10 Is it necessary any longer? We don't think that exemption 11 should be going on for an eternity certainly.

12 We ask you to strongly consider some kind of 13 cutting back on that exemption. We, of course, would like 14 to eliminate it, but at least put a sunset on it and have a 15 study on it.

16 Fourth major point, we believe that you 17 should drop or at a minimum delay the proposal to allow the 18 Premiere ozone catalyst to qualify for smog reduction 19 credits, especially zero emission credits. We believe this 20 technology is premature. We've talked to Mr. Dunlap,

21 Chairman, about this. It needs additional testing and 22 should not be included in the proposal at this time. We 23 would ask to you remove that part of the proposal.

24 In summary, what we want you to do today is 25 say no to the automakers and others who are requesting 191 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 weakening the delay in the LEV II regulation. We want you 2 to say no to those who would push more diesels into 3 California in the light passenger fleet. We're urging you 4 not to accept the myths and exaggerations, the 5 misrepresentations and wrong assumptions that are being 6 cast out about the cost and the availability of cleaner 7 technologies. We're asking you to support the need for the 8 best emission standards that are technologically feasible 9 for sports utilities, and this means the ARB staff proposal 10 should be tightened even further than it is.

11 When you go to adopt a resolution today, we 12 hope that you will ask yourself, how can we get every ton 13 of emissions reductions possible out of this rulemaking to 14 achieve healthier air as quickly as possible? How can we 15 best promote true electrical technology? How can we reduce 16 diesel particulates and diesel NOx in this rulemaking?

17 If you do that, I believe the answers will 18 be to tighten up the regulation, to not trade zero emission 19 vehicles for diesels, to eliminate the transitional low 20 emission category  and I forgot to specifically stress 21 that, but we do believe that category was an introductory 22 category and there's no need for it really at this point.

23 That was an introductory category and now we need to meet 24 the low emission vehicle standards that are more stringent.

25 We believe it would eliminate the Premiere 192 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 catalyst from the program and that you ensure that only 2 true zero emission vehicles qualify for ZEV credits.

3 CHAIRMAN DUNLAP: Thank you, Bonnie. Are 4 there any questions?

5 MS. EDGERTON: Ms. Holmes Gen, in your 6 material here you indicate that in exchange for  maybe 7 it's not in exchange for  that with respect to the .2 8 SULEV partial ZEV credit, you oppose that. However, you 9 support providing additional flexibility between 2003 and 10 2005 to restore a ramp that was lost. You're looking at 11 me. Are you familiar with this?

12 MS. HOLMES GEN: Well, I'm not sure. Is 13 this the letter that we submitted?

14 MS. EDGERTON: Section B of the green one 15 that you signed, this green one.

16 MS. HOLMES GEN: Those are Roland's 17 comments. I'm sorry. I can have Roland answer that 18 question.

19 MS. EDGERTON: Oh, Roland can answer that 20 question.

21 MR. HWANG: I'm not sure I know exactly what 22 your question is.

23 MS. EDGERTON: Some flexibility in 2003 24 through 2005.

25 MR. HWANG: Right. Union of Concerned 193 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 Scientists does support allowing for partial ZEV credit for 2 hybrid electrical vehicles to have an electric range and 3 for methanol powered fuel cells, like that part of the 4 proposal. We also believe that flexibility helps 5 compliance with the program in the early years because in 6 2003 the manufacturers are responsible for 10 percent zero 7 emission vehicles. The original program as conceived 8 started at 2 percent in 1998 and ran up to 10 percent.

9 I think that if the manufacturers are saying 10 they can no longer meet at 10 percent, that's partly 11 because the Air Board is being very generous to the 12 manufacturers and rolling back the program from 1998 to 13 2003. And we admit there is some difficulty in trying to 14 ramp up production to the 10 percent level without having 15 some steps in between. That's why we support that 16 flexibility.

17 CHAIRMAN DUNLAP: That's the distinction.

18 MS. EDGERTON: So it seems there are two 19 things that come to mind. One would be that you're saying 20 more concrete it should be 8 percent in 2003 and 10 in 21 2005, or the other alternative is to keep it 10 percent but 22 let there be an aggregating possibility there, so that if 23 the company missed the 10 percent, in 2003 they can do

24 say they get a 5 percent in 2003 and they can have 15 25 percent in 2004, so that by the end of 2005 they would have 194 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 the equivalent of 10 percent for each of three years. Is 2 either one of those what that means?

3 MR. HWANG: Essentially. The merits between 4 those two different pathways, as you suggested that's two 5 different pathways. The merits between those two  and 6 it's very difficult to assess at this point which is the 7 better pathway. I do agree, though, there's some 8 tremendous technologies coming out, Toyota's Acreas for 9 example, and many manufacturers are working on other hybrid 10 vehicles.

11 In fact, I just read Automotive News 12 yesterday. General Motors plans to bring a hybrid electric 13 vehicle to the marketplace, so I think that's appropriate 14 to flex the program, bring in and capture the benefits of 15 some of these technologies to get us towards that true zero 16 emission vehicle technology.

17 CHAIRMAN DUNLAP: I think we've got that.

18 Can we go on. Can I do my auction now?

19 MS. WALSH: Chairman Dunlap, if I could just 20 suggest here that given notice for the meeting today, this 21 is an issue that is outside the scope of that notice, and 22 while this is a significant issue and probably one that may 23 bear discussion in the future, it really is not something 24 that we would be able to do today given the notice.

25 MS. EDGERTON: Could the  for example, if 195 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 the Board were to withdraw the .2 percent for the gasoline 2 vehicles, could the Board ask the staff then to look at the 3 possibility of some sort of averaging for the remaining ZEV 4 category between the years 2003, 2005, to wind us up in the 5 same place but give more flexibility there?

6 MS. WALSH: In the context of the regulation 7 as proposed

8 MR. KENNY: I think what I understood you to 9 say is if in fact the Board was to say no to the .2 for 10 SULEV vehicles, could the Board then give directions to 11 staff to put these people back on credit. We could do that 12 but not in the context of the current hearing today.

13 We would have to bring a different proposal 14 to the Board. The notice today was written in such a way 15 that the 10 percent requirement is not up for change today. 16 MS. EDGERTON: We could ask to you come back 17 and report that to the Board early next year?

18 MR. KENNY: Sure.

19 CHAIRMAN DUNLAP: Mike, I would like to give 20 Tom a chance to explain his body language during the 21 conversation, not the part where she said we're all excited 22 about the change in the administration.

23 ( Laughter)

24 CHAIRMAN DUNLAP: The part where we're 25 talking about can we get diesel fuel cleaner and are we 196 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 automatically

2 MR. CACKETTE:  Diesel vehicles cleaner.

3 CHAIRMAN DUNLAP: Right. Become dirtier by 4 this action.

5 MR. CACKETTE: Why I flinched at first was 6 the comment that what we seem to be implicit, if we're not 7 going to ban diesels from this program, then at least we 8 ought to make them have catalysts. And in fact the diesels 9 that are being sold under the existing LEV I rules which do 10 allow diesels  and there are only two models right now,

11 Mercedes and Volkswagen  those do both come with 12 oxidation catalysts on them.

13 The standards that we're talking about for 14 diesels in LEV II terminate the existing standards that 15 lets diesels come in and replace it with one that's about 16 40 percent tighter. And under that scenario we believe 17 that you'll not only end up with an oxidation catalyst,

18 that you'll end up with a reduction catalyst that takes NOx 19 and gets rid of it, as well as oxidation catalysts which 20 help get rid of some of the particulate.

21 And it's what Mr. Kenny said, that's what 22 we're looking for as a technology foreseen because the car 23 manufacturers have a strong incentive to improve fuel 24 economy and they want to do it through some diesels.

25 They have a strong economic driver to sell 197 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 more diesels. They're in kind of a stagnant market. If 2 they can make heavy duty trucks and if they can introduce a 3 few into this market, it's significant to them.

4 That puts two economic drivers behind 5 getting this technology into place, and the return on the 6 benefit is what we're willing to gamble on because we're 7 talking about just a few percent of light duty vehicles 8 that under this constrained end law average could actually 9 beat diesels, these TLEV diesels.

10 But if we get that technology, the return on 11 investment in terms of emission reductions is somewhere 12 between 10 and 15 to 1 by putting that technology on 13 18 wheel trucks. That's where the big NOx sources are that 14 are left, so we were kind of  admittedly we were gambling 15 that the technology will be developed, but if it's not,

16 with the stringency of the standard, we propose there won't 17 be diesels in the light duty sector.

18 Either the technology happens or Janet's,

19 the environmentalist viewpoint is realized, we don't have 20 any diesels, one of the two. We think it's a risk we're 21 taking. It may be a slight step backwards now, but it 22 could be a fairly giant leap forward for controlling diesel 23 truck emissions.

24 MS. EDGERTON: Wouldn't that also, once you 25 got there, put a lot of pressure to keep that category open 198 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 and expand?

2 CHAIRMAN DUNLAP: That depends on the will 3 of the Board to let the inventories tell us what kind of 4 progress we're making. I can tell you  I think 5 everybody's been put on notice, the Board certainly, the 6 staff, the engine manufacturers, environmentalists, that 7 particulate emissions in particular are priority number one 8 for all of us to control better. So anything that would be 9 done to make that more difficult, that role to be more 10 difficult, would certainly be something that's going to be 11 problematic from a long term policy standpoint, so I don't 12 think

13 MR. CACKETTE: Mr. Chairman, there's 14 safeguards, though, because the way we've designed this 15 program  and somebody said it's complicated and I have to 16 admit that is very true. It's constrained on hydrocarbon 17 emissions to a fleet average for the manufacturer. At some 18 point the only way they can sell more diesels is because 19 they are given higher hydrocarbon emissions credit.

20 They're assigned a standard that's a high value.

21 The only way you can sell more diesels is to 22 ratchet them down and make them the next cleaner standard.

23 So if they want more, they have to make them cleaner than 24 the standards we are talking about. So it is somewhat 25 self constraining, and I don't think there's a possibility 199 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 that under this rule the door can go open for more than the 2 sliver that it's open now. We can't open it wide up.

3 CHAIRMAN DUNLAP: Okay. We're going to move 4 along. Thank you. Nice job.

5 All right. Here's the auction part of the 6 program today. I've got 25 witnesses left, not even 7 halfway through. I've been generous with the time. The 8 witnesses who are remaining have also been patient. Is 9 there anyone here  I want to see hands  who can get up 10 and give us their remarks in three minutes or less?

11 ( Laughter)

12 CHAIRMAN DUNLAP: Keep the hands up. Where 13 are they?

14 Pat, you come on up first. The rest of you 15 line up in the front row and we'll talk to you one at a 16 time. I'm sure you've all signed up with the clerk. Greg,

17 you had your hand up. Come on, let's go. Jerry Secundy,

18 did your hand go up?

19 MR. SECUNDY: Bob and I just worked it out.

20 He's going to speak for us.

21 CHAIRMAN DUNLAP: So you're off the list?

22 MR. SECUNDY: I'm off the list.

23 CHAIRMAN DUNLAP: All right. Jerry, you're 24 a fine man.

25 Front row, three minutes. Anybody longer is 200 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 in the back. Pat, good to see you. Welcome.

2 MR. PUDELL: Chairman Dunlap and members of 3 the Board, my name is Patrick Pudell. I am representing 4 the American Lung Association of California and its medical 5 arm, the California Thoracic Society.

6 We strongly support the LEV II proposal as a 7 reasoned, deliberate approach of California to achieve 8 federal one hour ozone standard as contained in the ZEV.

9 Health risks of both short and long term exposure to the 10 ozone have been demonstrated in chamber and longitudinal 11 studies, additional health risks related to PM10 and PM2.5 12 in which the smallest particles have been documented by 13 studies showing premature death, increased hospital visits 14 and other serious health problems.

15 We echo and endorse the concerns regarding diesel 16 fuel as articulated by my colleagues in the environmental 17 community. We also oppose allowing gasoline SULEVs to 18 qualify for partial ZEV credit because such an allowance 19 would undermine the goal of the ZEV program to 20 commercialize vehicles with zero tailpipe emissions.

21 We urge your support of the regulation with 22 the exceptions as noted. Thank you.

23 CHAIRMAN DUNLAP: Thank you for taking the 24 time to join us. Okay. Who's next. Yes, sir.

25 MR. LOWE: My name is Aaron Lowe and I'm 201 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 Vice President for Regulatory Government Affairs of the 2 Automotive Parts and Accessories Association. In addition 3 to the APAA, I'm testifying on behalf of a broad range of 4 aftermarket groups that are listed in the testimony so I 5 won't repeat them.

6 These groups represent the independent 7 aftermarket comprised of manufacturers and manufacturer 8 representatives, rebuilders, distributors and retailers of 9 parts and services. Our industry is comprised of 10 competitive options of otherwise obtaining repairs and 11 parts strictly from franchise dealerships, and that keeps 12 vehicle maintenance prices the lowest in the world.

13 We oppose the warranty provisions of the 14 proposal, the staff proposal as it was written, a 15 year,

15 150,000 mile emissions warranty and credits on an 8 year,

16 100,000 mile warranty.

17 We don't oppose the durability part and 18 consider it otherwise. I want to make that clear.

19 Inclusion of the extended warranty requirement would do 20 nothing to increase vehicle durability and would actually 21 result as not a consumer benefit, and we think it will hurt 22 many of the small automotive repair businesses in this 23 state.

24 Our major contention is that warranties do 25 not serve to improve vehicle durability. The car always 202 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 has recall and durability testing to bring that about, and 2 we see there's also competition in the industry right now.

3 Durability has been increasing due to competition and 4 consumer expectation since the 80s, and we see that trend 5 continuing with or without this proposal.

6 If anything, warranties are a sales tool and 7 should remain that way, and CARB should not be involved in 8 that. We also do not believe that warranties will somehow 9 repel consumers to go into repair shops to get their cars 10 repaired because it will be free. We don't think consumers 11 react just because they get their repairs for free.

12 Convenience is also a major reason why they do not get 13 their cars repaired.

14 This provision will actually work against 15 that by making it more inconvenient, by forcing car owners 16 into dealerships which they have shown in surveys to not 17 prefer. We don't understand why CARB would want to send 18 the consumer back to places they prefer not to go.

19 Another factor why we don't think warranties 20 improve durability is most car owners don't know they have 21 a warranty by the time they get the car. CARB's own survey 22 in the late 80s found that 22 percent of the voters don't 23 think they have an emission warranty and 60 percent do not 24 know of the coverage. Therefore there's very little 25 incentive for maintenance in this proposal. 203 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 In truth, the maintenance, the warranties 2 also provide a false sense of security to the motorist, if 3 he knows about it, that that car is going to last for the 4 warranty period and therefore he has to do nothing to that 5 car but drive it around. We don't think that is in the 6 best interest of clean air.

7 CHAIRMAN DUNLAP: Mr. Lowe, in conclusion 8 you're going to provide me and my colleagues with some 9 language that you would have us use to change these rules,

10 for us to look at. Will you do that for me?

11 MR. LOWE: Yes. We've already done that.

12 CHAIRMAN DUNLAP: Send it up here anew and 13 let me take a look at it. Does that do it for you?

14 MR. LOWE: Well, we just want to make the 15 case that the warranty, there is no data since the 20 years 16 you've had emissions warranties. There's been no data to 17 support that it actually is a benefit at this time to 18 durability, that has shown to prove to be a benefit to 19 consumers, and yet the Board has gone ahead every year and 20 tried to  in this case tried to increase the warranties.

21 Just looking at the other proposals that they've pushed,

22 there should be some data.

23 CHAIRMAN DUNLAP: Let me see the language,

24 would you?

25 MRS. RAKOW: Mr. Chairman. 204 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 CHAIRMAN DUNLAP: Yes.

2 MRS. RAKOW: Regarding the language, I think 3 the service station repair people will also be testifying 4 regarding their concern about the 150,000 mile warranty 5 unless Mr. Lowe was testifying for them, and I had talked 6 to staff about this and I know there have been meetings 7 with staff, and I think later on they will see proposed 8 language.

9 CHAIRMAN DUNLAP: All right. That's fine,

10 Mrs. Rakow. I want to make sure the language lines up and 11 we know what the problem is.

12 MR. RILEY: Mr. Chairman, my name is Tom 13 Riley representing the Automotive Service Councils of 14 California. We are 2700 small " mom and pop" garages 15 distributed throughout the state that are currently 16 involved in the smog check program.

17 We believe in what you're trying to do. We 18 think the staff has a very difficult task before them as 19 evidenced by the wide range of testimony today. One point 20 I wanted to make that has not yet been made is that our 21 preference  we believe that the warranty provision of 22 this regulatory proposal will be devistating for our small 23 businesses.

24 We would prefer that the decision only on 25 the warranty provision be delayed for a period of time to 205 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 allow staff to sit down with us and work through this. If 2 that does not happen, we would like having this regulatory 3 proposal going out to have an 18 month period to work with 4 staff, and I believe that Mr. Cackette has that language 5 before him now.

6 I used the word " devastating". I recognize 7 that's a harsh word, and we have one of our members here 8 who is in the Rankin file of people out there in the 9 current smog check program. Her name is Lynn Cardwell.

10 MS. CARDWELL: Thank you for hearing my 11 testimony. I'll be very brief. I think I can do this in 12 three and a half minutes.

13 My name is Lynn Cardwell and I own an auto 14 repair shop in Sacramento, California. We are a smog check 15 facility. I have a lot of qualifications and I think I'll 16 shortcut through all that and tell you we know what we're 17 doing. We've worked in every smog program since the 18 inception of smog programs, so all of our technicians are 19 qualified. We have many specialists in various areas. We 20  I'm going to just bypass all of that.

21 I'm also an environmentalist, I suppose,

22 part time. I'm very proud of the American Lung Association 23 that gave me the Clean Air Award last year. I believe in 24 what the Board is doing in cleaning up the air and I 25 support that. 206 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 My concern is  and I will give one 2 specific reason for my concern. This regulation seems to 3 direct, by the 150,000 mile warranty, customers as captive 4 customers to the dealerships for their service, and the 5 reason is  and I don't have a copy. Thankfully  I 6 don't have a transparency, but the third page of the letter 7 that you have before you, I believe just the flow of data 8 between the various computer systems on a car, and you have 9 an ECM and BCM and IPC and SIR. And I can tell you all 10 those things and what they mean, but I don't care so much 11 as they are totally interdependent and the relationship is 12 inseparable.

13 You cannot send a customer to have their 14 emission system worked on. If you touch the car, you have 15 touched the emission system, so we would like to ask the 16 Board to address this in future months and talk with 17 industry and determine the impact on small businesses like 18 ourselves. Thank you.

19 CHAIRMAN DUNLAP: Appreciate that. We 20 certainly see you as a partner and we know that you take 21 your share of spears and arrows relative to smog check and 22 other programs. We know you're an important partner, so 23 that's not lost. It is not our position  and I've talked 24 to staff about it several times  to hurt you in any way.

25 MS. CARDWELL: But one of the things about 207 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 warranties you would expect us to do is look after the 2 consumer when we can, and we think in some cases these 3 manufacturers may be for significant periods of time taking 4 care of this problem.

5 CHAIRMAN DUNLAP: The motive is not to harm 6 you. I can assure you.

7 MS. CARDWELL: And I do believe that. I 8 think it would be

9 CHAIRMAN DUNLAP: I must say

10 MS. CARDWELL:  an entirely unintentional 11 consequence of the

12 CHAIRMAN DUNLAP: And I'm convinced the 13 manufacturers want to make a durable product that works 14 well. We all want the same thing. It's how to coexist so 15 we don't step on each other.

16 MS. CARDWELL: There is a network of repair 17 shops that have had advanced training. We call ourselves 18 Gold Shield. We would like to participate as service 19 providers.

20 CHAIRMAN DUNLAP: Great. Thank you and 21 congratulations on that award. All right.

22 Yes, sir. You are

23 MR. GALLO: My name is Johan Gallo.

24 Mr. Chairman, members of the Board, I'm the President of 25 the Auto Repair Coalition. We represent over 10,000 repair 208 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 dealers in California that constitutes over 100,000 jobs 2 and about $ 5 billion in sales.

3 The main concern we have is the extended 4 warranty issue, as by a lot of people that went before me.

5 Our concern is we would like the opportunity to work with 6 staff in order to refine this and give us an opportunity to 7 stay in the repair business. There's no way the 1200 8 automotive dealers in California can begin to fix the 26 9 million vehicles in our fleet. That's the reality of it.

10 For to us help you keep the air clean by being in the smog 11 check program, by becoming Gold Shield shops and doing 12 things we need to do to clean up the air, we need an 13 opportunity to refine the extended warranty portion and be 14 given an opportunity to work with staff to do so.

15 As we look at the numbers and get to the 16 bottom line, as we surveyed some of our members, the 17 proposed warranty changes, in our business, currently 22 18 percent of our fleet that we work on fall within that 19 7 year plus, 70,000 mile plus warranty issue. What that 20 means for us in sales is in excess of $ 5 million which 21 impacts jobs, tax revenue, and the ability to stay in 22 business.

23 We want the opportunity to work with staff,

24 and for the sake of brevity we would like that opportunity 25 and hope the Board hears us. 209 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 CHAIRMAN DUNLAP: Okay.

2 MR. GALLO: Thank you.

3 CHAIRMAN DUNLAP: All right. Very good.

4 Thank you.

5 MR. WALKER: Good afternoon. I'm Chris 6 Walker from the California Service Station and Automotive 7 Repair Association. Thank you for the opportunity to speak 8 briefly.

9 I would like to begin by thanking Chairman 10 Dunlap, Executive Officer Mike Kenny, Deputy Executive 11 Officer Mr. Cackette, and Jim Schoning for the generous 12 time in the last few weeks working with us.

13 We cumulatively  a quarter of a billion 14 dollars in the last 12 months to engage in the smog check 15 program as well as train their employees, become the elite 16 emissions task force if you will to reduce emissions in the 17 state of California. We would like to continue the war on 18 smog and do not want to see our business one day, 8 years, 19 10 years from now go on the way to dealerships, so we 20 appreciate the opportunity to work with you.

21 Again, the biggest point we disagreed with 22 staff is that we believe there has been an inadequate 23 economic analysis of the impact on industry and consumers.

24 I'm sorry to see that Supervisor Roberts is gone because I 25 was going to say our contention of warranties is not going 210 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 to cost $ 7,000 a car, but we do believe it's over $ 150 a 2 car. But in any event, we're working to come to a 3 conclusion on some language.

4 CHAIRMAN DUNLAP: Thank you. Mr. Valencia.

5 MR. VALENCIA: I am John Valencia. I 6 represent the California Automotive Task Force.

7 All of the good people before me are part of 8 the 16 organizations with 16,000 members and over 100,000 9 employees in California. They've asked me to ask you to 10 either defer or actually delete the warranty, extended 11 warranty emissions provision from this proposal, and it's 12 the only component of this proposal we care about for two 13 specific reasons.

14 One, it is illegally ineligible, and two,

15 there hasn't been adequate cost analysis assessment of the 16 impact on small business if you do adopt that component of 17 this overall proposal. The rest of the proposal we 18 allotted and we support.

19 As you know, we perform better than 70 20 percent of the automotive repairs in the aftermarket in 21 California, so we have a very big stake in clean air.

22 Here's what you create in the warranty. You 23 create a legal entitlement for manufacturers. That 24 entitlement is to sell vehicles in California which don't 25 meet the standards that they've spent all day telling you 211 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 are technologically infeasible, those vehicles won't meet 2 those standards. But if they agree to offer an extended 3 warranty for their vehicle, their vehicle line, they earn 4 artificial credits towards meeting those emission standards 5 they told you they can't meet anyway. And that's how this 6 component helps them get around limits that they say they 7 can't meet anyway.

8 You can't do that because the legislature 9 hasn't said you can do that. That's a transaction that 10 you, this Board, don't have the authority to do.

11 Here's what California law does require you 12 to do. It requires you to cite the specific statute of law 13 authorizing the adoption of a regulation. It also requires 14 to you refer to the specific authority under which you're 15 promulgating this regulation.

16 Here's what the staff report rests on. It 17 rests on Health and Safety Code, three sections, 43101,

18 43101.5 and 43205, all of which the legislature enacted 19 with limits and none of which authorize this particular 20 transaction or this particular component of the regulation 21 that you're reviewing.

22 In addition, the Administrative Procedure 23 Act requires any regulation  and you've heard me appear 24 before this Board previously  it requires a much better 25 assessment, much more detailed assessment of cost impact on 212 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 small business.

2 Now, here's what the staff report says at 3 page II 62. This about sums it up. There's not much more 4 to it than this brief quote. " Staff is not convinced,

5 however, there would be a net shift in business to 6 dealerships due to an extended warranty. Extended 7 warranties should result in emission related components 8 much less likely to fail in the early years of a vehicle's 9 life, thus dealers compared with new merchants today 10 potentially providing an increase in independent repair 11 facility business for vehicle maintenance because of their 12 perceived advantages over dealerships."

13 That about sums it up. What the law 14 requires you to do, however, is much more specific. The 15 ARB has to put together facts, evidence, documents,

16 testimony that says that there won't be an impact. This 17 report tries to have it both ways. The report suggests on 18 the one hand there won't be an impact to the aftermarket,

19 but it also conceives there will be an aftermarket 20 automotive impact. You can't have it both ways in this 21 report because if you say there won't be an impact, you 22 have put in writing before you for adoption the facts and 23 evidence that suggest why there won't be an impact on the 24 aftermarket. If, however, as the report also does, if you 25 concede there's an impact on the automotive aftermarket, 213 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 then state law requires you  and this is the California 2 Administrative Procedure Act  requires you to identify 3 alternatives to that impact.

4 Well, here's what the Board staff says at 5 that same page. " Perhaps helping to offset the effects on 6 the repair industry, durability from extended emission 7 warranty could be an increase in repairs due to 8 proliferating comfort and convenience options on new 9 vehicles."

10 Staff sees our future in repairing vanity 11 mirrors and lights and leather seat butt warmers. That's 12 essentially what they're talking about.

13 MS. RIORDAN: I have a task which the 14 Chairman has given me to move this along.

15 MR. VALENCIA: I have concluded. In fact,

16 those are the two key elements. I've managed to submit 17 them to into the record, that we expect the Office of 18 Administrative Law to look at and ultimately reject this 19 component, but we would ask you to anticipate that's what 20 OAL would do and if not, delete it. Thank you.

21 MS. RIORDAN: The next person that has the 22 ability to stay within three minutes, come on up and would 23 you please state your name for the record?

24 MR. WARDEN: Bob Warden representing Western 25 States Petroleum Association, companies that produce most 214 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 of the transportation fuel used in California.

2 Fuel standards have come up several times 3 today, although the CARB staff has not proposed fuel 4 modifications as part of the LEV II program. In fact 5 Ms. Guerrero said this morning that the staff had 6 demonstrated that LEV II emission standards could be met 7 even for large sport utility vehicles using cleaner burning 8 gasoline, CBG 2.

9 Western States Petroleum Association agrees 10 the fuel standards should not be part of the LEV II 11 program. One manufacturer this morning requested 12 consideration of new fuel standards as part of the program.

13 If one is going to consider new or bona fide fuel standards 14 as part of the LEV II program, then one needs to examine 15 the need and cost and cost effectiveness of the entire 16 program, the fuel vehicle system including fuel side costs.

17 Granting staff's conclusion that fuel 18 modifications are not required to meet LEV II emission 19 standards, any proposals to change fuel standards should be 20 studied independently, not as part of LEV II. The CARB 21 staff has started the study process for such fuel 22 specifications, standard changes in the deliberate process 23 for both gasoline and diesel fuel. Thank you.

24 MS. RIORDAN: Thank you. Just a moment for 25 this witness. Are there any questions for this gentleman? 215 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 Seeing none, I thank you.

2 The next gentleman can step forward and then 3 I'm going to move to Ellen Garvey.

4 MR. VILLEGAS: Members of the Air Resources 5 Board, I'm Mike Villegas of Air Pollution Control District.

6 I'm representing our Air Pollution Control Officer Richard 7 Baldwin who cannot be here today. I'll be providing 8 testimony on behalf of the Air Pollution Control Board to 9 convey their support for the proposal before you today.

10 You have before you one of the most 11 important emission reduction strategies and cleaner burning 12 fuel requirements. Our board urges you to adopt the 13 proposed regulation. A Copy of our proposal was provided 14 to you several weeks ago.

15 Ventura County has the nation's 16 nonattainment for the federal one hour standard, and of 17 course we're going to be nonattainment for the 8 hour and 18 the new more stringent 61 percent of our ozone precursory 19 emission with on road motor vehicles accounting for 49 20 percent of those emissions.

21 The District has already implemented for all 22 categories of stationary sources. Reduction and control of 23 emissions from motor vehicles is one of the most cost 24 effective strategies still available. Subsequently our 25 interest in what you're willing to do today is very high. 216 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 In 1990, your Board adopted for low emissions and clean 2 fuels. LEV I set increasingly more stringent standards for 3 light duty cars and trucks to the model year 2003. An 4 important aspect of this regulation was the clean fuel 5 requirement, the introduction of clean fuels, especially 6 sulfuric acid, to not only meet the current standards but 7 allow them to meet even more stringent in the future.

8 The increased sales of full sized pickup 9 trucks and the recent introduction of the popular SUV has 10 greatly altered the mix of light duty trucks to cars. It 11 is now common of light trucks and SUVs to be used for 12 primary transportation. Once dominated by cars, it is 13 approaching a split between cars and light duty trucks.

14 In 1990, over 80 percent of the vehicle 15 sales were cars. In 1997, we're looking at 54 percent,

16 with light trucks and SUVs climbing to 46 percent. The 17 trend has had a substantial impact on California's air 18 quality because although these vehicles are essentially 19 used as passenger cars, they're certified to less stringent 20 emission standards designed for commercial work trucks.

21 The reclassification in the LEV regulation 22 of the light duty truck and medium duty vehicle categories 23 will require them to meet more stringent standards. The 24 amendments are applicable to both gasoline and diesel 25 powered vehicles and are essential, necessary to meet our 217 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 state implementation plan goals for vehicles.

2 The emission reductions that will result 3 from the implementation of this regulation and the 4 reclassification of light duty and medium duty vehicles are 5 critical to Ventura County's efforts to meet the new 8 hour 6 federal standard and the more stringent state standard.

7 In addition to the other aspects of the 8 regulation, the new super low emission category and its use 9 in generating partial ZEV credits if provided with the 10 150,000 mile warranty will provide incentives for 11 automobile manufacturers to make greater contributions to 12 our emission reduction goals.

13 Gasoline powered vehicles currently have 14 broad public acceptance, much greater than current  we 15 have electric vehicles, and offering the manufacturers an 16 incentive for decelerated introduction of a technology that 17 is transparent to the motoring public. It is not a win win 18 situation for air quality and the manufacturers.

19 California has always been a leader in air 20 pollution control. This has been especially true for motor 21 vehicle emission control. The adoption of today's proposal 22 will provide for you an opportunity to continue this 23 leadership. This proposed regulation is achievable and 24 it's needed. Therefore on behalf of our Board, I urge you 25 adopt this regulation. 218 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 MS. RIORDAN: Thank you. Any questions for 2 the witness? Thank you.

3 Ellen Garvey, come forward, please. You're 4 going to represent both CAPCOA and Bay Area AQMD?

5 MS. GARVEY: Yes. Madam Chair and members 6 of the Board, good afternoon. My name is Ellen Garvey and 7 I am the Executive Officer at the Bay Area AQMD and wearing 8 two hats. 9 First I would like to speak on behalf of the 10 Bay Area District and secondly on behalf of CAPCOA. I am 11 here today to support your proposal for the new LEV II 12 standards and the new LEV II regulations. The San 13 Francisco Bay area has almost five million cars that 14 produce about half of the overall air pollution in the nine 15 bay area counties. While the state has done an admirable 16 job in the past years reducing emissions from the vehicles,

17 we still have problems with ozone as well as particulate 18 matter, and we still have opportunities to mitigate those 19 problems. The LEV II program is a very important step in 20 this process.

21 Adoption of the LEV II regulations is very 22 important for the long term air quality prospects for the 23 bay area as well as for many other nonattainment areas 24 throughout the state. EPA's recent redesignation for 25 nonattainment with the national one hour ozone standard has 219 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 triggered new attention and what we can do selectively to 2 help continue to reduce pollution emissions from those 3 sources.

4 We know that mobile sources represent the 5 largest sector of emissions in the bay area for ozone, and 6 they are also mainly contributors of nitrate and 7 particulate matter. To adopt new motor vehicle standards 8 as well as new motor vehicle regulations is a noteworthy 9 event.

10 We supported and have benefited from ARB's 11 prior actions to implement clean fuels and clean vehicle 12 programs, your goal in getting new as well as effective 13 emission control technologies on the road. We have seen 14 the successful introduction and customer acceptance of 15 ultra low emission vehicles as well as zero emission 16 vehicles, and in fact I have some personal experience with 17 both. Recently I purchased a new personal car, a Honda 18 Accord which meets the ULEV certifications, and I can 19 verify for you today it performs well, gets good gas 20 mileage, and all in all it's a great car. My agency has 21 also purchased two vehicles, a Toyota RAV 4 as well as an 22 EV plus with great user satisfaction and sparked a lot of 23 public interest. They're comfortable, they're reliable and 24 fun to drive. So we feel very positive about the ability 25 of the manufacturers to develop and implement new as well 220 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 as cleaner technologies.

2 We also feel very positive about ARB's role 3 in the foster of such an implementation. You and your 4 staff play a vital role in expediting the research grants,

5 setting of certification and durability standards and 6 lastly through monitoring compliance. Your current 7 proposal gaps and strengthens some areas where levels of 8 control can be improved. These measures will ultimately be 9 of great benefit to the bay area as well as other 10 nonattainment areas throughout the state by achieving 11 additional emission reductions beyond those attainable with 12 the current LEV program.

13 LEV II will help ensure we attain and 14 maintain California's state standards for ozone and 15 particulate matter.

16 I bring with me today a resolution from my 17 Board. This resolution was brought yesterday before 18 Director DeSaulnier and members of my Board. I ask this be 19 made a part of the record.

20 In closing I would like to say it is 21 critical ARB adopt the new requirements as soon as possible 22 so we can get the process started and see the benefits in 23 the near future.

24 With the permission of the Chair, I would 25 like to indulge your Board for just a few more minutes and 221 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 speak on behalf of CAPCOA in support of LEV II, and I bring 2 with me today another resolution signed by the membership 3 of CAPCOA which occurred last week in Monterey, which the 4 Chairman also attended, and we appreciate your taking the 5 time.

6 The testimony I have just provided is 7 essentially the same as CAPCOA, so I'll not take the time 8 to repeat it. I will say California air districts 9 throughout California support LEV II. We ask you to adopt 10 these requirements so we can see the benefits of it in the 11 near future.

12 Thank you for your time today, and I will be 13 happy to answer any questions that you have.

14 CHAIRMAN DUNLAP: Any questions? Thank you.

15 I appreciate that. Always a pleasure to see you. 16 Greg, I know you're going to be speedy, but 17 before you go up there, is Bob Carr here from the San Luis 18 Obispo APC? Had he signed up? Chung, are you a 19 three minute or less guy?

20 DR. LUI: I'll try.

21 CHAIRMAN DUNLAP: You do three minutes, and 22 Greg, you're up next.

23 DR. LUI: The important issue, I think, is 24 the need of good air quality in our basins. I do want to 25 say that Barry Waters, our acting Executive Officer Thomas, 222 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 and he sent me here to represent the District on these 2 issues, and I want to go back really fast on the air 3 quality issue.

4 CHAIRMAN DUNLAP: You've got to introduce 5 yourself to the court reporter.

6 DR. LUI: My name is Chung Lui for the 7 record. I am the Assistant Deputy Executive Officer for 8 the South Coast AQMD.

9 This chart I'm showing here is the reason we 10 are here mostly, and I can probably say that in the new 11 8 hour ozone standards we are making progress, even this 12 year, but we still have a long way to go. The reason is 13 that we still are over 10 days. We cannot meet the 14 standards in our basin. We have the worst quality air in 15 this basin, but I have to say that ARB's program in the 16 past two decades, probably in principal, is responsible for 17 the improvements. And I also want to say something about 18 this morning's use of control. We support LEV I. We see 19 progress. Not only on weekdays, but on weekends, and we 20 believe with LEV II, the progress to be made on weekdays 21 and weekends. Let's go to the next one.

22 We do have another air pollution problem.

23 It's the PM2.5 standards newly adopted by the EPA. As 24 these charts show, that PM2.5 is probably a more 25 discriminating pollutant in terms of our basins. 223 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 Everywhere you can see problems almost at the same levels.

2 Also I want to direct attention to the 3 parts, the yellow part and the pink part, the two biggest 4 components. One is the nitrate component, the yellow, and 5 the pink is ammonia. Ammonia nitrate is the single most 6 important component for PM2.5, which is a pollutant killing 7 our premature child here, and I want to emphasize with 8 control this is going to come a long way. So I really want 9 to put the case on this here, but we still want to say that 10 even PM10 would need improvements.

11 We have a long way to go. The 1997 AQMD 12 called for 68 percent of VOC reduction and 57 percent 13 reduction NOx. With the new standards of PM2.5 and 8 hour 14 ozone standards, we have even farther to go, and really 15 most of them, I would say 50 percent of the reduction, we 16 need to achieve clean air. We don't know what to do here.

17 If we know what to do with LEV II, let's do it.

18 And especially this morning I heard ARB's 19 stipulation one dollar per pound cost effectiveness. I'm 20 saying in our basin nowadays, in south coast we are 21 stationary sources. We use a mainly 10 per ton.

22 We do have some input here and quickly spend 23 about one minute to summarize them all. We don't want to 24 provide a loophole for diesel. We don't want legislation 25 to become a starting point to bring diesel back as 224 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 passenger cars, and we all know here with one sports 2 vehicle coming to increase one passenger car. That's not 3 replacing work truck. We all know that. Let's face it.

4 If we want to bring something back with 5 higher emissions, we're going to have worse air quality.

6 We don't want that. We've got to have one standard for all 7 things over 8500 pounds. We also want to make sure the 8 four part ZEV would be LEV, and we want to work with ARB 9 staff on this.

10 And number three, we believe the technology 11 here, if we push for two or three years ahead of schedule 12 for this hydrocarbon base, we can achieve air better and 13 sooner.

14 Number four and five quickly. We think, we 15 believe the ARB staff did an excellent job, that we want to 16 support on the emissions which we really lacked in the 17 past, and I think value is a good thing we strongly 18 support.

19 Lastly, the district pushed for the ozone so 20 hard, we want to eventually  even with the defeat of 21 Proposition 7, we want this to be part of the program and 22 want to make sure it's qualifiable execution is real. With 23 that, I'm putting my presentation, and if there's any 24 questions.

25 CHAIRMAN DUNLAP: Thank you, Chung. Any 225 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 questions of the witness? Okay. Thank you.

2 Mr. Vlasek?

3 MR. VLASEK: Good afternoon, Chairman and 4 members. My name is Greg Vlasek. I represent the 5 California Natural Gas Vehicle Coalition. We are a 6 40 member industry association of Sacramento, California.

7 I have a single point. Our members, our 8 coalition supports the partial ZEV credit for CNG super LEV 9 vehicles. We are aware of the evidence that staff has 10 accumulated in making the decision to include that 11 provision. In some cases our members provided that 12 information to the staff and have been working on that for 13 a number of years, so we very much appreciate the 14 recognition of natural gas vehicles as continuing, as the 15 benchmark for what is achievable in terms of emissions from 16 IC engines, and our job now of our industry is to continue 17 to build the infrastructure in California, to increase the 18 demand for these vehicles and give customers assurance 19 there's plenty of fuel available so we can help get the 20 vehicle manufacturers' incremental cost down from that 21 dreaded $ 7,000. Thank you very much.

22 CHAIRMAN DUNLAP: Thank you. Let me run 23 through the list of folks who haven't testified yet. We 24 have two representatives from Engelhard, one Terence Poles.

25 Is your colleague with you? Bill, did you sign up? 226 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 MR. ROSENBERG: I did.

2 CHAIRMAN DUNLAP: You're not on my list 3 here, Bill. So we have Jed Mandel in the bull pen over 4 here, Pat Charboneau, Bob Jorgenson, Tim  where's Tim 5 Carmichael? Tim in the bull pen, Jennifer Jennings, Bruce 6 Bykowski, Cece Martin, Wayne Nastri and Joe Caves. Is Joe 7 out there anywhere? Did Joe already go? Come on over 8 here, Joe. We have a rule in here today. Cece, you're up.

9 MS. MARTIN: Good afternoon, Chairman Dunlap 10 and members of the Board. My name is Cecille Martin. I'm 11 Deputy Executive Director of the California Electric 12 Transportation Coalition and I am speaking today for our 13 board of directors.

14 I believe you received letters from Sempra 15 Energy and SEV and Los Angeles Department of Water and 16 Power, and then my comments will supplement that and we'll 17 only be speaking today on the zero emissions vehicle 18 portion of LEV II.

19 Now, Chairman Dunlap, it's your last Board 20 meeting.

21 CHAIRMAN DUNLAP: It is?

22 MS. MARTIN: And I wanted to be really kind,

23 but I have to take a small issue with something that you 24 said earlier which possibly you didn't really mean the way 25 I took it. 227 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 CHAIRMAN DUNLAP: I probably didn't.

2 MS. MARTIN: That CARB has swept away 3 utility emissions, and in fact that's very much opposite is 4 the case. That in fact the bar, the lower bar for the 5 SULEV to meet with their tailpipe is the upper bar of 6 potentially what utility emissions could be if they weren't 7 as regulated as they are in this state. Utility emissions 8 are very clean, and it is also that statement that gets our 9 hackles up a little bit because we like to remind people 10 that every vehicle on the road has upstream emissions.

11 For us, they're power plants and they're 12 very clean, but as other witnesses have mentioned, they're 13 refueling, distributions and marketing as other fuels, and 14 we like to look at it as a whole package.

15 So I want to tell you today that we are in 16 general support of what you're doing. In fact there's only 17 one exception and that exception is that we don't believe 18 gasoline SULEVs have the ZEV characteristics described in 19 the report. We think it's theoretically inconsistent with 20 the way in which ZEV characteristics have been described.

21 I would leave it at that, but there are a 22 few other things I need to say because I understand that 23 some of the documents that the Board has received recently 24 said that ZEVs don't really have a big part of the future.

25 And I want to tell you that the EV market 228 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 has just begun. Ten years ago an EV market was your 2 Board's vision and today it's a reality. The Board has 3 changed the world's view of our transportation future by 4 making EVs a part of the transportation mix.

5 You have done an incredible thing. You've 6 created a legacy that holds the future and you haven't 7 stopped there. You've gone beyond regulation by 8 recognizing that help is needed to develop this new market,

9 to ensure its success and the continued commitment from all 10 of the stakeholders.

11 CARB has supported vehicle and 12 infrastructure incentives, infrastructure development,

13 safety training and now have a developing EV loader program 14 and more. We appreciate this. The market needs it. The 15 market needs your continuing support.

16 Now as we look to the future, we see that 17 the challenge that you face is to craft a mobile source 18 strategy to get the state to attainment in 2010 and 19 maintain that level of cleaner, healthier air in the years 20 beyond. The Board's successful strategies to technologies 21 have resulted in the most significant mobile emissions 22 reductions, and yet there is a shadow stalking this 23 success.

24 Predictions for California's growth turn 25 every mile gained into an inch. With population expected 229 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 to double in the next 30 or 40 years, California can expect 2 an accompanying doubling of cars and trucks. This growth 3 trend turns 26 million vehicles into 46 million. In the 4 interim, these emissions must still be multiplied by the 5 number of vehicles in the state and by the increasing 6 vehicle miles traveled.

7 It is within this perspective that CARB's 8 reasoning behind the gold standard becomes clear. True 9 ZEVs are a necessary part of mobile source strategy because 10 zero times 46 million is still zero. Cal. ATC is not 11 suggesting that EVs will make up 100 percent of 12 California's vehicles. We are suggesting, however, that 13 the unique characteristics of battery electric and other 14 vehicles that rely on electric drive systems like hybrid 15 electric, that accompanies growth by offering 100 percent 16 or some, for example there, of zero emission miles.

17 We believe that this perspective is an 18 important one to keep in mind today when considering 19 increasing flexibility to the 2003 10 percent ZEV 20 requirement. The zero emission miles that have become the 21 gold standard are also the less costly miles both in terms 22 of the environment and the fuel when they are derived from 23 California's clean electricity generation.

24 EVs and HEVs that plug into fuel capture 25 this benefit, and this benefit takes on more importance as 230 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 we move on to the next century. As more California 2 vehicles meet the new SULEV standard, the largest source of 3 fuel emissions will be the combination of evaporatives that 4 occur upstream of the vehicle.

5 Electric drive addresses the fuel cycle 6 issue. When fueled by electricity, electric drive offers 7 the lowest fuel cycle emissions of any fuel and completely 8 eliminates the emissions that occur from fuel.

9 California's power mix can be considered in the manner 10 staff is proposing that versions should be considered, that 11 is that they will be driven a certain portion of the time 12 as zero emission vehicles.

13 When considering the types of power 14 generation that serve California, a significant portion of 15 these sources deliver electricity emission free. This 16 emissions reduction opportunity is not available from any 17 other transportation fuel.

18 Cal. ATC has been asked how electricity 19 deregulation will effect the state's power generation.

20 Well, we don't use a crystal ball. Energy analysts have 21 said that deregulation will likely spur reductions as 22 utilities sell off power plants and new energy providers 23 power them cleaner over time, decreasing current and future 24 power plant regulation and technology advancement.

25 Best available retrofit control technology 231 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 will assure lower than current emission levels and level 2 the impacted areas like the South Coast Air Quality 3 Management District who have an emissions cap for power 4 plants over their entire basin, further encouraging this 5 downward trend.

6 Today we've heard a little bit about this 7 150,000 mile warranty, and we believe that deterioration is 8 another shadow that follows even the cleanest vehicle, 9 followed by an internal combustion engine over the life of 10 the conventional vehicle and will also continue to occur 11 although hopefully with on board diagnostics.

12 Again looking to the future, Cal. ATC feels 13 it is important to know the longer vehicle lifetime 14 durability without any off cycle emissions. Because they 15 have eliminated the need for a tailpipe, EVs stay clean 16 without smog check and with no possibility of equipment 17 failure.

18 CHAIRMAN DUNLAP: Cece, I have the letter.

19 You're doing good.

20 MS. MARTIN: I am not going to go through 21 the bottom part. I would like to do three more paragraphs.

22 CHAIRMAN DUNLAP: Okay.

23 MS. MARTIN: Okay. There are additional 24 electric drive benefits that although not directly part of 25 CARB ZEV program, remain an area of concern in the state 232 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 and the world. California EVs offer significant net 2 reductions of CO2 up to 70 percent. Vehicles with even 3 partial electric drive, as long as they are fueled in part 4 by electricity, will always offer CO2 benefits because 5 electric drives displace CO2 created by gasoline 6 combustion.

7 Overall reduction of CO2. Electric drive 8 can be two to three times more  and EVs, electric drive 9 vehicles, for the portion they're on electric do not expose 10 the population to toxics, Benzene, and all known for their 11 effects on human health.

12 Now I'm going to skip through the rest of 13 this because I know you have my written testimony, but I 14 did want to end by saying that our organization has been to 15 many of these hearings and often our testimony is a small 16 part of the whole, and we want you to know we didn't 17 overlook the whole and we want to commend you for the hard 18 work that we've seen you do this year, 1998. We feel 19 you've taken on the challenge and that you've been very 20 consistent in passing the measures that are critical to 21 success, and we feel this program, if passed today, would 22 create a significant contribution towards the ZEV and 23 toward the reduction in mobile source emissions. We would 24 like to thank you for that in the broadest sense.

25 CHAIRMAN DUNLAP: Thank you. Any questions 233 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 of the witness? Okay. Very good.

2 Engelhard, you're up next. Is there any 3 other three minute people in that group by chance? There's 4 two three minute people. Would you yield, sir? The lady 5 in red in the back. Sorry. Hang on. We'll get to you and 6 there's

7 MS. JENNINGS: Thank you, Chair. My name is 8 Jennifer Jennings. I'm here on behalf of the Planning and 9 Conservation League and I forgot blue, gray and brown was 10 the color requirement for ARB hearings.

11 I submitted written comments and I don't 12 want to go over those. I want to support the comments made 13 by my colleagues on their three major points. 14 We oppose the credit for gasoline SULEVs 15 because they do not have the characteristics. Introduction 16 of diesels, I think that if you want advances in heavy duty 17 diesel technology, you need to address that directly rather 18 than indirectly, and we applaud the restrictions on the 19 SUV, but we do not think the evidence supports the work 20 trucks.

21 I also want to say in addition to my written 22 comments that we do support the extended warranty control 23 system. I was not aware that was an issue so I didn't 24 include it in my letter, but I think it's a very important 25 proposal and we urge you to stick with it. 234 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 Thank you very much.

2 CHAIRMAN DUNLAP: Thank you. Thanks for 3 your patience.

4 By the way, I think we have eight witnesses 5 left.

6 ALABC REPRESENTATIVE: Thank you, Chairman 7 Dunlap.

8 My name is  Advanced Lead Acid Battery 9 Consortium. We're here in support of the proposed LEV II 10 program. I think staff has done an excellent job. I think 11 it's only appropriate you're here in the South Coast Basin 12 as you consider adopting. The ALABC does have some ideas 13 in terms of increasing the flexibility with regard to the 14 ZEVs and we've had discussions with staff and they've 15 agreed to continue those discussions and move forward in 16 terms of additional range and addressing the fast recharge 17 capabilities.

18 So again, we urge you to adopt the LEV II 19 proposal. Thank you.

20 CHAIRMAN DUNLAP: Thank you. Any questions?

21 Terry, you're up. Thank you for your patience, too.

22 MR. POLES: Thank you.

23 CHAIRMAN DUNLAP: But I think you did 24 signify you were in the neighborhood of a three minute job 25 I thought; is that right, Bill? 235 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 MR. POLES: Three, three and a half minutes 2 or so.

3 Chairman Dunlap and members of the Board, my 4 name is Terry Poles. I am the Director of New Ventures for 5 Engelhard, developer of the Premiere ozone catalyst system.

6 First of all I would like to thank the staff 7 for their cooperation over the last three years and really 8 putting together a full scientific study of this 9 technology. Premiere catalyst involves coating automotive 10 or truck radiators or other heaters as shown. This special 11 catalyst destroys between 17 and 19 percent of the ozone in 12 the air that passes through this coating. As far as CARB's 13 action, to introduce the Premiere catalyst in the program 14 will not only provide complying with the LEV requirements,

15 but it will also illustrate California's support for the 16 development of new technologies. These can reduce the 17 exposure of citizens to harmful pollutions. In this way 18 the Board can encourage the industry to continue its 19 research and development activities to bring forward new 20 innovative technologies that will be needed to meet the 21 needs of California citizens in the coming years.

22 An analogy of this technology can be drawn 23 back to the mid 1970s when Volvo Car Company first began 24 using innovative ideas. That was the three way catalytic 25 converter which was being developed by Engelhard 236 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 Corporation. Today it continues to spend more than $ 50 2 million a year to develop new technologies like the 3 catalytic converter and Premiere catalyst system.

4 Volvo has again demonstrated its 5 technological leadership. It plans to install the catalyst 6 on its new line of SAT vehicles beginning next year. We 7 believe that Volvo's voluntary action like the events in 8 the mid 1970s will usher in a new technological innovation.

9 Recognition of the potential air quality 10 benefits from this approach will support the 11 commercialization of this and other innovative 12 technologies. The South Coast Air Quality Management 13 District and the CARB staff has recognized the potential 14 air quality benefits. The SCAQMD has concluded in its 1997 15 Air Quality Management Plan control measure programs to 16 reduce  levels which prefers to the Premiere catalyst and 17 its use on air conditioning utilities. The Premiere 18 catalyst directly destroys ozone which is coated. It is 19 therefore a fuel neutral technology.

20 The primary applications of the technology 21 as shown in this slide are in automobiles, trucks, urban 22 bus radiators where it's already applied in some areas, and 23 residential and commercial air conditioning systems.

24 Application of the Premiere catalyst coating to an 25 automobile or truck radiator takes advantage of the 237 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 existing air flow being used for engine cooling and the 2 moderate temperatures associated with the air cooling 3 system. The radiator even on vehicles is currently 4 designed effectively and becomes an ozone scrubbing device.

5 Testing in California has shown that the 6 Premiere catalyst reduces ozone concentration in the air by 7 approximately 75 percent or more. Manufacturers also 8 suggested that enhancements to the radiator and cooling 9 system could increase the effectiveness of the Premiere 10 catalyst considerably.

11 The Premiere catalyst, unlike traditional 12 ozone control measures, directly destroys the ozone rather 13 than the OCs and NOx. To understand the potential quality 14 benefits from this approach and relate the benefits from 15 traditional ozone control strategists, we began working 16 almost four years ago with John Seinfeld at Cal Tech and 17 others recognized in atmospheric modeling, with CARB 18 modelists and from the AQMD. These provide the methodology 19 in the CARB staff proposal for assessing the air quality 20 benefits of the Premiere catalyst.

21 In summary, we appreciate the support that 22 we have received from CARB staff in evaluating the Premiere 23 catalyst and developing a reasonable approach for assessing 24 the value of this innovative technology in the LEV program.

25 We look forward to working with the staff to determine the 238 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 appropriate procedures, for demonstrating durability of the 2 catalyst and other specifications of the particular 3 catalyst applications.

4 We encourage the Board to approve the 5 staff's recommendation. Thank you.

6 I'll be glad to answer any questions.

7 MR. CALHOUN: Excuse me, Terence. This is a 8 relatively new technology as you know, and there's people 9 who couldn't understand the mechanisms of how it's taking 10 place. I was having a discussion with someone in the past 11 week or so and I was told that some of the ozone that is 12 initially converted is lost. By that, I mean some of it is 13 reconverted to ozone. Do you have any knowledge of that at 14 all?

15 MR. POLES: Mr. Calhoun, we have conducted 16 some chamber assessments at the University of North 17 Carolina and here in California which gets at the issue of 18 does this ozone reform after it's being destroyed. Almost 19 immeasurable quantities are reformed. Once the ozone is 20 destroyed, it stays destroyed.

21 MR. CALHOUN: I think that's important,

22 although the staff has tried to build into the proposal 23 certain amounts that you would have to accomplish, that you 24 would have to accomplish in order to get credit. I think 25 it's important you take those factors into consideration. 239 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 CHAIRMAN DUNLAP: Ms. Edgerton.

2 MS. EDGERTON: I wanted the staff to clarify 3 one point with respect to this catalyst, Premiere 4 ozone eating catalyst. Is the one person  that's 5 supposed to apply to any vehicle that has that technology 6 applied on it, or is it supposed to  not the 1 percent,

7 the credit. Is that supposed to apply to any vehicle that 8 has this or is it supposed to apply only to vehicles which 9 otherwise qualify under the ZEV partial credit?

10 MR. CACKETTE: It can be used by any 11 vehicle.

12 MS. EDGERTON: The thing that confuses me,

13 if it's used by any vehicle it might be double benefit in 14 the sense that a car is motoring along and it's emitting a 15 certain amount of emissions which will produce ozone and 16 also eating up some of those, so it might have a net

17 your overall emissions factor for the car would already 18 have been reduced by the ozone eating catalyst, wouldn't 19 it?

20 MR. CACKETTE: Well, the way it works is 21 return the ozone eating capability of that into negative 22 grams per mile of hydrocarbons which then could be added to 23 the tailpipe emissions to determining compliance with the 24 standard, so that's how the scheme works. So it has to be 25 standard, but essentially get credit in negative grams per 240 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 mile of hydrocarbons for the ozone that it siphoned out and 2 removed.

3 MS. EDGERTON: So it gets the credit versus 4 the  and gets the credit toward the ZEV standard.

5 MR. CACKETTE: Yes, that's true. SULEV 6 without a catalystic radiator, also. To gain the ZEV 7 credit, you have to have the SULEV standard, but then you 8 have to have the 150,000 mile warranty, you have to have 9 zero incentive, half a gram of  you have to have OBD 10 compliance for 150,000 miles. You have to have all these 11 things that are a threshold before you get a ZEV credit.

12 CHAIRMAN DUNLAP: Thank you. Tom or Mike,

13 with this I'm not trying to be critical of this technology.

14 Are we talking about granting any credits here for nothing?

15 We are getting emission reduction; right? And they're 16 going to be credited accordingly; right?

17 MR. CACKETTE: We've looked at this very 18 carefully and there's no doubt it reduces. The only issues 19 remaining are things like durability issues, what happens 20 if you get in an accident, do you get one that's coated.

21 The uncertainty level in the chemistry that develops the 22 credit numbers is relatively small as the credits are 23 relatively small, so I don't think there's a lot of risk 24 associated with this device, and it's always going to be 25 positive. 241 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 CHAIRMAN DUNLAP: The briefings I've had is 2 these folks are willing to work with us to make sure that 3 it is durable and the credits are real, and that people 4 know it's having a positive effect. So I know there's 5 people that kicked it a little bit today. I'm just trying 6 to understand the rationale. Mr. Rosenberg.

7 DR. FRIEDMAN: I just want to add, the 8 cross sectional area is a key determinant so the effect, if 9 I'm right, would be relatively greater in a big truck than 10 an automobile?

11 MR. ROSENBERG: That's absolutely right.

12 The benefit is proportional to the volume of air. So 13 that's the two things, the size of the radiator and how 14 quickly the air passes through.

15 CHAIRMAN DUNLAP: Great.

16 MR. ROSENBERG: Mr. Chairman, members, my 17 name is William Rosenberg. I'm president of AQ Ventures 18 and I serve as an advisor to Engelhard. In 1990 when you 19 passed the LEV I, I was the assistant administrator of the 20 EPA serving along with Jack Crammel and the Bush 21 administration, and it was great to work with you in that 22 capacity and I'm glad to be here today.

23 I put aside my prepared text to make a 24 couple of points. In my opinion I think this is one of the 25 most important potential pollution control technologies 242 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 that has come along in a long time. Because of the fact 2 that it's totally transparent, it goes  it comes in the 3 form of a paint actually. It looks like a paint. It goes 4 on the radiator of a car or goes on the air conditioning 5 condenser coil in your backyard or goes on the air 6 conditioner of a bus or radiator of a bus. And yet even 7 these are all small negative sources. The modeling that 8 Tom Cackette talked about that had been reviewed by the 9 South Coast Air Quality Management District and by your 10 people with the benefit of SAI and other very, very good 11 people, shows if this were on all air conditioners,

12 theoretically it could be potentially as much as a 10, 15,

13 or 20 percent  if you took 20 tons of VOV out of the air,

14 you get about the same ozone benefit as if you put this on 15 all the radiators.

16 We were very disappointed when Proposition 7 17 was defeated because this would be a way to make this 18 happen. The utilities could have put this on people's air 19 conditioners and had this paid for with the South Coast,

20 but this is a very important step forward.

21 I think the fact that they spent millions of 22 dollars of private money developing this is attributed to 23 the policies of this Board because you have set the 24 opportunity for people to come forward with new 25 technologies. This is really new. This is out of the box 243 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 in a real sense, although it will help in what you're 2 doing.

3 One of the issues I did want to address for 4 a moment and then I'll sit down, is that as the Chairman 5 mentioned, before any company  whether it's Volvo or 6 anyone else  gets any credits whatsoever, they're going 7 to have to bring their testing, their car and test it 8 before new certification tests under CARB staff direction 9 as to durability, as to impact of different environments,

10 they would have to meet the same warranties for this credit 11 as anybody else would have to meet.

12 There's an OBV II requirement that has to 13 get worked out, so the actual credits will be the function 14 of a car company coming forward two to three years from 15 now, request this on the radiator and saying we believe 16 under your rules and regulations with your testing we're 17 entitled to 0.1 grams per mile credit or something of that 18 sort.

19 This is not going to solve the problems,

20 but it is a step forward. It does enable car companies to 21 meet your stringent requirements, and if we're lucky and it 22 is on buses and trucks and on air conditioners and on cars,

23 besides them being very happy, I think the air quality in 24 this region will improve dramatically.

25 We really do appreciate you, and the staff 244 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 has given to bringing forward new technology, and it's a 2 lot harder on the outside to do that than it looked like in 3 the EPA, and you guys have really made it work.

4 Thank you very much.

5 CHAIRMAN DUNLAP: One comment I made when 6 Tom or Mike and I met with Bill Rosenberg  and Bill, you 7 can tell this story better than I  I was impressed with 8 your commentary about the rigorous nature of the staff 9 review of any new technology, in particular yours, really 10 putting us through the paces here. That impressed me, not 11 only in the diligence of the staff trying to get to the 12 bottom of how much value could be attributed to this, but 13 also to your and Engelhard's contribution to working 14 through this. It's not easy.

15 MR. ROSENBERG: They were outstanding, and 16 of course they have a lot of experience with Engelhard.

17 They did develop the three way catalyst back in the 70s.

18 I'm sure some of the catalysts they were testing were 19 probably from them or it involved their technology.

20 The company views itself in the same 21 business that the Board is in, and although they very much 22 want to serve their customers, the car companies, to give 23 them cost effective solutions to these problems, but this 24 part of your LEV II proceeding I think will be one of the 25 finest moments of this Board and provide great dividends in 245 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 the future if these other potentials can occur.

2 CHAIRMAN DUNLAP: Thank you. Okay. Six 3 witnesses remaining. Jed Mandel, Pat Charboneau, Bob 4 Jorgenson, Tim Carmichael, Bruce Bykowski and Joe Caves.

5 We'll go in that order unless someone wants 6 to change.

7 MR. MANDEL: Good afternoon. I'm Jed Mandel 8 speaking on behalf of the Engine Manufacturers Association.

9 As you know from my frequent appearances before you this 10 year, EMA's members make a number of products regulated by 11 the California Air Resources Board. Today I am principally 12 addressing issues of concern of diesel engine 13 manufacturers.

14 As we have discussed with you and the staff 15 in this and other rules, diesel engine manufacturers have 16 achieved significant success in reducing the emissions of 17 NOx particulate matter and hydrocarbon from compression 18 engines, and also as we have discussed, we have submitted 19 today even greater reductions and even more might be 20 feasible.

21 The engine out emission levels which have 22 been achieved from diesel engines have truly been 23 remarkable. We believe there's an opportunity to replicate 24 that success in applying aftertreatment technologies to 25 diesel engines. 246 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 However, there are significant technical 2 barriers which must be overcome. These include the fact 3 that compression ignition engines are lean burning. That 4 is, their exhaust is relatively cool, and the most 5 promising advanced technologies are very sensitive to fuel 6 sulfur. If these problems can be overcome, and we believe 7 that they can, there will be an opportunity to optimize 8 emissions performance, commercialize advanced technologies 9 and apply those technologies to a wide range of diesel 10 engine applications. That's the prize we must focus on.

11 The staff has proposed an unbelievably 12 challenging set of standards. The diesel engine 13 manufacturers will do their best to provide products which 14 can comply, and by so doing to give Californians the 15 opportunity to have a power choice that provides them the 16 performance, durability, high torque pulling power and 17 outstanding fuel economy they want, all without adverse 18 emissions impacts and while maintaining the well recognized 19 low CO and low CO2 and essentially zero evaporated 20 emissions associated with diesel engines.

21 Because the standards are so challenging and 22 the availability of technological breakthroughs is still 23 uncertain, it is critical ARB continue to monitor and 24 report on progress being made as part of the technology 25 review process. We look forward to working with the staff 247 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 on that effort and sharing our knowledge and our expertise 2 with them and with you.

3 On a brief personal note, EMA has appeared 4 before this Board at almost every one of your hearings this 5 year. This has had two benefits. It has had assured full 6 employment for EMA staff and it has provided us an 7 opportunity to work with this Board and its Chairman.

8 One might not think that would be a positive 9 experience since you are the regulators and we are the 10 regulated industry. That has not been the case even though 11 we don't always agree. We thank you for your willingness 12 to work with us.

13 We wish the Chairman well in his future 14 endeavors. Two of EMA's members, Navistar and Cummins, are 15 going to follow me with specific comments. However if you 16 have any questions, as always we would be pleased to answer 17 them.

18 CHAIRMAN DUNLAP: Thank you. You want to 19 introduce them? Go ahead, Jed.

20 MR. MANDEL: Pat Charboneau.

21 MR. CHARBONEAU: Chairman Dunlap, members of 22 the Board and staff, my name is Pat Charboneau. I'm the 23 Vice President of Engine Engineering for Navistar. I 24 appreciate the opportunity to speak here today.

25 First I would like to say we really 248 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 appreciate the staff's willingness to listen carefully to 2 our concerns and to try to respond to these concerns, and 3 we will support the LEV II proposal as it moves forward.

4 Having said that, I want to make it clear 5 this proposal sets a tremendous technical challenge in 6 front of us. We cannot meet the standards with our current 7 technology, but Navistar has a history and will therefore 8 focus our advanced technologies on meeting the new 9 challenge.

10 Navistar was the first engine manufacturer 11 to demonstrate it was possible to meet the heavy duty one,

12 the four particulate standard five years ahead of time, and 13 we did this by coming out to California and providing a 14 demonstration. Last year we presented two demonstrations 15 to meet the 2004 emission standards, and one of those 16 demonstrations actually used a pass trap with a serum fuel 17 additive and came within gasoline level particulate 18 standards certified in California to the LEV standard. 19 To meet the emissions challenges, clean 20 diesel fuel will allow Navistar to leverage its advanced 21 technology, sulfur content down to 30 parts per million.

22 Navistar looks forward to working with the 23 Board and the staff to achieve nationwide low sulfur diesel 24 fuel standards that will propel further technological 25 breakthroughs. 249 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 We appreciate the opportunity to making 2 another contribution to cleaning California air by 3 impacting light and heavy duty diesel vehicles with 4 cleaner fuel. Thank you.

5 CHAIRMAN DUNLAP: Thank you. We'll hear 6 from your colleague now, Bob Jorgenson. Good to see you.

7 MR. JORGENSON: Thank you. Chairman Dunlap,

8 members of the Board, good afternoon. My name is Bob 9 Jorgenson. I'm the Director of Product Developmental 10 Management at Cummins Engine Company.

11 As many of you know, Cummins Engine Company 12 has manufactured diesels for on highway, mobile off highway 13 and stationary applications around the globe. We are in 14 the process of developing a family of smaller engines, one 15 target for which is light duty trucks.

16 Compression ignition engines have a number 17 of attributes which we believe will make them attractive in 18 this market. For the purchasers of these vehicles, first 19 and foremost is the improved fuel economy. Direct 20 injection, compression engines offer 50 to 70 percent of 21 improvement over their spark ignited counterparts. In 22 addition, their towing capacity will offer a much sought 23 after asset, but there are also significant environmental 24 attributes of compression ignition engines.

25 The great fuel economy I just mentioned 250 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 translate into much less CO2 emitted per mile traveled.

2 CO2, of course, has been implicated as a global warming or 3 greenhouse gas. Such a significant reduction in CO2 4 emitted by even a small segment of the light duty vehicle 5 sector could go a long way in helping us meet the challenge 6 posed in the report. The high combustion temperatures and 7 pressures of the compression engine's cycle is inherently 8 very low CO and hydrocarbon exhaust emissions. In 9 addition, there are negligible evaporative emissions from 10 diesel fueled engines.

11 Furthermore, the production of diesel fuel 12 produces significantly less hydrocarbons than does the 13 reduction of the same amount of gasoline.

14 Unfortunately, on the other hand, the high 15 combustion temperatures and pressures of the diesel cycle,

16 again responsible for the good fuel economy and low CO 17 hydrocarbon emission do tend to produce higher NOx 18 emissions and the non premix nature of the combustion of 19 diesel has a tendency to produce particulate emissions. In 20 the heavy duty, on highway arena where combustion ignitions 21 have been predominate for many years, and where we've had 22 significant very stringent emission standards, we've shown 23 the capability to reduce NOx 70 percent and particulate 90 24 percent of unregulated levels.

25 We're very proud of that achievement, but 251 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 the standards proposed by the staff today will necessitate 2 significant reductions in both NOx and PM well beyond these 3 levels and represent significant technological challenge.

4 Cummins is committed to making these further 5 reductions while maintaining the fuel economy advantage as 6 well as the advantages in CO, hydrocarbons and CO2 7 emissions. We believe that the most cost effective means 8 to do this will involve significant engine modifications 9 but will also necessitate fuel changes and continued 10 invention and development in the area of lien 11 aftertreatment.

12 Cummins is working with several fuel 13 providers to understand the impacts of various fuel changes 14 and has a number of research programs with aftertreatment 15 manufacturers and several national research laboratories.

16 We believe that this work will enable us to meet the 17 stringent proposed standards.

18 Thank you for the opportunity to present 19 these comments. And again, if there are any questions, I 20 would be happy to answer them.

21 MR. CALHOUN: I've been listening to your 22 testimony and that of the person preceding you very 23 carefully, and you make  not issue, but you emphasize the 24 need for cleaner fuel, and are you saying that low sulfur 25 in the California diesel fuel is going to be necessary? 252 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 I know you talked about doing this 2 nationwide and having California become a partner, because 3 that's obvious to nationwide technology. But where are 4 you?

5 MR. JORGENSON: Yes. The  as you've 6 heard, sulfur  the reduction of sulfur is an enabler.

7 First of all, sulfur in the fuel become  a significant 8 proportion of sulfur in the fuel become sulfate in the 9 exhaust. Sulfate is a particulate it in and of itself. To 10 reduce sulfur in the fuel is to reduce sulfur in the 11 atmosphere. But furthermore, probably as important or more 12 important is that the NOx, the lien NOx aftertreatment that 13 is unique for diesel because of the lien operating 14 conditions, is a very important characteristic.

15 We, though, are concerned about the fuel 16 cost for our customers. Fuel cost is a very important 17 element of technology, of their costs, and we want to make 18 sure that we're doing this in the most cost effective 19 manner possible. So the combination of engine changes 20 versus fuel changes, we're looking to see. We're trying to 21 make that again the most cost effective set of changes.

22 MR. CHARBONEAU: Also, once again, the very 23 low sulfur is an enabler. Will we have to have this in 24 order to achieve California objectives? We want to achieve 25 gas like objectives. It's absolutely mandatory, but when 253 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 you do that, when you have 30 parts per million capability,

2 you now have the potential to take on this challenge. So 3 it's inherent. It's something we have to do, is something 4 we want to work with ARB Board members and the EPA to 5 achieve.

6 CHAIRMAN DUNLAP: If I might interject, I 7 appreciate the lack of finger pointing on that answer, that 8 it's an enabler, it's a partnership meaning we're working 9 together with the fuel providers to make sure you get the 10 optimal arrangement, and I appreciate that. And I think 11 that kind of discussion has evolved. I heard some other 12 things earlier, not to make you bad guys, but there's been 13 a whole lot of back and forth finger pointing, so I 14 appreciate that collaterally, that attitude.

15 MS. EDGERTON: This is a comment to Mr.

16 Charboneau and Mr. Jorgenson. Not personally, but I want 17 to be sure it's not a personal comment because it's a 18 comment about your industry, the diesel industry and the 19 engine manufacturers.

20 I feel differently about your statements 21 today than I might have felt a month ago. You say your 22 industry has a commitment to fuel economy and to engine 23 changes and fuel changes. That's just been the problem,

24 hasn't it. We've just had a $ 1 billion settlement against 25 your industry for setting your computers so that  254 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 MR. CHARBONEAU: Can I make a comment here?

2 The Navistar has provided information both to the EPA and 3 to CARB that they have not done anything in operation in 4 our engines, in our vehicles that goes over the standard.

5 We provided that information to the EPA and the combination 6 of agreement we have with both EPA and CARB says that that 7 is in fact the case. So from the Navistar perspective, we 8 are achieving the standards and continue to achieve the 9 standards.

10 We are the only manufacturer with 11 unconditional certificates by the EPA that say we are 100 12 percent legal.

13 MS. EDGERTON: Correction. I don't know 14 specifically except for what I have read which was that 15 most of the diesel engine manufacturers had been involved 16 in this effort to have their engines testes meeting our 17 standards, and then when they got out on the road in order 18 to achieve greater fuel efficiency, they programmed them so 19 they would be performing to a different standard.

20 And that is not impressive. That's not the 21 kind of thing that makes me take seriously what you all 22 say, and it's not a personal thing. It's hard to say to 23 anybody. You're standing here, and I appreciate your 24 saying Navistar didn't do it, but it's not something that 25 makes me want to make it more difficult for other 255 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 stationary sources in California. More of the emissions 2 are going to have to come from them in order to make it 3 possible for your company to get special allowances so that 4 diesel can continue along the route you want.

5 It's always a tradeoff, and I think what I 6 would suggest is that if you can come up with the 7 technologies that will be competitive  and this is for 8 me  if you can come up with them, I'm sure this Board 9 will consider them and we'll take that into account, but I 10 am not inclined at this point to include the TLEV diesel 11 issue as something I can support.

12 I did want to say for the record that a 13 factor has been my disappointment in the way that the 14 recent issue

15 CHAIRMAN DUNLAP: Well, just perhaps a word 16 of caution. Ms. Edgerton, if we were to apply that same 17 standard to everybody that's come before us today, various 18 points in their interaction with us where they've had a 19 compliance problem or with the environmental community who 20 may have disagreed with us ensued, or whatever it is, we 21 would be yelling at each other all the time. So I think 22 one of the things I learned perhaps too well is we need to 23 try to look past some of that and find common ground.

24 Mr. Kenny and I have had this conversation 25 and I've had it with Ms. Walsh. We expect the staff to 256 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 enforce the rules that we pass and be aggressive about it 2 and show no fear or favor and just do the job. As 3 policymakers, we need to at least be able to separate.

4 The issue before us today and another rule 5 problem or issue, or if we can't do that, we're not going 6 to have I think interaction that is going to be meaningful.

7 So I appreciate the concern you have and I share it too,

8 but again just want to remind you and others, We would be 9 yelling at Sam every time he showed up. At the same time 10 we would be giving him awards for the EV I because it was a 11 remarkable thing. Sorry, Sam.

12 ( Laughter.)

13 CHAIRMAN DUNLAP: The point is we have to 14 look past those kinds of issues and there have been times 15 we've enacted rules and missed the mark and felt strongly 16 about it, but there needs to be a civil exchange. My point 17 is I tend to let that go under my bridge a little more.

18 Okay. Thank you, gentlemen.

19 I probably offended everyone in the room 20 with that comment. It was not my intention.

21 MS. EDGERTON: Anyone you didn't offend, I 22 offended.

23 CHAIRMAN DUNLAP: Two remaining witnesses,

24 both from the environmental community. Tim Carmichael and 25 Joe, I guess you're going to bat clean up today. 257 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 Is there anyone else who has not signed up 2 to testify that desires to? All right. Tim, welcome.

3 Thanks for your patience.

4 MR. CARMICHAEL: Thank you, Chairman Dunlap.

5 Tim Carmichael for Coalition for Clean Air.

6 I could start on just a lighter comment real 7 quickly. There have been changes at the coalition recently 8 and changes here, dynamic times. I wanted to let you know 9 that one of my recent executive decisions was to create a 10 new division at the coalition dedicated exclusively to 11 working on reducing emissions in the restaurant industry.

12 ( Laughter.)

13 CHAIRMAN DUNLAP: I certainly have a lot of 14 well wishers.

15 Some of my colleagues indicated they're 16 going to be looking into that issue too. Thank you Tim.

17 MR. CARMICHAEL: With that said, I do have 18 serious comments.

19 I would like to cover just a couple of 20 points covered earlier today, step back from the details.

21 I have one detail that I want to focus on, but just take a 22 step back and look at the fundamentals of today's decision 23 from the environmental community's perspective, from my 24 perspective.

25 There are three challenges, three tests this 258 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 proposal needs to meet for your approval. One, are the 2 emission reductions necessary. I don't think there's 3 anybody in the room that's going to debate that issue.

4 Here in southern California, throughout this state, we've 5 got a long ways to go to get from where we are with regard 6 to clean air. Clearly the emission reductions are 7 necessary.

8 Two, is it technically feasible? There was 9 an exchange this morning which I found quite interesting 10 between the auto industry and your staff and there was a 11 challenge almost. Is the ARB staff as credible as the 12 automobile industry. From my perspective, the automobile 13 industry has a bit of a checkered past, and saying that 14 standards challenges can't be met  and there are numerous 15 examples throughout the 70s, 80s and even into the 90s.

16 If I was going to pick a fight with the 17 staff or be critical of them, I would suggest that their 18 flaw is being too conservative. They don't push hard 19 enough.

20 If they come forward and say something can 21 be done, they have checked it and checked it and checked 22 it, I think there's one thing we can rely on, is that if 23 the staff says it can be done, it can be done.

24 And the third test that I think is critical 25 in today's decision process, is it cost effective. You 259 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 heard not only your own staff, but other representatives 2 from air agencies. Other individuals explained how 3 inexpensive these reductions are. I don't want to minimize 4 the fact that a lot of money is going to be spent to 5 achieve these standards, but relative to other control 6 programs that we have under way and will soon be adopted,

7 these are inexpensive and absolutely have to be adopted,

8 and we have to go after these emission reductions where we 9 have found them and know they can be achieved.

10 I do want to address one of the issues 11 specifically that's in the proposal that we have real 12 problems with, and I didn't have documents prepared in 13 advance and would just like to have these in front of you. 14 Just for clarity's sake, this is from the document that was 15 on the back table today. It's the staff's suggested 16 changes, and at page 2, the table that lists the standard 17 and I've highlighted  I know this issue has been raised 18 already, but I want the Board to know exactly where we are 19 on this issue and see the numbers that have created such a 20 problem for the environmental community.

21 Specifically, the numbers for the TLEV 22 standard for oxides of nitrogen and particulates are 23 clearly much higher, much weaker than the standards 24 proposed for LEV. The only reason those standards are 25 higher is to accommodate a dirtier fuel. This agency for a 260 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 long time has professed a principal of fuel neutrality, and 2 yet here we are proposing standards to take effect five 3 years down the road that clearly make a distinction between 4 the standard and a dirtier fuel diesel. We have a real 5 problem with that and ask you to consider seriously 6 removing this piece of the proposal. It is not necessary.

7 This standard is not necessary for gasoline 8 vehicles. It only exists to accommodate diesel vehicles 9 and that is fundamentally contrary to the principals 10 professed by this agency, so we urge you to pull this piece 11 of the proposal.

12 I won't belabor the other points that have 13 been raised on warranty issues. Strongly support for the 14 strengthening the warranties.

15 We have the desire to continue to examine 16 the Premiere catalyst and make sure that it really is 17 achieving reductions before we give credit for it.

18 We have concerns about the relaxation of the 19 CAP 2000. The SULEV issue has been raised for many months 20 by organizations, but fundamentally this is, I think, the 21 biggest issue and the biggest problem with this proposal.

22 There are a lot of good things in this 23 proposal and we are here to support the proposal and want 24 to see it adopted, but it sets a double standard and it's a 25 double standard that shouldn't be set and we urge you to 261 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 pull this component and not accommodate a dirtier fuel.

2 Thank you very much.

3 CHAIRMAN DUNLAP: Tim, was there any  the 4 whole idea about the work trucks and loads, and you 5 listened to all that today. Did any of that testimony,

6 commentary move you at all? I'm talking about from a 7 practical standpoint because you've got to understand.

8 Sitting up here  and you and others from the community 9 may be here one day. That's one of the things we're 10 charged with doing, trying to find that balance. Did that 11 resonate with you in any way?

12 MR. CARMICHAEL: I understand why it's part 13 of the proposal, but I disagree with the reason for 14 including it. I think the staff has done an excellent job 15 of demonstrating the fact that all vehicles under 8500 16 pounds can meet the same standards in 2004, and we think 17 that should be the driving principal.

18 CHAIRMAN DUNLAP: Okay. All right. 19 Mr. Caves.

20 MR. CAVES: I'm not quite sure how I ended 21 up last. I'm going to try and be very brief. I know you 22 want to get out of here as much as I do. I did want to 23 stand up here, Mr. Chairman

24 My name is Joe Caves representing the Union 25 of Concerned Scientists. I did want an opportunity to 262 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 commend this Board and particularly you, Mr. Chairman, for 2 your leadership, particularly this year you have set 3 yourselves a very challenging task and a very aggressive 4 schedule of trying to adopt regulations to address a number 5 of the really critical, outstanding issues, and I think 6 this is well within the tradition of the leadership of CARB 7 and I think CARB's distributed leadership has been 8 demonstrated by being here today.

9 The reason we can have these debates is 10 because in 1990 that Board was willing to take a very bold,

11 even historic move and try to establish a new standard to 12 push automotive technology way beyond where anyone thought 13 it could be. They were willing to take that chance based 14 on really three things  a technical staff that was able 15 to identify the possibilities and develop a program of 16 periodic review and lead time that enabled them to identify 17 a standard, to set a goal, and then to follow it up along a 18 reasonable path that made sure that their efforts were 19 going to be successful. Everything we're talking about 20 today is built on that foundation. 21 I think what you have before you is the 22 chance to make the next step, to set the new foundation for 23 the future Boards to address the air quality needs of the 24 state. We want to urge you to take a very close look at 25 that challenge, to think about what the problems are going 263 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 to be for the next Boards.

2 They're going to have to deal with the 3 additional emissions reductions that are necessary to close 4 the black box, but even more than that, they are going to 5 face a much greater challenge of dealing with new national 6 air quality standards that are setting very, very difficult 7 challenges on ozone and PM2.5 that are going to press in 8 every one of our sectors, press us to the limits.

9 We need to find every emission reduction we 10 can, and the decisions you make today are in many ways 11 going to determine whether they are going to be able to be 12 successful to meet the air quality needs for California's 13 future.

14 The second thing they're going to have to 15 deal with is they're going to have to deal with the problem 16 of air toxics. This Board took a very courageous action in 17 designating diesel particulate as an air toxic. Because 18 our entire economy is so dependent upon diesel today, the 19 challenge for the next Board is going to be tremendous to 20 try to adopt control measures to help reduce the public 21 health threat in this very serious problem without harming 22 our economy. This is not going to be an easy task.

23 You have set a very high bar for the next 24 Board they're going to have to meet. So we would ask 25 you  and my colleagues have expressed we're supportive of 264 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 the plan here, what the staff has set out, but we have 2 drawn a couple of exceptions, a couple of points that I 3 want to hit very lightly.

4 Now, we've been talking about them for a 5 long time, but please keep in mind that because you're 6 setting the next foundation you have to look at this plan 7 in that context. Think back to what happened in 1990. One 8 of the biggest errors, if you will, omissions in that plan 9 was not foreseeing that sport utility vehicles would become 10 such a significant component of our inventory. It's easy 11 for us to look back on it now. At the time they didn't 12 have any way of anticipating, and yet the whole reason 13 we're here, the whole reason we're trying to address these 14 issues is because they have become such a large part of the 15 inventory. So we would ask you to take a look at this 16 proposal and just keep in mind those factors.

17 Please reject the AAMA proposal. We need 18 those tons. Not only do we need them now, but we 19 desperately need them for the future.

20 Two, with respect to the TLEV proposal, I 21 just want to reiterate what my colleagues have said. Our 22 fear is that this will become a gamble that goes against 23 us, this will become a loophole in this plan that future 24 Boards will look back on and say this was a mistake.

25 You've set the challenge for future Boards 265 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 to go up here and address diesel as a toxic air 2 contaminant. I just don't think we want to go down this 3 path now of encouraging the introduction of a larger number 4 of diesels into another sector. I think this is a mistake.

5 Finally I want to mention we're concerned 6 about a final mistake, and that is providing ZEV credit for 7 SULEVs. Mr. Chairman, you raised a very legitimate issue 8 of fuel neutrality. If something provides the same 9 emission benefits, shouldn't we give it the same credit?

10 The ZEV mandate has been a separate component in the LEV 11 program for a good reason. Its purpose was to give this 12 Board and future Boards other alternatives, alternatives 13 that would otherwise not be available, and I just contend 14 future Boards will need that even more with increased VMT 15 and increased population growth. One thing we're going to 16 need are true zero emission alternatives in transportation.

17 While you may not need it immediately, you may be able to 18 make the rationale that using gasoline powered vehicles,

19 even though there are upstream emissions, even though you 20 have potential for deterioration, even though some of them 21 when those warranties are over may be gross polluters and 22 contributing to the overrule inventory. Even though we may 23 be able to deal with that now, in the future we will need 24 those alternatives.

25 Our concern is giving SULEV's credit moves 266 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 you down a slippery slope that can undermine the 2 technology forcing aspects in a way that we will truly 3 regret in 10 or 15 years.

4 With that I would just say, Mr. Chairman,

5 best wishes. I want to thank all the Board members for the 6 fine work this year. I would urge you to make the same 7 kind of courageous action today the Board took in 1990 by 8 passing this program. Thank you.

9 CHAIRMAN DUNLAP: Thank you. Okay. That 10 will conclude the public testimony on this Board item.

11 For the record, I would like to have staff 12 summarize the 4500 letters in all their diversity that the 13 Board has received.

14 MR. CARLSON: I raised my hand. I think I 15 can do it fairly expeditiously.

16 Mr. Schoning I think summarized probably

17 MS. SHELBY: Please identify yourself for 18 the record.

19 MR. CARLSON: Bob Carlson. As I said,

20 Mr. Schoning summarized most of the letters in his comments 21 this morning, and I think that the ones that I have here 22 are subsets of those letters.

23 I have letters from the Olive Growers 24 Council, Stock and District Kidney Bean, California 25 Business Properties Association, California Association of 267 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 Nurserymen, Connection Catering and California Poultry 2 Industry Federation, California Building Industry 3 Association, and all of them expressed the same concern 4 which is related to the medium duty part of the proposal.

5 And they're concerned about work trucks and I think the 6 Board has had ample dialogue on that. Not much more needs 7 to be said.

8 Also we have a couple of letters from 9 Bicycle Coalition and California Humane Society, supporting 10 the option of the proposed amendments.

11 I have a couple of other quick 12 administrative details here. On the 15 day changes that 13 were put on the back table this morning, on page 6 there is 14 a minor change which we need to make at the bottom. It's 15 section B24, it's  first, second third line strike out 16 the first " 4", 2004 through, and put in " prior to the", and 17 " model years" becomes " year", and essentially then there's 18 language at the end, and basically all these changes do is 19 change it from a three year fixed period of the  for the 20 in use compliance allowance of 1.75 on down, through a 21 rolling three years. This starts when an engine family is 22 certified, so in the time that engine family is certified 23 it has three years whether it be in the first, second or 24 third year.

25 CHAIRMAN DUNLAP: Can you say the page 268 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 again?

2 MR. CARLSON: I didn't finish reading the 3 language, but that's what the language does is changes a 4 static three year to a running three year. It's page 6 of 5 the 15 day changes at the bottom.

6 CHAIRMAN DUNLAP: Your job is to comfort us,

7 not confuse us.

8 MS. SHELBY: I think the changes he is 9 announcing are for those in the audience that have the 10 first version and you have the most recent version.

11 MR. CARLSON: Does your recent version have 12 handwriting on the bottom?

13 CHAIRMAN DUNLAP: Whatever he's talking 14 about, we have copies for the audience. Does the audience 15 have copies of the material? Where do they get it if they 16 don't have it?

17 MS. SHELBY: It's at the back table, but 18 there are people who picked ones up earlier.

19 CHAIRMAN DUNLAP: Three people with the 20 different rows, have them walk back so people.

21 MR. SCHONING: Chairman, this is the same 22 language that was released this morning on the back table 23 on the 15 day changes, so what Bob is doing is identifying 24 one change orally to the language that was put on the back 25 table and one of the things  269 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 CHAIRMAN DUNLAP: Does everybody in the 2 audience know what they're talking about? If you don't 3 know, raise your hand. Okay. Hi. Counsel will come find 4 and you explain it. This is serious. We've got 200 people 5 or whatever it is that stayed the whole time and we want 6 you to know what we're talking about. Mike, handle this.

7 MR. SCHONING: Very simply what it does is 8 treats the in use compliance stays in for EVAP the exactly 9 the same as we were doing it for costs.

10 CHAIRMAN DUNLAP: That's fine. I want them 11 to have the exact language. Okay.

12 MR. CARLSON: One more. Hopefully this will 13 be easier. This is in the proposed resolution and it's on 14 page number 7 in the " whereas". You see " whereas the Board 15 further finds"? That first, second, third, the projected 16 costs to comply with the amendments provided here and are 17 expected to range from $ 100 to $ 200 per vehicle with an 18 average of about $ 100 and that's it. $ 100 to $ 200 and then 19 instead of $ 200

20 MR. CALHOUN: That's as cockeyed as it was 21 before. If the range is $ 100 to $ 200, the average is going 22 to be somewhere between

23 MR. CACKETTE: $ 107.

24 DR. FRIEDMAN: Okay.

25 CHAIRMAN DUNLAP: Say it so everyone hears 270 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 it.

2 MR. CACKETTE: We did rounding there. The 3 lower numbers are $ 40 some I think, but I understand the 4 confusion.

5 CHAIRMAN DUNLAP: All right. So we've 6 summarized the written comments. I'm going to officially 7 close the record now. We'll come back.

8 The record will be reopened when 15 day 9 notice of public availability is issued. Written and oral 10 comments received after this hearing date before the 15 day 11 notice is issued will not be accepted as part of the 12 official record on this agenda either. When the record is 13 reopened for 15 day comment period, the public may submit 14 written comments on the proposed changes which may submit 15 written comments on the proposed changes which will be 16 considered and responded to in the final statement of 17 reasons for regulation.

18 We're going to go through ex parte 19 communications. Just a reminder to the Board members of 20 our policy concerning ex parte, how we may communicate off 21 the record with outside persons regarding rulemaking, we 22 must disclose the names of the contacts and the nature of 23 contacts on the record. This requirement applies 24 specifically to communications which take place after the 25 notice of the Board hearing has been published. 271 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 Are there any communications which we need 2 to disclose? We'll start with Supervisor Roberts.

3 SUPERVISOR ROBERTS: I haven't had any.

4 CHAIRMAN DUNLAP: Supervisor Patrick.

5 SUPERVISOR PATRICK: Yes. I had three 6 meetings one on October 8th with Pat Charboneau, Brian 7 Whalen, Tom Trueblood and Warren Slodowski of Navistar; on 8 October 14th with Reginald Modelin of Chrysler and Richard 9 Bell of Ford; and on October 22nd with Joe Caves of the 10 Union of Concerned Scientists, Roland Hwang, Union of 11 Concerned Scientists and Robert Lucas of CCEEB, and the 12 information that we discussed is essentially what's part of 13 the public record today.

14 CHAIRMAN DUNLAP: Thank you. Dr. Friedman.

15 DR. FRIEDMAN: I had a brief conversation 16 this morning with Mr. Rosenberg in which he presented some 17 of the same information that Mr. Poles presented to us this 18 afternoon.

19 CHAIRMAN DUNLAP: Very good. Mr. Calhoun.

20 MR. CALHOUN: I had conversation with 21 representatives from Navistar on October 18th, Pat 22 Charboneau, Mr. Slodowski, and their testimony, their 23 discussion or our discussion was essentially as to their 24 testimony here today.

25 CHAIRMAN DUNLAP: Okay. 272 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 MR. CALHOUN: On October the 13th I had a 2 meeting with Sam Leonard and his testimony concerned the 3 proposal. October 13th I met with  I had a conversation 4 with Mr. Steve Douglas relative to the vehicles, that heavy 5 duty category ordered with the towing package. October the 6 25th I talked to Mr. Sam Leonard again about the standards,

7 and Roland Hwang on the 4th, which was yesterday, and 8 Mr. Brown, Kelly Brown from Forth Motor Company.

9 CHAIRMAN DUNLAP: Okay. On the 13th of 10 October I spoke with Jed Mandel and Bob Johannsen of EMA;

11 Thomas Trueblood, Manager Public Affairs International; Don 12 Ustien, Group VP General Manager, Engine and Foundry 13 Division; Pat Charboneau, Vice President, Engine 14 Engineering; Warren Slodowski, Manager Environmental Staff;

15 Brian Whalen, VP Public Affairs Navistar. That's the 13th.

16 On the 16th, Alan Zamberg, California 17 Chamber of Commerce; 19th Phil Rosenberg and Bob Teeter of 18 Ford. On the 2nd of November I spoke with Melanie Wagner 19 of Ford, Kelly Brown and Sam Leonard, also Bob Teeter via 20 conference call; on the 2nd of November Chris Walker, Tom 21 Riley and John Valencia; on the 3rd, Ford Motor Company,

22 Melanie Wagner, Kelly Brown and Sam Leonard from GM as well 23 as Peter Welch from the California Motor Car Dealers 24 Association, and I also spoke with Alan Zamberg of the 25 Chamber and that is it. All consistent with the testimony 273 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 and commentary today.

2 MS. RIORDAN: Mr. Chairman, those that I met 3 were also are consistent with the testimony that was 4 provided today.

5 On the 14th of October I met with Warren 6 Slodowski, Brian Whalen and Tom Trueblood from Navistar; on 7 October 13th I met with Steven Douglas, AAMA, Mr. Modelin 8 from Chrysler, Mr. McCann from General Motors, Mr. Leonard 9 from General Motors, Mr. Bell from Ford.

10 I met very briefly this morning with 11 Mr. Rosenberg, and then on October 26th I met with Mr.

12 Hwang from the Union of Concerned Scientists and Mr. Tim 13 Carmichael from the Coalition for Clean Air.

14 CHAIRMAN DUNLAP: Mr. Parnell.

15 MR. PARNELL: Mr. Chairman, I met with 16 several, and each of those conferences were via telephone 17 conference with the exception of one. The contents of 18 those conversation was consistent with the testimony that 19 we heard today.

20 I've met with Sam Leonard from GM; Kelly 21 Brown, Ford; Gene Kelly and Roland Hwang of the Union of 22 Concerned Scientists; Jed Mandel, Engine Manufacturers 23 Association; Navistar, Pat Charboneau, and Bill Rosenberg 24 personally this morning. We talked about the catalyst 25 issue. 274 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 CHAIRMAN DUNLAP: Thank you. Ms. Edgerton.

2 MS. EDGERTON: I met Barbara Wood Davis and 3 Sam Leonard and Steve Douglas, and I think it was the 13th 4 of October that I met with Mr. Leonard, Mr. Douglas,

5 Mr. Bell, that same group; October 22nd I met with Roland 6 Hwang, Joe Caves and Bob Lucas from CCEEB. Sally was 7 there. October 13th I met with Navistar representatives 8 Brian Whalen, Warren Sodowski, Tom Trueblood, Patrick 9 Charboneau, and outside today I talked a little bit more 10 with Mr. Leonard and Mr. Kitz.

11 CHAIRMAN DUNLAP: Mrs. Rakow.

12 MRS. RAKOW: Yes. On October 14th I met 13 with Warren Sodowski, Thomas Trueblood and Brian Whalen 14 from Navistar; on the 8th of October I met with Steve 15 Douglas, AAMA, Kelly Brown from Ford, and Charlie Kitz from 16 Chrysler. On the 22nd of October I met with the Union of 17 Concerned Scientists, Roland Hwang and Joseph Caves, and 18 the CCEEB representative Bob Lucas. On the 20th I had a 19 telephone conversation with Christopher Walker, California 20 Service Station and Auto Repair Association. On the 30th I 21 met with Dennis Dakota, Executive Director of the 22 California Service Station and Automotive Repair 23 Association, and today I had a brief conversation with 24 Christopher Walker during the meeting, and this morning a 25 brief conversation with Mr. Rosenberg, all of which were 275 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 consistent with what we've heard today.

2 CHAIRMAN DUNLAP: Mark DeSaulnier.

3 SUPERVISOR DE SAULNIER: Mr. Chairman, I was 4 visited by Kelly M. Brown of Ford Motor Company, Charlie 5 Kitz of Chrysler and Steve Douglas of the AAMA on October 6 8th, and also I had a brief phone conversation with Don 7 Slolem representing the Citizens for Automotive Choice. If 8 I didn't say it, November 3rd.

9 All of the communications were consistent 10 with the testimony today and a letter submitted by Citizens 11 for Automotive Choice.

12 MS. EDGERTON: I forgot one person. I 13 received a call from Peter Hunter from Sempra indicating to 14 me that he thought that the Engelhard technology was 15 excellent. He was very glad it was included in the

16 CHAIRMAN DUNLAP: Do you remember the date?

17 MS. EDGERTON: The day before yesterday.

18 CHAIRMAN DUNLAP: It would be the 2nd.

19 MS. EDGERTON: November 2nd.

20 CHAIRMAN DUNLAP: Mr. Calhoun, I also was 21 remiss and was reached by Joseph Caves and Roland Hwang in 22 late October. My apologies for not remembering that date.

23 MR. CALHOUN: I was only brief. I had a 24 discussion with Roland Hwang on November the 2nd, and that 25 testimony was consistent with what he presented today. 276 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 CHAIRMAN DUNLAP: All right. Did we capture 2 it? All right. Very good.

3 Now for the moment we've all been waiting 4 for. I want to try to do this in a manner that is 5 recognizable to the group here. Mrs. Rakow, I'm going to 6 ask you to talk about the Service Station group's concerns 7 and how that was accommodated in the resolution. That's an 8 easy one.

9 MRS. RAKOW: Yes.

10 CHAIRMAN DUNLAP: That is an easy one.

11 MRS. RAKOW: That is an easy one because 12 everybody is in agreement that there should be some 13 accommodation to look into their concerns, and I thought 14 that we had to look, to see what we would do to provide 15 some flexibility and options to the independent automobile 16 owner in this state. We wish to do something about the 17 150,000 mile warranty that wasn't directly with the 18 dealership, and we don't know really whether there is or is 19 not a real adverse effect on the independent repair 20 station.

21 So the language that both the 22 representatives of the different independent repair 23 associations, the staff and our legal office has agreed to 24 is the first draft on the last page, page 8, which says,

25 " That be it further resolved that the ARB staff shall work 277 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 with representatives of the independent automobile service 2 and aftermarket parts industry and other interested parties 3 to assess the degree to which this industry may be 4 adversely impacted by the extended warranties and to report 5 back to the Board within 18 months with its findings and 6 proposal, and if appropriate to mitigate any adverse 7 impacts so the independent automotive service and 8 aftermarket parts industry may continue to contribute to 9 the State's efforts to reduce smog and to continue to 10 provide our state's 26 million vehicle owners with a 11 competitive automotive repair marketplace for their service 12 related needs," so that is an amendment that I strongly 13 suggest.

14 CHAIRMAN DUNLAP: All right. Does this 15 Board seem comfortable with that? I am. One of the things 16 I'm going to bring up and ask Mr. Kenny or the lawyers, Sam 17 and Kelly in particular made some very good points. One of 18 them was about  I offered it up as a response to some of 19 that review. Tom, you guys have become masters of doing 20 technology reviews. Is that built into this package, this 21 resolution?

22 MR. CACKETTE: Yes, it is.

23 CHAIRMAN DUNLAP: Okay.

24 MR. SCHONING: The last " whereas" on page 7.

25 CHAIRMAN DUNLAP: Okay. Now, what we're 278 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 going to do  when will we do this, Tom? When will staff 2 come back and do the collaborative review?

3 MR. CACKETTE: Well, we promised to do that 4 review biannually or we can come back at any frequency you 5 want, but that would be roughly the beginning of the year 6 2001.

7 CHAIRMAN DUNLAP: Okay. Which gives them 8 three more years, two and a half more years; correct?

9 MR. CACKETTE: Right.

10 CHAIRMAN DUNLAP: Is there any hesitation

11 I'm talking technical staff now  if you guys find the 12 progress hasn't been made, that it truly is taking more 13 time, is there anybody here that has any hesitation about 14 being truthful to the Board about that and telling them we 15 need to make changes? Is there anybody here that feels 16 they can't do that?

17 Okay. That's a very important thing. It's 18 important to the Board. Not just the Board itself, but the 19 staff to have credibility. All right? So I'm seeing heads 20 bobbing and people are willing to do that in good 21 conscience.

22 MR. KENNY: Mr. Chairman, I think what 23 you're seeing from the staff is essentially a willingness 24 to always be very truthful and we'll be very factual.

25 CHAIRMAN DUNLAP: Okay. So we get the 279 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 two year review or two years from now. All right.

2 There's been some concerns about  Joe had 3 an issue or two. Take the easy one.

4 MR. CALHOUN: Mr. Chairman of the Board and 5 the audience, I have discussed the concern that I have 6 relative to the difference between the ozone levels during 7 the week, weekdays and weekends, and I've talked to 8 Dr. Holmes, I've talked to Mr. Kent, I've talked to Mike 9 Kenny, and I still  recently I received several papers 10 regarding this, so I've suggested that there be a meeting 11 of the stakeholders and an investigation. I don't want to 12 just see a written memo that's disposing of the issue.

13 I would like to see us get together with the 14 other stakeholders and decide if we are headed down the 15 right road. I recognize that we need NOx control for 16 particulates and we need NOx control for ozone because of 17 the end game somewhere. I'm not sure what that is going to 18 look like, and I guess I'm suggesting that we, with the 19 other stakeholders, look into this. I'd like to get a 20 commitment from this Board, from the staff today to do 21 that.

22 MR. KENNY: I think what you're seeing from 23 the staff with regard to the issues, that this staff does 24 at least believe NOx control is important to control 25 strategies. We are willing to sit down with people and 280 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 listen to any evidence or any information that they have 2 and go through that with them, and try to understand what 3 they're saying and why they're saying it so we can provide 4 you with that commitment. In terms of a report back to the 5 Board, we can do that even.

6 CHAIRMAN DUNLAP: Okay. What form would you 7 like it, Mr. Calhoun, back to the Board? You said you want 8 a little memo.

9 MR. CALHOUN: I guess I would like to have 10 them have some discussion with the stakeholders first and 11 then have something in writing back.

12 CHAIRMAN DUNLAP: Okay.

13 MR. KENNY: We'd be happy to have a workshop 14 where we basically talk about this.

15 CHAIRMAN DUNLAP: Is the Board comfortable 16 with that? Okay. Let's  you had another one, didn't 17 you.

18 MR. CALHOUN: I'm through.

19 CHAIRMAN DUNLAP: Premiere. There was some 20 environmentalists named who made a consistent plea that we 21 make sure that credit is given for performance and not for 22 something else. To my satisfaction staff answered the 23 concern that I think we all should have, which is does it 24 work and does the credit we're talking about in this 25 proposal reflect that and no more. And the response I got 281 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 back was yes, Chairman, it's reflective of that. I think 2 we heard from Engelhard in testimony today they're willing 3 to work with us and studies, you know, Joe had an issue he 4 heard about, that there's going to be some collaboration 5 and we're going to have some continued monitoring and 6 durability assurance; correct?

7 MR. KENNY: Correct.

8 CHAIRMAN DUNLAP: Is Engelhard here?

9 Mr. Rosenberg, that's your understanding?

10 MR. ROSENBERG: Yes.

11 CHAIRMAN DUNLAP: Okay. So with that 12 covered, the Chair feels comfortable with supporting the 13 Premiere credit. Anybody?

14 MR. CALHOUN: On the part of the actions by 15 the staff

16 CHAIRMAN DUNLAP: Understood, but I'm just 17 trying to disect the points at issue. People are 18 comfortable with that. Okay.

19 The diesel issue, and again the 20 environmentalists made a very consistent argument there 21 about the fact we identified diesel particulate as a toxic 22 air contaminant. They don't want to see any kind of 23 reversal, et cetera, or lose ground in any way.

24 One of the things that carried some weight 25 with me, despite Ms. Edgerton's concerns which I respect, 282 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 just relative to the engine manufacturers, the concern 2 there is that we feel staff feels and is recommending that 3 we go forward with this element in the program, largely 4 because we think that we can learn some things that will be 5 applicable, that provides for that duty cycle element that 6 people have clammered for. People have concerns, people 7 are worried  Mr. Parnell for one, who has been paying 8 close attention to that. What's the Board's feeling about 9 the diesel element?

10 Yes, Ms. Edgerton.

11 MS. EDGERTON: Mr. Chairman, I'm going to 12 ask it be withdrawn from the proposal and I'm going to ask 13 for a second. I'll just make a couple of comments about

14 CHAIRMAN DUNLAP: You can do that. I just 15 want to have kind of a discussion ourselves before we get 16 to that.

17 MS. EDGERTON: I think

18 CHAIRMAN DUNLAP: I want to get out the 19 issues that people have reservations about.

20 MS. EDGERTON: I think this part is fraught 21 with downside, and I think this special lower standard for 22 diesel vehicles into the next century is a mistake. I 23 think it's well intentioned, but I do not believe that it's 24 appropriate in view of our having listed the toxic air 25 contaminant. I do not believe it's necessary. I don't 283 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 believe it's fuel neutral, and I would propose instead of 2 that, because I do respect the intentions of the staff and 3 the purpose behind the proposal, I would suggest that we 4 leave it to the next Board to consider. There may be other 5 ways to incentivize that by having a program to spend $ 10 6 million to provide one which would be a direct way of doing 7 it, and I think the people of California would understand 8 that better and it would make more sense than loading such 9 an inconsistent, public health damaging measure into this 10 superb proposal.

11 CHAIRMAN DUNLAP: Okay.

12 MS. EDGERTON: Also one other thing, sir.

13 What I would like to be able to do, if I could impose on 14 you when we do come up for a vote, I would like to ask you 15 to  let's set it out of the way so I can have the 16 privilege of voting for LEV II but do not have to vote for 17 the two measures I cannot support. I would like those to 18 be separated out if we can.

19 CHAIRMAN DUNLAP: What's the other element 20 you can't support?

21 MS. EDGERTON: The gasoline, the .2 credit 22 for  the partial ZEV credit for gasoline vehicles. I 23 believe that is a rear guard defensive measure to protect 24 the ZEV mandate, and I believe the next Board can handle it 25 very well if that's how they think that's the best way to 284 BARNEY, UNGERMANN & ASSOCIATES 1 888 326 5900 1 protect it. That's my opinion.

2 CHAIRMAN DUNLAP: Okay. All right. Does 3 the diesel argument as it's outlined resonate with any 4 other Board members?

5 SUPERVISOR ROBERTS: Mr. Chairman, I was 6 impressed by Mr. Cackette's explanation, but I wasn't 7 persuaded by it. I think I would associate myself very 8 strongly with the comments she's made on both ZEV and 9 gasoline.

10 CHAIRMAN DUNLAP: Anyone else? Mark. 11 SUPERVISOR DE SAULNIER: I have the same 12 concern, although I appreciate what Tom said. As Lynne 13 said, the intention is good, but I'm not sure as a lay 14 person sitting here that I'm wholly comforted even though 15 it came from you, Tom.

16 CHAIRMAN DUNLAP: Okay. So we have three,

17 four Board members that have concerns there. Lynne, we'll 18 get to that in the form of a motion.

19 Trucks. Help me out here, Joe. He was 20 doing so well with that one. What else is left on the 21 table?