5 And I don't think from my perspective  you 6 know, Matt mentioned semantics. I do think it's a 7 question of degree up here, and truly it's a question of 8 trust from my perspective. This is an incredible bully 9 pulpit, as Teddy Roosevelt used to say about another 10 office. But when it comes to air quality, the value of 11 being a member of the California Air Resources Board is 12 really quite amazing. And one of the things I've been 13 concerned is devaluing that in any way. And, of course,

14 we deal with perception. Optics is a favorite word now in 15 politics. And I think it's important that we all leave 16 here with a true commitment to whatever the reg is because 17 I don't think victory will be determined today. It will 18 be determined most likely in the coming decade, but really 19 in the next year, I think. And I see that in terms of 20 what the auto industry does with what happens today.

21 My difficulty with the staff recommendation and 22 why I agreed with D. D. and Matt a month ago was perhaps 23 somewhat simplistic. But as a generalist, maybe that's 24 the best thing to do. Was the 500 number or better was a 25 source of currency basically that would be, as staff put PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 95 1 it, used to leverage BEV technology.

2 I don't think BEV technology in my own 3 experience  and it's largely intuitive  is we should 4 give up on it, as D. D. said and Matt said. I look at 5 vehicle miles traveled in the state of California from a 6 transportation perspective. And I've mentioned this 7 before, and I know others up here who have sat on MPOs 8 metropolitan planning organizations. We realize we can't 9 provide the infrastructure over the next few decades for 10 single occupancy vehicle used the way we have in the past.

11 The California dream of super highways and that kind of 12 infrastructure doesn't exist. So the cars are going to 13 have to change by necessity. The land use is changing.

14 And the dependence on transit is changing.

15 I think there's an opportunity there that people 16 will begin to see things like city cars as a viable 17 alternative, the way they see them in Europe right now in 18 the smart car in particular, although that's an 19 alternative combustion engine. But I do think that 20 platform will have growing validity. And I think the 21 possibility for the battery technology is something my 22 friends at Toyota have led me to believe is there are more 23 and more mass produced hybrids, there's greater 24 opportunity for that kind of use.

25 Now, the Chairman assures me, and I trust him,

PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 96 1 that that opportunity exists with this regulation. As I 2 read it, it does. But my level of trust is not as strong 3 with some of the other auto manufacturers who at the very 4 best I feel have been disingenuous. And unfortunately 5 those are American companies, one large American company 6 in particular.

7 So the reason I hesitate to support it is not 8 because I feel it's a step back or I don't trust staff or 9 I don't trust some of the manufacturers or I lack respect 10 for where the Chairman is coming from. It's that from my 11 experience  unfortunately, I've been growingly skeptical 12 about certain of the people who are involved in the 13 regulated community.

14 And then, in addition, going back to Mr. Friedman 15 when he was here in his attempt to look like Cal and speak 16 like Cal Worthington, I think there's great opportunity 17 for fuel cells  or hydrogen, I should say, not just fuel 18 cells and internal combustion engines. But this  and 19 for lack of a better expression and I've been corrected on 20 this  chicken and egg aspect, whether it's deliberate or 21 not, the fuels' people, the petroleum industry, I don't 22 think are going to be terribly interested in providing the 23 infrastructure of the hydrogen either small scale or large 24 scale.

25 So I am interested  and maybe staff can respond PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 97 1 when we come back in three months about not just 2 infrastructure but the trick to the infrastructure is 3 matching it so supply and demand and the possibility for a 4 very low emitter a PZEV or close to it that would be 5 hydrogen ice that may be captured in this regulation that 6 I'm missing or perhaps we need to work with.

7 And then I appreciate the time  I've gone back 8 and forth. Allen called me last night, and I do think 9 that if this motion passes, which I'm inclined to think it 10 will, we all leave here expecting that there won't be 11 revisions backwards, that the auto industry will embrace 12 it and accept it for what it is and work with us and work 13 with us in the next year on other areas.

14 I won't support it because I've unfortunately 15 grown skeptical. But I'm willing to be proven wrong. And 16 I hope I will be proven wrong by those members of the auto 17 industry who chose to be responsible to California and its 18 public health.

19 Thank you, Mr. Chairman.

20 CHAIRPERSON LLOYD: Just a clarification, again,

21 for just reminding us I think in the resolution it does 22 require staff to come back with a report talking about the 23 appropriate process for incentivizing station cars and 24 hydrogen infrastructure and also how we might integrate 25 that into the related transportation management programs PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 98 1 and also looking at the appropriate role for stationary 2 fuel cells.

3 SUPERVISOR DeSAULNIER: Mr. Chair, if I could 4 clarify. I appreciate that paragraph. I have it 5 highlighted. Also as part of that is the connection with 6 potentially that infrastructure with a growing demand 7 which would be perhaps hydrogen ice.

8 CHAIRPERSON LLOYD: As I mentioned before, I 9 think I had the  again, the opportunity yesterday to see 10 the progress made by  being made by South Coast with 11 various partners to deploy hydrogen infrastructure down 12 there. They're doing a really excellent job. We're 13 slower up north. But that's moving across from Auburn 14 through West Sacramento to the Bay Area and down. And we 15 will have links north and south. So that's coming on.

16 But obviously as I said before, that will be a slower 17 progress.

18 Dr. Friedman.

19 BOARD MEMBER WILLIAM FRIEDMAN: As usual as I 20 was trying to put my thoughts together about what to say 21 about this regulation, Ron Roberts said the things I was 22 thinking better than I could have said. I'm not going to 23 repeat those things.

24 But both D. D. and Bill Burke did raise this issue 25 about out of state transport. And Catherine mentioned the PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 99 1 fact that this would be monitored. I'm curious why can't 2 we  I mean, of course, you'll monitor it. But can we at 3 some date  doesn't have to be today  get some notion 4 of what indices will be employed to raise a red flag.

5 It's one thing to monitor. It's another thing to know 6 what, indeed, will trigger some response that we need to 7 make.

8 CHAIRPERSON LLOYD: You want early warning?

9 BOARD MEMBER WILLIAM FRIEDMAN: I think that's 10 appropriate. And I'd like to make sure that, you know,

11 indeed, we get some more clarification on that point.

12 EXECUTIVE OFFICER WITHERSPOON: Earlier today the 13 Chairman asked us to report back annually on how the 14 entire program is evolving. That's certainly one 15 mechanism.

16 But the things we would be looking at is actually 17 vehicle placements, the amount of time that California 18 vehicles reside in California. That's been an issue in 19 the Fuel Cell Partnership to date. And to the extent we 20 start to credit them under our regulation, we need to be 21 clear about how long we expect them to remain in our state 22 to count against the alternative compliance path.

23 BOARD MEMBER WILLIAM FRIEDMAN: That's my point,

24 Catherine. I agree with  those are the things you're 25 going to look at. But where's the line about when we PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 100 1 really need to be  need to potentially do something when 2 the line is crossed?

3 EXECUTIVE OFFICER WITHERSPOON: It's your call,

4 of course, how much alarms you. I would say anything over 5 10 percent would alarm me. I would want to bring it to 6 your attention.

7 The vehicles only count if they're played in 8 another LEV state. So we're only talking about New York 9 and Massachusetts. Placements in Washington D. C. where 10 there's a lot of interest in getting Congressal attention 11 these vehicles or in Michigan would not count. Those have 12 to be vehicles produced separately for that purpose. And 13 the temperature situation in New York and Massachusetts 14 works against them. Getting cars early, cold weather 15 management is a problem with fuel cells. So California's 16 more temperate climate is the one of the biggest reasons 17 we'll get them first, along with the fact we have a very 18 well developed partnership and early introduction of 19 hydrogen infrastructure and now a regulatory reason to 20 bring them here.

21 CHAIRPERSON LLOYD: And if you'd like,

22 Dr. Friedman, we could  again, if there's anything that 23 staff want to elaborate on in three months time, we can 24 add to that.

25 Dr. Burke.

PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 101 1 BOARD MEMBER BURKE: South Coast is spending a 2 lot of money putting in hydrogen infrastructure. Some 3 people question if we're not spending more than we should.

4 And it's the basis probably of our concern of movement of 5 these cars. There are cities like Santa Ana who want to 6 establish a city free of hydrogen cars and have federal 7 indication that there may be some support there to do 8 that. This question nibbles at me because we're spending 9 millions and millions and millions on this infrastructure.

10 And I'd think to be at the back side of the bell curve

11 and I know Catherine's going to watch it. But if there 12 was something we could figure out that would give us 13 rather than retrospective, prospective warning, we sure 14 would appreciate it. But we don't want to let that stand 15 in the way of the progress of what we're doing today.

16 CHAIRPERSON LLOYD: I think, Dr. Burke, we 17 will  staff will report back on that in three months. I 18 think that's a  plus the fact, just remind my 19 colleagues, that as we are developing the hydrogen 20 infrastructure as a result of one of the other regulations 21 we are having a demonstration of zero emission fuel cell 22 buses which we hope will grow in the latter part of this 23 decade. So that's also being an important part. These 24 are being developed in California.

25 EXECUTIVE OFFICER WITHERSPOON: Chairman Lloyd,

PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 102 1 Tom could get at another point he wanted to bring to the 2 Board's attention about early signal to where these cars 3 might go.

4 MR. CACKETTE: One other strong pulling factor 5 for these vehicles is that the Department of Energy has 6 announced a large amount of money to subsidize fuel cell 7 demonstrations. And there's an RFP on the street and 8 people are teaming up to bid on it. They do to have to be 9 in multiple states. So there would be some bids that will 10 include cars going to other states.

11 But that's one way that we will sort of get an 12 advance that something's happening. We'll see the results 13 of those, who gets awarded them. And if there's going to 14 be a problem because they're all going somewhere else 15 because of that money and not California, I think we could 16 react fairly quickly and let you know right away if 17 there's a problem. And you could take the action to 18 require more of them here.

19 BOARD MEMBER BURKE: I would just like to share 20 with you we have an intelligence which indicates that it's 21 not coming here. Already we know it's not coming here.

22 So if we want to protect our own, you don't have to wait 23 for that information. I'm giving that to you now.

24 CHAIRPERSON LLOYD: I've been talking to maybe 25 not the same source, but I'm a bit more optimistic than PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 103 1 you are that we can get them. But it is a concern, I 2 agree. I agree. And that's where I think we need to work 3 into true partnership with the partners in the Fuel Cell 4 Partnership to make sure that, if fact, what we're hoping 5 for here does happen.

6 EXECUTIVE OFFICER WITHERSPOON: Just one last 7 comment on the whole issue. The cure for the travel issue 8 is to take fuel cell vehicles out of regulation entirely 9 and have them administered under a memorandum of 10 agreement, which is how we did electric vehicles back in 11 1998. And staff believes that a regulatory approach is 12 preferable to a memorandum of agreement because it's 13 enforceable. But it has this leakage aspect to it, and 14 we'll see as we go whether we should switch to a different 15 mechanism which has its own drawbacks as well.

16 CHAIRPERSON LLOYD: Any other discussion on the 17 motion?

18 Supervisor Patrick.

19 SUPERVISOR PATRICK: Thank you very much.

20 As you know, I was not here at last month's 21 meeting. And I thought I had dodged a bullet, but 22 apparently I wasn't able to do that. I have read the 23 transcript, and I especially was interested in the 24 transcript of the discussion on the Friday of last month's 25 meeting and the issues of concern which I think were or PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 104 1 well articulated.

2 And I would like to compliment staff on the good 3 job that you have done in addressing each and every one of 4 those issues. I think that I in looking at the proposal 5 that's before us today on a much higher comfort level with 6 it certainly than I did previously.

7 But I'm very supportive of this proposal. I 8 think that it moves us into the future. And I do have to 9 agree, though, with Supervisor DeSaulnier, the proof of 10 this is going to be in the pudding. And so we're looking 11 forward to working with all of the stakeholders in making 12 sure this proposal is something that moves us forward in 13 the zero emission area because that's critically important 14 to all of us here in the state, certainly in the Valley 15 where I represent quite a few folks.

16 But I think it's no more necessary in the Valley,

17 really, than it is in any other particular area. And that 18 we need to move forward and that this proposal does that 19 and look forward to seeing what happens in the next decade 20 as that proposal comes to fruition.

21 CHAIRPERSON LLOYD: Thank you.

22 Mr. Calhoun.

23 BOARD MEMBER CALHOUN: Mr. Chairman, members of 24 the Board, I guess I'm not as pessimistic about the auto 25 industry as some of any fellow Board members. And maybe PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 105 1 that's understandable.

2 We can't dictate technology. We have to set a 3 goal and expect the manufacturers to work toward meeting 4 that goal. I don't think we've eliminated battery 5 technology. I don't think we've eliminated any 6 technology. I think if the manufacturers can make 7 business case for a given technology, then obviously that 8 will be their preference. We've heard over and over 9 comments about their inability to make a business case for 10 batteries. And hopefully if progress is made in the 11 future, maybe they can. And I'd like to see the battery 12 technology survive also, but I don't think that it's up to 13 this Board to try to force the manufacturers to produce 14 battery powered vehicle.

15 So I'm going to support the regulation. And I 16 think it's essential that we get the auto manufacturers to 17 cooperate with us. In whatever is it we're trying to 18 accomplish, you can't head down one road and they head 19 down a different road because you're going to end up 20 having a battle on your hands. And you'll end up in 21 court. We're fighting them or they're fighting us. And 22 if I've learned anything in the last 40 years it's that 23 you need them to cooperate. So hopefully they will take a 24 lead from this and the action taken by the Board they that 25 will encourage them to cooperate. So I will support the PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 106 1 motion.

2 CHAIRPERSON LLOYD: Thank you, Mr. Calhoun.

3 Professor Friedman, you're the last.

4 BOARD MEMBER HUGH FRIEDMAN: I'm used to having 5 the last word in my classes so

6 I, too, commend staff. There was a lot of 7 clarity in the presentation. And I know how hard you've 8 worked to read what we said and try and get a proposal 9 that's rational, and I think you've accomplished that. I 10 think this proposal is realistic of achievement. I think 11 it gives stability and continuity to what was long begun 12 before and to what lies ahead. I think it gives us some 13 sure and realistic progress in attaining cleaner air 14 through lower emissions. Especially while the early years 15 don't give us as many zero emissions, they give us a lot 16 of reduced emissions, earlier and more.

17 And some of this  and I, too  I, too, wish to 18 share the desire of Board Member D'Adamo and my good 19 friend, Matt, my fellow public member, and the Supervisor 20 DeSaulnier that we could dictate technology or so 21 incentivize it they would have no choice but to build it.

22 But I do  I'm pleased to see the incentivizing 23 for releasing, extending the  hopefully, the 24 availability and use and presence on our roads in 25 California of the some or hopefully most of the battery PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 107 1 electrics that were made, and that those great people who 2 bought them early on because they believed in it and have 3 supported all of our efforts will be able to continue to 4 use those cars and show them, showcase them and create a 5 culture  further a culture in our society for the 6 battery zero, which is the only game in town at this point 7 that has been produced.

8 On the other hand, as has been said, I don't feel 9 comfortable and I probably never would writing on somebody 10 else's checkbook and telling them exactly what they have 11 to make or buy. Our goal is zero emission vehicles. We 12 have been steadfast in that. How they get there is still,

13 I think, ultimately got to be left to those who make it.

14 And I realize that much of this is dependent on 15 good faith and a collaborative effort. And some of you 16 are closer than I am to the auto manufacturers. And I 17 think those of you who are closer, at least the Chairman,

18 and the partnership, Fuel Cell Partnerships and its 19 aspirations of its members have a lot of faith and feel 20 that that's important to preserve and to make this effort.

21 And I hope it's not misplaced. It would be a shame, a 22 tragedy if it is.

23 But we have every opportunity to monitor, to look 24 again at all of this. And it's a brave, brave kind of 25 faith. And there's some reasons to be skeptical, as has PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 108 1 been pointed out. But let's hope that this works.

2 And if it doesn't, and there are good reasons on 3 both sides why it didn't work, we can always come back.

4 We don't have all the answers now. None of us does. And 5 all we can do is hold to the zero emission goal and 6 continue our quest and our journey. And I think this is 7 advancing the progress toward it. It's a good balance.

8 And so I think I'm prepared  as I second the 9 motion, I'm prepared to support it. I do join in the 10 request, and I think the motion embraced it, that it 11 include the  at least annually reviewing  that is a 12 report from the staff to give us an opportunity to decide 13 whether we need to have another review and a hearing. And 14 I would also suggest that that report be at least annually 15 so that if the staff or the Chair, obviously, or anybody 16 else gets an idea that somebody's not working the way we 17 are all hoping it works in the spirit of what we've said,

18 it can be brought back before us.

19 CHAIRPERSON LLOYD: Thank you very much,

20 Professor Friedman.

21 Before we go to go to  I guess we've got a 22 motion. Again, I would like to thank my colleagues. I 23 would reiterate what Mr. McKinnon and Ms. D'Adamo and 24 Supervisor DeSaulnier was saying. Again, I have the 25 utmost respect for all three of them. I continue to learn PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 109 1 every day. It's painful also for me to not have that. We 2 really tried, and you can see from the amount of ex parte 3 that we've had meetings with all stakeholders. It's been 4 the toughest job I've had because I got the deep desires 5 to zero. I also don't want to give up on batteries, but I 6 also want to encourage other technologies. It's been 7 extremely tough and continues to be very, very tough.

8 I'd also like to thank staff for the tremendous 9 hours they've put in, many long hours, days, nights,

10 mornings. And you've done a tremendous job. And it's not 11 easy, the issues. I think that the Board  I know I've 12 been in some of those meetings where staff has been 13 battling amongst each other because you have advocates and 14 you have detractors within the staff so this gets hashed 15 out. So my hat's off to you doing this job.

16 And to Ms. Witherspoon for this mammoth job here.

17 I know  again, I thank you so much for the effort you 18 put in.

19 We really tried. It's much easier if you have a 20 clean sheet of paper when we started off. But we have 21 many people on different pieces of the path, different 22 parts of the path. And that's where the difficulties come 23 in. Whenever we've looked at that, on the face of it 24 looks easy to do, somebody is impacted. And you have many 25 people making good faith efforts, and you want  so PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 110 1 that's made it very difficult. I'd say if we started off,

2 it'd have been much easier.

3 So with that, again, I want to express my true 4 gratitude to my colleagues for very thoughtful comments 5 here to the staff and the people we've interacted with.

6 As Mr. McKinnon said, we've got many thoughtful proposals 7 from many of the stakeholders. And it's really made our 8 job both easier and more difficult because everybody is 9 sincere.

10 So it's really a responsibility when part of it 11 comes down to it  and I remember Mr. Cackette saying 12 early on that people say well, we have a responsibility 13 and we have an obligation. But we have a credibility.

14 And he pointed out to me credibility works both ways. So 15 I also see that we have a technical credibility as well.

16 And you know, unfortunately, with some technical 17 understanding I've had to make some tough choices here,

18 that two years ago I was probably looking at numbers and 19 higher numbers.

20 With that said, I'd like to thank you all. And 21 maybe now we can  since we have a motion on the floor 22 proposal by Ms. Riordan, could I can the Clerk of the 23 Board the call the roll.

24 CLERK DORAIS: Dr. Burke?

25 BOARD MEMBER BURKE: Aye.

PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 111 1 CLERK DORAIS: Mr. Calhoun?

2 BOARD MEMBER CALHOUN: Aye.

3 CLERK DORAIS: Ms. D'Adamo?

4 BOARD MEMBER D'ADAMO: No.

5 CLERK DORAIS: Supervisor DeSaulnier?

6 SUPERVISOR DeSAULNIER: No.

7 CLERK DORAIS: Professor Friedman?

8 BOARD MEMBER WILLIAM FRIEDMAN: Yes.

9 CLERK DORAIS: Dr. Friedman?

10 BOARD MEMBER WILLIAM FRIEDMAN: Yes.

11 CLERK DORAIS: Mr. McKinnon?

12 BOARD MEMBER McKINNON: No.

13 CLERK DORAIS: Supervisor Patrick?

14 SUPERVISOR PATRICK: Yes.

15 CLERK DORAIS: Ms. Riordan?

16 BOARD MEMBER RIORDAN: Aye.

17 CLERK DORAIS: Supervisor Roberts?

18 SUPERVISOR ROBERTS: Aye.

19 CLERK DORAIS: Chairman Lloyd?

20 CHAIRPERSON LLOYD: Yes.

21 With that, the motion passes eight to three.

22 And, again, thank you all very much. I'm sorry 23 for the court reporter. We'll have to take a break now.

24 Let's take a 15 minute break.

25 ( Thereupon a lunch recess was taken.)

PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 112 1 CHAIRPERSON LLOYD: We'll recommence with the 2 next agenda item, 03 2 3, public meeting to consider 3 Proposition 40 and related amendments to the Carl Moyer 4 program guidelines.

5 This item was considered by the Board at our last 6 hearing on March 27th. At that time we approved the Prop.

7 40 school bus funding for this year but continued our 8 deliberation on the Carl Moyer funding in response to 9 issues and concerns raised by the Bay Area Air Quality 10 Management District. Since then, the Bay Area AQMD and 11 all of CAPCOA's membership have come together to discuss 12 this issue. And we decided collectively to leave the 13 current allocation formula intact for this year. Remember 14 it's a two year program. For this year. There's still a 15 great deal of interest in modifying the formula, but all 16 parties agree it will take additional time to work through 17 the various options and implications.

18 So Ms. Witherspoon, staff's job looks relatively 19 straightforward. I presume we can go through this fairly 20 quickly.

21 EXECUTIVE OFFICER WITHERSPOON: Yes, Dr. Lloyd.

22 That's correct. Since the last hearing we received a 23 letter from the Bay Area District withdrawing their 24 request for the Board to consider a new Carl Moyer funding 25 distribution this year. However, they would like staff to PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 113 1 carefully consider the issues they raise as we consider 2 funding allocations for next year. Staff is fully 3 committed to doing that and will begin those discussions 4 with all of CAPCOA's members immediately following this 5 hearing.

6 At this point all parties accept the existing 7 formula which is based 50 percent on population and 8 50 percent on the M4 SIP commitment to reducing NOx from 9 mobile sources. Again, that's just for this year.

10 And Dr. Alberto Ayala is prepared to cover some 11 of the items we discussed last time. But in the interest 12 of time you could dispense with that and go straight to a 13 vote.

14 CHAIRPERSON LLOYD: Unless you have a burning 15 desire to Dr. Ayala, reading the sentiments of the Board,

16 if you can contain those and we can have the first 17 witness.

18 ALTERNATIVE STRATEGIES SECTION MANAGER AYALA:

19 I'd be happy to try, Dr. Lloyd.

20 CHAIRPERSON LLOYD: Thank you very much. So with 21 that, we'll call the first and only witness on this. And 22 it's Tom Addison from the Bay Area who started this.

23 MR. ADDISON: Indeed, Dr. Lloyd. As staff know,

24 we started this four years ago. But it did certainly come 25 to a head at the last Board meeting. And I'd just like to PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 114 1 say that, you know, what you've heard from your Executive 2 Officer is correct. The Bay Area Air District does not 3 want to cause any funds to not be spent. We realize your 4 staff was not  had not planned a distribution of 02/ 03 5 funds. So we're withdrawing our request for 02/ 03 funds,

6 and we look forward to a productive and fruitful 7 discussion for 03/ 04 in future years.

8 CHAIRPERSON LLOYD: Thank you, Tom.

9 Again, on the serious side  I was being a 10 little bit flippant. But the conversations you and I had,

11 this issue had been raised in the past, and I know it's an 12 ongoing issue. So I appreciate that. And, in fact, as 13 you heard from staff it's a commitment to work with you as 14 we look at the next round of funding. And we appreciate 15 your patience on that.

16 MR. ADDISON: And we commit to working together 17 to try to come up with something that makes sense for all 18 parties.

19 CHAIRPERSON LLOYD: Thank you very much.

20 SUPERVISOR DeSAULNIER: Mr. Chairman.

21 CHAIRPERSON LLOYD: Yes, Supervisor DeSaulnier.

22 SUPERVISOR DeSAULNIER: He hesitates to recognize 23 me. I just want to be on the losing end of everything 24 today. No. I appreciate  I do appreciate your comments 25 from staff and Tom. But it's a really important, I think,

PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 115 1 for this Board  and D. D. and I have had some of 2 this conversation, and Barbara  that we don't look at 3 this just in isolation, but we look at it collectively 4 between our relationship with the Bay Area and the our 5 downwind neighbors sort of globally.

6 So hopefully our staff can help facilitate with 7 us being able to do that with the CAPCOAs. Not just for 8 this, but for transport, some of what we talked about over 9 lunch.

10 So with that, I would move the staff 11 recommendation.

12 BOARD MEMBER McKINNON: Second.

13 SUPERVISOR DeSAULNIER: That's not part of a 14 motion. That's just a request.

15 CHAIRPERSON LLOYD: So the bottom line, so do we 16 have any objections to that proposal?

17 SUPERVISOR DeSAULNIER: I'm sorry. Do you want 18 me to withdraw the motion? You seem startled.

19 CHAIRPERSON LLOYD: No. It's good. So do we 20 have any objections? It's unanimous approval. Thank you.

21 Thank you.

22 And thank you for that great presentation,

23 Dr. Ayala. Cost effectiveness was tremendous.

24 EXECUTIVE OFFICER WITHERSPOON: Chairman Lloyd,

25 we talked about juggling the next few agenda items, it PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 116 1 turns out they're still working on the slides and the 2 copies for both the in use motor vehicles and the smog 3 check items. So I would suggest that we proceed with the 4 health update after all.

5 CHAIRPERSON LLOYD: Do we have the same staff 6 working of ZEVs as this other stuff?

7 EXECUTIVE OFFICER WITHERSPOON: No.

8 CHAIRPERSON LLOYD: Okay. So what you're 9 suggesting is we actually go ahead with the health update 10 and the R& D.

11 EXECUTIVE OFFICER WITHERSPOON: I saw Bart Croes 12 walked into the room. I'm wondering where the rest of the 13 research staff is. They're here.

14 CHAIRPERSON LLOYD: Again, just the recognition 15 we have several Board members who are going to be leaving.

16 I think again the third item on the agenda is 17 03 3 1, monthly public health update. And today's update 18 focus on the health effects of ozone, which obviously 19 important because staff is currently reviewing the 20 scientific literature on ozone in preparation from making 21 recommendation on a possible revision to the California 22 ozone standard.

23 With that, Ms. Witherspoon, would you start the 24 presentation and introduce this item.

25 EXECUTIVE OFFICER WITHERSPOON: Thank you,

PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 117 1 Dr. Lloyd.

2 This informational item will highlight recent 3 findings from a study on responses of allergic asthmatics 4 exposed to ozone. Today Dr. Deborah Drechsler from the 5 Research Division will update the Board on the findings 6 from this study.

7 Dr. Drechsler.

8 AIR POLLUTION SPECIALIST DRECHSLER: Good 9 afternoon, Dr. Lloyd and members of the Board.

10 The study we are discussing today deals with 11 ozone health effects in people with asthma. The health 12 effects of air pollution on people with asthma have been a 13 concern of the Board for some time due to the sensitivity 14 of this vulnerable population.

15 CHAIRPERSON LLOYD: Could you speak a bit closer 16 to the mic, please.

17 AIR POLLUTION SPECIALIST DRECHSLER: The result 18 of many epidemiological studies have demonstrated 19 statistical associations between ambient ozone exposures 20 and emergency room visits and hospital admissions for 21 asthma. To give you a perspective on the magnitude of 22 this issue, over 300,00 California residents visited the 23 emergency room during 2001 because of their asthma.

24 However, a biological explanation for why asthmatics may 25 be vulnerable to air pollution's effects is only just PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 118 1 beginning to emerge.

2 ( Thereupon an overhead presentation was 3 presented as follows.)

4 AIR POLLUTION SPECIALIST DRECHSLER: This 5 afternoon we would like to tell you about a recently 6 published paper entitled " Ozone Exposure Increases 7 Eosinophilic Airway Response Induced By Previous Allergen 8 Challenge," by Vagaggini and colleagues from the 9 University of Pisa in Italy. The paper appeared in late 10 2002 in the American Journal of Respiratory and Critical 11 Care Medicine.

12  o0o

13 AIR POLLUTION SPECIALIST DRECHSLER: As I 14 mentioned, epidemiological studies have reported an 15 association between ozone exposure, asthma exacerbation,

16 and emergency room visits and hospital admissions for 17 asthma. However, in most studies of asthmatics who have 18 been exposed to controlled concentrations of just ozone,

19 the asthmatics have shown responses that were not 20 different from non asthmatics. This raises the question 21 of how to reconcile these disparate findings.

22 Asthma is a chronic lung disease characterized by 23 airway inflammation that is primarily related to a type of 24 immune cell called the eosinophil. Eosinophils release 25 chemicals that induce inflammation of the lung tissues.

PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 119 1 These cells are also involved in allergic responses inside 2 the lungs.

3 Other features of asthma include reversible 4 airway constriction and hyperreactive airway muscle cells.

5 Allergy is a prominent feature in most cases of asthma.

6 Ozone is not an allergen. However, some researchers have 7 hypothesized that ozone may increase ongoing allergic 8 responses by increasing the intensity of airway 9 inflammation and thereby increasing bronchial constriction 10 and airway hyperreactivity in asthmatics.

11 The purpose of this study was to investigate the 12 effects of ozone exposure in allergic asthmatics who were 13 already experiencing allergen induced asthma exacerbation.

14  o0o

15 AIR POLLUTION SPECIALIST DRECHSLER: The study 16 involved 12 mild allergics as who attended the laboratory 17 on four days. In order to induce an asthma exacerbation,

18 subjects were asked to inhale allergens on the first day.

19 24 hours later the subjects were exposed to either 20 filtered air or .27 parts per million ozone for two hours 21 and they performed 20 minutes of light exercise during 22 each hour of exposure.

23 At least four weeks later the subjects repeated 24 allergen inhalation and 24 hours after that completed a 25 two hour exposure to the opposite atmosphere as PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 120 1 previously, that is ozone or filtered air. All subjects 2 completed both exposures. The ozone concentration used 3 .27 parts per million is higher than has been measured in 4 California in recent years. It was chosen to maximize the 5 possibility of sedating the biological mechanisms involved 6 in the responses of interest while ensuring subject safety 7 and the relevance of the results to current ambient 8 conditions.

9 Further, the study involved mild asthmatics. It 10 is likely that more severe asthmatics would experience 11 similar responses with lower levels of ozone exposure.

12 The measures of respiratory health included lung function 13 tests and the presence and severity of a group of 14 respiratory symptoms, including among others cough, chest 15 tightness, pain on deep breath, and nose and throat 16 irritation. The number of the eosinophils in sputum 17 samples was used an as index of the degrees of allergic 18 inflammation in the lungs.

19  o0o

20 AIR POLLUTION SPECIALIST DRECHSLER: Two hours of 21 exposure to filtered air did not change lung function or 22 respiratory symptoms in this these subjects. In contrast,

23 a two hour exposure to ozone resulted in reduced lung 24 function and increased respiratory symptoms, such as 25 cough, chest tightness, and pain on deep breath compared PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 121 1 to the filtered air exposure.

2 In addition, exposure to ozone increased the 3 number of eosinophils in the lungs compared to the 4 exposure to filtered air. This means that ozone 5 inhalation increased the allergic inflammation that had 6 been induced by the allergen exposure the previous day.

7  o0o

8 AIR POLLUTION SPECIALIST DRECHSLER: These 9 results indicate that ozone exposure can intensify 10 allergic inflammatory responses induced by previous 11 allergen exposure in subjects with mild allergic asthma.

12 Further, the results provide biological explanation for 13 increased asthma systems, emergency room visits, and 14 hospital admissions for asthma exacerbation observed in 15 epidemiological studies.

16 Finally, this report illustrates that exposure 17 studies that do not include an allergen challenge may 18 underestimate the impact of ozone on the health of 19 asthmatics. Thank you. We would be happy to respond to 20 any questions at this time.

21 CHAIRPERSON LLOYD: Thank you, very much.

22 Dr. Friedman.

23 BOARD MEMBER WILLIAM FRIEDMAN: I don't have any 24 questions, but the Italians actually got this right.

25 Because in the past, people have done these experiments PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 122 1 the opposite way. First they expose you to a lot of 2 ozone, and then they expose you to some allergen. And 3 that's not what happens in the real world. For example,

4 right now it's a big allergy season in California. You 5 know, so your exposure to allergens occurs, period. And 6 then if you're unlikely enough to be in an ozone 7 high intensity area, then you really have a problem.

8 And what I like about the study, these 9 eosinophils they harvest  the eosinophils are the little 10 white blood cells that have all the histamine in them.

11 And that really is what triggers a lot of the 12 inflammation. So something  this is simple clinical 13 experiment, and it really makes a lot of sense. And it 14 shows a really powerful relationship, and it was done 15 sequentially the right way. So it's a nice study.

16 CHAIRPERSON LLOYD: The levels aren't that far 17 from ambient.

18 BOARD MEMBER WILLIAM FRIEDMAN: The ozone levels 19 are a bit higher than we're used to seeing. But you need 20 to get a response to know if there's going to be a 21 response.

22 CHAIRPERSON LLOYD: But not that far from the

23 BOARD MEMBER WILLIAM FRIEDMAN: Not too bad.

24 Thank you.

25 CHAIRPERSON LLOYD: Thank you very much indeed.

PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 123 1 Thank you.

2 So I guess since it's not a regulatory item. Not 3 necessary to close the record. Thank you.

4 And we'll move on to the next item, and that is 5 agenda item 03 2 2, public meeting to consider 6 appointments to the Research Screening Committee.

7 The statute creating the Board also authorized 8 the Board to appoint a Research Screening Committee to 9 advise the Boards on its extramural research activities.

10 Currently, the Committee has one vacancy to be 11 filled, and we would like to add one ex officio member,

12 each representing a scientific or technical discipline 13 that is relevant to review, and advise on our air quality 14 research program.

15 We have been privileged over the years to have a 16 host of eminent scientists serve on the committee. As you 17 know, the workload is significant, and the compensation is 18 definitely more symbolic than financial. The input has 19 been invaluable to the Board over the years. Nominations 20 for the Research Screening Committee along with the 21 candidates' credentials and resume are before us today.

22 Ms. Witherspoon, would you like you and your 23 staff to provide names and their general affiliations and 24 areas of expertise.

25 EXECUTIVE OFFICER WITHERSPOON: Bart Croes is PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 124 1 going read into the question the qualifications of the 2 nominated Research Screening Committee members.

3 RESEARCH DIVISION CHIEF CROES: Thank you,

4 Ms. Witherspoon, and good afternoon Chairman Lloyd and 5 members of the Board. We are very pleased that two highly 6 qualified candidates are willing to serve on the Research 7 Screening Committee.

8 The first nominee, Dr. Tracy Thatcher, is a 9 scientist with the Air Flow and Pollutant Transport Group 10 within the Indoor Department at the National Berkeley

11 at the Lawrence Berkeley National Laboratory. She 12 received her Ph. D. in civil and environmental engineering 13 from the University of California, Berkeley.

14 Dr. Thatcher has over ten years of experience in 15 the design and execution of aerosol and pollutant 16 transport experiments in the indoor environment. Her 17 expertise will be particularly useful for indoor air 18 quality projects that we will manage with the California 19 Energy Commission.

20 Dr. Thatcher's research interests have focused on 21 aerosol behavior indoors and the transport of pollutants 22 across the building. Dr. Thatcher is also a registered 23 professional engineer in civil engineering in the state of 24 California.

25 Dr. Michael Prather, an ex officio nominee for PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 125 1 Climate Change Research, is a chaired professor in the 2 Earth System Science Department at the University of 3 California, Irvine. He received his Ph. D. in astronomy 4 from Yale University. His research interests include 5 simulation of the physical, chemical, and biological 6 processes that determine atmospheric composition and the 7 development of detailed numerical models of photochemistry 8 and atmospheric radiation, and global chemical transport 9 models that describe ozone and other trace gasses.

10 Dr. Prather has played a significant role in the 11 second and third assessments from the Intergovernmental 12 Panel on Climate Change and the World Meteorological 13 Organization's Ozone Assessments. He's served on several 14 National Academy of Science panels on climate change. His 15 expertise will assist with research projects supporting 16 AB 1493. The number of climate change research projects 17 is small and does not require attendance at every meeting 18 of the Research Screening Committee.

19 This summarizes the qualifications of the 20 candidates. Further details are available in your 21 information packages.

22 We recommend that you approve the appointments of 23 Dr. Tracy Thatcher and Dr. Michael Prather to the Research 24 Screening Committee. We'll be happy to answer any 25 questions that you may have.

PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 126 1 CHAIRPERSON LLOYD: Is Dr. Thatcher a student of 2 the Bill Nazaroff?

3 RESEARCH DIVISION CHIEF CROES: That's correct.

4 BOARD MEMBER WILLIAM FRIEDMAN: I'd like to move 5 approval and then make a comment.

6 BOARD MEMBER RIORDAN: I'll second the motion.

7 BOARD MEMBER WILLIAM FRIEDMAN: I want to 8 congratulate Bart on identifying two truly imminent 9 scientists who will contribute importantly. Dr. Thatcher 10 because we really are going to be focusing on indoor air 11 in a very important way. Both of these people are 12 award winning and renowned folks. I think these are great 13 complements to the Committee. I'm very, very pleased.

14 Thanks for your help.

15 RESEARCH DIVISION CHIEF CROES: Thank you very 16 much.

17 CHAIRPERSON LLOYD: I reiterate those comments.

18 I don't know Dr. Thatcher. I do know Dr. Prather, so I 19 think that area's going to be a tremendous help to us as 20 we move ahead in those areas so good job.

21 We have a motion before us. All in favor say 22 aye.

23 ( Ayes)

24 CHAIRPERSON LLOYD: Thank you very much. So a 25 unanimous approval.

PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 127 1 And thank you very much, Bart.

2 RESEARCH DIVISION CHIEF CROES: Thank you.

3 CHAIRPERSON LLOYD: Now we will move ahead to the 4 next item, and that is item 03 3 3 report on findings on 5 the effect of exempting additional vehicles from the 6 smog

7 EXECUTIVE OFFICER WITHERSPOON: We're doing 8 reducing in use emissions first, 03 3 2.

9 CHAIRPERSON LLOYD: Sorry. Thank you. My zeal 10 to get this over.

11 EXECUTIVE OFFICER WITHERSPOON: It's an important 12 set up. That's why we're doing this one first.

13 CHAIRPERSON LLOYD: I'm sorry. Next item,

14 03 3 2, strategies for reducing emission from in use 15 gallons vehicles.

16 Some months ago I asked staff to report to the 17 Board what the effect of existing passenger cars on the 18 state's air quality. I've been concerned about the 19 significant and continuing contribution of emission from 20 older cars and what, if anything, can we do about that.

21 That's the genesis of the item. And, actually, I 22 didn't realize that it's going to work out this way 23 because the concern that I had at the time was that we've 24 been focusing so much on zero emission on new vehicles,

25 and we've been criticized for not paying attention to PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 128 1 vehicles on the road. So it turns out today we've 2 actually finished up the new vehicles, and now we're 3 addressing the existing vehicles. So I think the timing 4 is great.

5 And I thank staff for bringing this item back to 6 us.

7 So with that, I'll turn it to Ms. Witherspoon.

8 EXECUTIVE OFFICER WITHERSPOON: Thank you,

9 Chairman Lloyd, members of the Board.

10 We've made great progress in reducing vehicle 11 emission since catalysts were first required in the 1970s.

12 New light duty vehicles are now 99 percent cleaner for 13 non methane organic gasses and 95 percent cleaner for NOx.

14 Despite this progress, existing vehicles still 15 account for a significant portion of remaining emissions.

16 There are several reasons for this. First of all,

17 California's vehicle population keeps growing, as does the 18 total number of vehicle miles traveled each day. In 19 addition, cars last a long time in our climate, resulting 20 in a slower retirement rate than other states may observe.

21 Finally, deterioration of emission control 22 systems is a significant factor causing vehicles to emit 23 more as they age. By the time we get to 2010, 10 year old 24 and older cars will be the dominant portion of the 25 light duty inventory which forces us to concentrate now on PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 129 1 how those in use vehicles might be addressed.

2 Today staff presentation will be given by a 3 Annette Guerrero of our Mobile Source Control Division.

4 Annette.

5 ( Thereupon an overhead presentation was 6 presented as follows.)

7 STAFF AIR POLLUTION SPECIALIST GUERRERO: Thank 8 you, Catherine.

9 Good afternoon, Chairman Lloyd and members of the 10 Board.

11 Today in response to a request by Chairman Lloyd 12 at the December Board hearing, I will be discussing excess 13 emissions from the in use light duty vehicle fleet and the 14 potential to reduce these emissions. To clarify excess 15 emission are the portion that exceed the standards to 16 which the vehicles have been certified.

17 CHAIRPERSON LLOYD: Zero emissions.

18 MR. LUNA: That file doesn't look like it's going 19 to open for us.

20 STAFF AIR POLLUTION SPECIALIST GUERRERO: I'll 21 wave my hands a lot.

22 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Just 23 say the slide number.

24 STAFF AIR POLLUTION SPECIALIST GUERRERO: This is 25 slide number 2. After providing you some background on PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 130 1 our progress on reducing vehicle emissions, I will 2 quantify the impact of older vehicles on emissions,

3 followed by a discussion of several programs currently 4 being examined that can reduce these excess emissions from 5 in use light duty vehicles. Although we will present the 6 emissions in the South Coast air basin, the same trends 7 can be observed throughout the state.

8 Slide number 3.

9  o0o

10 STAFF AIR POLLUTION SPECIALIST GUERRERO: Since 11 the 1960s emissions from light duty vehicles on a per mile 12 basis have been dramatically reduced due to the adoption 13 of increasingly stringent emission standards. These 14 emission reductions have been possible due to the 15 development and use of catalysts, on board computers, and 16 cleaner gasoline. Because of these efforts, hydrocarbon 17 plus NOx, emissions from cars were reduced by over 18 90 percent from the 1990 under controlled level  90 19 percent by 1990 from uncontrolled levels.

20 Slide number 4.

21  o0o

22 STAFF AIR POLLUTION SPECIALIST GUERRERO: Despite 23 this accomplishment, continuing air quality problems 24 required emissions from light duty vehicles to be reduced 25 even further. Consequently, in 1990 the Air Resources PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 131 1 Board adopted the low emission vehicle program, or LEV I.

2 The Lev I program further reduces light duty vehicle 3 emissions by 75 percent between 1994 and 2003.

4 The second phase of these regulations left to 5 expand the scope of the LEV regulations beginning in 2004.

6 The LEV program combined with cleaner burning gasoline 7 will result in emissions from new light duty vehicles on a 8 per mile basis being reduced in 2010 to approximately 9 1 percent of their uncontrolled levels.

10 Slide number 5.

11  o0o

12 STAFF AIR POLLUTION SPECIALIST GUERRERO:

13 Reductions in cumulative emissions of light duty vehicles 14 have, in general, followed the downward trend of new 15 vehicle emissions. This has occurred despite the 16 ever increasing number of miles traveled by these vehicles 17 every day. For example, hydrocarbon emissions from 18 light duty vehicles were reduced from more than 1200 tons 19 per day in 1970 to approximately 350 tons per day in 2000.

20 By 2020 we anticipate that hydrocarbon emissions will have 21 dropped below 90 tons per day. Similarly, NOx emissions 22 from light duty vehicles will have dropped from 23 approximately 650 tons per day in 1970 to 380 tons per day 24 in 2000 and will be further reduced to below 75 tons per 25 day in 2020.

PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 132 1 Slide number 6.

2  o0o

3 STAFF AIR POLLUTION SPECIALIST GUERRERO: At this 4 point I would like to focus on the impact of excess 5 emissions from light duty vehicles. It's often heard that 6 a very small portion of the fleet is responsible for a 7 disproportionately high percentage of vehicle emissions.

8 As you can see in 2000, pre 1993 or non LEV 9 vehicles made up 53 percent of the vehicle fleet but 10 accounted for 87 percent of hydrocarbon emissions. By 11 2010 only 18 percent of light duty vehicles are 1993 and 12 older models, but they are responsible for 62 percent of 13 hydrocarbon emissions.

14 In contrast, LEV I and LEV II vehicles will 15 comprise 82 percent of the light duty vehicle fleet in 16 22010, yet only contribute 28 percent of the hydrocarbon 17 emissions. Clearly, older vehicles need attention in 18 addressing ways to reduce emissions, especially in the 19 near term.

20 Slide number 7.

21  o0o

22 STAFF AIR POLLUTION SPECIALIST GUERRERO: Older 23 vehicles emit a disproportionately high level emissions 24 for several reasons. First, these vehicles were certified 25 to less stringent emission standards. Second, they employ PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 133 1 emission control systems that are less durable than those 2 used on newer low emission vehicles. And third, they lack 3 on board diagnostic systems that can facilitate proper 4 maintenance of their emission control systems.

5 This display on your slide of the emissions from 6 the vehicle fleet in 2010 demonstrates the contribution of 7 each model year to the total light duty hydrocarbon 8 emissions.

9 I don't know you have color slides, but the 10 bottom bars are green. They represent hydrocarbon 11 emissions if passenger cars just meet the emission 12 standard to which they originally certified.

13 I see we have the slide coming up.

14  o0o

15 STAFF AIR POLLUTION SPECIALIST GUERRERO: The red 16 bars show the excess emissions due to vehicles that exceed 17 emission standards in use.

18 As you can see, excess emissions can more than 19 double the emission levels from a properly maintained 20 vehicle fleet. Excess NOx emission from non LEV vehicles 21 are similar in magnitude. These excess emission are the 22 target of the smog check program. As I will discuss 23 later, we are looking at other ways of reducing these 24 excess emissions. Also note that the excess emission 25 levels from LEV vehicles equipped with OBD II are PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 134 1 projected to be much lower.

2  o0o

3 STAFF AIR POLLUTION SPECIALIST GUERRERO: By 2020 4 when most of the cars on the road are OBD II equipped 5 low emission vehicles, excess emissions from the vehicle 6 fleet are projected to be minimal. By facilitating proper 7 vehicle maintenance, OBD II allows the very significant 8 emission reduction achieved by the low emission vehicle 9 program to be maintained throughout the full life of the 10 vehicle.

11 I will now turn to a discussion of some of the 12 measures specifically designed to reduce in use vehicle 13 emission.

14  o0o

15 STAFF AIR POLLUTION SPECIALIST GUERRERO: Three 16 of these measures include improvement to the smog check 17 program, voluntary vehicle scrapping, and an emission 18 control replacement program to examine the feasibility and 19 benefits of replacing critical emission control components 20 on pre LEV vehicles.

21  o0o

22 STAFF AIR POLLUTION SPECIALIST GUERRERO: The 23 smog check program has been designed to reduce excess 24 emissions through requiring proper maintenance and repair 25 of high emitting vehicles. As illustrated in the chart,

PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 135 1 the remission reductions currently being achieved are 2 large, approximately 90 tons per day in the South Coast.

3 Also illustrated is that even with the current 4 program in place, substantial excess emissions remain.

5 One way this is being addressed is by making improvement 6 to the smog check program.

7  o0o

8 STAFF AIR POLLUTION SPECIALIST GUERRERO: Three 9 significant improvements are being implemented to smog 10 check. The first requires heavier gasoline trucks between 11 8500 and 10,000 pounds GVW to undergo a dyamometer test 12 used for cars. This test allows measurement of NOx 13 emissions in addition to hydrocarbon NCO.

14 The second improvement increases the number of 15 vehicles tested at test only smog check stations. BAR 16 studies have shown that greater emission reductions are 17 achieved at test only stations, rather than at test and 18 repair station. Consequently, BAR lass recently increased 19 the volume of cars tested at test only stations from 20 20 percent to 37 percent of the fleet.

21 The third improvement to be implemented in 2004 22 incorporates a more effective test of the integrity of the 23 evaporative control system. The emission benefit of these 24 improvements to the current smog check required is 14 tons 25 per day hydrocarbon plus NOx in the South Coast air basin PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 136 1 in 2010.

2  o0o

3 STAFF AIR POLLUTION SPECIALIST GUERRERO: Another 4 program we have evaluated is voluntary vehicle scrapping.

5 This program aims to reduce the number of older vehicles 6 in the fleet. In doing so, the inherently high emissions 7 of those older cars is reduced when the vehicle is reduced 8 by a newer vehicle which meets more recent emission 9 standards.

10 Another benefit of scrapping older cars is these 11 vehicles often have the highest excess emissions as well.

12 There are several different programs that 13 encourage scrapping of older cars. In 2000 about 4,000 14 vehicles were retired through this program. BAR has also 15 offered to pay for scrapping vehicles which cannot pass 16 the smog check test, although funding for this program has 17 run out.

18 Private sector firms also pay for scrapping 19 vehicles in order to generate marketable emission credits.

20 To put the potential benefits of scrapping vehicles into 21 perspective if 75,000 vehicles were scrapped each year,

22 emissions would be reduced by 7 tons per day in 2010. The 23 cost for such a program would run between 70 and $ 100 24 million per year.

25  o0o

PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 137 1 STAFF AIR POLLUTION SPECIALIST GUERRERO: The 2 third program under consideration addresses reducing 3 excess in use emissions by replacing key emission control 4 components on older vehicles. Even when a vehicle passes 5 the smog check program cut points, its emissions may still 6 be well in excess of the emission standard to which it was 7 certified when it was new. Some evidence suggests that 8 replacing certain critical emission components, such as 9 the oxygen censor, will further reduce emissions.

10 ARB is currently conducting a test program to 11 evaluate the effectiveness and cost effectiveness of 12 replacing emission control components on older vehicles 13 that pass smog check cut points.

14 The components slated for replacements are the 15 oxygen censor and catalyst to reduce exhaust emissions and 16 the canister and associated hoses to reduce evaporative 17 emissions. Preliminary results from the test program 18 indicate that replacing catalytic converter and oxygen 19 censor is effective in reducing excess emissions.

20 However, the emission benefits from replacing the 21 evaporative canister and associated hoses are less clear 22 due to the limited number of vehicles tested to date and 23 high variability in test results. Further testing is 24 planned to better understand the potential of this 25 program.

PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 138 1  o0o

2 STAFF AIR POLLUTION SPECIALIST GUERRERO: This 3 chart illustrates the potential of the programs just 4 discussed to reduce excess emissions. The red part of 5 each bar is the excess emissions. The second and third 6 bars show that the smog check programs provide large 7 emission reductions and improvements under way will 8 provide additional reductions.

9 The component replacement program, should it turn 10 out to be viable, also has a potential to provide large 11 reductions. The AVR, the code name for vehicle scrapping,

12 shows a small benefit in this illustration, but it is 13 important to note that reductions can be bigger if more 14 money were available to fund scrapping.

15 Overall, the chart illustrates that it is 16 possible to eliminate most of the excess emissions.

17 With the implementation of all three in use 18 vehicle programs previously discussed, improvements to 19 California smog check program, a voluntary accelerated 20 vehicle retired program, and an emission control component 21 replacement program excess emission could be substantially 22 reduced.

23  o0o

24 STAFF AIR POLLUTION SPECIALIST GUERRERO: In 25 summary, the biggest reduction in emissions is coming from PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 139 1 the new vehicle emission standard as the fleet turns over 2 to lower emitting vehicles. We can look forward to a 3 75 percent reduction in fleet wide emission from 4 light duty vehicles over the next 20 years.

5 In the mean time, older vehicles emit a 6 disproportionate amount of pollution. Even by 2010 when 7 the fleet is made up of a majority of low emission 8 vehicles, a small number of older vehicles will emit over 9 half of light duty emissions. The smog check program and 10 vehicle scrappage which focus on older vehicles can be 11 effective in further reducing emissions.

12  o0o

13 STAFF AIR POLLUTION SPECIALIST GUERRERO: Excess 14 emissions are significant and will continue to be 15 significant until 2020 or beyond. While the latest 16 technology used to meet LEV II coupled with OBD II and 17 extended warranty will reduce or eliminate excess 18 emissions, the older vehicles will still have excess 19 emissions that need to be reduced through the smog check 20 program. We also hope we will find that replacement of 21 certain critical emission control components will further 22 restore the lower emitting capability of some of the older 23 vehicles. We will be able to share with you more on this 24 next year. That completes

25 CHAIRPERSON LLOYD: Thank you very much indeed.

PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 140 1 EXECUTIVE OFFICER WITHERSPOON: Just one final 2 comment from the staff to put that presentation in 3 perspective.

4 In the current draft plan for the South Coast Air 5 Quality Management District, we have a black box of 400 6 tons per day of ROG and NOx that we don't know how to 7 accomplish. And certainly coming up with the full 8 complement of controls for existing emissions from in use 9 vehicles will be necessary. Anything we can do to reduce 10 those emissions will help us fill that black box and 11 achieve attainment.

12 BOARD MEMBER D'ADAMO: Mr. Chairman.

13 CHAIRPERSON LLOYD: Yes, Ms. D'Adamo.

14 BOARD MEMBER D'ADAMO: Looking at slide 15, the 15 summary and older vehicle caused disproportionate amount 16 of emissions, 55 percent if we look at the older vehicles,

17 if all of the suggestions were implemented, the vehicle 18 scrapping program, for example, the potential benefits of 19 retiring  associated with retiring 75,000 vehicles per 20 year, et cetera, what would that number look like or could 21 you take

22 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: If you 23 look back at slide 14, you can see the excess emissions 24 can be eliminated. But you still have the inherent 25 emissions of the older vehicles depending on how much PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 141 1 scrapping you do.

2 So as we showed in that one illustration, it 3 costs a lot of money to scrap a lot of vehicles to get 7 4 tons per day. To some degree we're destined to waiting 5 for those vehicles to eliminate themselves from the fleet.

6 And there's  there's no other way of getting at that 7 other than a modernization of the fleet. Well maintained 8 25 year old vehicle puts out a lot more emissions than a 9 well maintained five year old vehicle. That's just seems 10 like time. We're a very large scrapping program. It's 11 only way is to address that.

12 BOARD MEMBER D'ADAMO: And could you elaborate on 13 the voluntary vehicle scrapping program, that the cost at 14 $ 3 million, that's public expenditures on the local 15 district programs.

16 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: That 17 was the example of the local district programs. A lot 18 more vehicles were scrapped through the smog check program 19 which had an option if you couldn't pass that you could 20 get scrappage money. It was as much as $ 1,000 a vehicle.

21 That money's run out. I think there may be as many as 22 20,000 vehicles scrapped there.

23 There's also scrapping going on for the purposes 24 of generating emission credits. That one doesn't bring 25 down the overall emissions very much because you scrap the PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 142 1 vehicle and use most of those emissions to allow other 2 industry to expand or something like that. So  or site.

3 And that's still ongoing in the private sector right now 4 generating marketable emission credits from scrapping 5 vehicles.

6 BOARD MEMBER D'ADAMO: And the smog vehicle 7 scrappage program as a result of not complying with smog,

8 what do those numbers look like?

9 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: I think 10 there was about 20,000 scrapped. I'm not sure over 11 exactly what time frame. Someone here would know that if 12 it's important to be more precise.

13 BOARD MEMBER D'ADAMO: No. Just general.

14 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: The 15 source of funding with the budget crisis has dried up so 16 they're not paying for scrap cars right now. But it could 17 restart. Right now all the money that is available is 18 going to pay for low income repairs assistance.

19 BOARD MEMBER D'ADAMO: And same thing with the 20 district scrappage program.

21 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: I think 22 district scrappage programs are still under way. But it 23 depends on  the money's coming out of things like the $ 4 24 surcharge on your registration fee that districts have 25 adopted. It's not in all districts. And I'm not PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 143 1 personally aware of which ones are doing it right at this 2 point in time.

3 BOARD MEMBER D'ADAMO: Sounds like there's not 4 much room. But I'd be interested in seeing if there's 5 anything that can be done, short of just money falling out 6 of the sky.

7 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: I think 8 one of the observations that may be useful when we start 9 looking at the clean air plans, the SIPS later this year,

10 is that Catherine mentioned we're short hundreds of tons 11 of each pollutant. And we went through and showed you 12 smog check of 90 tons in the South Coast. That sounds

13 that's really big.

14 But the other once we're looking at like 15 improving the smog check program, scrapping cars, they 16 were getting like tens of tons. So we're facing this very 17 difficult situation where there's no more hundred ton 18 things that we can do. And we're having to look at a lot 19 of ten ton type ones or less. And many of them  because 20 the goal is to get to 400 more tons of emission reduction.

21 So on one hand these look small. But on the other hand,

22 they're all the ammo we have in our arsenal at the moment,

23 and we're going to have to look in each one of them.

24 BOARD MEMBER D'ADAMO: And on a similar line, in 25 looking at the proposals that the district will be PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 144 1 presenting, do you see that the older vehicles are 2 concentrated in certain parts of the state, or are they 3 pretty well evenly distributed?

4 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: There 5 is a distribution. It's different in different areas.

6 But in general, if you look at regional areas 7 it's not a whole bunch different. If you look at the 8 valley versus L. A., for example, you wouldn't see huge 9 differences in the age distribution. If you go to parts 10 of L. A. versus other parts of L. A., you see fairly radical 11 differences in age distribution. That would be true of 12 other areas too.

13 BOARD MEMBER D'ADAMO: Thank you.

14 CHAIRPERSON LLOYD: Thank you.

15 Mr. McKinnon.

16 BOARD MEMBER McKINNON: If I follow, you know,

17 sort of the logic that's  we're doing very as well sort 18 of at reducing emissions sort of in recent times. And 19 getting older cars repaired is very important, and 20 hopefully them leaving the fleet is also important.

21 One of the things I often end up talking to 22 people about when they want to talk to me because I'm an 23 Air Board member because of sort of other aspects of my 24 life is sort of the hot rodder car collector concern that 25 there are people that have cars that they don't drive a PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 145 1 whole lot.

2 Have we ever sort of tried to figure out what is 3 sort of a fair amount of miles per year to talk about what 4 a collector car or hot rodder's car would be like? If you 5 start going after older cars, there is a constituency of 6 people that, I think, work hard on their cars. And I 7 think there's sort of an interest in figuring out a 8 solution for them. Have we ever considered sort of 9 variables in mileage?

10 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Yes.

11 The car collectors and car enthusiasts have been very 12 vocal in this whole issue of scrappage. They are very 13 concerned that someone might take their car away from them 14 in some manner or require them to do something that no 15 longer makes it a classic car or a collectible car.

16 The word I want to emphasize in that VAVR which 17 we were calling scrappage, the V is for voluntary. These 18 are only people that want to get rid of their car for 19 money that are in this kind of a program. No one has ever 20 suggested that there be a mandatory claiming of older 21 cars.

22 When the car collectors expressed concern about 23 things like smog check, it can be come from two angles.

24 One is they don't drive the car much so why do they have 25 to spend 50 bucks every two years. That's one angle. The PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 146 1 other angle is a fear that some aspect of smog check will 2 be too stringent such as the older car could never pass,

3 and then it has no option. Maybe scrappage is its only 4 option.

5 That, I don't think, is really a genuine concern 6 because the standards as we showed for smog check allow a 7 lot of excess emissions. And the car collectors are the 8 people that, you know, make the car run perfectly. And 9 it's going to have this inherently low emission as it 10 possibly can. It's still going to be much dirty than a 11 new car. It's not going to be a gross emitter. Those are 12 pristine cars.

13 We're not aware of any evidence that collector 14 type car, well maintained cars have any problem getting 15 past the smog check program. That shouldn't be a concern.

16 The scrappage is voluntary and shouldn't be a certain.

17 But there is a heightened concern by those members that 18 something will happen to their cars.

19 BOARD MEMBER McKINNON: They're required to be 20 tested at sort of the standard for their model year of 21 car?

22 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Yes.

23 The standard is typically at least a couple times what the 24 car could emit if all the components were in good working 25 order for a car of 100,000 miles. So if they can restore PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 147 1 it to be something like a normal car at 100,000, they're 2 going to pass with flying colors. And they do.

3 BOARD MEMBER McKINNON: Thanks.

4 CHAIRPERSON LLOYD: Thank you.

5 BOARD MEMBER CALHOUN: What is your current 6 thinking about replacing of these older parts? Are you 7 thinking in terms of only when they fail smog check or 8 voluntary replacement?

9 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Well,

10 until we've completed the study, we're not going to know 11 exactly which are the most effective and most cost 12 effective of the three parts to replace. And some of them 13 are simple to do like  and low cost like an oxygen 14 censor. And some of them are simple and higher cost, like 15 catalysts. Some of them are not so costly but hard to do 16 like evaporative canisters because on many cars they're 17 hidden somewhere in the car and very hard to get at.

18 So it will depend on which one sort of looms, if 19 any of them loom, as the most cost effective and practical 20 way of doing it. We are thinking very preliminary that it 21 could be done in smog check in some manner. As you know,

22 a mandatory repair if you do fail, for example, this would 23 be one of this things that has to be fixed because we know 24 from the study it would reduce emissions. There's other 25 options too to how this could happen.

PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 148 1 But it's hard to design until we know which the 2 components are. It's a $ 300 part like a catalyst or 3 something that's going to be very hard to do because 4 that's a repair  that's in excess of what people pay 5 now. They only pay $ 150, $ 125 on average repairs for smog 6 check.

7 CHAIRPERSON LLOYD: Thank you.

8 SUPERVISOR DeSAULNIER: I had a question for you 9 anyway.

10 CHAIRPERSON LLOYD: I guess we have one witness 11 signed up.

12 Do you want to speak on this one or the next one?

13 MR. PETERS: I would love to speak on this one,

14 sir. Chairman Lloyd, Committee, and staff, I'm Charlie 15 Peters, Clean Air Performance Professionals. And we 16 represent motorists.

17 I find it interesting  Matthew brought up the 18 issue of collector cars, et cetera because Hemming's Motor 19 News has honored us and had for most every month for about 20 the last seven or eight years put our letter reporting 21 on

22 BOARD MEMBER WILLIAM FRIEDMAN: Can you speak 23 up?

24 CHAIRPERSON LLOYD: We can't hear you very well 25 up here.

PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 149 1 MR. PETERS: Excuse me. I'll try to help that a 2 little bit.

3 I'm Charlie Peters, Clean Air Performance 4 Professionals. We represent motorists. And for about the 5 last seven or eight years we have had a letter most every 6 month in Hemming's Motor news, which is considered the 7 Bible of the old car hobby. And Matthew brought up the 8 issue of concerns of some of the hobbyists. So we have 9 been trying to contribute to that and trying to report on 10 that.

11 We're quite concerned that there are significant 12 opportunities to improve how the public's being treated,

13 to increase their options, to improve performance of cars,

14 and to significantly improve the environmental performance 15 of cars by some appropriate supportive credit and support 16 for the providers of service in the marketplace to enhance 17 and improve compliance and improve how the public's being 18 treated.

19 I've heard many times here today talking about 20 how, " Gee, we got this great program called PZEVs and 15 21 year, 150,000 mile emissions warranties, and that's just 22 going to make all the flowers bloom and make it a great 23 day and make it a better world." Just because those are 24 free, all the car manufacturers are just going to be there 25 and just do it right every time. And every one of those PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 150 1 cars is going to get fixed every time just right.

2 Let me say to you there are currently 3 downloadable free programs where you can go in and say 4 every monitor on the car is happy and just right when, in 5 fact, there's nothing on the car that's right. And that 6 warranty situations in the dealer depends upon having 7 options to the public where they can get their cars to get 8 a second opinion. And we have a market that's supported 9 by a regulatory process to improve performance.

10 So I believe that this  what I've been hearing 11 here today, the technology and huge amounts of money and 12 huge costs, enforcing technology is the solution to all 13 the problems in the world, that maybe we need to consider 14 the possibility of this particular subject that huge 15 opportunities to improve air quality in California by 16 appropriate support and credit for an industry that serves 17 the public to see it gets done right more often.

18 The I& M Review Committee, yesterday the subject 19 came up  customer goes to one place, gets a smog check.

20 Fails. Goes someplace else, and it passes. We take care 21 of that complaint. Well, who's going to get the 22 complaint? The guy that failed the car. Who gets 23 addressed by the regulatory agency? The guy that got the 24 complaint. Who's the guy that did the job right? The guy 25 that got the complaint. Who's the guy that said it was PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 151 1 okay? In this case it happened to be the new car dealer.

2 The car never got fixed.

3 So without a regulatory support, without some 4 credit, without starting to be concerned about the 5 breathers out here, the people that drive cars, and the 6 air, then all we're going to do in California is continue 7 to exacerbate the loss of credibility for our Governor,

8 the loss in opportunities to improve the air quality, and 9 we're not going to get where we should be able to 10 responsibly go.

11 We can cut fraud in half in the smog check 12 program in a year. We can cut the failure rate in half by 13 a year and reduce fleet emissions 2,000 tons a day. Oh,

14 gee, that would be expensive. We need to start by maybe 15 going out and finding out if we can improve performance 16 with one shop with a best guy in the state or the worst 17 guy in the state. Do a little pilot study to find out if 18 there is, in fact, a quantifiable real benefit to the 19 public that can take place by reduced fraud and improved 20 performance by the most important technology that has not 21 been discussed here at all today, that's the stuff between 22 people's ears. Empowering that to work and serve the 23 public. I would appreciate your consideration of a 24 possibility of accomplishing that.

25 We have an appointment to see a Senator who's PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 152 1 thrown his hat in the ring to be the pro tem of the Senate 2 on Tuesday. We have heard that the Air Resources Board 3 and the Department of Consumers Affairs have been invited 4 to that meeting. That's extremely exciting. We've 5 already met with the founder and author of " Smog Check for 6 California," Senator Presley. He was fantastic. And 7 we've met with the Secretary of State and Consumer 8 Services and the Chief of the Bureau of Automotive Repair.

9 Maybe it's time for us to consider the motoring public and 10 the air and create some support to do it better.

11 Thank you.

12 CHAIRPERSON LLOYD: Thank you. We have another 13 witness signed up, Chris Ervine. Recognize that  I know 14 you spoke in opposition. We don't have any resolution 15 before us on this item. This is an information item. The 16 next one is

17 MR. ERVINE: I understand that.

18 CHAIRPERSON LLOYD: Thank you.

19 MR. ERVINE: I'm Chris Ervine. I'm with the 20 Coalition of State Test and Repair Stations.

21 I'm a little disappointed. We're hearing an 22 awful lot of talk about reducing emissions, and we have a 23 huge untapped reservoir of emissions out there that are 24 available for reduction. And this is in the basic area in 25 the change of ownership areas. We're talking about a very PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 153 1 small percentage of vehicles here that are 19  or older 2 vehicles. When you get into a change of ownership area

3 I just live in a change of ownership area. I just retired 4 a 1993 Nissan Maxima with 225,000 miles on it. Has never 5 been in a smog check station. Now, my car was well taken 6 care of. Passed with no problem at all.

7 But problem that we have in these outlining areas 8 is these people ignore the check engine light. As long as 9 that car gets them from point A to point B, they don't 10 care if that light's on or not. The vehicles are not 11 maintained properly. They've never been checked in a smog 12 check station and probably upwards of 70 percent of those 13 vehicles are transit vehicles that go into the enhanced 14 areas and spew their pollution out there as computer 15 vehicles. So we have a large untapped resource of 16 emission reductions that nobody wants to talk about. And 17 I think this is something that needs to be looked into.

18 The other problem that we have is  it was 19 brought up we're shifting more and more vehicles to the 20 test only stations. You're asking the test and repair 21 industry in the Bay Area right now to invest $ 50,000 in a 22 piece of equipment that they're never going to get their 23 money out of because they're going to lose so much of 24 their business to the test only industry when it really 25 gets going.

PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 154 1 In San Joaquin Valley my shop and other shops

2 I have  at this point I have 60 members in the San 3 Joaquin Valley. We have experienced an 80 percent 4 reduction in smog tests. You're now talking to us about 5 in 2004 we're going to have to invest in emission testing 6 for evaporative emission control system. You're taking 7 cars away from us to where we can't pay for the equipment 8 we have presently, and you're asking us to spend more 9 money towards testing vehicles that we're never going to 10 see.

11 It does not make good business sense, and I urge 12 the people in the Bay Area not to come on line with this 13 program because of these problems with the test only 14 industry. They're never going to recover their 15 investment. And I think that everybody needs to look at 16 this. More and more test and repair stations are shifting 17 over to test only. And when this is all said and done,

18 who's going to reduce all your emissions when the test and 19 repair industry is out of business?

20 Thank you.

21 CHAIRPERSON LLOYD: Thank you.

22 Mr. McKinnon, comment.

23 BOARD MEMBER McKINNON: Yeah. The question for 24 staff, can you kind of quantify the sort of the older car 25 question versus those cars that are transiting between PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 155 1 enhance  not enhanced areas into enhanced areas. That 2 was your  do you have a way of quantifying that.

3 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: I don't 4 think we have information about exactly how many cars that 5 are in basic areas, which are the smaller cities rural 6 areas go to the smoggy areas or what fraction of the 7 vehicles in the smoggy areas are from these basic areas.

8 The one thing that has happened that's addressed 9 this is the number of ZIP codes or the subregions that now 10 have the enhanced programs, particularly in the valley 11 have been greatly expanded. I think they added 100,000 12 cars  over 700,000 cars were shifted from the basic 13 program to the enhanced program in the Valley. Like in 14 South Coast it's virtually all enhanced so. It wasn't 15 necessarily change. But that's one way it's been 16 addressed is to spread the enhanced program which is the 17 dyno testing, to more and more of the state that now 18 represents almost 90 percent of the cars that are in the 19 enhanced program. So it's to the extent this transfer of 20 vehicles from one basic area to the other one is 21 occurring, that's being reduced because there's less 22 opportunity for that. Certainly it still occurs.

23 EXECUTIVE OFFICER WITHERSPOON: Just as a follow 24 up. It's been the staff's preference for a long time that 25 we have a state wide enhanced program. But it was a PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 156 1 decision by the state Legislature to create a three tier 2 structure where in very rural parts of the state it's 3 change of ownership only. In smaller towns it's a basic 4 inspection program. And then in federal, urban,

5 non attainment areas in the urbanized portion it's 6 enhanced. And that's the structure we have to live with.

7 So most of the improvements we talked about in 8 this presentation are within the enhanced program. And we 9 just have to live with the fact that vehicles move across 10 boundaries. But as Mr. Cackette indicated, the number of 11 vehicles outside of enhanced areas represents roughly 10 12 percent of the whole fleet that might be subject to 13 inspections were we to have a state wide enhanced 14 inspection program.

15 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Just to 16 point out that while it's desirable, perhaps, to have a 17 uniform program throughout the state, the gentleman 18 mentioned it cost $ 50,000 to go to enhanced. And if 19 you're a test station or repair station and you're in a 20 community of a couple thousand people who only get a 21 couple thousand inspections and it's out in the boonies 22 somewhere, it's going to be hard for someone to make that 23 decision to provide the equipment. If they don't provide 24 the equipment there, you've got the person having to drive 25 50 miles or something to find a test station. That's not PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 157 1 a good public policy.

2 So there's something on the positive side for 3 having some basic areas with less stringent, less costly 4 requirement in some. But I think what we had before was a 5 lot of urbanized areas with basic program what we're going 6 towards was really just the small towns and the rural 7 areas that will not have the fully enhanced program.

8 BOARD MEMBER McKINNON: Can I follow up?

9 CHAIRPERSON LLOYD: Yes.

10 BOARD MEMBER McKINNON: Did that shift happen so 11 recently that it wouldn't be felt by folks or

12 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: A year 13 or so ago.

14 BOARD MEMBER McKINNON: A year or so ago. Okay.

15 Is there any  clearly, we had cars that were 16 old enough to be exempted and we have cleaner cars that 17 are going to pass tests for at least a few years. Other 18 than those two explanations, can you think of any reason 19 why 80 percent of the tests would be at test only 20 stations?

21 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: No. We 22 had the  if you talk about the total fleet  and very 23 roughly we've got 36 percent being directed to test only.

24 We've got a similar number that can go to test and repair,

25 and there's a similar number that are exempted, something PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 158 1 around 30 percent. Those are the cars for the first four 2 years. I don't know the exact numbers precisely, but it's 3 kind of partitioned into threes.

4 When we went from 20 percent test only to 36, it 5 certainly doesn't represent a potential loss of business 6 of 80 percent. We do know that many people do find 7 test only more convenient. There's a fraction of people 8 that choose to got to test only, even though they're not 9 directed. Maybe that's what's happening. I don't know.

10 But in any case, there is a business case for 11 those cars that are directed to test only are the ones 12 with the high probability of failing. And the test 13 only station won't fix them. They've got to go somewhere 14 to be repaired. That's where one of the business 15 opportunities remains.

16 So I don't think the comment that the test and 17 repair business will go out of business probably is not 18 correct. But clearly they've lost some test business when 19 the state directed more cars to test only.

20 BOARD MEMBER McKINNON: Mr. Chairman, I started 21 this. There was somebody testifying, and he walked away.

22 And I think he wants to be

23 CHAIRPERSON LLOYD: I saw both shoot up when 24 staff made a comment. So we owe it to them. So if one of 25 you could come up. And I assume from the reaction you PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 159 1 disagreed with staff's comment.

2 MR. ERVINE: Yes.

3 As to his remark with 36 percent of the smog 4 fleet is directed to test only, you have to understand 5 that four years of newer vehicles  we're talking about 6 enhanced areas with test only. We're not talking bout the 7 basic area or the change of ownership area. Enhanced 8 area, this is where they're spending the big money for the 9 dynos. In the enhanced areas, four years and newer 10 vehicles are exempt from the program. This is 40 percent 11 of the smog fleet is exempt from the program. 1974 and 12 earlier makes up 6 percent of the program. They are 13 exempt from the program.

14 What VAR has done is they have taken 36 percent 15 of brand new vehicles all the way to 1966 vehicles and 16 this is what their 36 percent is. And when you do the 17 fuzzy math, you come up with about 80 percent of the 18 vehicles are either exempt or going to test only. And 19 that leaves a very small percentage of the vehicle to go 20 to the test and repair industry.

21 The test and repair industry, we need to keep our 22 dynos busy. I need to do six tests a day to pay for my 23 dyno. I have $ 1,000 a month payment on it. I pay $ 4,000 24 a year for the maintenance contract on it. My most 25 expensive technician runs that dyno. I have one stall PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 160 1 dedicated solely to that smog test. I can't do anything 2 else in that bay because of the dyno being in the way.

3 And I need to keep that machine busy all day long in order 4 to make a profit on it. I have gone from 12 and 13 smogs 5 per day to less than two.

6 CHAIRPERSON LLOYD: Thank you.

7 BOARD MEMBER McKINNON: You certainly got me to 8 the 80 percent. Now I get how we're very close to that.

9 Thanks a lot.

10 CHAIRPERSON LLOYD: Is there a comment from staff 11 or is there

12 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: I just 13 have to say we'll sit down and go over the math with them.

14 But that's not our understanding of where the cars go.

15 That's not 80. You know, 20 percent of them don't go to 16 test and repair.

17 BOARD MEMBER McKINNON: I thought it was 36.

18 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Test 19 and repair, the kind of business he runs.

20 BOARD MEMBER McKINNON: Maybe I misunderstood.

21 How many are referred to test only? What percentage?

22 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: It's 36 23 percent of the vehicles subject to the program, which 24 includes the exempted newer vehicles, which when I 25 characterized it I said it was about a third. Maybe it's PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 161 1 a little bit more. I'm not sure what the exact number is.

2 He said it was 40 percent of.

3 But of the cars that actually get a renewal, I 4 think it's closer to 40 percent of them would end up in 5 the test and repair situation. Then you've got 17 percent 6 of the cars that go through change of ownerships. They 7 can go anywhere they want on top of that. So I think the 8 best estimate we have is about half the cars seeking a 9 smog check go to test and repair. Half of them go to test 10 only.

11 BOARD MEMBER McKINNON: If you start out of 40 12 percent of exempt  that's where I was following his 13 number. But anyway

14 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Those 15 are exempted by the Legislature. They're not in the 16 program until they're four years old. And the old ones 17 too are exempted by the Legislature. So with the 18 remaining  I think the dispute there is that we called 19 it 36 percent which is in  the denominator has those 20 exempted newer cars in it. And the gentleman's saying,

21 well, take those out and it's different. It's more like 22 half at that point.

23 MR. ERVINE: If you have 100 vehicles, 46 of them 24 are exempted, and 36 of them go to test only. That leaves 25 you 82 percent of the fleet is either exempted or going to PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 162 1 test only, which leaves roughly about 15 percent that are 2 going to the test and repair.

3 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: We'll 4 have to sit down and go over the math because that's not 5 the way the math looks for us.

6 CHAIRPERSON LLOYD: It would be helpful if you 7 could get together.

8 Charlie, I see your hand, but what I'd like to do 9 is move onto the next item because it's related. You 10 won't let me do that. Okay. Well, you may have a very 11 short time there.

12 MR. PETERS: I very much appreciate your 13 consideration of that, Dr. Lloyd.

14 I think some consideration of whether or not

15 just how it is testing a car on a dynamometer by itself 16 fixes cars. I don't think that's true. And as a matter 17 of fact, I think the real performance is test and repair 18 is more than twice as effective as test only as a system.

19 Based upon observations comparing test only 20 programs and test and repair programs for campers, for 21 emissions, and all factors, whether or not it passes in an 22 off cycle test later, the test and repair is more than 23 twice as effective as test only. If, in fact, you have to 24 have test only because you have fraud and cheating, which 25 certainly might be true, then an appropriate oversight PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 163 1 demanding improvement in performance can improve that by a 2 significant factor.

3 The Clean Air Act doesn't require any test only.

4 Doesn't require dynamometers. The California Legislation 5 statutes up until quite recently required no test only.

6 It required the ability to test in test only, but didn't 7 require any test only. So this division of the industry 8 and abuse of the public with multiple tests that are not 9 necessary needs to be looked at and evaluated because this 10 requirement for test only is not required by the federal 11 government or by the statutes of the Legislature until 12 quite recently. I think it needs some additional 13 consideration.

14 Thank you.

15 CHAIRPERSON LLOYD: Do you want to respond now?

16 Any other comments?

17 BOARD MEMBER D'ADAMO: I just have a quick 18 question. Whether or not there's any further discretion 19 on the part of the San Joaquin Valley to expand a program 20 even further.

21 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: It's my 22 understanding they work with BAR to identify all of the 23 areas that would fit the definition mainly because they 24 grew and got  there's a threshold of population minimum 25 for doing enhanced. And they found all those areas that PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 164 1 have grown since the last census included them. And then 2 they included a bunch of other areas that were adjacent.

3 So that you  instead of having these little pockets of 4 areas, they kind of made a smooth curve around it, around 5 the urban areas and included all those areas in the 6 enhanced, except some of those areas are not allowed by 7 state law to have the test only feature.

8 I think it's been expanded roughly as far as it 9 can go under the current structure.

10 BOARD MEMBER D'ADAMO: Okay.

11 CHAIRPERSON LLOYD: Thank you. Any other 12 comments? Since it's not a regulatory item, it's not 13 necessary to officially close the record.

14 So with that, we move on to the next item, the 15 time to change staff. The next item 03 3 3, report and 16 findings on the effect of exempting additional vehicles 17 from the smog check program, highly related to the last 18 discussion. And this is an item where we would also be 19 taking testimony.

20 During the last item we talked about the 21 contribution of in use vehicles to California's air 22 quality problem and the general role of smog check 23 inspections. Now we're going to turn to a specific aspect 24 of the smog check program itself, namely the exception for 25 new vehicles and whether that can be expanded without PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 165 1 causing us to move backward in our emission control 2 efforts.

3 AB 2637 provides that new motor vehicles shall be 4 exempted from smog check inspections for six years,

5 instead of the current four years, unless this Board finds 6 such an exemption would prevent California from complying 7 with the Federal Clean Air Act or meeting our state plan 8 commitments. So you can see there's a significant 9 obligation here.

10 So Ms. Witherspoon, please introduce the item and 11 begin staff's presentation.

12 EXECUTIVE OFFICER WITHERSPOON: Thank you,

13 Chairman Lloyd and members of the Board.

14 Last year AB 2637 by then Assemblyman Dennis 15 Cardoza was signed into law establishing the enhanced smog 16 check program in the San Francisco Bay Area. That program 17 is in the process of being implemented right now by the 18 Bureau of Automotive Repair with enhanced inspections due 19 to begin in July of this year.

20 As AB 2637 was being debated in the state 21 Legislature, the question came up could the state wide 22 smog check program be modified to reduce the burdens on 23 all motorists. Lots of alternatives were discussed during 24 that process, and the Legislature eventually settled on 25 the concept of expanding the new car exemption for PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 166 1 everyone but with one important caveat. They asked the 2 Air Resources Board to determine whether that change would 3 prohibit California from complying with federal law or 4 from meeting our state implementation plan commitments.

5 If the Board makes this determination, then 6 AB 2637 specifies that the increased exemption will not 7 occur.

8 I'm going to steal staff's thunder and tell you 9 the bottom line. Exempting five and six year old cars 10 would prohibit California from meeting its SIP commitments 11 and is, therefore, not recommended at this time for 12 enhanced smog check areas. However, that change could be 13 implemented in basic rather than enhanced smog check areas 14 without creating a SIP difficulty.

15 The Legislature is continuing to inquire whether 16 changes to the overall smog check program are warranted,

17 and we are continuing to evaluate any and all such 18 proposals. On July 1st, ARB and the Bureau of Automotive 19 Repair will be submitting a major joint report to the 20 Legislature on the status and effectiveness of the current 21 smog check program. In that report we will also be making 22 various recommendations for program improvements. So the 23 dialogue will continue beyond your deliberations here 24 today.

25 But at this juncture, we're here for just one PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 167 1 narrow purpose, to present our analysis on the effect of 2 exempting five and six year old cars from smog check 3 inspections. At the request of the Chairman, a 4 representative from the Bureau of Automotive Repair has 5 joined us today to answer any questions you may have.

6 David Amlin, the engineering chief for BAR, is present and 7 will be available to answer questions following staff's 8 presentation.

9 CHAIRMAN LLOYD: Has the Legislature been waiting 10 for this report?

11 EXECUTIVE OFFICER WITHERSPOON: This report? The 12 law requires that you make a determination. Otherwise,

13 the exemption would take effect January 1st of next year.

14 Staff's presentation will be made by Tony 15 Dickerson of the Mobile Source Operations Division.

16 FIELD INSPECTION/ TESTING SECTION ENGINEER 17 DICKERSON: Thank you, Catherine.

18 Good afternoon, Dr. Lloyd and members of the 19 Board.

20 This afternoon I'm presenting for your 21 consideration the results of an analysis on the emissions 22 impact of removing five and six year old vehicles from 23 the state smog check program. This analysis was performed 24 in response to recent Legislation with state wide smog 25 check implications.

PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 168 1 ( Thereupon an overhead presentation was 2 presented as follows.)

3 FIELD INSPECTION/ TESTING SECTION ENGINEER 4 DICKERSON: Assembly 2637 was signed in law in September 5 2002 providing for the establishment of enhanced smog 6 check program in the urbanized area of San Francisco Bay 7 Area  excuse me  San Francisco Bay Area basin. The 8 areas affected will be the counties of Alameda, Contra 9 Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara,

10 and portions of Solano and Sonoma Counties. These areas 11 are indicated in orange on the map. The enhanced smog 12 check program is to be implemented by January 2004.

13  o0o

14 FIELD INSPECTION/ TESTING SECTION ENGINEER 15 DICKERSON: Another portion of AB 2637 has state wide 16 impact on smog check, specifically the bill increased the 17 existing smog check exemption for new vehicles from four 18 to six years after purchase. The additional two year 19 exemption from the biannual smog check program was 20 included in the law with the intent to decrease program 21 cost and improve efficiency and was based on a preliminary 22 emissions analysis which indicated that the reduction in 23 smog check emissions benefits might not be significant.

24  o0o

25 FIELD INSPECTION/ TESTING SECTION ENGINEER PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 169 1 DICKERSON: The increased exemptions are to be effective 2 in all basic and enhanced smog check areas beginning 3 January 1, 2004, unless the ARB finds that exempting the 4 additional vehicles would prohibit the state from meeting 5 the requirements of the Federal Clean Air Act or the state 6 implementation plan.

7 A detailed analysis of the emissions impact of 8 extending the new vehicle emissions from four to six years 9 has been performed. The purpose of the staff report and 10 this presentation is to provide the Board with the results 11 of this analysis and staff's recommendation regarding the 12 finding called for in legislation.

13  o0o

14 FIELD INSPECTION/ TESTING SECTION ENGINEER 15 DICKERSON: Staff used the latest data available to assess 16 the emissions impact of additional vehicle exemptions. In 17 some cases multiple data sets were used to verify limited 18 California data, including those from other states. Also 19 staff decided to try to identify alternative exemptions 20 should the evaluation indicate significant adverse 21 emission impacts.

22  o0o

23 FIELD INSPECTION/ TESTING SECTION ENGINEER 24 DICKERSON: This slide summarizes the different sources of 25 data we analyzed. For example, the Bureau of Automotive PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 170 1 Repair has performed enhanced smog checks on randomly 2 selected vehicles at the roadside. Data on the frequency 3 of OBD II check engine lights that were illuminated has 4 been collected in California and during emission 5 inspections performed in Wisconsin and Arizona.

6 Testing in our El Monte laboratory allowed us to 7 convert the smog check data to on road emissions. Testing 8 before and after repairs done at U. C. Riverside allowed us 9 to determine per vehicle emission reductions that can be 10 lost due to exemptions. Computer models such as NVAC 11 allow us to calculate emissions in tons per day.

12  o0o

13 FIELD INSPECTION/ TESTING SECTION ENGINEER 14 DICKERSON: This chart illustrates one of the findings of 15 our evaluation. Shown is the smog check failure rate of 16 vehicles by age based on OBD II failures. It is clear 17 that by age four, the age that most vehicles will receive 18 their first smog check, the failure rate has begun to 19 increase. This is also the age when the emission warranty 20 for most parts expire. By age six the failure rate is 21 five times higher than it was at age three.

22  o0o

23 FIELD INSPECTION/ TESTING SECTION ENGINEER 24 DICKERSON: The results of the analysis indicated that 25 extending the new vehicle exemption for an additional one PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 171 1 to two more years is projected to significantly increase 2 vehicle emission in enhanced smog check area.

3 As shown in this chart, exempting both five and 4 six year old vehicles will increase emissions by about 5 four tons per day of ROG and NOx in 2005. Exempting only 6 five year old vehicles would increase 2005 calendar year 7 emissions by nearly two tons per day in enhanced areas.

8 The projected emission increases are lower in 2010 due 9 to lower baseline emissions levels. However, a five or 10 six year exemption is still estimated to increase 11 ozone forming emissions by one to two and a half tons per 12 day respectively.

13  o0o

14 FIELD INSPECTION/ TESTING SECTION ENGINEER 15 DICKERSON: In November 1994 California submitted to the 16 U. S. EPA a comprehensive SIP detailing how San Diego 17 County, San Joaquin Valley, Ventura County, the Sacramento 18 region, the southeast desert, and the South Coast areas 19 would attain the one hour federal ozone standard by a 20 statutory deadline.

21 Enhanced smog check was included in the SIP for 22 each area and contributed emission reductions needed for 23 attainment. In fact, in the South Coast, enhanced smog 24 check provided about one fourth of the emission reductions 25 needed. Smog check will also be very important in helping PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 172 1 the state attain the new more stringent federal eight hour 2 standard. In addition to being a key strategy for 3 attaining the one hour ozone standard, smog check is a 4 critical element in the South Coast, San Joaquin Valley PM 5 10 attainment plans.

6  o0o

7 FIELD INSPECTION/ TESTING SECTION ENGINEER 8 DICKERSON: In July 2000 ARB and BAR released a report 9 that concluded enhanced smog check was achieving emission 10 reductions, but the reductions fall short of meeting ARB 11 SIP commitment. In August 2000 ARB and BAR committed to 12 implement additional smog check improvement to remedy the 13 short fall. Most, but not all of these improvements, have 14 been fully implemented. This illustrates the difficulty 15 of achieving the full benefits of the enhanced smog check 16 program. Lost emission reductions through program 17 relaxations would make this an even more difficult task.

18  o0o

19 FIELD INSPECTION/ TESTING SECTION ENGINEER 20 DICKERSON: In bringing SIP implications more into focus,

21 I'll outline the implications of a five and six year 22 exemption separately for areas of California in fall under 23 the enhanced program and the basic program.

24 Enhanced smog check has been implemented under 25 SIP commitments that areas that currently do not meet air PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 173 1 quality standards. As mentioned previously, additional 2 emission reductions are needed in these areas from smog 3 check and other programs in order to insure that 4 California will meet its air quality objectives.

5 Therefore, staff believes the emission reductions 6 lost from the exception of five or six year old vehicle 7 would jeopardize SIP commitments. And basic smog check 8 areas which in general have a lesser air pollution 9 problem, the emission increase due to additional 10 exemptions are not large enough to jeopardize existing SIP 11 commitments. Therefore, the staff believes a fleet wide 12 exemption for new motor vehicles beyond current four years 13 would not prohibit the state for meeting California's 14 commitment with respected to the SIP in basic areas.

15  o0o

16 FIELD INSPECTION/ TESTING SECTION ENGINEER 17 DICKERSON: In order to put staff's recommendation to 18 perspective, this map of California identifies the three 19 smog check program types. Also included is a breakdown by 20 percentage of vehicles in the state smog check program.

21 The enhanced program areas are shown here in orange.

22 85 percent of the total state fleet is concentrated in 23 these areas.

24 The program basic program areas shown here in 25 dark blue comprise only 12 percent of the state's total PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 174 1 fleet. Lastly, the change of ownership areas are shown in 2 light blue with only 3 percent of the state's population.

3  o0o

4 FIELD INSPECTION/ TESTING SECTION ENGINEER 5 DICKERSON: In summary, staff has reviewed the 6 requirements AB 2637 and has investigated the emission 7 impact of increasing the smog check exemption to either 8 five or six years for new motor vehicles.

9 The analysis shows that a significant adverse 10 emissions impact would result in enhanced smog check areas 11 from such a change. Therefore, the staff proposes that 12 the Board approve its report and find that a fleet wide 13 exemption for new motor vehicles beyond the current four 14 years would prohibit the state from meeting California SIP 15 commitments in enhanced smog check areas. This means that 16 the exemptions would not occur in enhanced areas.

17 In basic smog check areas, the staff recommends 18 the Board find that five and six year exemptions would 19 not prohibit the state from meeting California SIP 20 commitments, clearing the way for exemptions to be 21 implemented.

22 The ARB staff in cooperation with BAR will 23 continue to study targeted new vehicle exemption options 24 for enhanced areas that offer promise to decrease smog 25 check testing costs while preserving the emission benefits PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 175 1 of the program.

2 On the next few slides I'll give you a preview of 3 the alternatives staff is investigating.

4  o0o

5 FIELD INSPECTION/ TESTING SECTION ENGINEER 6 DICKERSON: In evaluating other possible exemptions, staff 7 is seeking to improve the cost effectiveness of smog check 8 by exempting vehicles or vehicle classes that have a high 9 likelihood of passing a smog check inspection. This would 10 reduce consumer cost and inconvenience. It will also 11 minimize any lost emission reductions. We are currently 12 evaluating three different ways of exempting additional 13 vehicles.

14  o0o

15 FIELD INSPECTION/ TESTING SECTION ENGINEER 16 DICKERSON: The first is to exempt all PZEVs. Because 17 PZEVs have a 150,000 mile warranty, we expect most owners 18 will seek out repairs whenever the check engine light come 19 on.

20 The second approach involves using remote censors 21 at the roadside to identify vehicles which repeatedly 22 demonstrate very low emissions.

23 Finally, BAR is evaluating whether there are 24 groups of vehicles, such as a specific model, which rarely 25 fail smog check and, therefore, could be exempted.

PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 176 1 We will inform you if any of these approaches 2 proves itself a viable way to exempt more vehicles from 3 the smog check.

4 Thank you.

5 CHAIRPERSON LLOYD: Thank you very much.

6 Questions. Ms. D'Adamo.

7 BOARD MEMBER D'ADAMO: Yes. The slide that you 8 provided results  lost emission benefits and enhanced 9 smog check areas. Do you have a similar chart for the 10 basic areas? Or regardless of whether or not you have a 11 chart, do you have that information on the basic areas?

12 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: In the 13 chart here it showed the basic areas being 12 percent of 14 the cars in the state and 85, not 90 I said before, were 15 in the enhanced. Another 3 percent that were only subject 16 to change of ownership inspections. So I guess you could 17 use that ratio roughly to figure out what the tons would 18 be. I guess it would be 12/ 85th times these numbers.

19 BOARD MEMBER D'ADAMO: The concern that I have

20 and this relates to our earlier conversations. I suppose 21 in certain areas of the state that are almost entirely in 22 basic areas it's not going to make that big of a 23 difference. But in areas such as the Valley  and I 24 don't know about South Coast. I imagine there's probably 25 not much of anything in South Coast that's in basic. So PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 177 1 just for purposes of discussion here, looking at the 2 Valley, I imagine there's a fair portion of the rural 3 areas that would still be considered basic. And 4 especially if the Valley gets bumped up to extreme, I 5 would think, you know, anything that could come out of 6 that black box would make a difference in terms of meeting 7 the state's air quality standards.

8 So I'm just wondering if the staff considered not 9 allowing the exemption to occur in certain areas

10 certain non attainment areas extreme, severe.

11 EXECUTIVE OFFICER WITHERSPOON: We had the same 12 concern you did about whether  in the Valley in 13 particular if you look in the map and see how much basic 14 and enhanced coexist side by side whether we'd be eroding 15 progress. But the standard that the Cardoza Bill gave us 16 was very narrow. It said we had to find it was going to 17 directly violate a SIP commitment or interfere with 18 conformity. And by that standard we could not reach the 19 finding that it would necessarily undercut what we were 20 legally committed to do because we had established one SIP 21 finding for basic areas and a separate one for enhanced 22 originally.

23 So where we're deficient in enhanced areas  and 24 certainly some vehicles will traverse back and forth  we 25 couldn't pin that down sufficiently to say it had risen to PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 178 1 the level of the standard of the Cardoza Bill that we 2 could tell you to make this finding and stop the exemption 3 from going into effect. But we did weigh that.

4 BOARD MEMBER D'ADAMO: Even in the event the 5 Valley goes extreme? We're looking at Title 5, for 6 example, remote areas of the Valley where farmers are 7 going to be required to get their diesel irrigation pumps 8 either permitted or replaced and in remote areas of the 9 state. So just  I realize this bill had nothing to do 10 with Title 5, but just drawing a comparison I think that 11 especially in an area  maybe Ms. Walsh can answer this.

12 But is the language so restrictive that it wouldn't allow 13 for some additional consideration if the Valley were to go 14 extreme and have the black box situation?

15 SENIOR STAFF COUNSEL JENNE: I think the issue is 16 whether we can make a finding that would prohibit the 17 state from meeting its SIP commitments. And the bottom 18 line I think when staff looked at the numbers, it just 19 looked like the numbers were very, very small. And we 20 couldn't make that legal finding that they were big enough 21 to prohibit the state from meeting SIP. I think in the 22 Valley when you go to extreme that the number is still 23 very small, and it's probably not enough to reach that 24 legal standard.

25 BOARD MEMBER D'ADAMO: And the standard actually PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 179 1 requires  it's tied to SIP commitments?

2 SENIOR STAFF COUNSEL JENNE: It says " prohibit 3 the state from meeting their requirements of the state's 4 commitments with respect to the state implementation plan.

5 EXECUTIVE OFFICER WITHERSPOON: D. D., the other 6 factor  excuse me  Ms. D'Adamo is the existing legally 7 enforceable SIP. So it's the 1994 SIP in the San Joaquin 8 Valley's case, not the one that's under preparation now,

9 or would be required under extreme designation.

10 I suppose could you construct a conflict by 11 setting up the SIP to depend on those emission reductions.

12 And later we could revisit this and make a finding under a 13 new SIP. But under the one we have on the books, we 14 didn't think we could reach the result.

15 BOARD MEMBER D'ADAMO: Would the district have 16 the option as they reevaluate  as they evaluate the SIP 17 measures to include that as a measure that they would like 18 to have?

19 EXECUTIVE OFFICER WITHERSPOON: I think we can.

20 BOARD MEMBER D'ADAMO: Just looking for any way I 21 can to have there be another inequity argument that we can 22 bring back to the Board later.

23 SUPERVISOR DeSAULNIER: I'm prepared to ask 24 Senator Burton to write a bill so you don't have to have 25 enhanced areas at all in the valley. We keep giving and PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 180 1 giving.

2 CHAIRPERSON LLOYD: I thought we should use 3 staff's creativity and have a partially enhanced area, the 4 transition. I think it's a good point.

5 BOARD MEMBER D'ADAMO: Right. I guess I'm a bit 6 more sympathetic to the test only situation. But basic 7 doesn't require that anyways. So, Mr. Cackette, what you 8 had mentioned earlier about someone in a remote area 9 having to drive in to go to a test only station, that 10 wouldn't apply. These people are

11 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: To go 12 to an enhanced station which means one with a dyamometer.

13 It would be test and repair. But even in those areas, you 14 know, there may not be enough business to support a 15 $ 50,000 dyamometer purchase. Not test only, but enhanced 16 with the dyamometer.

17 BOARD MEMBER D'ADAMO: But in the rural areas 18 they're required already. This would be an exemption with 19 regard to the newer vehicles under a basic.

20 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Yes.

21 That's correct.

22 CHAIRPERSON LLOYD: The other area where it could 23 be helpful  and this context is getting back some of the 24 later comments from staff. If you're able to work the 25 district to identify makes and models which basically are PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 181 1 more reliable more vital for that period of time, get some 2 preferred options there.

3 Mr.  Supervisor DeSaulnier and Mr. McKinnon.

4 SUPERVISOR DeSAULNIER: Matt says he wants the 5 last word this time.

6 As I read this, I don't know whether to ask staff 7 from the author's office or our staff. It doesn't seem if 8 as if we have any legal discretion, or very little.

9 EXECUTIVE OFFICER WITHERSPOON: With respect to 10 enhanced areas, you mean? I think that's correct.

11 SUPERVISOR DeSAULNIER: Just in terms of 12 philosophically, what the last speaker on the last item 13 said  I've heard this from other people Dennis Dakota 14 amongst them. In an area like the Bay Area that 15 generally, as I understand it, for a metropolitan area has 16 a relatively new fleet, just the issue of we bring the 17 tested only stations on and the amount of demand is going 18 to decrease. So you've got these people putting out a 19 large capital investment considering the size of their 20 business and the demand may not be there, which would be a 21 good thing for air quality.

22 Could you respond to that? Or is that something 23 you can look at in terms of the ongoing look at how we can 24 improve smog check.

25 EXECUTIVE OFFICER WITHERSPOON: I would say there PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 182 1 is a tension between trying to minimize burdens on 2 motorists and also trying to preserve market share and 3 business opportunities for the stations that have been 4 invested in equipment and wish to provide these services.

5 That, you know, to the extent more vehicles are exempt now 6 by any means, whether because there PZEV, because they're 7 super clean models, because they've passed clean screen 8 remote censors, that will reduce business to  whether 9 it's test only or test and repair. And the competing 10 public policy goal is why send someone to a test that 11 doesn't have a dirty vehicle that needs to be repaired?

12 And so the cost effectiveness  even if keeping 13 these vehicles in is at the high side of 45,000 a ton,

14 something to that effect, so the I& M Committee when they 15 looked at it they supported our determination but said we 16 really need to keep working on this problem because we're 17 wasting dollars. Now, granted, those are dollars we're 18 not viewed as wasted by the industry that's invested in 19 dynos and trying to recoup its investment. But in terms 20 of dollars spent to reduces pollution, it's wasted in 21 another sense if there is no pollution there to be 22 addressed.

23 So finding that balance point and not 24 undercutting the companys that are our partners this in 25 this effort is very challenging task and it has been PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 183 1 challenging ever since smog check began.

2 SUPERVISOR DeSAULNIER: I'm fine with this item,

3 Mr. Chairman. But I do think as staff reviews it, it 4 seems this tension will most likely get worse. And with 5 the risk of agreeing with Charlie, then you get into the 6 issue as this business operation becomes more difficult to 7 be profitable, it seems that you might have further 8 problems with fraud, with people trying to create an 9 underground business.

10 So when we look at this, it'd just be nice if 11 staff would report on that and try to figure out as well 12 as you can without  just generally quantify if this is 13 an issue, if the issue's growing, if there's a way to stop 14 it or prohibit it.

15 Thank you.

16 CHAIRPERSON LLOYD: I think Mr. McKinnon had a 17 comment.

18 BOARD MEMBER McKINNON: Yeah. I'm very 19 comfortable with the resolution. I also  I think as 20 warranties get better and better and as the cars get more 21 and more reliable, I think that it should be a benefit to 22 the person that's purchasing a car that they've paid more 23 for emission controls that are warranted for longer and 24 long they should receive some of the benefit of that of 25 going less often. And I think eventually we have to as PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 184 1 the cleaner and cleaner cars with the longer warranties 2 come into effect, we have to get good at figuring out 3 which cars fit that category and how reliable it is. But 4 it should be a benefit of buying one of those cars is that 5 you go less often, I think.

6 Now, as long time advocate for defense workers,

7 when your market is developed by government, you are 8 subject to government changing and deciding that you have 9 less of a market. And you're also subject to things that 10 happen. And I think we were just talking about the 11 tensions. You know, we all know we need to deal with 12 older cars. We know that. And then there's sort of 13 another subject that enters in this area, and that is that 14 rule changes don't contemplate what it costs to do the 15 change. And sometimes it's the dyno in that example, and 16 sometimes it's rule changes that require training at a 17 frequency that is almost unfair to the people that do the 18 work.

19 And I don't  I'm not on BAR's Board. I 20 don't  but I often talk to mechanics who have difficulty 21 with frequent rule changes having to take courses, course 22 availability being a problem, and certification being a 23 problem in such a frequent time frame. And I think, you 24 know, there are places where we could be better and fairer 25 as government. I mean, it may not be this agency. It may PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 185 1 be BAR. But we could be a little more consider at of how 2 often we change to give people time to adjust to the 3 changes.

4 But I don't buy that when you create a regulated 5 market that you have a duty to protect that market if the 6 technology gets to the point where the cars are cleaner 7 for longer. I'm comfortable with this decision where 8 there's evidence that the cars get dirty at four years.

9 But if we get to the point where cars don't get dirty for 10 ten years, we need to look at that, and we need to be fair 11 to the people that purchase the cars that stay in good 12 shape for ten years.

13 CHAIRPERSON LLOYD: Thank you.

14 Professor Friedman.

15 BOARD MEMBER HUGH FRIEDMAN: Would you correct me 16 if I'm wrong. My understanding is that the Legislature,

17 not us, has imposed this smog check regime and made the 18 distinctions between test and  test only and test and 19 repair. I'm sure  or I assume we had  we or our 20 predecessors have some input on that. We can either 21 voluntarily testify or be asked and called upon for our 22 views.

23 But I'm not sure that it is our ultimate decision 24 or responsibility, and I don't believe it is, to decide 25 what gets exempt  other than being referred this PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 186 1 specific issue to extend the exception for two years.

2 Actually, we're just making a finding. But beyond that,

3 it's the Bureau of Automotive Repair. That's in a 4 different agency. And it's the Legislature. And I'm

5 while I certainly that  I really like, Matt, your 6 putting the context on this in terms of what the test and 7 repair people are facing potentially. I'm  other than 8 just being sympathetic, I'm not sure we're the right forum 9 for any kind of action or decision other than what we have 10 before us. And I'm comfortable with the recommendation.

11 GENERAL COUNSEL WALSH: I think that's an 12 accurate description of the situation that states law does 13 largely draw the design of the system we are looking at.

14 As Supervisor DeSaulnier indicated earlier, it's 15 accurate that this is not a discretionary decision in the 16 way that most of the decisions that come before you are.

17 This is making a factual finding, and that finding will 18 trigger a specific requirement that's already in state 19 law.

20 CHAIRPERSON LLOYD: Supervisor Patrick.

21 SUPERVISOR PATRICK: Thank you, Mr. Chairman.

22 Professor Friedman's comments, notwithstanding, I 23 think it's important that we go back to Board Member 24 D'Adamo's point. As someone who's from the Valley and 25 recognizes, as all of us in this room do, the Valley's PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 187 1 challenges, it concerns me that our basic areas will 2 get  they're already basic as opposed to enhanced. And 3 now they're going to get an additional two years. And our 4 charts show us that at year four the emissions start 5 rising. So I think your point is very well taken. And I 6 think that that's something that we have to be concerned 7 about.

8 Now, perhaps, it's not something that we have,

9 you know  under this piece of legislation that we have 10 the ability to do anything about. But I think that we 11 would be remiss if not at least acknowledging that in the 12 Valley we're going to need all the help that we can get.

13 And to give them a pass on advance versus basic, I think,

14 makes a lot of sense. Because they're in small 15 communities and, you know, perhaps it's an inconvenience.

16 Perhaps if we want to make sure that the folks that are 17 providing these tests in small communities, you know, that 18 they can stay in their community and do this.

19 So I'm completely comfortable with that. But 20 then to give them an additional two years I don't think 21 makes a whole lot of sense. I don't know how you go about 22 acknowledging that, but I do think it's something that in 23 the Valley that we have to be concerned about, perhaps 24 some other areas as well.

25 But I appreciate you bringing it up and you beat PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 188 1 me to the punch. Thank you.

2 CHAIRPERSON LLOYD: Thank you.

3 EXECUTIVE OFFICER WITHERSPOON: We've been having 4 a furious discussion between all four deputies

5 SUPERVISOR PATRICK: I noticed.

6 EXECUTIVE OFFICER WITHERSPOON:  on this 7 question and whether we erred, whether we can construct a 8 different theory, how we might to get to the result, which 9 seems too obvious that the basic portions of the San 10 Joaquin Valley, because they are in an attainment area 11 somehow be included.

12 So what I think I would like to recommend at this 13 point is that staff go back and take another look at the 14 Valley specifically and see if we want to make a different 15 finding about them.

16 We have time. This law does not take effect 17 until January 1st of 2004, though we'd certainly need to 18 decide relatively soon so BAR and the Department of Motor 19 Vehicles can take the appropriate steps to implement or 20 not implement this exemption. But there's enough dialog 21 going on between the four of us that we want to put our 22 best brains to it and see if we can't reach a finding that 23 the Valley should say stay in. And our preliminary 24 conclusion was they can't, but we'll take one more look at 25 it, if that would be amenable to Ms. D'Adamo and PETERS SHORTHAND REPORTING CORPORATION ( 916) 362 2345 189 1 Supervisor Patrick.

2 BOARD MEMBER D'ADAMO: I'm fine with that, or to 3 adopt what we have and bring that smaller piece back.