here. Can you go with one more?

9 Go ahead, Bruce. Welcome. Bruce Bertelsen, MECA.

10 BRUCE BERTELSEN: Good afternoon. MECA is 11 pleased to have the opportunity to testify today in support 12 of the proposed LEV II Program. We commend the Board for 13 your continuing efforts to implementing effective programs 14 to protect public health of the people who live in 15 California. We also want to take the opportunity to 16 compliment the staff on what we thought was an extremely 17 thorough analysis and evaluation of the technological 18 issues supporting this proposal.

19 Today the Board faces an important and 20 certainly challenging decision. And I think in that 21 regard, it's instructive to look back briefly to 1990 when 22 the LEV Program was first proposed. At the time, that 23 proposal was viewed by most as revolutionary, and I think 24 indeed it was. And from many, it was viewed as infeasible.

25 I went back and looked at our testimony that 157 1 we gave back in 1990, and MECA made several points. First,

2 that the LEV Program was technology forcing; but, second,

3 it would stimulate important technological advances; third,

4 there were significant challenges facing compliance with 5 that program, but we did express our optimism that those 6 challenges could be met.

7 Eight years later, that program is on or 8 ahead of schedule, certainly from the technological point 9 of view. The technologies that are being used to meet the 10 standards are less complex than I think anybody thought.

11 And the cost of those technologies are below what I think 12 anyone estimated.

13 Today, with this proposal, again, there are 14 significant challenges. But we think in this case actually 15 the technological pathway to meeting those challenges is 16 actually clearer than it was in 1990 where it looked like 17 we were going to need breakthrough technologies.

18 The state to which catalyst technology has 19 advanced and will continue to advance is extremely 20 promising and encouraging. I think there are a number of 21 engine and fuel control strategies that are beginning to be 22 introduced that can be applied to other vehicles. And it 23 seems clear to us today, just as clear today as it did in 24 1990, that if the Board implements this program, you will 25 stimulate important and significant technology 158 1 advancements.

2 With regard to the technological 3 feasibility, I think the staff report outlined a variety of 4 technical options that are available and presented some 5 test data. MECA conducted a test program of its own,

6 reevaluated three vehicles that met the tier one 7 standards  not the LEV standard, not the ULEV standards.

8 But we took US Federal tier one vehicles, equipped them 9 with advanced catalyst systems, modified some of the 10 controls, aged the catalysts, and those vehicles  one was 11 an eight cylinder passenger car, a Ford Crown Vic; we had a 12 six cylinder light duty truck, a Toyota T100; and a six 13 cylinder passenger car, a Buick Le Sabre. And those 14 vehicles did achieve the LEV II ULEV 120,000 mile 15 standards. A copy of that report is included in the 16 testimony.

17 We think that the types of strategies that 18 are being used and introduced on passenger cars can be 19 applied to other categories of vehicles, the heavier weight 20 vehicles. Looking at the work that the staff did on the 21 Ford vehicle, I guess our perspective is a little bit 22 different. We think it's remarkable what was accomplished 23 by the staff in a relatively short period of time by a 24 group of individuals who are not auto manufacturers.

25 So from our perspective, the glass looks 159 1 half full or maybe even three quarters full rather than 2 half empty. The types that we were pleased to provide 3 catalyst technology program. That catalyst technology is 4 reflective of what is available today. I'm very optimistic 5 that the catalyst technology of tomorrow is going to be 6 even better. And we see no reason why these types of 7 strategies cannot be applied to other vehicles.

8 One point that was brought up earlier 9 regarding temperature and that is an issue with heavier 10 vehicles. Heavier vehicles, particularly those who are 11 operating in a commercial mode, will generate higher 12 exhaust temperatures. I think it's important to point out,

13 however, at least with regard to the catalyst technology,

14 over the past five years there have been incredible 15 advances in the thermal durability of the catalyst 16 technology. So we don't see that as a barrier to applying 17 advanced catalyst technology to heavier vehicles.

18 I did just want to say a quick word about 19 diesel vehicles, and I'm sure you'll have some other 20 discussion later this afternoon. Our philosophy has always 21 been fuel neutral. We are prepared to provide technical 22 solutions to any type fuel, and that includes diesels. We 23 believe that the proposal that the staff has developed with 24 regard to diesel will provide flexibility to permit the 25 development and evolution of the diesel vehicle to a point 160 1 where it is extremely clean, and we support that proposal.

2 Our companies are working on a number of 3 technologies, exhaust control technologies for diesels. I 4 should point out though that some of these technologies,

5 like lean NOx catalysts, NOx absorbers, some types of 6 particulate filters will require a lower sulfur level than 7 is currently available and therefore we encourage the 8 Board, at a subsequent time, to begin to look at the issue 9 of lower sulfur fuel. I guess I'll wrap

10 CHAIRMAN DUNLAP: I think we are willing to 11 talk about and contribute. I mean, this Board has been 12 willing to tackle fuel issues, but we can't go there alone,

13 as you know.

14 BRUCE BERTELSEN: In closing, again, I don't 15 want to understate the fact that there are technology 16 changes, but I think the proposal, as it's crafted, offers 17 a lot of the flexibility and it also offers some safety 18 valves. And I think that, if the program is implemented,

19 you will see a significant stimulation in technical 20 effort. We think the end result will be vehicles, a wide 21 choice of vehicles that are fuel efficient, high 22 performance vehicles that are extremely clean, and I want 23 to state on behalf of our all members that, if the Board 24 adopts this program, we are prepared to do our part to make 25 LEV II the kind of success story that LEV I has been.

161 1 CHAIRMAN DUNLAP: Thank you. Any questions 2 for Mr. Bertelsen? All right. Good deal.

3 Roland, you're up. Now you want to be a 4 floor manager here; right? You've got two or three of your 5 colleagues you're going to.

6 ROLAND HWANG: That's correct. We have a 7 few of my environmentalists colleagues that also wanted to 8 emphasize the points, which I will provide

9 CHAIRMAN DUNLAP: You need a little more 10 time

11 ROLAND HWANG: Yes. I have overheads.

12 Hopefully we can move through this

13 CHAIRMAN DUNLAP: Which I'll give you. Who 14 else are you going to bring up with you?

15 ROLAND HWANG: I think Janet Hathaway is 16 coming up after me and then Bonnie Holmes.

17 CHAIRMAN DUNLAP: Okay. Where is Janet?

18 I'll give you the time, but I want you to manage it as 19 efficiently as you can. So Janet Hathaway, Bonnie Holmes,

20 when they get here will come up with you. After that,

21 we'll have Aaron Lowe, Tim Riley, Lynn Cardwell, Johan 22 Gallo. Well, does Joe Caves want to be part of your group?

23 Is Joe here?

24 ROLAND HWANG: Joe is going to go a little 25 bit later.

162 1 CHAIRMAN DUNLAP: Okay. Chris Walker, John 2 Valencia. So those folks can come over here and sit.

3 Go ahead, Roland.

4 ROLAND HWANG: Thank you, Mr. Dunlap. Union 5 of Concerned Scientists appreciates this opportunity to 6 provide comments to the Board and the Chairman on this 7 extremely important program for the future of California's 8 air quality.

9 I know that you folks have a lot of paper in 10 front of you; so I've provided my written comments and 11 overheads in this green covered report. I hope it stands 12 out a little bit from all the other piles of paper you have 13 in front of you.

14 I think I want to build actually on what 15 Bruce Bertelsen just said. We believe this program, as 16 proposed, we admit it's a very aggressive program, but we 17 do believe the staff has done an incredible amount of work,

18 very thorough work, and we believe the program is 19 technically sound. And like Bruce said, we believe the 20 program is not a whole lot different than what ARB 21 traditionally has done, especially as recently as 1990 with 22 the LEV Program.

23 This program is a combination of 24 off the shelf technology, which I hope that most the Board 25 members did get a chance to go outside and see those 163 1 Expeditions and see the catalysts. Nothing exotic. I 2 didn't see anything which had a $ 7,000 price tag on it.

3 This is off the shelf technology. It is a combination of 4 that, and it's a combination of technology forcing.

5 Traditionally, this is what the Air Board has done and has 6 done very well. So with that introduction, let me go to my 7 first slide.

8 And as an overview, we have delivered a 9 letter to the Board Chairman and staff with our number of 10 recommendations, and I wanted to go through the top three 11 recommendations which we wanted to present to you as a way 12 of strengthening the ARB proposal. Again, we believe the 13 ARB proposal, the bulk of it, is extremely sound. We do 14 have some concern about certain issues. And again, this 15 letter was signed by a number of different environmental 16 groups as listed above.

17 The first issue that we have raised is this 18 issue of diesel vehicles in our light duty fleet. We are 19 concerned that introduction of these diesel vehicles, which 20 clearly the automobile companies have plans for and that's 21 exactly why AMA has proposed more relaxed standards for 22 PM10 in their counter proposal to the Board. Auto 23 companies clearly have plans for diesel introduction.

24 We are obviously concerned about 25 implications for the increase in the diesel exhaust 164 1 particulates, especially since the Board just two months 2 ago, I believe, identified diesel exhaust as a toxic air 3 contaminant. I don't really want to be making the problem 4 worse here. We need to be trying to address problem with 5 heavy duty vehicles sector, obviously.

6 Second is that we all have concerns. We 7 have had long discussions with staff about this. We have 8 concerns about this ZEV Program being watered down too 9 much. We do believe the program should flex, but 10 shouldn't allow in some of the gasoline SULEVs which do not 11 have electric drive technology. We believe the hybrids and 12 fuel cell vehicles are appropriate to get partial ZEF 13 credit because they get us toward the true ZEV category.

14 Finally, we believe all 8,500 pound vehicles 15 staff has shown as demonstrated that technologically 16 feasible during all 8,500 pound, even the work trucks, to 17 the same standards as passenger cars. So we believe 18 actually that 4 percent work truck exemption, we question 19 the reason for why it should be there.

20 But also, we've heard a lot this morning 21 about the AAMA's proposal, their counter proposal. We want 22 to make it clear to the Board that we feel like this 23 proposal should be soundly rejected because it does not 24 meet the California air quality needs, does not provide the 25 equivalent pollution reductions. That's by the AAMA's own 165 1 admissions. And by the way, my understanding of the 2 trade offs they're making with the vehicle categories less 3 than 6,000 pounds, where they are trading off some  they 4 claim they're tightening the ULEV standard and trading off 5 or laxing the LEV standard for passenger cars.

6 That proposal actually loses 2 tons per 7 day. They're not offsetting that in the lower. So they 8 may claim that they are trying to offset more relaxed LEV 9 standards. My understanding from staff is they have not 10 fully offset it. The other reason, of course, that we want 11 you to reject AAMA's proposal is this question of diesel,

12 which I'll get into a little bit more. But it's a 13 potential for substantial increases in diesel as a toxic 14 air contaminant in our air.

15 Finally, the ARB proposal, from our 16 evaluation, is technically feasible and cost effective.

17 California needs every ton of emission reductions you can 18 get.

19 * * *

20 21 22 23 24 25 166 1 2 STATE OF CALIFORNIA ) ) ss. 3 COUNTY OF LOS ANGELES )

4 5 I, Lynne R. Rutledge, CSR 11091, a Certified 6 Shorthand Reporter in and for the State of California, do 7 hereby certify:

8 That the foregoing proceeding was taken down 9 by me in shorthand at the time and place named therein and 10 was thereafter reduced to typewriting under my supervision;

11 that this transcript is a true record of the testimony 12 given by the witnesses and contains a full, true and 13 correct record of the proceedings which took place at the 14 time and place set forth in the caption hereto as shown by 15 my original stenographic notes.

16 I further certify that I have no interest in 17 the event of the action.

18 EXECUTED this 17th day of November 1998.

19 20 _____________________________

21 Lynne R. Rutledge, CSR # 11091 22 23 24 25 1 CALIFORNIA AIR RESOURCES BOARD 2 3 4 5 6 PUBLIC HEARING TO CONSIDER THE " LEV II" ) AND " CAP 2000" AMENDMENTS TO THE ) 7 CALIFORNIA EXHAUST AND EVAPORATIVE ) EMISSION STANDARDS AND TEST PROCEDURES ) 8 FOR PASSENGER CARS, LIGHT DUTY TRUCKS ) 98 12 1 AND MEDIUM DUTY VEHICLES, AND TO THE ) 9 EVAPORATIVE EMISSION REQUIREMENTS FOR ) HEAVY DUTY VEHICLES. ) 10 ___________________________________________)

11 12 TRANSCRIPT OF PROCEEDINGS 13 November 5, 1998 14 9530 Telstar Avenue 15 El Monte, California 16 17 18 19 20 21 22 23 REPORTED BY: 24 Terri L. Emery CSR No. 11598 25 Our File No.: 1 49953 1 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 APPEARANCES OF BOARD MEMBERS:

2 Chairman DunlapMr. Calhoun Supervisor DeSaulnier 3 Ms. Edgerton 4 Dr. Friedman Mr. Parnell 5 Supervisor Patrick Mrs. Rakow 6 Ms. Riordan 7 Supervisor Roberts Supervisor Silva 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 2 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 I N D E X 2 Public Comments PAGE Roland Hwang ( co ntinued) 167 3 Janet Hathaway 179 Bonnie Holmes Gen 186 4 Patrick Pudell 201 Aaron Lowe 202 5 Tom Riley 205 Lynn Cardwell 206 6 Johan Gallo 208 Chris Walker 210 7 John Valencia 211 Bob Warden 215 8 Mike Villegas 216 Ellen Garvey 219 9 Chung Lui 222 Greg Vlasik 226 10 Cece Martin 227 Jennifer Jennings 233 11 ALABC Representative 235 Terence Poles 235 12 William Rosenberg 242 Jed Mandel 246 13 Pat Charboneau 248 Bob Jorgenson 250 14 Tim Carmichael 258 Joe Caves 262 15 Sumary of Letters Received by Board 267 16 Close of Record 271 17 Ex Parte Communications 271 18 Motion on Revised Proposed Resolution 291 19 Motion  Delete .2 Partial ZEV Credit/ Gasoline 292 20 Result of Motion to Delete Partial Credit 297 21 Motion  Delete TLEV Standards in Staff Proposal 298 22 Result of Motion to Delete TLEV Standards 304 23 Result of Motion to Adopt LEV II with Exception of TLEV Standards 305 24 Open Comment Period 305 25 3 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 MR. HWANG: At U of C we agree that every 2 ton counts at this point. We need to make continued 3 progress on the 1994 ozone SIP obligations including M 2 4 and the black box. Even larger amounts of reductions are 5 necessary for PM2.5 attainment in the future. That will 6 come to, I believe, around the year 2003. We need to be 7 setting ourselves up now. That's going to require large 8 amounts of nitrogen oxide emission reductions. LEV II, I 9 would say, is vital, absolutely necessary, if we are going 10 to meet the 2.5 standards.

11 Finally, for 7 tons is not just 7 tons of 12 loss. The Air Board I know has been extremely diligent 13 about pursuing every possible measure as long as it's 14 technically feasible and cost effective. A variety of 15 measures were adopted in the 1974 ozone SIP. Five measures 16 I counted at less than 10 tons per day benefits and 17 fortunately the on road motorcycle controls too, which is 18 probably a couple of tons.

19 I want to jump to my third point because I 20 think there's been a lot of discussion this morning about 21 the feasibility of the 6000, 8500 pound vehicles to meet 22 the passenger car type standards. We believe that in fact 23 not only is it feasible, but the 4 percent work truck 24 exemption is not necessary.

25 Our understanding is that CARB took the Ford 167 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 Expedition you see outside and gauge it over cycle which 2 simulated the towing drive cycle of a Ford pickup truck 3 that weighs 10,000 GVW that can tow 14,000 pounds. This is 4 the worst case scenario. This is a work truck type 5 scenario. This is a work truck that goes beyond the 6 8500 pound cutoff, so it seems to us staff has really 7 demonstrated that this can be done for work trucks.

8 Furthermore, I think we've also talked about 9 the amount of lead time the automobile companies have,

10 whether it be 8 years or maybe  Kevin from General 11 Motors, maybe it's 6 years, but the standards do not fully 12 roll into 2007, which means that there's quite a bit of 13 leeway.

14 And of course we talked about there's the 15 ability for the manufacturers for technicatalyst currently 16 allowed in regulations to protect the catalyst from towing 17 conditions by which they are fueled. Currently in the 18 regulations I understand staff continues, will continue 19 that provision. There doesn't appear to be any kind of 20 legitimate argument to make the catalyst to be burned out.

21 CHAIRMAN DUNLAP: Do you think we ought to 22 cut this out and take this out of the package and certainly 23 I'd go to 15. Okay.

24 MR. HWANG: That's right. That's right.

25 That's our recommendation. 168 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 CHAIRMAN DUNLAP: All right.

2 MR. HWANG: Again, one of the main points 3 you will see today I think from our fellow enviros is the 4 issue of diesel. Why should we allow diesel into our light 5 duty vehicle fleet, all be it there are fuel economy 6 benefits.

7 The Union of Concerned Scientists and other 8 environmentalists deeply care about cutting the issue of 9 emissions. However, we don't believe it's appropriate or 10 necessary for that fuel economy bench to come at the 11 expense of public health. We believe that the ARB TLEV 12 standards themselves are too weak. They should be 13 tightened to help protect the levels, the gasoline 14 equivalent levels, or the TLEV category should be phased 15 out completely.

16 Let me try to drive home a point here with 17 the next slide. This is the potential for diesel,

18 light duty diesel vehicles to penetrate into our passenger 19 vehicle fleet under AAMA's proposal and under ARB's 20 proposals also, and as you can see there could be as high 21 as we estimate a 20 percent penetration with AAMA's 22 proposal which could lead to the next slide, a tremendous 23 increase in diesel exhaust particulates from on road 24 vehicles.

25 This is a  you know, this is not just us 169 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 crying wolf. This is a very real type of scenario of what 2 we could be seeing in the future. Manufacturers have 3 doubled the sales in the heavy and light trucks in the last 4 five years. We are fuel neutral. We are technology 5 neutral. However, we cannot trade off environmental goals 6 one for another, especially when technologies are available 7 to address both.

8 As I mentioned before, we are  Union of 9 Concerned Scientists is supportive of allowing hybrids and 10 methanol fuel cells for partial ZEV credit, but we are 11 opposed to gasoline SULEVs. We had long discussions with 12 staff about this and I expect we will have continued 13 discussions, but we are recommending to drop that provision 14 of allowing the conventional gasoline SULEV to qualify to 15 receive credit. 16 CHAIRMAN DUNLAP: How does that square with 17 your fuel neutral policy that you just espoused a moment 18 ago? You're fuel neutral, but you don't want to give 19 gasolines credit even if they're cleaner than gasoline 20 powered SULEVs credit.

21 MR. HWANG: The ZEV program

22 CHAIRMAN DUNLAP: That's a neat trick. If I 23 could figure out how to do that in other areas, we could do 24 a lot of different things, but that doesn't feel right to 25 me. 170 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 MR. HWANG: It is our belief the ZEV program 2 is a program intended to commercialize true zero emitting 3 vehicles, battery electric vehicles and hydrogen fuel cell 4 vehicles. That is the goal, and the 10 percent level is 5 the level to ensure a marketplace in which they can 6 compete.

7 CHAIRMAN DUNLAP: Also, we kind of squeaked 8 away the power plant emissions. There's some issues there,

9 too. It's not quite pure. It's not a big point with me, I 10 just kind of want to let you know where I'm coming from.

11 MR. HWANG: Our point is this. We agree 12 there should be some flexibility in the ZEV program as long 13 as it gets us towards those technologies which we need to 14 solve, not just our ozone problems but to solve the fine 15 particulates problem, our air toxics problems and our 16 climate change problems in the future.

17 A gasoline SULEV gives us air quality 18 benefits. However, it's not going to help us kick the oil 19 habit, it's not going to reduce the air toxics, it's not 20 going to help us with contamination.

21 CHAIRMAN DUNLAP: Okay.

22 MR. HWANG: Other recommendations that kind 23 of summarize our letter is that first of all, we believe 24 that we're supportive of ARB extending the durability 25 requirements. We think that is an extremely crucial 171 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 component of ensuring that vehicles are clean in use and 2 that the burden of cleaning up the vehicles does not 3 continue to fall upon drivers under the inspection and 4 maintenance programs. It's a very excellent program, but 5 very burdensome also. Some communities believe that.

6 Five is strengthen the CAP 2000. We would 7 like to discuss more with staff post this hearing about 8 that.

9 Six is that we want to make sure the ozone 10 eating technologies  we are in favor of innovative 11 technologies. We want to make sure that the ozone eating 12 technology is fully evaluated before the methodology is 13 finalized. We would like the process for finalizing that 14 credit be a stakeholder open process.

15 Finally, separately from LEV II, we do 16 believe the ARB should consider strengthening the fuel 17 standards that are cost effective.

18 In conclusion, I think the Board today were 19 really looking and we support ratification of the LEV II 20 program. We believe in strengthening the proposal in the 21 three ways that we recommended.

22 Finally, we really implore you to reject 23 AAMA's proposal because it does not meet California's air 24 quality needs. You can't put 7 tons here when it certainly 25 won't be cost effective and will be difficult to find it 172 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 elsewhere, and we're very concerned about the increase in 2 diesel emissions.

3 CHAIRMAN DUNLAP: Okay. Very good.

4 Janet, are you up next?

5 MS. EDGERTON: Can I ask something?

6 CHAIRMAN DUNLAP: We can interject if you 7 want, but I kind of wanted to move through this.

8 MS. EDGERTON: I wanted to focus on two 9 areas that you specifically recommended. One is the point 10 that you made about not relaxing pollution standards for 11 diesel and indicating that the TLEV standards are nine 12 times higher for NOx and four times higher than PM10 at LEV 13 for standards at 120,000 miles.

14 What I want to ask the staff, this just 15 seems to make a lot of sense to me. I think we just got 16 $ 25 million, in fact, I know we just got $ 25 million

17 worked very hard to get that with the legislature and the 18 environmentalists and the Governor. That was appropriated 19 by the legislature to Air Resources Board to help to retire 20 dirty diesel vehicles from the road. And I know we're 21 going to need another $ 75 million over the next three years 22 to retire heavy duty diesel, particularly heavy polluting 23 diesel vehicles from our roads. That happened over this 24 summer.

25 In addition, as you all know and as you 173 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 mentioned, nine years of study was concluded and finding 2 that diesel particulates is a toxic air contaminant. Why 3 would we have a measure in here which provides that 4 light duty vehicles which are diesel get to be polluting 5 more starting in the year 2004, five years away?

6 MR. KENNY: The TLEV standard basically was 7 proposed as part of LEV I in order to essentially provide a 8 maximum level of flexibility to the manufacturers to meet 9 the average standard. The average standard continues as 10 part of LEV II to go down from 2004 to 2010. What we are 11 proposing with regard to the TLEV standard is that we 12 maintain it and that we maintain it through 2007 with 13 regard to the existing TLEV standard. That TLEV standard 14 would then phase out.

15 There is an alternative to the TLEV 16 standard, however, that would begin in 2004, and that TLEV 17 standard would then basically go forward through 2010 with 18 an incremental reduction in 2007. The benefit of all that 19 is we are trying to set up a scenario in which we are able 20 to address the heavy duty sector and the need that we have 21 in the heavy duty sector for the development of the NOx 22 catalysts are fairly high efficiency in order to get fairly 23 substantial reductions there because the NOx inventory for 24 that heavy duty sector is so large.

25 We don't see the incentive in that 174 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 heavy duty sector to develop that catalyst on its own. We 2 do think that in fact we can drive these types of numbers 3 down, and we are talking about the TLEV numbers going down 4 from where they currently are, that in fact we provide a 5 very good incentive to develop some level of catalystic 6 advancement that will allow us to then take that and 7 transfer it to the heavy duty sector.

8 The benefit from an overall perspective is 9 that the market penetration in the light duty sector is 10 fairly small, and yet if we can get those catalysts 11 developed, what we get in the heavy duty sector is the 12 opportunity for very substantial emission reductions. So 13 that is our basic theory behind what we're trying to do 14 here.

15 MS. EDGERTON: I know these are very 16 difficult balls and strikes to call, and I appreciate that,

17 and you may be right.

18 I do make the comment that it seems like

19 it's overwhelmingly clear we're robbing Peter to pay Paul,

20 and it does not  we're trying to do something in the 21 light duty sector, light duty vehicle area that will help 22 the heavy duty vehicle area.

23 My question is why don't we just do it in 24 the heavy duty sector and let the light duty sector which 25 currently does not have significant diesel  175 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 MR. KENNY: I think the answer to that, if I 2 might, is what we're trying to do here is set a very 3 aggressive alternative TLEV standard.

4 When you look at it in the year 2007, it 5 really requires substantial advancement for compliance to 6 occur, and in fact that compliance does occur. The market 7 penetration even in the light duty sector is still 8 relatively small, and yet if that advancement occurs, the 9 opportunities on the heavy duty side where the incentive 10 does not really exist can't be taken advantage of, and we 11 will be able to transfer that technology over.

12 On the other hand, if in fact for some 13 reason manufacturers cannot get to the point where they can 14 meet the 2007 standards, then we have a safety valve there.

15 The safety valve is in fact they don't have that standard 16 essentially available to them in terms of light duty 17 compliance because it guides you down to very low numbers,

18 low numbers in terms of hydrocarbon, low numbers in terms 19 of NOx and low numbers in terms of particulates from where 20 the current TLEV standard is.

21 MS. EDGERTON: Doesn't this increase the 22 number of diesel particulates from the light duty sector 23 even if they achieve this goal?

24 MR. KENNY: Yes.

25 MS. EDGERTON: And they're toxic air 176 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 contaminants.

2 MR. KENNY: The answer is yes to that, but 3 the alternative is that when we look at this from a broader 4 picture, if in fact we can get that technology transferred 5 to the heavy duty side, we'll get reductions eventually,

6 and those reductions are things that we need. We get the 7 reductions in NOx and we also have the potential for also 8 getting some PM reductions there, so the combination of 9 those two things from our perspective is worth this effort.

10 MS. EDGERTON: Mr. Kenny, I don't want to 11 take too much of your time, so I'll try to wrap up this 12 point here.

13 I have tremendous respect for your wisdom 14 and for your proposal there, and I think it might be right 15 and I expect it will probably prevail, but I do want to say 16 that from my own point of view, quite honestly  and of 17 course we're lame ducks and so forth  but I do believe 18 that the three things that in all of our policies do need 19 to move forward simultaneously addressing whether we're 20 advancing or rather reducing our emissions in terms of 21 toxic air contaminants and whether we're reducing emissions 22 in terms of gas emissions at the same time.

23 I know that's not yet in our official ARB 24 mandate from the California legislature, but it is in fact 25 in our real world life, and I think that's where we're 177 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 going. And this is a very difficult question for people 2 always because it's the means and the end in discussion.

3 However, in just one woman's judgment it's just a little 4 too convoluted for me, so I would prefer to not have that 5 there.

6 My second concern is we have

7 CHAIRMAN DUNLAP: Lynne, I'll let you go as 8 long as you want to, but I would prefer you wait because if 9 we're going to telegraph where we come down on each of 10 these points, we're going to be here a while. I'd rather 11 get to the witnesses and then you can talk and run through 12 this stuff.

13 MS. EDGERTON: I'll just say the other area 14 I have some concern about is what exactly the ZEV category 15 properly should be, whether it is the same issue that you 16 quite correctly, I thought, raised about the .2 for 17 gasoline vehicles there and whether that should be in this 18 particular proposal.

19 Now, I would like to ask a question and 20 think the testimony of witnesses can answer this. My 21 understanding is one of the benefits of having it in there 22 is that it will weaken attacks on the overall 10 percent 23 ZEV mandate. This is not a surprise to anybody. Everybody 24 knows that.

25 There's been a lot of talk about effort to 178 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 defeat it, weaken it, and one of the things that this does 2 is strengthen it because it provides participation from 3 gas. I was interested to see that you all  I don't know 4 if all of you are in the same place, but you all seem to 5 think that's not worth doing. 6 CHAIRMAN DUNLAP: We can have a good 7 discussion at the end on that. I'm not at odds with that 8 per se. Okay.

9 Janet, and is Bonnie back there somewhere?

10 We'll have you two come up and I was generous with Roland.

11 I'll be equally generous with you guys, but after this I'm 12 going to have an auction. The auction is going to be 13 whoever can go in three minutes or less I'm letting up 14 early out of order, so witnesses get ready and I'll move 15 you over to the bull pen and get you going.

16 Janet, go ahead.

17 MS. HATHAWAY: I know people are impatient 18 to move on, but I think it's important to spend some more 19 time on the diesel issue.

20 MS. SHELBY: Would you please identify 21 yourself for the record?

22 MS. HATHAWAY: My name is Janet Hathaway.

23 I'm a senior attorney with the Natural Resources Defense 24 Counsel.

25 I wanted to second Roland's comments. His 179 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 comments are in fact shared with other environmentalists.

2 And on the point that Lynne just asked about, the reason 3 why we don't support giving gasoline vehicles partial ZEV 4 credits is even the fueling emissions associated with 5 gasoline vehicles are more than the total emissions that 6 are associated with powering the batteries for the 7 electric, so there is no equivalence. There is no way a 8 gasoline vehicle, even if it had no tailpipe emissions, 9 could come out equal. So that's  our fundamental 10 principal is not in favor of one particular type of 11 technology, it's evaluate the total emissions that are 12 associated with ZEVs, and if you can get that then you 13 deserve partial ZEV credit.

14 But with gasoline, just the fueling side of 15 the emissions, the distribution of the gasoline, the 16 evaporation from gasoline tanks and so on, even before it 17 gets to the vehicle, exceed the ZEV emissions. So that's 18 the reason.

19 Now, I would like to just turn to the diesel 20 issue. I think it's important for us to think about this 21 in terms of sort of a paraphrase of the Hippocratic oath,

22 first do no harm. Right?

23 DR. FRIEDMAN: That's not the Hippocratic 24 oath.

25 MS. HATHAWAY: Well, it's a paraphrase. 180 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 It's what's commonly referred to. Do no harm is a good 2 principal even if it's not the Hippocratic oath.

3 DR. FRIEDMAN: Hippocrates never said that.

4 ( Laughter)

5 MS. HATHAWAY: There's always somebody who 6 knows a lot more than me. So do no harm is an important 7 principal for ARB, and nine times out of ten when we come 8 before you as environmentalists, we're not arguing about 9 whether your proposal does harm at all. We're all talking 10 about doing more progress and faster, and that generally 11 has been our feeling about LEV II. It's a good proposal.

12 We'd like more and faster.

13 On the diesel issue, however, we're talking 14 about something that could literally do harm. Currently 15 there are very few diesels in the light duty fleet, and 16 gasoline vehicles in the light duty fleet have very little 17 particle emissions. Diesels, on the other hand, even if 18 they have the best technology that we know of for right now 19 would have almost an order of magnitude ten times higher 20 particle emissions, and your Board has just decided that 21 diesel is a toxic air contaminant. That is consistent with 22 all these other illustrative agencies throughout the world 23 that understand that diesel is in fact associated with 24 increased cancer risk.

25 So not only because of cancer hazards but 181 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 because of the particle hazard, allowing the introduction 2 of diesels into the light duty fleet really seriously could 3 do some harm. It goes backwards.

4 The studies as you all reviewed them are 5 very consistent. There's really not a whole lot of 6 question about the cancer risk and I applaud you all for 7 listing diesel as a toxic air contaminant.

8 There's also evidence that diesel may 9 disrupt the immune system, may be associated with asthma 10 and other respiratory diseases, may actually aggravate our 11 air quality problems in ways that we haven't yet 12 quantified, and that's in addition to the lung cancer and 13 the particle risk. 14 So why are automakers pushing for light duty 15 diesels? And that, I think, is the fundamental question.

16 The answer is simple. They are making tremendous profit on 17 the very heavy, light duty vehicles, but they're getting 18 penalized from the federal government because their fuel 19 economy is not up to snuff. So what they want is a slight 20 improvement in fuel economy that will allow them to keep 21 selling these very big SUVs and making $ 10,000 per vehicle 22 profit on those vehicles. That's a tremendous incentive.

23 But does California need these diesels? I 24 don't think so, not unless there's something that nobody 25 has talked to us about that is behind these diesels. 182 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 Diesels are not a green machine. They're a slight 2 improvement in fuel economy.

3 Can diesels be made clean? Now, I mentioned 4 that the particles are about an order of magnitude higher 5 than comparable gasoline vehicles. So even though the 6 standard, the TLEV standard, doesn't look like it's all 7 that weak, the truth is current gasoline vehicles are 8 what's going to be replaced by these diesels, and they are 9 much dirtier. So the standard in the sense isn't really 10 the benchmark. The benchmark is today's air.

11 We don't have a lot of diesels in the 12 light duty fleet. We're going to be introducing them 13 because it's profitable for the automakers to go that route 14 and enable them to meet the needs of the federal government 15 without in any way compromising the weight of these 16 vehicles and will enable them to get this profitability but 17 not clean up our air. And that's a very big problem.

18 So let's ask the question. Can diesels be 19 as clean as gasoline? Well, we don't know because we 20 haven't demanded this of manufacturers. They have never 21 put all the available equipment that could reduce the 22 particles and reduce the hydrocarbons on the diesels. They 23 have not been requested to do that.

24 This standard would not require oxydation 25 catalysts, a currently available technology, on our 183 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 light duty vehicles. So the sequence is we have these very 2 fine particles that could be trapped. They're difficult to 3 trap, but they could be trapped. We have these gaseous 4 hydrocarbons that we know are carcinogens. Those could be 5 reduced by an oxydation catalyst, and if you set a standard 6 that says look, if you automakers want to bring diesels 7 into the market, at least make them as clean as gasoline,

8 suddenly they have an incentive to use that technology.

9 So I submit to you that the incentive is 10 there for the industry to come forward with some good 11 technology to clean diesel up at least to the gasoline 12 level so that at the very least we would be doing no harm.

13 So the risk assessment that you all 14 evaluated when you looked at diesel last month, in 15 August  it was more than last month  assumes that there 16 would be no increase in diesel in the light duty fleet.

17 There were assumptions that there would continue to be some 18 increase in the heavy duty fleet, but did not assume 19 light duty, mainly introduction of diesels. That would 20 have to be reconsidered. Our risk from diesel even now is 21 unacceptably high in terms of the lung cancer risk.

22 You just convened a group, a series of 23 different committees to try to look at ways of reducing the 24 lung cancer risk from diesel. Why make that more 25 problematic? Why undermine the progress there by allowing 184 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 even more diesels on the road?

2 The bottom line is the light duty diesels 3 aren't necessary, so if we're going to introduce them,

4 let's have them as clean.

5 Truly clean diesels, I don't know if they 6 can do it or not. They have an incentive to try, but 7 diesels are not the only way to reduce fuel consumption.

8 And if the goal on the part of the auto industry is to 9 reduce fuel consumption, they can do it by other means. It 10 might be somewhat requesting them to be inventive, but one 11 thing they can clearly do is reduce weight. Reducing 12 weight will save lives, save lives of pedestrians, save 13 lives of people in automobile accidents with these giant 14 SUVs, they smash them.

15 CHAIRMAN DUNLAP: I could lose a few pounds 16 too, Janet.

17 MS. HATHAWAY: A few pounds would be about 18 right  aerodynamic. One more slide; okay?

19 CHAIRMAN DUNLAP: Okay. It's interesting

20 MS. HATHAWAY: Finally, we need the cleaner 21 cars. You're moving in the right direction with LEV II.

22 In this particular you're actually losing ground, and it 23 seems to me that putting on all this on the manufacturers 24 to actually use the best available catalyst on diesels is 25 something you can and you should do here. 185 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 CHAIRMAN DUNLAP: Okay.

2 MS. HATHAWAY: Finally, diesels should be at 3 least as clean as our gasoline vehicles if we're going to 4 introduce them. Thanks.

5 One other point. I think some of the 6 automakers made this point, but I want to underline that we 7 agree with it. The fuels and the vehicles should be looked 8 at as a system. Cleaner fuels are a way to ensure that our 9 vehicles stay clean over the lifetime and that the 10 catalysts don't degrade that rapidly, so I really 11 appreciate that and I hope that we can work with the Board 12 on that issue soon.

13 CHAIRMAN DUNLAP: Okay. Thank you, Janet.

14 Any questions for Ms. Hathaway?

15 Very good. Thank you.

16 Bonnie, you're up.

17 MS. HOLMES GEN: Thank you for the 18 opportunity to speak, Mr. Chairman and members. I'm very 19 glad to be here today.

20 I'm going get to my bottom line so all of 21 our very well thought out but brief points on why we 22 believe this proposal

23 MS. SHELBY: Would you please identify 24 yourself for the record?

25 MS. HOLMES GEN: Yes. My name is Bonnie 186 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 Holmes Gen. I'm a senior lobbyist with Sierra Club,

2 California.

3 We believe the stakes are very high here 4 today, and the results of this rulemaking will determine in 5 large part whether we are going to be able to meet our 6 state air quality standards on time. We strongly support 7 the need to close loopholes in vehicle emission standards 8 and regulate sport utility vehicles, and we applaud 9 especially that portion of the proposal, but we do continue 10 to have major concerns that we're just not getting all of 11 the emissions reductions that we can achieve today. In 12 fact, we are alarmed that the proposal moves us backwards 13 in two areas. These have been mentioned so I'll go through 14 them quickly.

15 A road to zero emission program by giving 16 credit to low emitting gasoline vehicles and it encourages 17 the introduction of more diesels into California. And that 18 concerns us that at the same time we're talking about a 19 ground breaking regulation of sports utilities, that we're 20 talking about eroding progress on zero emission vehicles.

21 That really concerns us.

22 We've talked about the need for every ton of 23 emission reduction and I want to emphasize that again. We 24 can do this. We can get every ton if we tighten up the 25 staff proposal and get rid of unnecessary emissions for 187 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 work trucks, get rid of credits for non electric vehicles 2 and get rid of weaker standards for diesels. We cannot 3 assume that there will be other measures to plug the holes.

4 The AAMA proposal, we strongly oppose that 5 proposal and appreciate that your staff pointed out there's 6 at least 8 tons of reduction you would not get with the 7 AAMA proposal. We believe there's still tons you can get 8 by tightening up the staff proposal before you, and if we 9 don't tighten up and plug the holes, we're not sure where 10 you're going to get these other emission reductions to fill 11 the black box.

12 We know that vehicle emissions are at least 13 half of the air pollution problem. The most cost effective 14 way to reduce vehicle emissions is to build the cars right,

15 to build the vans correctly, to build the trucks correctly,

16 to get that technology on the trucks when they come out of 17 the factory.

18 The 2010 window is getting smaller and 19 closer and we still have not figured out a way to get all 20 of the emissions reductions for the black box. There's 21 also been shortfalls in regulations that have previously 22 been adopted by your Board. I would point out one of the 23 first proposals the Board adopted was 8 tons short, so we 24 need to be gaining speed here and not losing tons.

25 CHAIRMAN DUNLAP: This will take care of a 188 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 chunk of the black box as you know.

2 MS. HOLMES GEN: I appreciate that, but not 3 all of it.

4 So number one point, after the general 5 testimony, we strongly oppose the relaxation of pollution 6 standards to accommodate diesel light duty vehicles.

7 Very briefly, introduction of diesel 8 vehicles is contrary to our clean air goals. It's 9 especially inappropriate after the ARB listing in August.

10 And I would just point out, you know, you've already heard 11 about the nine times and the four times. We were very 12 strongly opposed to establishing a special category for 13 diesels, and I wanted to point out that in August when your 14 Board did adopt the diesel particulate listing, we 15 testified in strong support of your action and we said that 16 the next big challenge that you're going to face is that 17 you're going to be facing the challenge of those who want 18 to introduce more diesels into California and nationally 19 into the passenger car fleet under the guise of 20 environmental protection.

21 We need to resist those efforts, and here we 22 are facing  I didn't quite realize we were facing quite 23 so quickly  but we are facing the challenge today in this 24 rulemaking. We urge you to stand against special standards 25 for vehicles. 189 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 We also oppose allowing the non electric 2 drive, gasoline powered SULEVs to qualify for the partial 3 ZEV credit. We need to be pushing, and we want you as a 4 Board to be pushing for development of true zero emission 5 vehicles, for battery and fuel cell vehicles, and we 6 believe that there's great support in this new 7 administration that has just elected to do that. There 8 will be a lot of effort going into the zero emission 9 program. We don't want to back down now, and we're very 10 concerned that approving these ZEV credits will take some 11 of the steam out of technology advancements for ZEVs and we 12 don't believe gasoline vehicles can ever be truly 13 equivalent. I think that point was made earlier.

14 A third major point, we do oppose the 15 relaxation of pollution standards for so called work 16 trucks. We do believe ARB should adopt single passenger 17 car standards for all of the vehicles in the weight classes 18 that you're covering up to the 8500 pounds. We disagree 19 with the proposal to allow so called work trucks to emit 40 20 percent more nitrogen oxide. We can't afford those tons.

21 We really want to stand behind the staff 22 that has done testing on this. They've expressed to you 23 the testing that was done covered work trucks, covered cars 24 and trucks that were carrying heavy loads, and based on 25 this testing there is no need for a special exemption for 190 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 work trucks. If you are going to be considering this and 2 we really don't believe you should, we think at a minimum 3 that your Board should place a sunset on this exemption, 4 maybe a two year sunset, and take that as an opportunity to 5 study what is happening under that exemption and look at 6 what kinds of cars are receiving that exemption.

7 And right now in the proposal there's no 8 particular way to look at what are the cars getting this 9 exemption. Are they work trucks? How are they being used?