MEETING
BEFORE THE
CALIFORNIA AIR RESOURCES BOARD
BOARD HEARING ROOM
2020 L STREET
SACRAMENTO, CALIFORNIA
THURSDAY, DECEMBER 14, 1995
9:25 A.M.
Nadine J. Parks
Shorthand Reporter
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MEMBERS PRESENT
John D. Dunlap, III, Chairman
Eugene Boston, M.D.
Joseph C. Calhoun
Lynne T. Edgerton
M. Patricia Hilligoss
John S. Lagarias
Jack C. Parnell
Barbara Riordan
Ron Roberts
James W. Silva
Doug Vagim
Staff:
Jim Boyd, Executive Officer
Tom Cackette, Chief Deputy Executive Officer
Mike Scheible, Deputy Executive Officer
Mike Kenny, Chief Counsel
Lynn Terry, Assistant Executive Officer
Peter Venturini, Chief, Stationary Source Division
Dean Simeroth, Chief, Criteria Pollutants Branch, SDA
John Courtis, Manager, Fuels Section, SDA
Tom Jennings, Senior Staff Counsel, Office of Legal Affairs
Bob Cross, Assistant Chief, Mobile Source Division
Jim Shears, Manager, On-Road Controls Section, MSD
Sue DeWitt, Project Leader, Technology Advancement
Section, MSD
Veronika Pesinova, Staff, On-Road Controls Section, MSD
Michael Terris, Staff Counsel, Office of Legal Affairs
Kathleen Walsh, Staff Counsel, Office of Legal Affairs
Dean Saito, Manager, Liaison Section, OAQTP
Jim Nyarady, Staff, Office of Air Quality and
Transportation Planning
Pat Hutchens, Board Secretary
Wendy Grandchamp, Secretary
Bill Valdez, Administrative Services
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I N D E X
PAGE
Proceedings 1
Call to Order 1
Pledge of Allegiance 1
Roll Call 1, 2
Opening Remarks by Chairman Dunlap 2
AGENDA ITEMS:
95-13-1 Public Meeting to Update Board on
Status of California Cleaner Burning
Gasoline Implementation Efforts
Introductory Remarks by
Chairman Dunlap 5
Staff Presentation:
Jim Boyd
Executive Officer 7
Dean Simeroth
Chief
Criteria Pollutants Branch
Peter Venturini
Chief, Stationary Source Division 14
Closing Remarks by Jim Boyd 18
Questions/Comments 19
95-13-2 Public Hearing to Consider Amendments
to California cleaner burning gasoline
Regulations, including amendments re
downstream blending of oxygenates
Introductory Remarks by
Chairman Dunlap 27
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INDEX, continued. . . PAGE
AGENDA ITEMS:
95-13-2 Staff Presentation:
Jim Boyd
Executive Officer 28
John Courtis
Manager
Fuels Section, SSD 30
Questions/Comments 37
PUBLIC COMMENTS
Mike Kulakowski
Texaco 40
Questions/Comments 42
Cindy Hasenjager
California Renewable Fuels Council 44
Questions/Comments 46
Robert Warden
Chevron Products USA 48
Written Comments Entered into
Record by Mr. Jennings 49
Closing Remarks by Mr. Boyd 50
Record Officially Closed to Await
Notice of 15-day Public Comment
Period 50
Motion by Vagim to Approve
Resolution 95-48 51
Roll Call Vote 52, 53
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INDEX, continued. . . PAGE
AGENDA ITEMS:
95-13-3 Public Hearing to Consider Adoption
of National Security Exemption for
Military Tactical Vehicles and
Equipment
Introductory Remarks by
Chairman Dunlap 53
Staff Presentation:
Jim Boyd
Executive Officer 54
Veronika Pesinova
Staff
On-Road Controls Section, MSD 55
Questions/Comments 61
PUBLIC COMMENTS:
Captain Kathy Dodge
with Randall Friedman
U.S. Department of Defense 63
Questions/Comments 66
Record Officially Closed on 95-13-3 69
Questions/Comments 70
Motion by Calhoun to Adopt
Resolution 95-49 71
Roll Call Vote 72
95-13-5 Public Meeting to Consider Approval
of Proposed report to Governor and
Legislature on State and Federal Air
Quality Planning Process required by
AB 2751
Introductory Remarks by
Chairman Dunlap 72
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INDEX, continued. . . PAGE
AGENDA ITEMS:
95-13-5 Staff Presentation:
Jim Boyd
Executive Officer 74
Jim Nyarady
Staff
Office of Air Quality and
Transportation Planning 75
Written Comments Entered into
Record 81
Motion by Boston to Adopt
Resolution 95-50 81
Discussion 81
Roll Call Vote 82
Luncheon Recess 83
Afternoon Session 84
95-13-4 Public Meeting to Update Board on
Zero-Emission Vehicle Program
Introductory Remarks by
Chairman Dunlap 84
Staff Presentation:
Jim Boyd
Executive Officer 86
Sue DeWitt
Project Leader
Technology Advancement Section, MSD 87
Questions/Comments 94
PUBLIC COMMENTS:
Tom Austin
Sierra Research 97
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INDEX, continued. . . PAGE
AGENDA ITEMS:
Questions/Comments 103
95-13-4 Matt Saboraria
for Assemblyman Curt Pringle 111
Questions/Comments 115
John Larrea
for Assemblyman Mickey Conroy 118
Questions/Comments 118
Reuel Jones
for Assemblyman Bruce Thompson 119
Laurie Conaty
for Assemblyman Bernie Richter 120
Questions/Comments 122
Ana Arakelian
for Assemblyman James Rogan 123
George A. Plescia
for Assemblyman Bill Morrow 124
Jim Haagen-Smit
Citizen 124
John Grimley
for Senator Ray Haynes 125
Supervisor Jan Mikels
South Coast AQMD 129
Questions/Comments 133
Ben Ovshinsky
Ovonic Battery Co. 136
Questions/Comments 141
Paul Knepprath
American Lung Assn. 145
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INDEX, continued. . . PAGE
AGENDA ITEMS:
95-13-4 Janet Hathaway
Natural Resources Defense Council 148
Questions/Comments 158
Joe Caves
Union of Concerned Scientists 164
Tim Carmichael
Coalition for Clean Air 171
Gary A. Patton
Planning & Conservation League 176
Statement and Request by Mr. Lagarias 183
Samuel A. Leonard
General Motors 186
Questions/Comments 189
Ed Maschke
CALPIRG 197
Bill Van Amburg
CALSTART 201
Cecile Martin
California Electric Transportation
Coalition 205
John Weber
SoCal Gas 212
Lloyd Dixon
Rand 215
Questions/Comments 219
Kelly Brown
Ford Motor Company 232
Questions/Comments 235
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INDEX, continued. . . PAGE
AGENDA ITEMS:
95-13-4 V. John White
Sierra Club 239
Dave Hermance
Toyota Technical Center 249
Paul Edison Pulliam
Citizen 251
John Schutz
Nissan R & D 254
Jerry Cole
Advanced Lead-Acid Battery Cons. 257
Stephen Heckeroth
Homestead Enterprises 260
Reg Modlin
Chrysler Corporation 263
Bruce Parmenter
EAA 266
Clare Bell
EEA 270
Chuck Olson
Citizen 279
Peter W. Barnes
Citizen 281
Questions/Comments 283
Leo Heagerty
U.S. Electricar 284
Tom Gage
AC Propulsion, Inc. 286
Questions/Comments 290
William Craven
Electrosource, Inc. 290
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INDEX, . . . PAGE
AGENDA ITEMS:
95-13-4 Closing Remarks by Chairman 293
Adjournment 294
Certificate of Reporter 295
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1 P R O C E E D I N G S
2 --o0o--
3 CHAIRMAN DUNLAP: Will the December Board meeting
4 of the California Air Resources Board please come to order.
5 I've asked Supervisor Vagim to please lead us in
6 the Pledge of Allegiance.
7 SUPERVISOR VAGIM: Good morning, Mr. Chairman.
8 Will you please stand and join me in the Pledge of
9 Allegiance.
10 (Thereupon, the Pledge of Allegiance
11 was recited by all present.)
12 CHAIRMAN DUNLAP: Thank you. I'd like to ask the
13 Board Secretary to please call the roll.
14 MS. HUTCHENS: Boston?
15 Calhoun?
16 MR. CALHOUN: Here.
17 MS. HUTCHENS: Edgerton?
18 MS. EDGERTON: Here.
19 MS. HUTCHENS: Hilligoss?
20 MAYOR HILLIGOSS: Here.
21 MS. HUTCHENS: Lagarias?
22 MR. LAGARIAS: Here.
23 MS. HUTCHENS: Parnell?
24 Riordan?
25 Roberts?
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1 Silva?
2 SUPERVISOR SILVA: Here.
3 MS. HUTCHENS: Vagim?
4 SUPERVISOR VAGIM: Here.
5 MS. HUTCHENS: Chairman Dunlap.
6 CHAIRMAN DUNLAP: Here. Is that seven? Is there
7 seven of us? Five, six, seven. Okay.
8 Well, due to the fogged-in condition of the
9 airport and some travel glitches, it looks like there'll
10 only be seven Board members here today. And this, as you
11 know, is a very important Board meeting. So, I would have
12 liked to have had a full contingent of members, but it
13 doesn't look like we're going to be able to do that.
14 Before we get into our agenda today, I'd like to
15 take care of a couple of items of recognition. And I have
16 two staff members, Air Resources Board staff members, I'd
17 like to tell you a bit about.
18 The first one I'd like to call forward is Allen
19 Hirsch. Allen, can I get you to come over here to the
20 right, to the podium? Allen Hirsch is a public information
21 officer here at the Board, and during the year of 1995, he
22 served as president of the State Information Officer's
23 Council. And it's called the SIOC, and it is an
24 organization dedicated to public service.
25 Members come from the ranks of State Civil Service
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1 and are also in appointed positions that deal with public
2 and media relations in State Government.
3 Allen was elected by his peers about a year ago,
4 and should take great pride in his year of service there,
5 going voluntarily above and beyond his normal work duties.
6 I want you to know, Allen, I'm proud of the work
7 that you've done with SIOC, and wanted to take this
8 opportunity to recognize your dedication, not only for those
9 assembled but before my colleagues on the Board.
10 I might point out, also, that Allen has a long
11 record of public service. He was a former member of the
12 Peace Corps and has done a lot of volunteer work in his
13 personal and public life.
14 And I wanted to again thank you and recognize you
15 for your service. If I can get you to come forward, I'll
16 give you a little letter and shake your hand.
17 MR. HIRSCH: Thank you.
18 (Applause)
19 CHAIRMAN DUNLAP: I also am pleased to be able to
20 tell you that Allen served with me at the Department of
21 Toxic Substances Control, and I was able to convince him to
22 come over here to the Air Resources Board. And it's been
23 great to have him here.
24 The second staff member of the Board that I'd like
25 to recognize is Kurt Karperos. Kurt, are you here? Can I
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1 get you to come forward as well?
2 It is a pleasure to be able to recognize Kurt, who
3 serves as a member of our legislative unit. And I have a
4 statement that I'd like to read.
5 It is routinely acknowledged that California
6 is a leader in the quest to find effective,
7 innovative solutions to air quality problems.
8 That reputation is deserved and it is shared
9 jointly by each member of this organization,
10 which I have called a world class organization.
11 It is something we should all be proud of. So,
12 when the opportunity arises to recognize an
13 individual who displayed those talents to
14 others we have become accustomed to expecting,
15 it is a chance to remind ourselves just how
16 talented and professional the California
17 Air Resources Board is as an organization.
18 I'd like, therefore, to present Kurt Karperos,
19 a member of our legislative unit, again one of
20 the finest groups of policy analysts and
21 legislative representatives that I've ever
22 been associated with, with this framed copy of
23 a letter that was signed by Governor Pete Wilson,
24 recognizing his efforts on a piece of
25 legislation, AB 531, which was carried by
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1 Assemblyman Morrissey.
2 Kurt is one of the newest members of the
3 legislative staff. He as an associate air pollution
4 specialist in the ARB Executive Office before joining the
5 legislative unit. Before coming to ARB, he was a research
6 specialist at Lockheed Corporation and, before that, he was
7 a senior member of the technical staff at Aerojet
8 ElectroSystems.
9 I'd like to acknowledge your excellent work, and
10 give you aa copy of the letter, the original letter that the
11 Governor sent to me recognizing and commending your work on
12 that bill.
13 Thank you, Kurt. Can I get you to come forward?
14 (Applause)
15 CHAIRMAN DUNLAP: I told him it was a beautiful
16 letter; I wanted to keep it myself.
17 Okay. Let's get into the agenda today.
18 The first item, 95-13-1 -- I'd like to remind
19 those of you in the audience who would like to present
20 testimony to the Board on any of today's agenda items to
21 please sign up with the Board Secretary here to my left.
22 If you have a written statement, please give 20
23 copies to her.
24 The first item on the agenda again is 95-13-1.
25 It's a public meeting to update the Board on the status of
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1 the California Cleaner Burning Gasoline regulation
2 implementation efforts.
3 This item before the Board today is an
4 informational report. Staff will provide a progress report
5 on the implementation of the program, which we now refer to
6 as cleaner burning gasoline.
7 This is the fourth status report the Board has
8 received on this program. Because the staff provided us
9 with an extensive presentation in September, this one will
10 be more brief. It will highlight significant
11 accomplishments since our last update.
12 The staff will provide us with an update on the
13 current status and results from the performance testing
14 programs, the latest forecast for supply and demand, and an
15 update on the public outreach efforts that are underway.
16 Before I turn the presentation over to Mr. Boyd
17 and staff, I'd like to recognize and thank several of our
18 fellow Board members for their extensive contribution to
19 this effort. First, I want to thank Jack Lagarias, who has
20 served as the Advisory Committee Chairman for the past year.
21 And I'd also like to thank Joe Calhoun, who has served as
22 the Advisory Committee Vice Chairman since last February.
23 I also want to remind Joe that it was Jack that
24 drafted him for that assignment and came to me and said he
25 had to have you involved there, Joe. Both have done an
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1 excellent job in representing the Board. And I also want to
2 thank Gene Boston for his assistance with our cleaner
3 burning gasoline outreach effort the medical community in
4 California.
5 And Gene, unfortunately, is fogged in the Orange
6 County Airport. I guess they can't even take off. So, with
7 that, I'd like to ask Mr. Boyd to go ahead and introduce the
8 staff presentation. Jim?
9 MR. BOYD: Thank you, Mr. Chairman. Good morning,
10 Board members, and good morning to the members of the
11 audience.
12 As you mentioned, we are indeed presenting what is
13 now the fourth in a series of reports to your Board on the
14 efforts being taken to implement the cleaner burning
15 gasoline program. In few minutes, I will yield the
16 microphone to Mr. Simeroth, who you've come to know as the
17 Chief of the Criteria Pollutants Branch in the Stationary
18 Source Division. He's been managing this program, and he
19 will provide you the presentation, and begin with a brief
20 background on the cleaner burning gasoline, then discuss the
21 results from the performance testing programs for motor
22 vehicles, engines, and equipment.
23 As part of this presentation, Dean's going to
24 provide information on the ARB's own on-road and off-road
25 test programs and explain the results of the cleaner burning
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1 gasoline fuel economy studies.
2 Dean's also going to discuss the findings from the
3 test programs and discuss the results from those test
4 programs that individual companies have been carrying out.
5 Finally, we'll conclude the presentation with a
6 presentation discussing the forecasts for the supply of
7 cleaner burning gasoline and the demand that is seen, and
8 the current status of refiner's efforts in complying with
9 the March 1 compliance date.
10 And, as you know, several of the Board members and
11 members of your staff have been visiting with refiners and
12 visiting some of the refineries, and basically have been
13 pleased with what we've seen.
14 Finally, Peter Venturini, Chief of the Stationary
15 Source Division, will provide an update on the status of the
16 public outreach effort which is so important, and he'll be
17 emphasizing the accomplishments since the Board's last
18 update -- and I will underscore "accomplishments" -- and
19 then close with just a short summary on the overall program.
20 With that, I'd like to turn the microphone over to
21 Mr. Simeroth.
22 MR. SIMEROTH: Thank you, Mr. Boyd.
23 Chairman Dunlap, members of the Board, today,
24 we'll give you a brief presentation on the status and
25 implementation efforts that we've been undergoing to
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1 implement the cleaner burning gasoline program.
2 We'll focus on what has occurred since we last
3 briefed the Board on this program. Primarily, as you heard
4 from Mr. Boyd, I'll focus on the results of the Air
5 Resources Board on-road and off-road test programs, the
6 individual company test programs, and include some comments
7 on our fuel economy studies as part of those programs.
8 I'll also touch on the supply and demand issue,
9 and then turn the presentation over to Mr. Venturini to
10 complete the -- to do the discussion on the public outreach.
11 For the performance test program since we last
12 met, the performance subcommittee has finalized its
13 findings. You have copies of those findings before you
14 today. I'd like to note what went into that.
15 The on- and off-road program was designed by the
16 Air Resources Board and the performance subcommittee
17 jointly. It was implemented by the Air Resources Board with
18 advice and financial/materials support from organizations
19 who serve on the performance subcommittee.
20 The findings are a result of a consensus of ARB
21 and the performance subcommittee. And I'd like to highlight
22 the performance subcommittee on reaching those findings.
23 Finally, I'll touch on the results of the
24 individual company test programs, which are also summarized
25 in the findings that you have before you.
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1 The basic findings for the on-road part of the
2 test programs are that California reformulated gasoline, or
3 cleaner burning gasoline, performs as well as current fuels
4 in vehicles.
5 We saw no increase in problems with the test
6 vehicles during the program as compared to the control
7 vehicles and as compared to a historic baseline that we
8 developed as part of the program.
9 The gas mileage, on average, may be reduced by
10 approximately one percent from current oxygenated gasoline.
11 This is on average. I'd like to emphasize that. On
12 average, it would be reduced approximately three percent
13 from current summertime nonoxygenated gasoline.
14 The range of that average is quite large. The
15 testing results indicate that the range is plus or minus 9
16 percent. So, if you have enough data, enough vehicles to
17 accurately calculate an average, then the average will be
18 approximately 1 percent less than current oxygenated and the
19 3 percent less than the nonoxygenated. But any one person's
20 individual vehicle may or may not be close to that range as
21 our actual test results indicate.
22 The off-road findings are equally positive. At
23 this time, based on results available to us, the cleaner
24 burning gasoline has been shown to perform as well as
25 current fuels.
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1 There are remaining studies to be completed.
2 These studies are being conducted by the Portable Power
3 Equipment Manufacturers Association. Two of their member
4 organizations have completed their studies. The other
5 approximately five members are in progress, and we should
6 have them n the very near future.
7 At this point, we don't expect any of the findings
8 to be changed as these studies become available to us.
9 For individual company test programs -- and I'd
10 like to compliment all the companies who participated and
11 provided us with the results of their test programs.
12 Starting with General Motors, they did a
13 laboratory or bench test program, looking at primarily soft
14 components that could be exposed to fuels. They tried to
15 identify all soft components that would be reasonably
16 expected to be found in the existing fleet and test those.
17 Their program is about three-quarters completed and, at this
18 point, they're seeing no expected problems.
19 Ford Motor Company contracted with the Southwest
20 Research Institute to look into lubricity issues in terms of
21 metal to metal contact, fuel pumps, et cetera. Their result
22 indicated no expected problems as well when you compare it
23 to the range of fuels presently available.
24 Nissan did vehicle testing and laboratory testing.
25 They accumulated approximately 30,000 miles on a vehicle
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1 fueled with conventional fuel and 30,000 miles on another
2 vehicle fueled with the cleaner burning gasoline.
3 Looking primarily for deposit formation in various
4 parts of the engine, except for the combustion chamber,
5 deposit formation was less with the cleaner burning
6 gasoline, and the combustion chamber is approximately equal.
7 Again, they saw no expected problems.
8 Chevron did an employee fleet test program using
9 another version of the cleaner burning gasoline. And the
10 results of their program were combined with the Air
11 Resources Board results. It does not change any of the
12 findings that you have before you.
13 The overall failure rate in the Chevron test
14 program for the test vehicles is lower than the baseline
15 failure rate calculated by Air Resources Board staff.
16 Texaco did two studies, one at their Bakersfield
17 refinery and one at their research facility in Beacon, New
18 York. The Bakersfield refinery used company-owned vehicles
19 that operate within the refinery. The Beacon, New York used
20 employee vehicles.
21 The Texaco program was to evaluate severely
22 reformulated fuels, fuels with very low aromatic hydrocarbon
23 content is what we mean by that. Staff, in evaluating with
24 that type of fuel be expected to be produced (sic) and, if
25 it is produced, could be expected to be in the distribution
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1 system, we found that if such severely reformulated fuels
2 are produced -- and we don't expect them to be produced
3 routinely at all -- then, they would not -- they would be
4 diluted in the distribution system, and we wouldn't expect
5 vehicles to experience those very low aromatic hydrocarbon
6 fuels as they're diluted through the distribution and in the
7 vehicle tanks.
8 Chevron test results indicate very low aromatic
9 hydrocarbon fuels -- emphasis on the word "very" -- may
10 accelerate problems in older, high-mileage vehicles and
11 vehicles in extreme service.
12 The Department of Energy has been conducting a
13 test program using five vehicles. They're vehicles that had
14 been used in California. They're relatively new, 10 to
15 20,000 miles on the vehicles. They're accumulating another
16 30,000 miles using the cleaner burning gasoline. Their
17 program is still underway.
18 In terms of supply and demand, looking at the
19 progress reports being submitted to us by the refiners,
20 which are being submitted at this point monthly, refiners
21 are still on schedule.
22 Looking at the information provided on their
23 expected production, we expect supply will meet demand,
24 expect no problems. If something should occur unforeseen,
25 variances are available as a relief.
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1 There is a hearing scheduled for this coming
2 January to consider the variance guidelines that are
3 required by Senate Bill 709, which becomes in effect this
4 January. So, we're on schedule to adopt those guidelines.
5 That public report -- the report is now publicly
6 available.
7 At this point, I'd like to turn it over to Mr.
8 Venturini to address the public outreach efforts.
9 MR. VENTURINI: Thank you, Dean.
10 Mr. Chairman, members of the Board, what I'd like
11 to do is take a few minutes and just briefly update you on
12 what we've been doing with respect to the public outreach
13 efforts since we last updated you.
14 It has been a very busy time for us over the last
15 couple of months.
16 Can I have the next slide, please?
17 What I've shown here is basically a slide I think
18 I showed you when we updated you on the program, our basic
19 overall strategy, which is basically to convey the
20 importance this program for public health protection, clean
21 air; to honestly address concerns, communicate, to work
22 cooperatively with all entities, particularly the public
23 education subcommittee; more importantly and most
24 importantly to be prepared.
25 On the next slide, we show some of our activities.
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1 In terms of our overall outreach plan, let me say that I
2 think we are about where we want to be at this point in time
3 with this program. We've essentially prepared the vast
4 majority of our outreach materials. The messages have been
5 completed and approved by the subcommittee, the basic facts;
6 these are the basic facts about the program and typical
7 questions and answers that individuals may have.
8 We've prepared two brochures, a short brochure, a
9 long brochure. We've prepared and finalized a video that is
10 now available. And we've activated our toll free
11 information line. The number's shown on the slide. That's
12 1-800-9CARFG9, and that is available. If anyone has any
13 questions or request information, they can call that line.
14 to date, we've received very few calls. Most of them have
15 been requests for additional information.
16 With respect to this, you should have received in
17 the mail a copy of our package in our folder that includes
18 the materials I've gone through, and you should have
19 received a copy of our video. We also have available
20 additional copies of these packages. If you'd like another
21 one today and at any time if you'd like copies of any of the
22 material that's in there, we're more than happy to provide
23 that.
24 I also want to touch briefly on training. We've
25 instituted a fairly extensive training program. To date, we
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1 are nearing completion of training all ARB staff members on
2 this program, so that all of us are aware of the key points
3 of this program.
4 We've also sent offers to train and brief local
5 district staffs -- EPA Region IX staff, and other agencies
6 in California, such as the Fire Marshal, Bureau of
7 Automotive Repair, the Energy Commission. And we expect to
8 be conducting those briefing training sessions over the next
9 month to six weeks.
10 What I'm showing you on this slide is the
11 briefings that we've held to date on this program. This has
12 been the major focus of our effort now for the last about
13 six weeks. We've conducted about 20 briefings to date.
14 These include local district boards and various associations
15 and organizations.
16 This is continued on the next slide. I want to
17 point out that many of these briefings have been what we
18 call team briefings or, in addition to a representative from
19 our organization, there's also a representative of an oil
20 company present as well.
21 Over the next months, we have scheduled about
22 another 15 briefings, and that will be ongoing. In addition
23 to these outreach briefings, we have also initiated
24 briefings of individual legislators by our legislative
25 staff. To date, there are about 15 such briefings that have
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1 occurred. Those will continue until all of the legislators
2 are briefed.
3 We also have scheduled media briefings. These
4 will begin next week with some editorial boards of the major
5 newspapers throughout the State.
6 Let me just say, overall, the response at all of
7 these briefings has been extremely positive to our cleaner
8 burning gasoline program. In addition, another benefit from
9 these briefings has been the many offers to help get the
10 message out, either through newsletters, articles in
11 publications, and so forth. And we are following with these
12 organizations to assist them in that outreach.
13 So, I think we're seeing somewhat of a domino
14 effect that will help further get the message out.
15 As I said, the major emphasis over the next couple
16 of months will be to continue our outreach efforts that we
17 have planned.
18 Let me just summarize very briefly this update.
19 As Dean indicated, we've essentially completed the testing
20 program. We saw no increase in problems, and vehicles
21 performed just as well on cleaner burning gasoline as they
22 do on conventional gasoline.
23 The supply situation is solid, and should be
24 adequate, and our outreach efforts are well underway. And
25 to date, the response has been very positive.
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1 Thank you very much.
2 CHAIRMAN DUNLAP: Thank you, Peter, Dean,
3 appreciate it. Jim, do you have anything to add?
4 MR. BOYD: Just a couple of closing remarks, Mr.
5 Chairman. Thank you.
6 We'll be providing the Board our next progress
7 report on this implementation of cleaner burning gasoline
8 efforts at our February Board meeting, which, as you know,
9 as just immediately prior to the March 1st, 1996, formal
10 introduction of cleaner burning gasoline here in California.
11 In addition, at that Board meeting, the February
12 meeting, we will be bringing to you, the Board, for your
13 consideration variance regulations that are, as indicated in
14 this presentation, part of the implementation program for
15 this overall program and this regulation.
16 I'll close with just a couple of additional
17 comments on the program. As has already been mentioned,
18 cleaner burning gasoline will provide one-fourth of the
19 emission reductions needed in our most important SIP. And
20 simply put, as I've said before, the SIP doesn't work
21 without California cleaner burning gasoline. The gasoline
22 is a critical portion of the total clean fuels/low-
23 emission/zero-emission vehicle program that will allow we
24 here in California to make progress towards cleaner air as
25 provided under both federal and State law.
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1 I think, as you've heard today again, the
2 implementation efforts are proceeding quite well. We have
3 our fingers crossed; we're hopeful. The outreach efforts
4 are now underway, and I expect you'll be seeing more and
5 more. And to date, the program is receiving a positive
6 response. As has been indicated, we are trying not to be
7 too complacent, but we are very grateful for the work of the
8 advisory committee and its subcommittees, and believe they
9 deserve a lot of the credit for the progress we've thus far.
10 And when all these diverse groups come together,
11 it's satisfying to see the harmony and the singleness of
12 purpose that people can come to in trying to see a launch of
13 a project that they all have invested so much in. So, we're
14 very pleased and very grateful for the help of all the
15 involved people, and we trust their continuing efforts to
16 advise and assist us in the future will be both invaluable
17 and extremely helpful.
18 Thank you.
19 CHAIRMAN DUNLAP: Thank you, Mr. Boyd. Supervisor
20 Silva.
21 SUPERVISOR SILVA: Yes. Thank you, Mr. Chairman.
22 Mr. Boyd, I have a couple questions. I know that we all
23 have a goal of cleaner burning gasoline. But when you run
24 lab tests in an ideal situation, I think sometimes the
25 result is a little bit different than maybe in the actual
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1 field.
2 When you have new cars versus high-mileage cars, I
3 think that that could be a difference. And when you have
4 professional drivers or you're using vehicles that are tuned
5 to perfection, I think that the results might be different
6 than what the consumers are using, or the public I should
7 say.
8 Will we be testing this with people that are not
9 associated with the industry such as the automobile or the
10 gasoline companies? And would we be testing new cars as
11 well as high-mileage vehicles?
12 MR. BOYD: Supervisor Silva, your observation is
13 very right on in terms of our concerns about what happens to
14 anything that we want to the -- in a real world situation of
15 the public. In the testing programs that have been
16 conducted, and I think you can see that from the video that
17 is being distributed, show that we've done everything we
18 think in our power to reach out to an extremely diverse base
19 in terms of the types of vehicles and the types of operation
20 of those vehicles.
21 So, we have test fleets. And admittedly, they're
22 fleets of responsible companies and corporations that are
23 being tested, and they perhaps are subjected to better
24 degrees of maintenance than the average public, although I
25 can't make that statement categorically.
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1 But the diversity of the test fleets, such as the
2 fleet, the very old fleet at the California State University
3 at Fresno, for instance, and the very diverse fleet, a very
4 high mileage fleet, and the fact that the employees and
5 student employees are drivers of the vehicles and don't have
6 the same daily possession of the vehicles that perhaps
7 professional fleets have give us some diversity.
8 The refiners have used fuel and others have used
9 fuels in fleet of their own employees and employee cars, and
10 thus they are getting to a more average set of individuals
11 in our community.
12 So, I recognize your point. It's a good point.
13 And I invite Mr. Scheible or Mr. Venturini to expand on my
14 comments, but recognizing that we all -- the advisory
15 committee -- in total tried to reach out to as diverse and
16 as typical California citizen vehicle fleet as we possibly
17 could to head off the very concern that you have.
18 SUPERVISOR SILVA: Well, if we're talking about
19 one percent, I think that we could live with that. If we're
20 talking about, in the real world, nine percent, I think that
21 that would be a situation that should be addressed.
22 But I feel you tried to cover every base.
23 MR. BOYD: We're trying. Thank you.
24 SUPERVISOR SILVA: Okay.
25 CHAIRMAN DUNLAP: Plus, Supervisor Vagim's had it
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1 in his car, Jim, and it ran pretty well. He can give you a
2 personal -- quick, personal testimony.
3 SUPERVISOR VAGIM: Having a guinea pig of this,
4 and not a professional driver; however, driven like a
5 professional driver probably should have been driving at a
6 very high rates of speed coming to Sacramento --
7 (Laughter.)
8 SUPERVISOR VAGIM: -- I can contest to you that
9 the fuel has not been a detriment to my automobile, and is
10 not a new automobile. It's an '88 version with medium
11 miles. And I wanted to purposely, as a Board member, be a
12 guinea pig to this to make sure that we weren't going to
13 find out with hindsight that we had a problem with this
14 fuel.
15 I am one of the higher averages, and Mr. Simeroth
16 and Mr. Venturini and I have had some discussions about
17 this. But they assure me the fleet averages are well within
18 the ranges that they've cited.
19 It'll be interesting. There'll be case by case
20 for some folk. There's probably 10 people in California
21 that keep meticulous records on their mileage. The rest of
22 us, probably who don't, will not have a fuel to compare it
23 to after the new fuel's in the system. So, those with long
24 memories will probably remember there's a nine percent
25 difference if there are extremes.
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1 Most of the Californians I think will just
2 disappear in the great big scheme of things, and they'll
3 probably know they're not getting as good a mileage, and
4 hopefully that percentage will be more to the three percent
5 than to the nine percent.
6 And if that's the case, I think the fuel's a
7 raging success, and we'll all be beneficial of it,
8 particularly with that 15 percent reduction in every
9 tailpipe.
10 CHAIRMAN DUNLAP: Okay. Thanks, Doug.
11 Mr. Lagarias.
12 MR. LAGARIAS: Well, I think I have been very
13 impressed with the work of the advisory committee. And in
14 response to Mr. Silva's, the very design of this program was
15 to compare the cleaner burning gasoline with the existing
16 gasoline. And what we're seeing is the differences between
17 these two gasolines and separating out the wide variation
18 that occurs between the way people drive, the age of the
19 cars, and the other wide variabilities that we find in gas
20 mileage in any given car or among people. And what we're
21 doing is concentrating on the differences between cleaner
22 burning gasoline and the conventional gasoline.
23 It separates out these wide variations that will
24 occur in any event.
25 CHAIRMAN DUNLAP: Very good. Any other questions
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1 of staff?
2 Okay. It seems that we have no one that signed up
3 to testify on this item. Do we have any written
4 communication we need to report on, Mike?
5 MR. BOYD: None that I'm aware of, Mr. Chairman.
6 CHAIRMAN DUNLAP: Okay.
7 MR. LAGARIAS: I have one more comment.
8 CHAIRMAN DUNLAP: Yes, Mr. Lagarias.
9 MR. LAGARIAS: I'd like to comment on the public
10 outreach program, which I think is remarkably effective.
11 But it's still concentrating on the knowledgeable people,
12 the people that are aware of what's going on. And it hasn't
13 reached the people that actually put the gasoline in their
14 car.
15 And you will recall at our earlier meetings, the
16 representative of the station operators pointed out that
17 when we introduce new fuel, even the pump jockeys didn't
18 know what was going on. So, perhaps the oil companies might
19 consider putting a pamphlet up beside each pump station; so,
20 when the self-service people -- all of us pump gasoline --
21 there's a little pamphlet on the pump that they can find out
22 more about cleaner burning gasoline.
23 CHAIRMAN DUNLAP: Point of purchase advertising I
24 think they call it.
25 MR. VENTURINI: Mr. Lagarias, your point is right
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1 on. And, in fact, that is going to be happening. A number
2 of companies will be putting information out, as the
3 Chairman mentioned, point of sale items to let the public
4 know that they are getting the cleaner burning gasoline.
5 Also, as part of our briefings, we are reaching out to the
6 service station associations and automotive service councils
7 and so forth to brief them, educate them about the program,
8 and also using them as a vehicle to also get information out
9 to their members.
10 SUPERVISOR VAGIM: Mr. Chairman?
11 CHAIRMAN DUNLAP: Supervisor Vagim.
12 SUPERVISOR VAGIM: First, March 1st is the
13 deadline for the refiners to put it out. Can a refiner put
14 out the fuel before that time?
15 MR. VENTURINI: Yes. As a matter of fact, in
16 reality, you're probably going to start seeing what we call
17 cleaner burning gasoline starting to hit probably even this
18 month as refineries complete their turnarounds, as you get
19 all the pipes hooked up and everything. They're going to
20 start trying to make and blend this gasoline.
21 So, we'll probably start seeing some of this fuel
22 being introduced. It may not be totally meeting all of our
23 specs, but they'll be working toward getting the specs by
24 March 1st. And we are planning to begin monitoring the fuel
25 specifications out there so we can kind of see what's
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1 happening in the marketplace.
2 SUPERVISOR VAGIM: And one other question, Mr.
3 Chairman.
4 CHAIRMAN DUNLAP: Sure.
5 SUPERVISOR VAGIM: On the one percent to nine
6 percent swing and the average of three percent, have you
7 identified any particular engine types or types of vehicles
8 for four cylinder, eight cylinder, six cylinder that have
9 any particular propensity to have worse mileage than others?
10 MR. SIMEROTH: Supervisor Vagim, at this point, we
11 haven't. One of the things -- and we're still going through
12 the data on this. Things we're finding are that our test
13 fuel was relatively uniform and was made to -- the 600,000
14 gallons looked like each other. We've been testing
15 conventional fuels as part of the program looking for the
16 energy content of conventional fuels.
17 We're finding the energy content of conventional
18 fuels, which reflects itself in the gas mileage, varies more
19 than the average that we're trying to determine. And that's
20 causing some of the confusion, and makes hard to identify
21 which vehicles are --
22 SUPERVISOR VAGIM: I see. It's hard to find a
23 benchmark from where you're coming from.
24 MR. SIMEROTH: Yes.
25 SUPERVISOR VAGIM: Thank you.
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1 MR. SCHEIBLE: To put it into perspective, we
2 found different fuels could vary as much as nine percent in
3 energy content. So, from one fill up to another, depending
4 on if you bought the fuel with the most energy and the next
5 time with the least energy of conventional gasoline, you
6 could see a nine percent change in fuel economy just because
7 of that.
8 And that's kind of masking the -- that may be a
9 large part of the individual vehicle effect as opposed to
10 different vehicles reacting differently to the fuel.
11 SUPERVISOR VAGIM: I see. Thank you.
12 CHAIRMAN DUNLAP: Okay. Very good. Any other
13 questions of staff?
14 Okay. Then I think we'll move on to the next
15 item. But before we do that, I must compliment Mr.
16 Venturini on his cufflinks. I've not quite seen any lapel
17 buttons used quite that way for "cleaner burning gasoline."
18 I hope that's not a new style trend among the staff. Okay.
19 Let's move on to the second agenda item, 95-13-2,
20 which is a public hearing to consider amendments to the
21 California cleaner burning gasoline regulations, including
22 amendments regarding downstream blending of oxygenates.
23 This agenda item is the consideration of several
24 proposed amendments to our cleaner burning gasoline
25 regulations. The most significant amendment would allow
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1 unoxygenated gasoline to leave a refinery without meeting
2 the standards as long as oxygen would be added downstream of
3 the refinery so that the final product would meet all of the
4 standards.
5 The other proposed amendments are less complex and
6 represent fine-tuning of the rule. They relate to
7 flexibility of compliance and ease of enforcement. This
8 package of amendments will provide additional flexibility to
9 refiners without sacrificing any of the emission benefits of
10 this clean air program.
11 At this point, I'd like to ask Mr. Boyd to
12 introduce the item and begin the staff's presentations.
13 MR. BOYD: Thank you again, Mr. Chairman.
14 As indicated, today, we are proposing several
15 changes. The major proposed change would allow producers of
16 gasoline who will add oxygenates at downstream pipeline
17 terminals or at the bulk plants to take into account the
18 dilution that occurs when oxygenates are blended with the
19 gasoline.
20 As the regulation stands today, all gasoline
21 shipped from a refinery must meet our specifications, except
22 those pertaining to oxygen content, when the gasoline leaves
23 the refinery or let's say the site of importation of the
24 gasoline.
25 Thus, the producer who adds oxygenates at a
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1 downstream location cannot take advantage of the dilution of
2 the benzene content, the aromatic content, the olefin
3 content, or the sulfur content. That occurs when the
4 oxygenate is finally added to the fuel stock.
5 The U.S. EPA now allows credit for this kind of
6 improvement, and we propose to do the same. While sounding
7 simple in content, the execution of this proposal is indeed
8 somewhat complex in order to ensure enforceability of the
9 regulations.
10 I also need to note that making this change will
11 not result in the loss of any of the anticipated emission
12 reductions attributed to cleaner burning gasoline.
13 Our other proposed modifications, as I indicated,
14 are less complex and deal with clarifications and
15 improvements, and to provide flexibility in compliance and
16 ease of enforcement. And they are, first, an extension at
17 thae outset of the regulation of the time that a refiner
18 will have to offset high values of regulated properties in
19 its initial batches of gasoline made under the regulations.
20 Secondly, a provision to let a refiner who's using
21 alternative limits set with our predictive model to switch
22 between flat and averaging limits.
23 Thirdly, a change in the definition of the, quote,
24 "production facility," end quote, in recognition that some
25 refiners' operations are not all on one property; also, a
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1 change in the winter oxygen season for San Luis Obispo, also
2 a clarification of the RVP season in Southern California, a
3 prohibition of mixing finished gasoline and gasoline that
4 lacks oxygen; and, finally, clarification of the calculation
5 of the amount of gasoline that a small refiner may produce
6 until 1998, without meeting all of our standards.
7 And with that summary, I'd now like to introduce
8 Mr. John Courtis, Manager of the Fuels Section of the
9 Stationary Source Division, to give you the staff's detailed
10 presentation.
11 Mr. Courtis.
12 MR. COURTIS: Thank you, Mr. Boyd.
13 Mr. Chairman and members of the Board, what I'm
14 going to present to you today is amendments for the
15 California reformulated gasoline regulations, and those
16 amendments include changes regarding the downstream blending
17 of oxygenates.
18 Over the past year, the ARB staff held a number of
19 meetings with gasoline producers, marketers, and others to
20 discuss implementation issues of California reformulated
21 gasoline regulations.
22 The proposal, as presented to you today, was
23 formed as a result of these discussions. It represents
24 improvements in flexibility of compliance without
25 sacrificing either the enforceability of the regulations or
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1 the environmental benefits.
2 Next slide, please.
3 I would like to provide you with some background
4 information first. This table lists the eight
5 specifications for the California reformulated gasoline. It
6 shows both the flat and the average standards that would
7 apply when gasoline is shipped from the refinery.
8 This table also shows the cap limits that are
9 applied for all the distribution systems.
10 Next, please.
11 Companies are also allowed to comply with the
12 requirements of the California reformulated gasoline
13 regulations by the use of the predictive model. The
14 predictive model allows for alternative gasoline
15 formulations to be produced as long as those gasoline
16 formulations have less or equal emissions with the limits as
17 adopted by the Board.
18 We expect that the majority of gasoline producers
19 in California will make extensive use of the predictive
20 model in order to comply with the California RFG
21 regulations.
22 Next.
23 The proposed amendments presented to you today,
24 again, is a result of meetings that we had held during 1995
25 with oil company representatives and others. We also held
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1 two public workshops to receive comments and discuss the
2 staff's proposals.
3 The latest workshop took place on November 30th of
4 1995, when we discussed the staff report. We believe that
5 you have in front of you copies of the suggested
6 modifications to the original proposal. Most of those
7 modifications have been suggested as the result of public
8 comments received at the November 30th workshop.
9 I would like to add, also, that copies of the
10 proposed modifications are available at the back of the
11 room.
12 Drafts of these modifications have been provided
13 to interested members of the public at the beginning of this
14 week. My presentation of the proposed amendments would
15 include both the original proposal and the proposed
16 modifications.
17 The most significant amendment is to add
18 provisions to the regulation for allowing downstream
19 oxygenate blending.
20 The other amendments, as Mr. Boyd talked about,
21 represent minor technical changes to the California RFG
22 regulations in order to assure a smooth implementation and
23 to improve flexibility.
24 And here in the next slides is a list of the
25 proposed changes.
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1 Next, please.
2 The first amendment that I would like to talk
3 about is the amendment for downstream blending of
4 oxygenates. We call that with the acronym CARBOB, which is
5 an acronym for California reformulated gasoline blendstocks
6 for oxygenate blending.
7 These amendments are patented after the federal
8 U.S. EPA requirement, and the U.S. EPA called their program
9 RBOB.
10 These federal RBOB requirements are already in
11 place in the South Coast Air Basin. The CARBOB is needed to
12 provide some additional flexibility to refiners that use
13 ethanol as the oxygenate of choice. And, again, the
14 requirements of CARBOB are very similar to the federal
15 requirements for RBOB.
16 This schematic gives you an idea of how oxygenates
17 are blended into the various points of the production and
18 distribution system. There are two types of oxygenates
19 commonly used -- MTBE, which is an ether, and ethanol, which
20 is an alcohol.
21 Usually, MTBE is added at the refinery prior to
22 the product being shipped out of the refinery either through
23 the pipeline or with a tank truck.
24 Ethanol is mostly added downstream at the terminal
25 facility. The addition of oxygenates into the gasoline
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1 would help producers of gasoline in meeting the California
2 RFG standards through a dilution effect. Because usually
3 oxygenate does not contain any components like aromatics and
4 others. In addition, oxygenates reduce the concentration of
5 these compounds in the gasoline.
6 Next, please.
7 Existing provisions of the regulations, as it
8 stands now, require compliance with the standards at the
9 production facility. Although it allows the downstream
10 blending of oxygenates, the product must comply with the
11 standards before it leaves the refinery. Refineries that
12 blend downstream of the refinery cannot take advantage of
13 the dilution effects of oxygenates therefore. That is
14 particularly important for refiners that plan to use ethanol
15 as the oxygenate of choice.
16 Next, please.
17 Our proposal would allow noncomplying gasoline to
18 be shipped if downstream blending with oxygenates would
19 result in a complying product. And, again, it is very
20 analogous to the U.S. EPA.
21 Next, please.
22 As I mentioned before, all the other amendments
23 are technical in nature, and I will cover them very briefly.
24 The first is a proposal to include changes that
25 would allow offsets up to 180 days at the start of the
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1 program, which is March 1st of 1996, for companies that
2 choose the averaging provisions.
3 This is important for companies that plan to use
4 the averaging provisions of the regulation.
5 Next, please.
6 The next proposal is to incorporate some changes
7 that allow a smoother administration of the predictive
8 model. The proposed amendment makes it a lot easier for the
9 refiners to switch between the flat and the average limits
10 when they are changing the PM formulations.
11 Refiners could not do that before if there was an
12 outstanding debit for one of the gasoline properties.
13 The next amendment is on the definition of
14 production facility. Some refineries operate tanks that are
15 outside of the main facility. The proposed amendments would
16 allow producers to expand their production facility limits
17 that may allow producers to include offsite tanks in the
18 definition production facility, especially tanks that they
19 have leased and operated under the direction of the
20 producer.
21 The next amendments that are proposed are for the
22 small refiner provisions. If you recall, the California RFG
23 regulations provide small refiners with a two-year extension
24 of the compliance date for four out of the eight California
25 RFG properties.
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1 That extension is subject to a number of
2 conditions for the gasoline that is supplied by the small
3 refiner. We propose today some minor clarifications to the
4 requirements for the gasoline that is supplied by the small
5 refiners.
6 The next amendment is a change in the wintertime
7 oxygenate seasons for San Luis Obispo. In 1992, the Board
8 amended the wintertime oxygenate regulations for San Luis
9 Obispo to align the control period with the period for the
10 areas that supply product to San Luis Obispo.
11 The regulation, California reformulated gasoline
12 regulations did not have that alignment. Our proposal is to
13 do the same thing for the California RFG oxygenate season.
14 Next, please.
15 The next amendment would affect the applicability
16 of RVP limit in the South Coast Air Basin. This is
17 basically to correct a drafting error for phasing in the RVP
18 season in the March through April period of 1996. The
19 proposed amendments will assure that the RVP limits would
20 apply to the refineries during startup period.
21 The last amendment and my least is proposed for
22 enforcement reasons. We propose some limits on the blending
23 of California gasoline with nonoxygenated blendstocks. This
24 amendment will help in preventing the addition of
25 noncomplying product into the California gasoline. It is
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1 required that certain demonstrations are made by the
2 producers and the blenders.
3 The staff looked at the environmental impacts over
4 the proposed amendments and we believe that the proposed
5 amendments will not change the environmental benefits over
6 the California RFG regulations.
7 Looking at the economic impacts, the staff did not
8 identify any adverse economic impacts. We believe that the
9 proposed amendments will add significant flexibility to
10 refiners with potential cost savings, and recommend that the
11 Board approve the proposed changes.
12 That concludes my presentation. I would like to
13 add that Mr. Tom Jennings, Senior Staff Counsel, is at the
14 end of the table, and Mr. Jennings drafted most of the
15 regulatory language of the proposed changes.
16 We are ready to answer any questions. Thank you.
17 CHAIRMAN DUNLAP: Any of the Board members have
18 any questions?
19 Okay. Mr. Calhoun.
20 MR. CALHOUN: In one of the slides, there's a
21 statement, "For enforcement reasons, we propose limits on
22 the blending of California gasoline with nonoxygenated
23 blendstocks, unless certain demonstrations are made."
24 Would you care to elaborate on that a little?
25 MR. JENNINGS: Certainly, Mr. Calhoun. One of the
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1 key principles of the regulation is that we have the more
2 stringent that apply at the refinery or import facility, and
3 then the less stringent cap limits that apply throughout the
4 distribution system.
5 What we want to do is make sure that every gallon
6 of gasoline that comes into the California distribution
7 system is made subject to the refinery limits at one point,
8 when it is converted from nongasoline to gasoline.
9 So, theoretically, the regulation has always said
10 that every person who produces gasoline has to meet those
11 refinery limits, but it was relatively difficult to
12 administer that in terms of a person who might be blending
13 blendstocks into reformulated gasoline some point downstream
14 of the refinery.
15 So, what we did is put in a provision that was
16 very closely patterned after a provision the EPA has that
17 prohibits adding nonoxygenate blendstocks into gasoline
18 unless the person can prove that those blendstocks
19 independently meet all of the California reformulated
20 gasoline requirements.
21 We're proposing two exceptions. One is a very
22 limited exception when transmix is used at a terminal, and
23 we'd allow that to be done in accordance with the protocol.
24 And also, we allow companies, with approval of the ARB, to
25 add blendstocks into off-spec gasoline to bring that
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1 gasoline into spec. Sometimes you have blendstocks that
2 would meet most of the requirements by far, but might not
3 have oxygen in them or something like that.
4 But we want people to be able to bring that
5 gasoline into spec.
6 MR. CALHOUN: How will the staff know the
7 composition of the blendstock? Will the companies tell you
8 this, or what?
9 MR. JENNINGS: Well, what we tried to do -- and,
10 again, the more complex and, quote, "flexible," unquote,
11 regulation you have the harder it is to enforce. And it
12 always creates tension with us.
13 With the proposed language, we no longer -- the
14 advantage of the proposed language is that we no longer have
15 to prove that those blendstocks didn't meet the standard.
16 Rather, we've put the responsibility on the blender to
17 demonstrate that those meet the standards. And unless the
18 blender can do that, blending the blendstocks into the
19 downstream gasoline is prohibited.
20 MR. CALHOUN: Thank you.
21 CHAIRMAN DUNLAP: Okay. Any other questions of
22 staff before we get into calling the witnesses forward?
23 All right. We have three people that have signed
24 up to testify on this item. I'd like to have them come
25 forward.
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1 Mike Kulakowski of Texaco, followed by Cindy
2 Hasenjager from the California Renewable Fuels Council, and
3 Robert Warden from Chevron, if you'd proceed in that order.
4 Good morning.
5 MR. KULAKOWSKI: Good morning, Mr. Chairman,
6 members of the Board. My name is Mike Kulakowski. I'm a
7 staff engineer with Texaco Refining & Marketing based on Los
8 Angeles.
9 I've been involved with these regulations since
10 before they were passed. I'm very familiar with it. I've
11 appeared before you before, and appreciate the opportunity
12 to be here today.
13 Texaco has participated cooperatively with the ARB
14 staff in the development of the changes before you today.
15 We believe that these changes will provide refiners with
16 greater flexibility in meeting the California RFG
17 requirements without any changes to the air quality benefits
18 of the regulation.
19 Texaco further believes that these changes
20 represent an important step in the successful implementation
21 of the program, and we support the staff proposal.
22 However, there is one more set of issues that we
23 have to overcome before March of 1996. These are
24 collectively known as the "overlap" issues.
25 As you know, after March 1st, 1996, both EPA and
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1 the ARB will regulate reformulated gasoline in California.
2 In the areas where these requirements do not precisely
3 overlap one another, simultaneous compliance can erode a
4 refiner's flexibility or result in needless and duplicative
5 reporting.
6 An example is in gasoline vapor pressure. ARB
7 sets a ceiling of 7.0 pounds per square inch, while EPA sets
8 a floor of 6.6 pounds per square inch. This is a very
9 narrow range which will significantly hamper refiners'
10 blending flexibility.
11 Over the last year and a half, we have met and
12 worked cooperatively with ARB and EPA staff to address these
13 overlap issues, but much work still remains. We have a
14 meeting scheduled January 12th, 1996, in Washington, D.C. to
15 address the remaining overlap issues with EPA.
16 Your staff has been very helpful and cooperative
17 in working on these issues, and we find that the presence of
18 your staff makes these meetings with EPA much more
19 productive.
20 So, Texaco requests that ARB staff versed in these
21 overlap issues attend this important meeting in Washington.
22 That concludes my written comments. I'll be happy
23 to answer any questions.
24 CHAIRMAN DUNLAP: Okay. Mr. Boyd, can you or your
25 RFG team say anything about this January 12th meeting in
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1 Washington, D.C.? Have we been invited?
2 MR. BOYD: We're aware of the meeting. We think
3 it is advisable to be at the meeting and are preparing to
4 request appropriate approvals to so attend.
5 And we, as mentioned, we've been on top of this
6 item working with the industry in the past.
7 CHAIRMAN DUNLAP: Right. We'll do everything we
8 can to make clarity happen, and we -- I won't say we're in
9 complete lock step with everything you propose relative to
10 those issues, but certainly we share many of those concerns.
11 And, Mr. Boyd, I would, of course, entertain
12 appropriate travel requests to send able representatives
13 from the Board.
14 Thank you for suggesting it.
15 MS. EDGERTON: Mr. Kulakowski, I want to thank you
16 for your support and working with the Board, and I'd also
17 like to thank you for wearing the pin. I think that looks
18 real good -- cleaner burning gasoline.
19 CHAIRMAN DUNLAP: But no cufflinks.
20 MS. EDGERTON: We're all together. Well, some
21 people have to wear them as cufflinks and some of them as
22 pins. Thank you.
23 CHAIRMAN DUNLAP: Thank you.
24 SUPERVISOR SILVA: Mr. Chairman.
25 CHAIRMAN DUNLAP: Yes, Mr. Silva.
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1 SUPERVISOR SILVA: Yes, Mr. Kulakowski. Real
2 quick. When a refinery -- from the time the gasoline leaves
3 the refinery production until it actually hits the service
4 station pumps, how long does that take?
5 MR. KULAKOWSKI: Typically, it takes approximately
6 six weeks.
7 In the past, it has taken about six weeks to get--
8 when we make a change in vapor pressure to get from a
9 refinery all the way through to retail. There you're
10 dealing with a single parameter and you have quite a bit of
11 leverage. You can -- back to when we were blending to 7.8
12 or 9 pounds per square inch, you could go quite a bit lower,
13 and we have a lot of leverage to turn the tanks over.
14 With cleaner burning gasoline, many of the
15 parameters are set so low that you can't get a lot of
16 leverage. You can't go much below the specifications. So,
17 I think a slightly longer leadtime, as staff has proposed,
18 the March through June, in essence, is appropriate.
19 SUPERVISOR SILVA: Okay. Thank you very much.
20 CHAIRMAN DUNLAP: Okay. Thank you.
21 MR. KULAKOWSKI: Thank you.
22 CHAIRMAN DUNLAP: Ms. Hasenjager from the
23 California Renewable Fuels Council.
24 It seems we have your comments in writing.
25 MS. HASENJAGER: Yes, you do.
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1 CHAIRMAN DUNLAP: Okay. You're welcome to cover
2 them verbatim. I don't think you need to. You could
3 highlight them if you like, and I think we can follow along.
4 MS. HASENJAGER: Right. I'll try to just
5 highlight them.
6 Good morning, Chairman Dunlap and Board members.
7 My name is Cindy Hasenjager, and I'm the Executive Director
8 of the California Renewable Fuels Council.
9 The Council supports the efforts of the Air Board
10 in developing regulation to allow for downstream blending of
11 oxygenates. It's obvious that staff has put a great deal of
12 time and effort into these amendments which move toward
13 compliance flexibility and fuel neutrality.
14 Staff has been very diligent in getting industry
15 input on the development of these amendments to ensure that
16 they are workable, while maintaining the overall integrity.
17 However, like Mr. Kulakowski, I'd like to raise an
18 issue that has yet to be resolved, and that's the --
19 currently, there is an RVP allowance for ethanol blended
20 gasoline during the month of October. The amendments that
21 you have before you do not carry that RVP allowance forward.
22 I recognize that it is a commitment of this agency
23 to provide policy that is oxygenate neutral. I would
24 suggest that the next step towards total fuel neutrality,
25 which will have the least impact on all affected parties, is
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1 to continue this October RVP allowance beyond 1995.
2 I also need to stress that this is a time-
3 sensitive issue and that it's important to get some
4 resolution to give clear direction to oxygenate blenders for
5 planning purposes for the 1996 carbon monoxide control
6 season.
7 Representatives of the ethanol industry have been
8 in discussion with ARB staff regarding this issue for some
9 time. Staff, however, is reluctant to propose extending the
10 existing RVP tolerance towards October because of their
11 concerns regarding ozone exceedances.
12 Now, up until very recently, tests of 10 percent
13 ethanol blends had not been conducted by this agency.
14 However, at this time, our industry, as well as other
15 agencies in this State, California Department of Food & Ag,
16 the California Energy Commission, the oil, automobile, rice,
17 and ethanol industry are working with ARB staff to develop a
18 test protocol to test 10 percent ethanol blends.
19 The objective of this test is to determine the
20 emissions impacts, including the ozone forming potential of
21 two fuels -- a 10 percent ethanol blend and an 11 percent
22 MTBE blended California cleaner burning gasoline.
23 Now, it's been our industry's long-standing
24 position that ethanol blended fuels should be evaluated and
25 judged on their ozone forming potential. The industry feels
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1 that the proposed tests will demonstrate that 10 percent
2 ethanol blends provide the maximum carbon monoxide reduction
3 that's available without exacerbating ozone.
4 We would ask that this Board not set policy that
5 judges ethanol fuels before the results of this test are
6 complete.
7 CRC supports these amendments as part of the
8 larger objective to provide fuel neutrality.
9 Now, as I've suggested, the next step towards fuel
10 neutrality is to continue the existing October RVP
11 tolerance. The industry stands ready to continue our work
12 with staff to find the best way of doing this and resolving
13 this issue.
14 The Council would urge the Board to direct staff
15 to find an administrative remedy that will continue the
16 existing RVP allowance for gasoline blends of at least 4.9
17 percent ethanol during the month of October.
18 Thank you. Any questions?
19 CHAIRMAN DUNLAP: As you understand it, what
20 barrier is there to the October -- at this juncture -- to
21 the October issue?
22 Do you mean the study primarily, the assessment?
23 MS. HASENJAGER: Well, right now, the October RVP
24 tolerance is not continued with the oxygen cap during
25 October and there is an RVP waiver for 10 percent ethanol
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1 blends October, also (sic). However, October falls within
2 the RVP control season and also the oxygen cap.
3 So, it is really the picture of the conflict
4 between the regulation and the legislation, which is SB
5 1166, that allows the RVP tolerance.
6 CHAIRMAN DUNLAP: Okay. Question, Mr. Calhoun?
7 MR. CALHOUN: Yes. I don't understand how you can
8 do this administratively. This is a regulation, is it not,
9 that requires the limitation on the RVP? So, how do you do
10 it administratively?
11 MR. KENNY: Mr. Calhoun, that's correct. Right
12 now, the reformulated gasoline regulation does have
13 limitations on October. And what Ms. Hasenjager is asking
14 for is a modification to that regulation and to the
15 standards of that regulation to allow for use of ethanol in
16 October.
17 MR. CALHOUN: I thought I heard Ms. Hasenjager say
18 find some administrative remedy for that.
19 MS. HASENJAGER: If I could interject, by
20 "administrative remedies," I mean whatever it would take to
21 change the regulation or whatever staff advises us is the
22 best way to proceed.
23 CHAIRMAN DUNLAP: Okay. Thank you.
24 MS. HASENJAGER: Thank you.
25 CHAIRMAN DUNLAP: Any other questions of the
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1 witness? Okay. Thank you, Cindy.
2 Our final witness, Bob Warden from Chevron.
3 Good morning.
4 MR. WARDEN: Good morning, Mr. Chairman, members
5 of the Board. My name is Bob Warden from Chevron USA
6 Products Company.
7 Today, I'm speaking in behalf of the Don Bea,
8 who's the Chevron Products' Issue Manager for California
9 reformulated gasoline.
10 The changes being considered by the Board today
11 will provide compliance flexibility to the producers of this
12 cleaner burning gasoline. In addition, the proposed changes
13 will allow gasoline producers to blend oxygenates downstream
14 of their refineries.
15 We have worked closely with CARB staff in the
16 development of these proposed changes. Staff has seriously
17 evaluated our comments and incorporated many of them in
18 their suggested modifications to the original proposals.
19 We now completely support these amendments to
20 California RFG regulations as modified by the staff today --
21 proposed today.
22 I will be pleased to answer any questions.
23 CHAIRMAN DUNLAP: Any questions of the witness?
24 Very good. Thank you for your time.
25 All right. That appears to conclude the public
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1 testimony. Is there anyone we've missed? All right.
2 With that, I'd ask staff to summarize any written
3 comments that we've received. If my package is correct, we
4 have about two letters; is that right?
5 MR. JENNINGS: I think we only have one written
6 comment from someone who -- oh, we have two written
7 comments. One is from Ultramar. Ultramar supports the
8 proposal with the staff modifications.
9 They, in particular, want to emphasize their
10 support of the change to the definition of production
11 facility.
12 We have a comment from a gentleman named Richard
13 Sealy. He had two points. One was that he believes that
14 the oxygen content requirement should apply year-round in
15 California. As you know, outside the wintertime oxygenate
16 control period, refiners are allowed to use the predictive
17 model to go below 1.8 weight percent oxygen.
18 We believe that during that period, the oxygen
19 content controls aren't necessary as long as the refiner can
20 demonstrate that they satisfy all of the criteria under the
21 predictive model.
22 I might note that the federal reformulated
23 gasoline regulations, which by June will be applying in most
24 of the State, have a 2 percent floor. So, in a sense, Mr.
25 Sealy's request is granted by that.
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1 His second point was that he wanted to make sure
2 that we had mechanisms to make sure that oxygenate was added
3 downstream. And we have made every effort to have
4 mechanisms like that, including a provision that producers
5 of CARBOB conduct a quality assurance program to make sure
6 that the oxygenate is being added as they designate it.
7 CHAIRMAN DUNLAP: Very good. Thank you. Is that
8 it?
9 MR. JENNINGS: Yes.
10 CHAIRMAN DUNLAP: Mr. Boyd, do you have anything
11 else to add?
12 MR. BOYD: Just a concluding remark. Again, to
13 reiterate some of what I believe I and the staff said, the
14 proposals that we have made to you we think will provide
15 greater flexibility to refiners as they continue to prepare
16 to bring us cleaner burning gasoline next year.
17 We think, in providing this flexibility, as I said
18 again, we will not compromise the benefits of cleaner
19 burning gasoline with regard to its effectiveness and, thus,
20 the emissions reductions. Therefore, we recommend your
21 adoption of the staff proposal.
22 CHAIRMAN DUNLAP: Very good. Thank you.
23 Okay. I will now close the record on this agenda
24 item; however, the record will be reopened when the 15-day
25 notice of public availability is issued. Written or oral
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1 comments received after this hearing date, but before the
2 15-day notice is issued will not be accepted as part of the
3 official record on this agenda item.
4 When the record is reopened for a 15-day comment
5 period, the public may submit written comments on the
6 proposed changes, which will be considered and responded to
7 in the final statement of reasons for the regulation.
8 Just a reminder to the Board members of our policy
9 concerning ex parte communication. Again, while we may
10 communicate off the record with outside persons regarding
11 Board rulemaking, we must disclose the names of our contacts
12 and the nature of the contents on the record.
13 And this requirement applies specifically to
14 communications which take place after notice of the Board
15 hearing has been published.
16 Are there any communications which need to be
17 disclosed? Okay.
18 With that, we have before a resolution that we've
19 had for a couple minutes.
20 Why don't we take a moment and review it, and then
21 we'll come back and see if we can take some action here.
22 The Chair would entertain a motion and a second to
23 move this item.
24 SUPERVISOR VAGIM: Mr. Chairman, I move for
25 adoption of Resolution 95-48.
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1 CHAIRMAN DUNLAP: Thank you, Supervisor Vagim. Is
2 there a second?
3 SUPERVISOR SILVA: Second.
4 CHAIRMAN DUNLAP: Supervisor Silva, thank you.
5 I have a motion and a second. Is there any
6 further discussion by members of the Board?
7 DR. BOSTON: Mr. Chairman?
8 CHAIRMAN DUNLAP: Yes, Dr. Boston.
9 DR. BOSTON: I wasn't here for part of the
10 presentation, but I have read the proposals. Is it
11 permissible for me to vote on this issue?
12 CHAIRMAN DUNLAP: Yes, it is.
13 DR. BOSTON: Thank you.
14 CHAIRMAN DUNLAP: And welcome, by the way. We've
15 missed you.
16 DR. BOSTON: Thank you.
17 CHAIRMAN DUNLAP: Okay. With that, we have a
18 motion and a second. Will the Board Secretary please call
19 the roll for a vote on Resolution 95-48.
20 MS. HUTCHENS: Boston?
21 DR. BOSTON: Yes.
22 MS. HUTCHENS: Calhoun?
23 MR. CALHOUN: Aye.
24 MS. HUTCHENS: Edgerton?
25 MS. EDGERTON: Aye.
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1 MS. HUTCHENS: Hilligoss?
2 MAYOR HILLIGOSS: Aye.
3 MS. HUTCHENS: Lagarias?
4 MR. LAGARIAS: Aye.
5 MS. HUTCHENS: Silva?
6 SUPERVISOR SILVA: Aye.
7 MS. HUTCHENS: Vagim?
8 SUPERVISOR VAGIM: Aye.
9 MS. HUTCHENS: Chairman Dunlap.
10 CHAIRMAN DUNLAP: Aye.
11 MS. HUTCHENS: Passes 8-0.
12 CHAIRMAN DUNLAP: Very well. Thank you. I'd like
13 to compliment the staff on a fine presentation. Mr.
14 Courtis, Mr. Jennings, Mr. Venturini, Mr. Simeroth, well
15 done. Thank you.
16 Okay. That brings us to the third agenda item.
17 And if staff will change places quietly, I'll continue right
18 along.
19 Again, I'd like to remind those who may have just
20 joined us in the audience that if you wish to present
21 testimony to the Board, please sign up with the Board
22 Secretary sitting to my left.
23 And if you have written statements, please provide
24 her with 20 copies so that they be distributed at the
25 meeting.
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1 The third agenda item is 95-13-3, which is a
2 public hearing to consider the adoption of the national
3 security exemption for military tactical vehicles and
4 equipment.
5 We have before us today a request by the military
6 to adopt amendments to the California regulations which
7 would provide exemptions for military tactical vehicles and
8 equipment.
9 These exemptions would be allowed in accordance
10 with the U.S. EPA's national security exemption and
11 exclusion provisions.
12 And, at this point, if staff has taken their
13 places, I'd ask Mr. Boyd to begin this item by introducing
14 it. Jim.
15 MR. BOYD: Thank you, Chairman Dunlap.
16 I think, as the Board members know, in general,
17 States in this nation have to align their programs with the
18 regulations adopted by the U.S. EPA as provided by the
19 Federal Clean Air Act.
20 But also, as this Board knows, in the area of
21 motor vehicle control emissions, California is, for the most
22 part, the only State authorized to adopt its own program and
23 to adopt more stringent programs and regulations than
24 federal requirements provide.
25 Currently, California has more stringent standards
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1 for light- and medium-duty vehicles and for diesel heavy-
2 duty off-road engines over 175 horsepower beyond the year
3 2001.
4 It is this latter regulation that prompted the
5 U.S. Military to request that the Board adopt the U.S. EPA's
6 national security exemption and exclusion provisions for
7 military tactical vehicles and equipment.
8 Since California currently does not have any
9 provisions for the exemption of these types of vehicles and
10 equipment, but we are totally sympathetic to the reason
11 therefore, we have developed a proposal which would amend
12 Title 13 of the California Code of Regulations. This
13 proposed amendment will provide the military with the needed
14 flexibility without a significantly adverse impact to
15 California air quality. And, overall, California standards
16 continue to be, in the aggregate, much more stringent than
17 the federal program.
18 With that brief introduction, I'd like to call
19 upon Ms. Veronika Pesinova of the Mobile Source Division who
20 will provide you with the staff's presentation.
21 Ms. Pesinova.
22 MS. PESINOVA: Thank you, Mr. Boyd, Chairman
23 Dunlap, and members of the Board. Good morning.
24 Today, I will present the staff's proposal to
25 adopt provisions that would exempt military tactical
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1 vehicles and equipment from California emission standards
2 and regulations for on-road motor vehicles and for engines
3 used in off-road vehicles and equipment.
4 Such provisions would incorporate the existing
5 federal rules and guidelines providing for a national
6 security exemption. This exemption from California
7 standards is necessary for the military to maintain a
8 uniform combat ready fleet worldwide, which is necessary for
9 the national security interest.
10 I will begin by providing a background on the U.S.
11 EPA regulations for military tactical vehicles and
12 equipment. Recognizing the unique requirements of military
13 tactical vehicles and equipment, the U.S. EPA determined
14 that it may be difficult, burdensome, and contrary to
15 national security interests to require that these vehicles
16 and equipment meet federal new engine emission standards.
17 Several years ago, the EPA established two
18 categories whereby military vehicles and equipment may be
19 exempted from emission standards. These categories are
20 referred to as national security exclusions and exemptions.
21 In the exclusion category, the U.S. EPA excludes
22 such military combat or tactical vehicles as armored tanks
23 from the federal motor vehicle regulations.
24 These types of vehicles were never intended to be
25 subject to emission standards due to their being designed
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1 solely for combat use.
2 In addition, the military tactical vehicles that
3 do not qualify for exclusions may be granted national
4 security exemptions by the U.S. EPA. These vehicles may be
5 similar to commercial designed vehicles, but are modified
6 for military operations.
7 In the armored vehicle category, exemptions apply
8 mostly to trucks that transport weapon systems and combat
9 and support personnel during military operations.
10 In the off-road vehicle and equipment category,
11 there's portable equipment such as compressors and
12 generators, and construction equipment such as tractors,
13 scrapers, and forklifts.
14 All of these vehicles and equipment must be
15 capable of being deployed and maintained worldwide in
16 remote, harsh environments as well as in urban locations.
17 Also, military technicians must be able to use
18 common technical manuals and interchangeable parts to repair
19 the equipment at any location.
20 In 1988, the U.S. EPA developed guidelines for
21 national security exemption procedures for fiscal years 1988
22 to 1995, to cover on-road vehicles. They are presently
23 developing new guidelines for on-road vehicles procured in
24 fiscal years 1996 to 2000 and for off-road vehicles and
25 equipment.
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1 The guidelines would essentially prescribe that
2 the military agency would request an exemption and that EPA
3 would grant the exemption under the condition that the
4 vehicles or equipment comply with the federal emission
5 standards in effect in the first year of procurement.
6 EPA would then issue a certificate of conformity
7 that would allow manufacturers who were awarded the contract
8 for procurement to manufacture those vehicles, engines, or
9 equipment in the same configuration for the duration of the
10 five-year contract.
11 Staff proposes that the ARB adopt the federal
12 provisions providing for national security exclusion and
13 exemptions, thus aligning with the U.S. EPA's regulations
14 and policies for military tactical vehicles and equipment.
15 The ARB would defer to the U.S. EPA the
16 administration of the program and the granting of national
17 security exemptions and exclusions.
18 In addition, staff is proposing that California
19 only exemptions be granted to certain vehicles and equipment
20 where the California standards differ from federal
21 standards.
22 For example, two categories that have unique
23 California standards are off-road diesel engines starting in
24 the year 2001 and utility engines starting in 1999.
25 Exemptions to those California standards would be
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1 granted only to military tactical vehicles or equipment that
2 do not require a federal exemption and that meet all
3 applicable federal emission standards and regulations.
4 This special exemption provision from California
5 emission standards is necessary for the military to provide
6 for and maintain a uniform combat ready fleet that can be
7 deployed worldwide.
8 Lastly, it is proposed that the U.S. Department of
9 Defense will be required to submit to the ARB a list of
10 types of all vehicles and equipment located in the State of
11 California that are excluded and/or exempted under these
12 provisions by January the 1st, 1997.
13 This list would be updated by the Department of
14 Defense as new types of vehicles and equipment would be
15 added.
16 This information will allow ARB to track the types
17 of vehicles and equipment that would be excluded or
18 exempted.
19 Besides the tactical vehicles and equipment, the
20 military also uses in California an administrative fleet
21 consisting of light-, medium-, and heavy-duty vehicles.
22 Although vehicles owned by the military or by military
23 personnel are not required to be registered in California,
24 the military has been procuring only ARB certified
25 nontactical vehicles to be used in California. And it has
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1 committed to the ARB staff that they will continue to do so.
2 Therefore, these vehicles would not be subject to
3 the national security exemption and exclusion provisions.
4 The staff's proposal would have minimal
5 environmental impact. The number of military tactical
6 vehicles and equipment that could possibly be exempted
7 amount to less than 21,000 units.
8 Due to this relatively small number of vehicles
9 and especially due to the very low usage per year, the total
10 possible emissions increase would amount to less than 0.1
11 percent of the mobile source inventory.
12 In addition, it should be noted that the ARB and
13 the U.S. EPA are developing uniform emission standards for
14 both on- and off-road heavy-duty engines that will cut
15 emissions in half by the 2004 time frame.
16 This more than compensates this minimal air
17 quality impact of the military exemption. Concerning the
18 economic impact of the proposal, the exemption of military
19 vehicles and equipment would have no associated costs.
20 There will be no adverse economic impact on small
21 business or to industry, nor would it adversely affect the
22 economy of the State. In fact, these proposed amendments
23 would align California regulations with federal exclusion
24 and exemption regulations and policies, which would provide
25 a benefit for the military and the ARB.
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1 In conclusion, to allow for the uniform combat
2 ready fleet, which is required for the purpose of the
3 national security, staff recommends that the Board adopt the
4 federal provisions providing for the exclusion or exemption
5 of military tactical vehicles and equipment in a California
6 only exemption that would be automatically granted to
7 tactical vehicles and equipment that meet the federal
8 emission standards.
9 In addition, the U.S. Department of Defense would
10 be required to submit to the ARB a list of all types of
11 excluded and exempted vehicles and equipment located in the
12 State of California by January the 1st, 1997. This list
13 would be updated by the Department of Defense as new types
14 of vehicles and equipment would be added.
15 We will be happy to answer your questions.
16 MR. LAGARIAS: Thank you. Are there any questions
17 from the Board?
18 Dr. Boston.
19 DR. BOSTON: Could you explain to me what the
20 purpose of the list is? If these vehicles are only going to
21 be exempted anyhow, why do we need to bother the Department
22 of Defense with providing us a list every year?
23 MR. SHEARS: Well, we thought it would be
24 reasonable, since we are allowing a California only
25 exemption, that we -- at least to get somewhat an idea of
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1 the types of vehicles that would be subject to this
2 exemption. And it's not to be a work-intensive type of list
3 at all. That's why we're calling it for vehicle types.
4 We're not asking for a total list of every
5 vehicle. That would be very work intensive. And I know the
6 military was concerned about that.
7 We're essentially wanting to know about just the
8 types of vehicles that the military -- and particularly, as
9 time goes on, they may be requesting other types of vehicles
10 to be exempted, and we wanted to be able to track that.
11 That's all. Just see how the program's working.
12 MS. PESINOVA: And also for the emission inventory
13 purposes, so our emission inventory group knows, you know,
14 what to include in the emission inventory model.
15 DR. BOSTON: Do you know what the emissions from a
16 tank are?
17 MS. PESINOVA: No.
18 MR. SHEARS: Now, we're looking for the exempted
19 vehicles, which are basically not -- the tanks fall under
20 excluded which, of course, they are not subject to emission
21 standards.
22 These vehicles are subject to emission standards,
23 generally federal emission standards, and we just want to
24 see how many types of vehicles are going to be meeting these
25 types of standards.
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1 DR. BOSTON: So, you'll get types and numbers. Is
2 that what you want?
3 MR. SHEARS: Yeah.
4 MS. PESINOVA: Right.
5 DR. BOSTON: Okay.
6 CHAIRMAN DUNLAP: Any other questions of staff on
7 this item?
8 All right. Very good. We have one witness.
9 We'll ask Captain Kathy Dodge from the U.S. Department of
10 Defense to come forward.
11 Good morning.
12 CAPTAIN DODGE: Good morning, Chairman Dunlap,
13 Board members.
14 I'm Captain Kathy Dodge. I'm here representing
15 Rear Admiral William Senter (phonetic), who is the
16 Commander, Naval Base, San Francisco. He's also the
17 Department of Defense appointed regional environmental
18 coordinator for EPA Region IX.
19 The item before you concerns a proposal by your
20 staff to create a national security exemption for military
21 tactical vehicles and equipment to be included in your
22 regulations establishing off-road diesel engine emission
23 standards.
24 DOD strongly supports the staff proposed adoption
25 of these exemptions. We fully concur with the conclusions
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1 and recommendations contained in the staff report. Without
2 such an exemption, California's new engine emission
3 standards will have a major impact on military operations in
4 California and military readiness generally.
5 I want to emphasize our agreement with the
6 conclusion in the staff report that this exemption is
7 necessary for the military to maintain a uniform combat
8 ready fleet worldwide.
9 DOD's tactical vehicles and equipment are all
10 integral parts of a carefully balanced fighting force
11 procured and maintained on a fleetwide basis.
12 Tactical vehicles and equipment must be uniform
13 throughout the world in order to facilitate the training of
14 mechanics, the ready availability of parts and replacement
15 engines, and repair on the battlefield.
16 Moreover, the California National Guard and
17 Reserve components, as an integrated part of our nation's
18 combat force, must train and fight with the same equipment
19 used by active-duty forces worldwide.
20 Consequently, designing and procuring a separate
21 fleet of tactical vehicles and equipment for California
22 would significantly impair military operational readiness.
23 With regard to the proposed annual reporting
24 requirements, we support technical amendments proposed by
25 your staff to more accurately reflect the staff's intention
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1 that DOD furnish the list of the types of tactical equipment
2 subject to the exemption as opposed to an individual listing
3 of all exempted vehicles and equipment.
4 The tracking and listing of thousands of tactical
5 vehicles and equipment items in California would be
6 extremely resource intensive and would not result in any
7 substantial air quality benefits.
8 On this note, I would like to add that the
9 Department of Defense is fully committed to programs with
10 substantive air quality benefits.
11 As an example, we are exceeding requirements for
12 alternative fuel vehicles, including electric, in our
13 fleets.
14 Our light- and medium-duty fleet vehicles meet
15 California emission standards and fully participate in the
16 California smog testing programs. We also wish to express
17 our appreciation to your staff, in particular Mr. Mike
18 Terris and Ms. Veronika Pesinova, for their timely and
19 cooperative responses to our DOD concerns on this issue.
20 Finally, I take this opportunity to ask your
21 assistance in quickly resolving another problem regarding
22 our inventory of tactical equipment in California.
23 Currently, our portable tactical equipment is
24 subject to regulation by each air district in California as
25 stationary sources. This patchwork of regulation is causing
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1 significant problems for the military services.
2 AB 531 signed by the Governor provides a sensible
3 framework for solving these problems through a statewide
4 registration program. We have started working with your
5 staff on the development of implementing regulations that
6 will accommodate our military requirements as intended by
7 the Legislature in AB 531.
8 We would like to work with you to complete these
9 regulations as quickly as possible. In the interim, we hope
10 that you will assist us in obtaining temporary relief from
11 the problems that we are currently experiencing. One
12 specific request is the possibility of reclassifying this
13 equipment as mobile sources instead of their current
14 stationary classification.
15 Again, on behalf of Rear Admiral Senter and the
16 Department of Defense, we appreciate your efforts in support
17 of our national defense mission, and ask adoption of the
18 staff report as amended.
19 I have a member of my staff, Mr. Randall Friedman
20 here, to answer any questions you may have on these issues.
21 Thank you.
22 CHAIRMAN DUNLAP: Thank you, Captain.
23 Any questions of our witness? Yes, Dr. Boston.
24 DR. BOSTON: Captain, when I was in the Service,
25 the only electric vehicles we had were golf carts. Do you
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1 mean you have --
2 (Laughter.)
3 DR. BOSTON: -- some other ones now that --
4 CAPTAIN DODGE: Yes.
5 DR. BOSTON: -- you could tell us about?
6 CAPTAIN DODGE: Randy?
7 CHAIRMAN DUNLAP: Now, don't be moving up, Gene,
8 the item here.
9 (Laughter)
10 MR. FRIEDMAN: Yes, the Department of Defense has
11 a number of programs. Our largest program is the CNG
12 vehicles. In fact, many of our facilities this year are
13 putting in the fueling facilities. And, incidentally, I
14 would add that those fueling facilities are generally going
15 to be open to the public as well, which is going to be
16 solving a problem for providing access to CNG where there's
17 no other feasible way to make that available.
18 We do have an electric vehicle program. There are
19 some electric vehicles. This is not as well developed as
20 the CNG program, but it is something that is being -- is an
21 active program. And, as the vehicles become more available,
22 it's the intent to purchase them and integrate them into our
23 fleets.
24 MS. EDGERTON: Can you comment? It's my
25 understanding that there's some technical advantages from an
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1 electric tank or some of the electric vehicles being used in
2 the fleet, something about they can't be detected as easily?
3 MR. FRIEDMAN: Well, the only place right now
4 where we are, you know, actively using the electric vehicles
5 is for the general fleet vehicles. And where they're
6 particularly working out is, you know, a lot of our sedans
7 are just used for errand trips on bases. They're
8 essentially perfect candidates for electric-type vehicles,
9 because their typical might have only five or ten miles of
10 use, but that's five or ten miles going from one building to
11 the next building, or going across the base.
12 And it's those types of areas where we're looking
13 at both the CNG and the electric vehicle. But the CNG is --
14 our goal is to double the federal requirement for the
15 procurement of those vehicles.
16 MS. EDGERTON: Perhaps that's not some of the
17 tactical uses under the other vehicles is not what you're --
18 MR. FRIEDMAN: Right. This is for nontactical --
19 MS. EDGERTON: -- particularly doing.
20 MR. FRIEDMAN: Right.
21 MS. EDGERTON: Yeah. Because I know there is some
22 value tactically on that. Thank you.
23 CHAIRMAN DUNLAP: Thank you very much. Okay. For
24 the record, does staff have any communications to summarize
25 for us on this item?
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1 MR. SHEARS: We just received one letter from the
2 Office of the Undersecretary of Defense. And essentially
3 our previous commenter just summarized that letter.
4 CHAIRMAN DUNLAP: Okay. Mr. Boyd, do you have
5 anything to add?
6 MR. BOYD: No, Mr. Chairman. I would just urge
7 adoption of the staff recommendation.
8 CHAIRMAN DUNLAP: Very good. Thank you.
9 Since all testimony and written submissions and
10 staff comments on this item have been entered into the
11 record and the Board has not granted an extension of the
12 comment period, I'm officially closing the record on this
13 portion of Agenda Item 95-13-3.
14 Written or oral comments received after the
15 comment period's been closed will not be accepted as part of
16 the official record on this agenda item.
17 Again, we must cover ex parte communications. Do
18 any of my colleagues on the Board have anything to disclose?
19 All right. We have before us or will in about 30
20 seconds a copy of Revolution -- Revolution!
21 (Laughter.)
22 CHAIRMAN DUNLAP: -- Resolution 95 -- it was the
23 military context. 95-49, which would take care of this item
24 for us.
25 So, why don't we take a moment and review it.
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1 MR. LAGARIAS: Mr. Chairman, since the military is
2 seeking an exemption for these vehicles in California, I
3 assume that would automatically apply to all vehicles going
4 into Bosnia as well?
5 CHAIRMAN DUNLAP: Maybe we'll have to check with
6 staff on that.
7 Jim, is that your understanding?
8 MR. BOYD: Indeed. A worldwide fleet, Mr.
9 Lagarias.
10 MR. CALHOUN: Can I ask the staff one other
11 question?
12 CHAIRMAN DUNLAP: Sure.
13 MR. CALHOUN: Mr. Terris, reading the letter we
14 received from the Assistant Secretary of the Navy, in the
15 last paragraph, they ask for our assistance in quickly
16 resolving the problem they're having with the inventory of
17 stationary source equipment on the various military bases
18 here within the State of California.
19 Would you care to comment on that at all?
20 MR. TERRIS: Mr. Calhoun, a workgroup has been
21 created to address the problems and to develop regulations
22 for 531. And, as part of that, we are working with the
23 districts in trying to provide relief in that regard.
24 MR. CALHOUN: What kind of relief?
25 MR. TERRIS: Asking that, in the interim period,
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1 that the districts not seek to enforce their stationary
2 source rules that apply to nonroad, off-road equipment that
3 are on military bases.
4 CHAIRMAN DUNLAP: The Chair would entertain a
5 motion. Yes.
6 MS. EDGERTON: I just want to make one comment.
7 It is my understanding -- and perhaps someone could correct
8 me afterwards if I'm not right. But since the military is
9 here, it's my understanding that electric vehicles -- the
10 advantage tactically, is that when they stop, the enemy
11 could not detect them, because they wouldn't be moving
12 anymore. They're not emitting any heat like a gasoline
13 engine, always it's idling and it's still continuing to emit
14 the heat. So, you can elude your opponent a little better
15 with the armored vehicle.
16 That's what I was speaking about when I thought
17 that was being developed. Thank you.
18 CHAIRMAN DUNLAP: Okay. Do I have a motion, then
19 a second?
20 MR. CALHOUN: I move the adoption of Resolution
21 95-49.
22 CHAIRMAN DUNLAP: Thank you, Mr. Calhoun.
23 MS. EDGERTON: Second.
24 CHAIRMAN DUNLAP: Ms. Edgerton was the second.
25 All right. The Board has before it Resolution No. 95-49,
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1 which contains the staff recommendations.
2 Would the Board Secretary please call the roll for
3 a vote?
4 MS. HUTCHENS: Boston?
5 DR. BOSTON: Yes.
6 MS. HUTCHENS: Calhoun?
7 MR. CALHOUN: Aye.
8 MS. HUTCHENS: Edgerton?
9 MS. EDGERTON: Yes.
10 MS. HUTCHENS: Hilligoss?
11 MAYOR HILLIGOSS: Aye.
12 MS. HUTCHENS: Lagarias?
13 MR. LAGARIAS: Aye.
14 MS. HUTCHENS: Silva?
15 SUPERVISOR SILVA: Aye.
16 MS. HUTCHENS: Vagim?
17 SUPERVISOR VAGIM: Aye.
18 MS. HUTCHENS: Chairman Dunlap.
19 CHAIRMAN DUNLAP: Aye.
20 MS. HUTCHENS: Passes 8-0.
21 CHAIRMAN DUNLAP: Very well, thank you. Staff,
22 well done.
23 Why don't we give the staff a moment to change
24 places.
25 All right. The fifth item on the agenda today is
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1 95-13-5, which is a public meeting to consider the approval
2 of the proposed report to the Governor and the Legislature
3 on State and Federal Air Quality planning processes as
4 required by AB 2751, which is found in the Statutes of 1994,
5 Chapter 189.
6 This item is a proposed report which discusses
7 specific aspects of the State and Federal air quality
8 planning processes as defined by that legislation.
9 The purpose of the report is to identify
10 differences in planning processes and deadlines and to make
11 recommendations to address any inconsistencies. The AB 2751
12 report is to be submitted again to the Governor and
13 Legislature.
14 The report itself is very brief. Its scope is
15 quite narrow. Nonetheless, preparation of the report
16 affords us the opportunity to consider ways to reduce paper
17 work and duplication in the air quality planning process.
18 That goal was explicitly stated in the bill, and
19 it's one which I heartily concur with. State and Federal
20 air quality planning requirements provide the framework by
21 which we design our efforts to achieve clean air in our
22 State.
23 Planning activities involve all levels of
24 government, so it makes sense to look at whether the process
25 is well-integrated and efficient. I expect that staff will
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1 discuss how well we are doing in that regard, and look
2 forward to hearing any recommendations for improvement.
3 And, at this point, I'd like to ask Mr. Boyd to
4 introduce the item and begin the staff's presentation.
5 MR. BOYD: Thank you. For the benefit of the
6 audience, I'd like to expand just a bit on the very
7 comprehensive introduction that you gave, Mr. Chairman.
8 As you know, shortly after this legislation, AB
9 2751 was enacted, California and this Board adopted the
10 federally required clean air plan for ozone, the infamous
11 1994 State Implementation Plan, or SIP.
12 Throughout the development of the SIP, air
13 districts and your staff worked closely to administratively
14 align the SIP planning process with State requirements.
15 And, as a result, the primary areas of so-called process
16 duplication were addressed at that time.
17 The main point that I would like to emphasize is
18 that there were no significant areas of inconsistency
19 between the State and Federal process for plan submittal
20 deadlines that affected development that, the 1994 SIP;
21 however, there indeed is the possibility of future
22 inconsistencies, which could be alleviated with minor
23 changes to the law.
24 I won't speak to the changes, but the staff will
25 elaborate on the changes we're recommending in their staff
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1 presentation.
2 With that, I'll call upon Mr. Nyarady to give you
3 the staff presentation.
4 Jim?
5 MR. NYARADY: Thank you, Mr. Boyd. Good morning,
6 Chairman Dunlap and members of the Board.
7 I'll begin with a short introduction to this item.
8 Assembly 2751 requires the ARB to prepare a report that
9 identifies inconsistencies between the air quality planning
10 processes required by State and Federal law.
11 The report must also make recommendations for any
12 changes in State law necessary to align the two planning
13 processes.
14 The intent of B 2751 is to identify ways to reduce
15 duplication and paper work for the air districts, while
16 still ensuring the timely preparation of plans for meeting
17 State and Federal air quality standards.
18 The recommendations that you will see shortly have
19 been discussed with air district planning managers to ensure
20 that the goal of reducing duplication is being met.
21 The report requirements specified in AB 2751 are
22 as follows: First, the report is to describe State and
23 Federal requirements for the submittal of clean air plans.
24 Second, the report is to identify any
25 inconsistencies in the State and Federal deadlines, planning
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1 processes, or related data collection and inventory
2 requirements.
3 Finally, the report is to recommend any changes to
4 State law needed to align the two planning processes.
5 First, I'll discuss the State and Federal planning
6 processes. In most ways, the planning processes are more
7 similar than they are different. State and Federal law both
8 require the preparation of attainment plans.
9 The 1990 Federal Clean Air Act set deadlines for
10 attainment federal standards. The California Clean Air Act
11 requires that State standards be attained by the earliest
12 practicable date.
13 Both State and Federal law require the development
14 of an emissions inventory for all nonattainment pollutants
15 and their precursors. However, there is only one emissions
16 inventory development process in California that is used for
17 both the State and Federal planning needs.
18 A key difference, though, is that the California
19 Clean Air Act uses 1987 as the base year and the Federal Act
20 uses 1990.
21 Both Acts also require the submittal of progress
22 reports. The California Act requires annual reports on the
23 status of rule adoption and implementation, as well as
24 triennial plan updates, which can include a more detailed
25 progress report.
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1 The Federal Act requires submittal of what are
2 called milestone compliance demonstrations to document that
3 the incremental emission reductions required on a three-year
4 cycle did actually occur.
5 I'll next discuss inconsistencies in the
6 deadlines. The California Clean Air Act required that
7 attainment plans be submitted in 1991, and originally
8 required updates three years after the ARB's approval of a
9 district plan.
10 Because the date of ARB approval varied, there was
11 no fixed due date for the plan updates. This was changed
12 with 1992 amendments to the California Act. These
13 amendments set a specific due date for the triennial updates
14 beginning in 1994.
15 This corresponds with the 1994 due date for the
16 federal ozone plans. As a result, State and Federal plan
17 deadlines were aligned beginning with last year's SIP
18 planning effort.
19 Since federal law does not require plan updates on
20 a fixed schedule, there are no future deadlines to align.
21 Rather, federal plans are updated as States deem necessary.
22 Thus, no changes to State law are needed regarding plan
23 deadlines.
24 Next, I will address inconsistencies in the
25 planning processes. In 1994, both federal ozone plans and
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1 State plan updates were due. As Mr. Boyd stated earlier,
2 ARB worked with the air districts to administratively
3 address the primary areas of potential duplication during
4 that process.
5 Specifically, ARB staff worked with individual
6 districts and the California Air Pollution Control Officers
7 Association, or CAPCOA, to administratively address the dual
8 plan requirements.
9 We recommended that districts prepare a single
10 document to meet both federal and State requirements. As a
11 result, most districts prepared a federal plan that included
12 a separate chapter or attachment to address the State
13 requirements for a plan update.
14 Consistent with State law, only the federally
15 required components of these plans were submitted to the
16 U.S. EPA as part of the SIP.
17 By integrating the planning processes, only one
18 document had to be prepared, and the accompanying public
19 workshops, CEQA documentation, public hearing notices, and
20 public hearings were not duplicated.
21 This saved time and resources not only for
22 districts and the ARB, but also for the public and affected
23 businesses and industries.
24 Because the Federal Act does not require updates
25 on a fixed schedule, any future SIP updates and State plan
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1 updates can be addressed the same way. Since there is no
2 inconsistency, we see no need to change State law.
3 The last potential area for inconsistency is in
4 the emission inventory requirements. What's key here is
5 that a single emissions inventory process is used by the air
6 districts and ARB to produce the information needed for both
7 State and Federal plans.
8 The single statewide planning inventory consists
9 of the combination of air districts' stationary source
10 inventories, and ARB's mobile and area source inventories.
11 This inventory serves as a technical foundation
12 for both State and Federal planning purposes. What's
13 different is the baseline year. It's 1987 in the California
14 Act and 1990 in the Federal Act. In the 1994 SIP planning
15 process, ARB recommended that districts preparing a dual
16 purpose plan use a 1990 baseline inventory.
17 Most districts in this situation took that
18 approach. One of the proposed recommendations I'm about to
19 discuss is to change State law to provide a statutory basis
20 for this alignment.
21 To simplify inventory efforts for both districts
22 and ARB, we recommend that the State base year be aligned
23 with the federal base year. All that would be needed is a
24 change to the base year specified in State law from 1987 to
25 1990. This is the primary recommendation in the proposed
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1 report.
2 The proposed report also recommends clarifying
3 State reporting requirements to ensure that future State
4 progress reports can be used to meet federal progress report
5 requirements. However, after further discussion with staff
6 in several districts, we would like to modify that
7 recommendation.
8 Instead of a change to State law, we recommend
9 working with the districts to administratively ensure that
10 progress reports can serve dual purposes. Instead of
11 defining the contents of the reports in State law, districts
12 prefer to work with us to address this issue through the
13 CAPCOA planning managers group.
14 We agree with this approach. It's more flexible
15 and there is no real need to lock in specific statutory
16 reporting requirements.
17 To conclude, staff recommends that the Board
18 approve the proposed report with the one modification I have
19 just described. I'll now be happy to answer any questions.
20 CHAIRMAN DUNLAP: Do any of my colleagues on the
21 Board have any questions of staff on this item?
22 Mr. Boyd, do you have anything to add?
23 MR. BOYD: No, Mr. Chairman, I do not. Thank you.
24 CHAIRMAN DUNLAP: Okay. We seem to have no one
25 signed up to testify. No one signed up to testify as I
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1 understand it?
2 MS. HUTCHENS: No.
3 CHAIRMAN DUNLAP: Do we have any written
4 correspondence on this item?
5 MR. NYARADY: Yes. We have received two letters
6 from separate air districts, but both letters support the
7 change to the base year, and they bring up their concerns
8 with the reporting requirement clarification, which we've
9 addressed with the proposed modifications.
10 CHAIRMAN DUNLAP: Which two districts?
11 MR. NYARADY: Ventura and Sacramento.
12 CHAIRMAN DUNLAP: Okay. We've just been given a
13 resolution, so I will take a moment to examine it.
14 DR. BOSTON: Mr. Chairman? I'll move item -- I'll
15 recommend adoption of Resolution 95-50.
16 SUPERVISOR VAGIM: Second.
17 MAYOR HILLIGOSS: Second.
18 CHAIRMAN DUNLAP: Okay. Any discussion? It was
19 Dr. Boston who made the motion and Mayor Hilligoss seconded.
20 Any discussion?
21 MR. LAGARIAS: Mr. Chairman, I think the comments
22 made by Ventura and the Sacramento District are appropriate.
23 I know the short time frame prevented coordination with
24 CAPCOA, and the fact that some districts do not get federal
25 funding may give them problems, but the fact remains, in the
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1 long run, this will certainly reduce paper work.
2 CHAIRMAN DUNLAP: Which is important, particularly
3 in this new era of finite resources and trying to do more
4 with less. We need to all be towing the wagon in the same
5 direction.
6 Okay. Any other points to discuss? Hearing or
7 seeing none, I'll ask the Board Secretary to please call the
8 roll, a vote on Resolution 95-50.
9 MS. HUTCHENS: Boston?
10 DR. BOSTON: Yes.
11 MS. HUTCHENS: Calhoun?
12 MR. CALHOUN: Aye.
13 MS. HUTCHENS: Edgerton?
14 MS. EDGERTON: Aye.
15 MS. HUTCHENS: Hilligoss?
16 MAYOR HILLIGOSS: Aye?
17 MS. HUTCHENS: Lagarias?
18 MR. LAGARIAS: Aye.
19 MS. HUTCHENS: Silva?
20 SUPERVISOR SILVA: Aye.
21 MS. HUTCHENS: Vagim?
22 SUPERVISOR VAGIM: Aye.
23 MS. HUTCHENS: Chairman Dunlap.
24 CHAIRMAN DUNLAP: Aye.
25 MS. HUTCHENS: Passes 8-0.
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1 CHAIRMAN DUNLAP: Very well, thank you.
2 At this point, what I would propose to do, seeing
3 that it's nearly the lunch hour, I would like to take a
4 lunch break at this time and reconvene back here a little
5 before one o'clock, and we will take up the final item,
6 which is the public meeting to update the Board on the zero-
7 emission vehicle program. I know there's a lot of interest
8 in that item, and I think we would be best served to take it
9 up in one shot without having a break in between.
10 So, we will convene slightly before one o'clock.
11 Thank you.
12 (Thereupon, the luncheon recess was
13 taken.)
14 --o0o--
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1 AFTERNOON SESSION
2 --o0o--
3 CHAIRMAN DUNLAP: I would like to remind those of
4 you in the audience who would like to speak to the Board
5 today or present testimony to please see the Board Secretary
6 who sits over to my left. If you want to provide us with
7 written comments, make sure you provide her with 20 copies
8 so that they may be distributed to the Board and the
9 executive staff.
10 This is the final agenda item today, 95-13-4. And
11 I appreciate those of you that are here for this item that
12 have had patience with us. We just returned from a lunch
13 break.
14 At least month's Board meeting, staff brought us
15 up to date on the comments heard at the forums held to
16 discuss the ZEV program. The testimony received led staff
17 to suggest to us, to the Board, that the ZEV program could
18 be modified in a manner that addresses many of the comments
19 and concerns raised. As a result, and with the support of
20 my Board member colleagues, I asked staff to prepare a
21 package for this Board's consideration no later than March
22 of next year.
23 I enumerated three principles to the staff as they
24 develop this package. First, ensure that not one pound of
25 emissions are given up toward meeting the emission
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1 reductions in the current rule and in our State
2 Implementation Plan.
3 Second, follow the steps identified by the
4 Independent Battery Panel; and, third, maximize use of
5 market forces and flexibility to achieve our environmental
6 standards and goals.
7 This direction is consistent with Governor
8 Wilson's letter of June of this past year to me. In that
9 letter, the Governor directed this Board to ensure that
10 equivalent or greater emissions reductions are obtained from
11 any substitutions or modifications to existing programs, and
12 that this Board take maximum and creative advantage of
13 competitive sources and market-based strategies to promote
14 advanced air pollution control strategies.
15 In November, Secretary Strock called on us to also
16 consider that any modifications be enforceable and certain,
17 respect the commitments made by many of the California-based
18 companies that have invested in bringing forward
19 technologies to meet our environmental challenges, and to
20 ensure that the Board explicitly considered the link between
21 environmental regulation and economic issues and
22 opportunities.
23 I've asked staff to report back to us at this
24 meeting on their progress for presenting a package of
25 revisions to us for next year.
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1 At this point, I'd like to ask our Executive
2 Officer, Mr. Boyd, to initiate that update and to begin this
3 Board agenda item.
4 Jim?
5 MR. BOYD: Thank you, Chairman Dunlap. I'd first
6 like to take this opportunity to thank and to compliment Bob
7 Cross and the entire ZEV team, which cuts across a wide
8 swath of the organization, for all the hard work that they
9 have put in these past days, weeks, which frankly have grown
10 into months.
11 I appreciate -- I think we call do -- what's been
12 involved and what they've done.
13 The Board directed staff, as you indicated, to
14 provide the Board with a status report at this month's
15 meeting, and also directed us at the November 16th Board
16 meeting to conduct a workshop, which we did on December 6th.
17 At this workshop, interested parties were invited to comment
18 on three alternatives to the current ZEV program.
19 These three alternatives, identified as Concepts
20 A, B, and C in the staff document, were the staff's
21 synthesis of all the proposals received both at and
22 subsequent to the forum series that we conducted. And, in
23 addition, of course, participant in the workshop had been
24 invited to present their own alternative concepts.
25 We believe the workshop -- well, we know the
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1 workshop was extremely well attended, and we received many
2 constructive comments as well as additional proposals. And
3 we believe the workshop was therefore a significant
4 milestone.
5 Our presentation to you today will be to summarize
6 what we did present at the December 6 workshop for the
7 information and education of members of the Board and the
8 audience.
9 And I think, as everyone knows, we continue to
10 work to bring the Board a proposal that we believe brings
11 into account both what we learned at the forums and at the
12 workshop, and also takes into account the principles and
13 objectives that you, and Secretary Strock, and the Governor
14 articulated in his letter to you.
15 So with that, I'd like to introduce Ms. Sue DeWitt
16 of our ZEV team to make the staff presentation. Sue?
17 CHAIRMAN DUNLAP: Sue, I bet it's nice to have Bob
18 here today, isn't it?
19 MS. DE WITT: Actually, we sent him out to the
20 airport earlier.
21 CHAIRMAN DUNLAP: Did you?
22 MS. DE WITT: Thank you, Mr. Boyd, and Mr.
23 Chairman and members of the Board.
24 Thank you for the opportunity to bring you this
25 status report on the ZEV program.
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1 This is an outline of what I'm about to present.
2 I'll give you a little background on California air quality,
3 a brief summary of the forums, and update you on the
4 testimony presented at the December 6th forum on alternative
5 concepts.
6 The California Air Quality and how did we get here
7 subject areas are identical to what we presented at the
8 December 6th forum.
9 What we told people at the forum was a little bit
10 of background about how we got here and, as you all are
11 probably aware, the State Implementation Plan was adopted in
12 1994, and that the SIP demonstrates the need for extremely
13 stringent emission standards for stationary and mobile
14 sources, and that even with all new SIP measures, additional
15 mobile source emission reductions are still needed.
16 The next slide shows this graphically. This slide
17 shows the impact that improved control technology measures
18 contained in the SIP will have on mobile source emissions.
19 Based on our current programs, emissions of ROG plus NOx
20 will be 1,094 tons per day in 2010. However, with the
21 improved control technology measures that were identified in
22 the State Implementation Plan, the ARB staff estimates that
23 mobile source emissions will be reduced to 708 tons per day
24 by 2010.
25 Although this is great progress, note that we're
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1 still 139 tons per day short of attainment.
2 What's already counted in these projections are
3 listed here in this slide. In mobile sources, there is
4 enhanced inspection and maintenance programs, scrappage
5 programs, reformulated gasoline, the LEV clean fuels
6 program, which includes the zero-emission vehicle program;
7 within stationary sources, consumer products, power plants,
8 and large and small businesses are all subject to emissions
9 requirements.
10 And in going through alternatives that we've been
11 provided in this ongoing series of forums, one point we've
12 made consistently is that some of the suggestions have
13 duplicated what's already counted, and that we really need
14 to be looking at things that are different from what has
15 already been counted.
16 And what's already been counted, just so that
17 you're aware, are these on-road mobile source State
18 implementation measures.
19 These things are already in our emissions
20 reduction plans.
21 So, how did we get here? I think other people
22 have seen this. Now, I'm turning to today. As you know,
23 staff conducted a series of workshops this summer to collect
24 public comment on various aspects of implementing the ZEV
25 program.
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1 This slide is fairly self-explanatory, but it
2 illustrates that staff received a great deal of information
3 and comment on these subjects, and that we have learned a
4 great deal from this testimony. It was a significant
5 benefit to the process.
6 In addition, the Board retained four experts in
7 battery technology to assess the state of battery
8 development. Their findings, which were presented at the
9 technology forum, were that the zero-emission vehicle
10 regulation was instrumental in stimulating investment and
11 progress in advanced batteries for zero-emission vehicles;
12 that a substantial volume of high-quality lead-acid
13 batteries will be available in the 1998 time frame, and that
14 advanced batteries are on the immediate horizon with
15 production quantities available in the 2000-2001 time frame,
16 if all goes well.
17 The panel also emphasized the need for pilot scale
18 production and fleet testing in order to continue the pace
19 of this progress. And a note that I would like to make for
20 the members of the Board and to the audience is that this
21 battery panel report is now available and we will be
22 reproducing it.
23 So, if anyone would like to give me a copy of
24 their business cards or a piece of paper with their name and
25 address on it, we'll make sure that by sometime next week, a
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1 copy of that report will be available to them.
2 Next slide.
3 In preparing the forum on alternatives to the
4 zero-emission vehicle program, staff developed criteria
5 based on the direction articulated by Chairman Dunlap.
6 The direction we received from the Chairman,
7 Secretary Strock's recent statement on this issue, and
8 Governor Wilson's letter to the Chairman this summer --
9 foremost was the need to ensure that any alternative would
10 meet California's implementation plan commitments and
11 include a premium to ensure against risk.
12 The next three bullets are interrelated, in that
13 we need to identify a program that provides flexibility in
14 the marketplace and builds or nurtures a viable market for
15 zero-emission vehicles.
16 The last bullet emphasizes a working relationship
17 with the stakeholders to ensure success and enforce the
18 emissions goals as needed.
19 In addition, we note the importance of the
20 investments made by many businesses to meet the demand for
21 clean transportation technologies and the need to balance
22 the impact that environmental regulation will have on
23 economic issues, particularly fleet turnover.
24 Many local governments have also invested in this
25 program and have worked in good faith to assist in the
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1 implementation of the program and, as noted by the battery
2 panel, it is also important to ensure that a healthy market
3 develops for the use of advanced technologies.
4 Turning to the forum, staff presented three
5 alternative concepts that took three different approaches.
6 You'll see them in more detail in the following slides.
7 Briefly, Concept A fully relies on performance
8 standards and market forces.
9 Concept B was a combination of market forces and
10 regulatory requirements, and Concept C was a regulatory
11 approach at a slower pace with incentives.
12 Concept A, which relies solely on market forces,
13 would achieve zero-emission vehicle equivalent reductions
14 plus a premium, and would allow any measure to be used to
15 achieve those reductions.
16 Zero-emission vehicles would be introduced through
17 a voluntary program if any manufacturer elected to do so.
18 Thus, manufacturers could be able to meet this requirement
19 without zero-emission vehicles.
20 Concept B combined market forces and regulatory
21 requirements with a voluntary sales program in the early
22 years. Incentives for early introduction and a voluntary
23 ramp-up to volume production of vehicles in anticipation of
24 a 10 percent requirement in 2004.
25 And Concept C was a regulatory approach which
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1 reduced the requirements and offers incentives for early
2 introduction of vehicles and implementation flexibility.
3 At the forum, staff heard presentations from 40
4 parties. Commenters included representatives from
5 automakers, electric utilities, environmental groups, oil
6 industry, local governments, and citizens.
7 Since the forum -- and actually I need to update
8 the slide from just this morning -- over 160 letters have
9 been sent to us.
10 In summary, each of the concepts had advances and
11 shortcomings, which I'm showing on this slide.
12 Concept A, for example, was very strongly market-
13 based, but it also had -- and this is according to the
14 testimony we received -- some risk of stranding business
15 investments and that the best development of zero-emission
16 vehicles would be unlikely under this scenario.
17 Under Concept B, it certainly offered increased
18 flexibility and provided an opportunity for partnerships
19 with automakers. Its shortcomings were, however, that it
20 deferred decisions on volume productions and that it
21 possibly jeopardized business investments in zero-emission
22 vehicle technology.
23 Concept C, zero-emission vehicle production was
24 certain, but it was also clear that the market for those
25 vehicles was also uncertain.
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1 Mr. Chairman and members of the Board, new options
2 have also been presented at the forum and new options have
3 been received since then. There are so many options now
4 that staff would like to ask the Board for a bit more time
5 to give these additional proposals fair consideration and
6 develop a recommendation once this review is complete.
7 Thank you.
8 CHAIRMAN DUNLAP: Thank you, Ms. DeWitt.
9 I want to thank the staff for the continuing work,
10 good work, fine work on this program. I believe I share
11 with the Board members a desire to bring this issue to a
12 point of decision by this Board.
13 However, I also understand the staff's need for
14 sufficient time to analyze the extensive volume of public
15 input that we received, and also to analyze more fully what
16 we have heard at the workshop.
17 This item, of course, is not an issue that should
18 be taken lightly by any of our stakeholders or by any
19 members of this Board. The Board needs to have all the
20 information at its disposal, and we have made -- certainly
21 up to this point -- a diligent effort to gather that
22 information.
23 However, what I hear the staff telling us is that
24 the full evaluation of this information is incomplete, much
25 of it only garnered at our last week's workshop. We have
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1 not had a chance it seems to fully analyze or assess what we
2 have received.
3 I am of the opinion that it is better to do it
4 right than to do it today. I believe we are close, but I do
5 not sense from staff that we've reached the knowledge
6 threshold that we need to make a decision.
7 With the concurrence of the Board, I would like to
8 continue this item to next Thursday, December 21st, for a
9 meeting here in Sacramento, at which time I hope the staff
10 will be able to provide us with a narrowing of the issues
11 and alternatives.
12 And it's my understanding, after making an initial
13 query of my colleagues, that most should be able to make it
14 that day, and I appreciate their effort.
15 I know that we have many visitors here today that
16 wish to share their concerns, their perspectives. Some have
17 traveled quite some distance to be here. Thus, I would like
18 to hear testimony today from any interested party. And we
19 do have a number that have signed up.
20 Also, a word, I guess -- I suppose I should make
21 this and may emphasize it again at the conclusion of
22 hearings and testimony. There has been an awful lot of
23 speculation about what this Board might do, about what this
24 Board might be considering, or direction that it may have
25 given to staff, or any other such item.
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1 I want to assure, certainly from my perspective,
2 that -- and I have said this many times -- any change or any
3 modification made to this program will be based upon an
4 assessment of the technology, the facts surrounding what it
5 would take to successfully launch this program, not based
6 upon any other factor.
7 So, I would discourage those from venturing
8 guesses or suspecting some conspiracy theory or whatever it
9 may be. We are moving in a very open fashion and will
10 continue to do that, because that's the only way to
11 successfully implement this program, in my view.
12 So, with that, I would ask my colleagues on t he
13 Board if they have any comments or questions of the staff's
14 presentation, and then I would encourage those who have
15 signed up to testify to please stand ready, because I'll
16 call you up in a few minutes.
17 Dr. Boston.
18 DR. BOSTON: Mr. Chairman, why was December 21st
19 selected? It seems like even one week isn't enough time to
20 fully analyze this issue. And I wondered why we didn't hold
21 it off till next year.
22 CHAIRMAN DUNLAP: Well, it's my feeling that we
23 have -- we have, what did Sue say, 160 letters? Many of
24 them are suggestions on modifications. I've had a chance to
25 sit with staff and go through some of them. So, we have --
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1 as a matter of fact, the three themes or concepts that you
2 saw outlined were kind of summaries of amalgamations of a
3 number of those.
4 We have the information. Staff has done much of
5 the evaluative work. There needs to be more. It was my
6 feeling that we get this done before the Christmas holidays,
7 and not prolong it anymore.
8 Again, we made a commitment last month to deal
9 with this in the March time frame. I've spoken to Mr. Kenny
10 about what it would take to have ample notice and the like,
11 and it seems that we need to get moving within the next week
12 or so.
13 Plus, there's a lot of people out there that are
14 very interested in what's done here for obvious reasons, and
15 it seems that lengthening the time will only encourage
16 speculation, which I guess doesn't do any of us any good.
17 DR. BOSTON: Thank you.
18 CHAIRMAN DUNLAP: Okay. With that, I'd like to
19 begin on the witness list.
20 I'll call you up in groups of three. If you would
21 move quickly, I'd be grateful. Tom Austin from Sierra
22 Research, Matt -- I apologize for this -- Saboraria from
23 Assemblyman Pringle's office, and Supervisor Jon Mikels, if
24 he's here, from the South Coast Air District.
25 MR. AUSTIN: Thank you, Mr. Chairman. I'm Tom
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1 Austin, senior partner of Sierra Research.
2 I'm testifying today at the request of Western
3 States Petroleum Association.
4 At your November 16th meeting, you provided
5 guidance to the staff regarding the criteria you believe
6 that should be used in developing alternatives to the ZEV
7 mandate. One criterion, as you just repeated it, there
8 should be no loss in emissions reductions associated with
9 any alternative.
10 And following the November 6th (sic) meeting, the
11 Western States Petroleum Association asked Sierra Research
12 to investigate the feasibility of meeting the Board's
13 emission reduction objective. We've been able to identify
14 several control measures, none of which are included in the
15 current State Implementation Plan that are capable of
16 providing greater emission reductions in smog precursors
17 than the staff estimates are possible with the ZEV program.
18 And the table, which is displayed up on the screen
19 now, is included in my written testimony, and briefly
20 summarizes these alternatives to the current ZEV program.
21 The ZEV program is listed in the first row of the
22 table shown with the staff's estimate of a 14-ton per day
23 reduction in NMOG plus NOx emissions. Our estimate of a
24 $14,600 cost premium for each vehicle, which translates --
25 depending on how you do the calculations -- into cost-
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1 effectiveness ratio of something in the vicinity of $200,000
2 per ton, which is far in excess of almost any other measure
3 in the SIP.
4 Tomorrow, we will be meeting with your staff to
5 discuss the details behind our cost estimates. We'll also
6 be presenting an analysis demonstrating the claimed life
7 cycle cost advantage of electric is completely eliminated by
8 assuming equal tax treatment and nonsubsidized electricity
9 rates. Our analysis will show that in order to get the
10 cost-effectiveness ratio down into the $20,000 per ton range
11 that ARB normally tries to stick to, the price premium for
12 an electric vehicle would have to be reduced to less than
13 $2,000. And based on what we understand are projections of
14 your own battery panel being, the cost of the battery alone
15 will be more than twice that much for a four-passenger
16 subcompact vehicle.
17 In the second row of the table, we show our
18 projections of the emission benefits of a 49-State low-
19 emission vehicle program. Under this alternative, federal
20 vehicles, which would otherwise be subject to a .25 gram per
21 mile hydrocarbon standard, become subject to a standard
22 which would allow them to achieve .075 grams per mile NMOG
23 when using California reformulated gasoline and operating in
24 California.
25 And as tourism and migration of federal vehicles
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1 brings them into California, the emission benefits we're
2 projecting by year 2010 are 18 tons per day, or four tons
3 per day more than the projections for the ZEV mandate.
4 The cost-effectiveness ratio that we've estimated
5 for the 49-State LEV program is well under $20,000 per ton.
6 And a big advantage of this approach is that prior to the
7 ZEV mandate reaching 10 percent, the benefits are
8 proportionately greater, and that occurs in the early years
9 when the public health benefits of reduced emissions are
10 also the greatest.
11 The next row of the slide shows the benefits of
12 more stringent standards for new motorcycles. It's been 20
13 years since the ARB tightened the emission standards for
14 motorcycles, and we believe it's clear that a 75 percent
15 reduction in emissions from motorcycles is possible. Even
16 though they don't travel very much and there aren't that
17 many of them compared to cars, with that kind of a change in
18 the emission standards, we're forecasting a reduction in
19 NMOG plus NOx emissions of 25 percent of the maximum
20 theoretical benefits of the ZEV mandate at a cost-
21 effectiveness ratio that we believe would be well under
22 $10,000 per ton based on some preliminary analysis that
23 we've done.
24 The fourth row in the table shows our estimates
25 for the repowering of off-road diesel equipment with some of
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1 the newer technology engines that will become available
2 because of the requirement that comes into play in 2005, for
3 a 2.5 gram per brake horsepower hour NOx standard. With the
4 repowering of only 10 to 15 percent of the off-road
5 equipment in Southern California, we're projecting that 70
6 percent of the maximum theoretical benefits of the ZEV
7 mandate could be achieved at a cost-effectiveness ratio of
8 less than $20,000 per ton.
9 The fourth alternative shown in the table is a
10 catalyst and oxygen sensor replacement program for high
11 mileage passenger cars and light trucks that marginally pass
12 the current standards in the smog check program. Those
13 standards are set such that older vehicles can pass the
14 test, even though the oxygen sensor may not have been
15 replaced for more than 50,000 miles, and the catalyst is
16 experiencing the deterioration due to more than a hundred
17 thousand miles of operation.
18 By requiring these key emission control components
19 to be replaced on marginally passing vehicles, we believe a
20 50 percent reduction in emissions is possible. That would
21 affect less than 3 percent of the fleet in 2010, and provide
22 almost 30 percent of the maximum theoretical benefits of the
23 ZEV mandate at a cost-effective ratio of less than $20,000
24 per ton.
25 And finally, the last item on the table, which we
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1 believe would have the biggest benefit, is the addition of
2 an under hood emissions test to the smog check program.
3 Recently collected data indicate that NMOG
4 emissions from under hood fuel leaks and defective positive
5 crankcase ventilation systems are a significant source of
6 emissions. The ARB's current emission projections assume
7 there are no emissions associated with defective PCV
8 systems.
9 Preliminary work by Sierra Research indicates that
10 it is feasible to measure these emissions during the smog
11 check program using a system that samples air flowing
12 through the engine compartment.
13 Our preliminary analysis indicates fleetwide NMOG
14 emission reductions achievable in the range of .1 grams per
15 mile which translates to 43 tons per day of NMOG in the
16 South Coast Air Basin.
17 And we believe, based on some preliminary work
18 we've done, that the cost-effectiveness of this alternative
19 would be well under $2,000 per ton.
20 When I described these alternative measures during
21 the December 6th public forum -- and I provided your staff
22 additional details on how we made these calculations -- the
23 staff indicated they believe these measures were worth
24 pursuing; however, the staff also suggested that ARB might
25 prefer to use such measures to further attainment of the
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1 ozone standard.
2 Because the measures were developed in response to
3 the Board's interest in identifying alternatives to the ZEV
4 mandate, it would encourage similar efforts in the future if
5 ARB were to allow at least 14 tons per day provided by these
6 measures to serve as a replacement for the ZEV mandate.
7 The additional reductions would then provide a
8 substantial clean air premium that the Board said it was
9 seeking.
10 In summary, the measures we proposed are much more
11 cost-effective than EVs. They include the development of
12 innovative new technology, and they achieve more emission
13 reductions than is attributed by the staff to the ZEV
14 mandate.
15 Thank you for your consideration. I'll be pleased
16 to answer any questions you might have.
17 MS. EDGERTON: Mr. Austin, let's leave the chart
18 up there. Ms. DeWitt just made the point that, in order for
19 us to meet our SIP obligations, we need 139 additional tons
20 per day of pollutants removed. Now, could you -- have you
21 added up this list, 14 tons, 18 tons, 4, 10, 4, 14? What's
22 the total?
23 MR. AUSTIN: I think if you look at the total for
24 the alternatives to the ZEV mandate that we developed, it's
25 something like 79 tons compared to the 14 tons from the ZEV
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1 mandate.
2 MS. EDGERTON: So, even if you add your 79 tons
3 and the 14 tons, what do you get? 113. That's what I got.
4 Is that right? No.
5 MR. BOYD: 93.
6 MR. CROSS: 93.
7 MS. EDGERTON: 93? I don't know why I got that.
8 Maybe I added ZEV twice. Maybe I was going to increase it.
9 MR. AUSTIN: We weren't attempting to develop a
10 new State Implementation Plan. We were attempting to come
11 up with -- to meet the Board's challenge to find alternative
12 control measures that are not in the current SIP just
13 recently developed by ARB. And I think we've done that.
14 MS. EDGERTON: I understand. So, what was the
15 total, Mr. Boyd?
16 MR. BOYD: 93.
17 MS. EDGERTON: 93. Okay. Now, 93 is the total
18 for that whole chart. Now, Mr. Austin, it's my
19 understanding you were formerly the Chairman of this Board.
20 MR. AUSTIN: No.
21 MS. EDGERTON: I mean the Executive Officer.
22 MR. AUSTIN: No, I was the Executive Officer.
23 MS. EDGERTON: Right. So, you understand the
24 California Clean Air Act very well. Our obligation is to
25 achieve the clean air standards in the Federal Clean Air
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1 Act, and that means that we have to have a program in place
2 that will have the emissions reductions required.
3 We are 139 short. Now, Mr. Strock offered a
4 speech in which he referred to what I call the Strock
5 principles. And on page 4 of his speech, he says, and I
6 quote, "Flexibility can only be offered in the context of
7 meeting California's commitments under the State
8 Implementation Plan for compliance with ozone air quality
9 standards by the year 2010. California submitted its SIP in
10 November, 1994, under the Federal Clean Air Act, including
11 the emissions reductions benefits from the ZEV regulation.
12 Any proposed alteration of the ZEV program must therefore
13 meet the same legal requirements of enforceability and
14 certainty."
15 To me, Mr. Austin, this means that we cannot
16 delete any measures deemed effective until we come up with
17 an additional -- until we have 139 tons put there. I don't
18 believe that his principles would allow the claimed
19 substitution of one measure that got a certain number of
20 emissions reductions for another when we believe that that
21 emission -- that the one that we have is potentially
22 effective.
23 MR. AUSTIN: Well, if I understand you then, you
24 weren't serious when you asked for any alternatives to the
25 current ZEV mandate, which is what I was focused on looking
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1 at. What does your staff say the ZEV mandate does now and
2 what would additional measures not in the SIP do compared to
3 that.
4 And I attempted to come up with measures that
5 would go beyond the benefits which your staff estimates for
6 the ZEV mandate and are not in the SIP. It seems to me it
7 would further the attainment goals, reduce the size of the
8 black box, and make substantial progress.
9 MS. EDGERTON: Well, on that point of no loss in
10 emission reduction, I guess we may have a misunderstanding
11 with respect to what emission reductions mean, whether it's
12 limited to the particular measure or whether it's limited to
13 the overall tons that need to be reduced.
14 In any case --
15 MR. AUSTIN: Well, that's what affects air
16 quality. And I assume that's what your focus would be.
17 MS. EDGERTON: The long-term healthy air, the
18 ozone attainment is what we're focused on. And the
19 California Clean Air Act makes it clear we're supposed to
20 use the maximum -- make the maximum progress practicable.
21 So, so long as the ZEV program is practicable
22 program, it, I think, has to be respected.
23 Now, I want to ask you about the 49-State car
24 program, 49-State low-emission vehicle program here.
25 Have you been working on that program in the
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1 Northeast?
2 MR. AUSTIN: I haven't done any work related to
3 that program in the Northeast for quite some time. I did
4 some work about a year ago. I'm familiar with the issue
5 there.
6 MS. EDGERTON: Uh-huh. And has there been
7 anything signed in the Northeast? Has anyone agreed to the
8 49-State car program?
9 MR. AUSTIN: I don't follow it closely. My
10 understanding is that it's still up in the air, and there is
11 no commitment made by the seven manufacturers subject to the
12 ZEV mandate to go and sell 49-State LEV vehicles in the
13 States neighboring California.
14 MS. EDGERTON: So, neighboring California or
15 anywhere for that matter, isn't that --
16 MR. AUSTIN: I think --
17 MS. EDGERTON: -- a fact?
18 MR. AUSTIN: I think anywhere for that matter,
19 yes.
20 MS. EDGERTON: So, if I understand correctly,
21 there is no 49-State low-emission vehicle program in any
22 form right now which is enforceable.
23 MR. AUSTIN: There's an offer on the table.
24 MS. EDGERTON: Right. Okay. So, it's --
25 MR. AUSTIN: Which could be made enforceable.
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1 MS. EDGERTON: I understand. I just wanted to
2 make sure that we understand what's real and what's
3 potential in this.
4 I'd like to make a comment also with respect to
5 what -- a couple of other Secretary Strock's principles.
6 On the clean air premium, he indicated that there
7 would need to be, if there were an interim alternative to
8 the numerical mandate, there would have to be a technology-
9 based clean air premium of pollution reductions
10 significantly greater than those provided by the current
11 regulation. This would be a risk premium for the State
12 whose SIP would be in that period less certain of federal
13 government approval.
14 I don't see how we're getting a clean air premium
15 here, since we're 139 tons short anyway. It seems to me
16 that a risk premium -- you know, we would still need -- we
17 would still be with this at risk of having our SIP less
18 certain of federal government approval, because it does not
19 hold the potential of a sustained achievement of sufficient
20 reductions to meet --
21 MR. AUSTIN: (Interjecting) Well, I think it's
22 pretty clear where the clean air premium comes from. In the
23 absence of the ZEV mandate, replacing it with the measures
24 that we've identified reduces emissions in the South Coast
25 Air Basin to lower levels than would occur under the current
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1 SIP.
2 So, obviously, the air's going to be cleaner. And
3 I think your staff recognizes that. These are real emission
4 reductions that are not currently in the SIP. Some of them
5 are not in the SIP because they really hadn't been thought
6 of before. The staff's had a lot to work on, and some of
7 these are fairly esoteric problems that we've identified in
8 very recent testing programs.
9 But they're real sources of emissions that can be
10 cost-effectively controlled and will provide more emissions
11 in the South Coast than under the current SIP with the ZEV
12 mandate.
13 MS. EDGERTON: Mr. Austin, I don't want there to
14 be any confusion here. I appreciate you having identified
15 them, and I think we ought to include them if the staff
16 feels that they're useful. I think we ought to include all
17 of the extra ones in our deliberations anyway, irrespective
18 of the ZEV issue.
19 And finally, there was another of the Strock
20 principles, which was number four. Any flexibility in
21 implementation must also respect the commitment of many
22 companies, including California-based companies, which have
23 invested in reliance not only on the initial 1990 regulation
24 but also on California's 1994 State Implementation Plan.
25 Whether one's concern is the ZEV regulation or environmental
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1 regulation in general, predictability in implementation is
2 critical for credibility, investment, and continued
3 technological and environmental improvement.
4 Mr. Austin, in your view, does this proposal meet
5 Strock principle four?
6 MR. AUSTIN: When I presented this in a more
7 detailed form at the December 6th workshop, I pointed out
8 right up front that these alternatives are not tied to any
9 one of the three concepts which your staff has explained.
10 They could be used under any of the concepts. And
11 it's my understanding that the Board has considerable
12 interest in seeing some type of program retained that would
13 provide that assurance to those working in the electric
14 vehicle area that there's still going to be progress on the
15 electric vehicle front.
16 We're not talking about -- I'm not saying this
17 only works with Concept A, where we forget about any kind of
18 a ZEV mandate at all. It would work under Concept A, it
19 would work under Concept B as well.
20 MS. EDGERTON: Thank you for your patience.
21 CHAIRMAN DUNLAP: Thank you.
22 MS. EDGERTON: And your talent.
23 CHAIRMAN DUNLAP: Any other questions of Mr.
24 Austin? Okay. I appreciate it. I'd ask staff to give us a
25 copy of that chart, a hard copy, and get that circulated.
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1 MS. EDGERTON: For today.
2 CHAIRMAN DUNLAP: Yes, for today.
3 Matt Saboraria, Assemblyman Pringle; followed by
4 Supervisor Mikels. Is the Supervisor here yet? Followed by
5 John Larrea, Assemblyman Mickey Conroy.
6 Good afternoon.
7 MR. SABORARIA: Good afternoon. I'm Matthew
8 Saboraria with Assemblyman Curtis Pringle's office.
9 Assemblyman Pringle represents part of Orange County, and
10 he's the Senate Republican leader. He sends his regrets
11 that he could not be here to present these remarks himself.
12 So, I will do so on his behalf.
13 Chairman Dunlap and members of the Board, I wish
14 to take this opportunity to reiterate my strong opposition
15 to the existing zero-emission vehicle mandate as expressed
16 in my previous letters to the Board.
17 In recent weeks, it's come to my attention that
18 the CARB is giving serious consideration to revising the
19 terms of the mandate, such that the two and five percent
20 market penetration requirements by 1998 and 2001,
21 respectively, will be eliminated, but that the 10 percent
22 penetration requirement by 2003 will be retained.
23 I applaud the CARB's apparent recognition that
24 electric vehicle technology is insufficiently advanced to
25 bring a viable cost-efficient product to market by 1998.
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1 Simply changing the time frame for a forced introduction of
2 such vehicles does not address the broader policy concerns
3 surrounding this issue.
4 As stated in my letters to Chairman Dunlap, the
5 ZEV mandate will not accomplish its primary objective,
6 improving the State's air quality. Based on the CARB's own
7 estimates, as reported in the Sacramento Bee, use of
8 electric vehicles will reduce less than 1.5 percent the
9 principal ingredients in smog in Southern California
10 required under the Federal Clean Air Act by the year 2010.
11 In addition, electric vehicles powered by lead-
12 acid batteries will be far from pollution free. Indeed, the
13 source of pollution will be shifted to more concentrated
14 locations, such as lead mining, and processing centers, and
15 electric power generating stations.
16 Furthermore, the cost associated with this
17 negligible reduction in air pollution are unacceptably high.
18 Even the most conservative estimates of the cost per ton of
19 pollutants from existing internal combustion engines that'll
20 be reduced through the implementation of this mandate are at
21 least 10 times higher than other pollution reduction
22 methods. These costs, both in terms of the production costs
23 of electric vehicles and the necessary infrastructure
24 improvements will be heavily subsidized by electric utility
25 ratepayers and car buyers in California.
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1 Additionally, even under the proposed changes in
2 the timing of the introduction of electric cars, the ZEV
3 mandate forces a product to market prematurely. Electric
4 cars, while advanced in many respects, currently lack the
5 technology to compete favorably with existing internal
6 combustion automobiles, particularly in terms of range.
7 In addition to the negative implications in terms
8 of cost and consumer acceptance, limitations in lead-acid
9 and other battery technologies raise serious concerns about
10 the safety of electric vehicles.
11 The auto industry has made great strides in
12 improving the efficiency and cleanliness of internal
13 combustion engines over the past 25 years. Furthermore,
14 several alternative pollution reduction methods, such as
15 low, ultra low emission alternative fuel vehicles, have
16 emerged in recent years and show much greater promise in
17 moving the State towards the air quality goals mandated in
18 the Clean Air Act, while continuing to meet the cost,
19 performance, and safety demands of consumers.
20 I wish to stress that I'm fully aware that
21 California is, to a great extent, bound by federal law to
22 meet the air quality standards set forth in the Clean Air
23 Act.
24 However, the State should give private industry
25 maximum flexibility in meeting these standards. As
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1 currently construed, the ZEV mandate does not provide for
2 such flexibility. Indeed, rather than focusing on meeting
3 higher air quality standards through the least restrictive,
4 most cost-efficient means, the ZEV mandate inappropriately
5 focuses on only one pollution reduction methodology,
6 electric cars.
7 When the federal government mandated higher fuel
8 efficiency standards in the 1970s and 1980s, it did not
9 require automakers to utilize specific technologies; rather,
10 automakers were given the flexibility to explore a wide
11 variety of methods to reduce fuel consumption and find the
12 most cost-efficient methods of meeting higher fuel
13 efficiency standards.
14 Through this market-driven process, automakers
15 developed the advanced fuel injection systems, computerized
16 on-board diagnostics, and a host of other engine design
17 modifications that have not only improved fuel efficiency,
18 but have maintained and, in many cases, improved engine
19 performance.
20 Several market-based alternatives to the existing
21 ZEV mandate, including proposals by the California Chamber
22 of Commerce and others, have received widespread support in
23 the private sector and merit serious consideration.
24 In closing, I again urge you to rescind the zero-
25 emission vehicle mandate and turn your attention to more
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1 feasible market-driven means of improving California's air
2 quality.
3 Thank you for your consideration.
4 CHAIRMAN DUNLAP: Dr. Boston, did you want to ask
5 a question?
6 DR. BOSTON: While you were speaking, it appears
7 to me that Senator Pringle must not have been aware of this
8 rule when it was passed way back in 1990, even after
9 millions of dollars were spent in development of this
10 technology. Why is he coming to us now with these
11 suggestions? Why didn't he come to us six years ago and
12 give these concerns?
13 Does he want us to abandon the whole program
14 immediately, right now? That's what you said.
15 MR. SABORARIA: Well, Mr. Pringle was not a member
16 of the Legislature in 1990. And I'm sure that had he been,
17 he would have expressed those concerns then as well. I
18 think the position is consistent with his position that
19 setting standards for improving the State's air quality is
20 one thing, and that would be an appropriate government
21 action in terms of intervening the market to control for
22 negative externalities such as pollution.
23 But in setting such standards, mandating the
24 manner in which private industry must come into compliance
25 would be inappropriate; rather, private industry should be
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1 given maximum flexibility to find the most cost-efficient--
2 DR. BOSTON: How can you be selective on which
3 private industry you're going to favor? If there's a whole
4 industry out there developing over batteries and electric
5 car technology, he's willing to dump those immediately and
6 in favor of the auto companies.
7 MR. SABORARIA: Not necessarily. I hesitate to
8 speak for him, but I think that he probably would say that
9 creating a government program that is heavily subsidized by
10 taxpayers and consumers to spur the growth of a particular
11 industry would be an inappropriate intervention into the
12 market. And such companies engaged in such technologies
13 should be able to compete favorably on their own in the
14 market if their product is viable.
15 DR. BOSTON: All right. Thank you.
16 MS. EDGERTON: Mr. Saboraria, I -- just I want to
17 make a comment. Sir? Hello. I want to make one comment.
18 I agree that we should maximum market flexibility.
19 The difficulty, from my point of view, just so you
20 know, is that that flexibility -- we can't give more
21 flexibility than the Congress gave to us. And the Congress
22 has required us to have an effective State Implementation
23 Plan, one that's enforceable and one that will show that
24 there is attainment by 2010.
25 So, I just wanted to be sure you understood that I
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1 agree that the maximum -- we can't give something we don't
2 have the right to give. We can't fail to comply with the
3 law, because our obligation to Californians is to comply
4 with the law.
5 I just wanted you to understand what I was -- I'm
6 sure you mean maximum flexibility within the context of the
7 law.
8 MR. SABORARIA: Well, yes. He understands that's
9 the charge of the Board to do that. I just think that he
10 would make the case that if you have certain products that a
11 more viable, such as a law or ultra low emission vehicle
12 that might have broader consumer acceptance, the aggregate
13 reduction in pollution in tailpipe emissions would be the
14 same or perhaps greater if those products were favored in a
15 market environment over an electric vehicle, which may be
16 less acceptable to consumers, and that those products should
17 all be allowed to compete.
18 MS. EDGERTON: I understand. Thank you.
19 CHAIRMAN DUNLAP: Thank you. Mr. Larrea from
20 Assemblyman Mickey Conroy's office, followed by -- I take it
21 Supervisor Mikels has not arrived yet. Reuel Jones
22 following Mr. Larrea.
23 One thing I would just say -- there's some 40
24 people that have signed up to testify. And we're interested
25 in hearing from everyone. But if you submitted written
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1 comments, I'd be grateful if you would just summarize those
2 if we promise to read those in their full glory prior to
3 next week's meeting.
4 MR. LARREA: I would be most happy to. In fact,
5 just to let you know, Mr. Chairman, Board members, Mr.
6 Conroy just instructed me that he'd just like to have me
7 come in and say that you're probably fully aware of his
8 position on the mandate, and that he would like to see it
9 just scrapped and allow it to proceed through the natural
10 market forces.
11 And his brief statement that he did fax me was
12 only a reiteration of his further position.
13 I will report to him that you're going to have a
14 further meeting after your staff does more considering on
15 this matter. And I think that it'd be best at that time
16 that he made a statement.
17 CHAIRMAN DUNLAP: Just a clarification point for
18 us. The Assemblyman would, of course, want us to be sure to
19 get emissions reductions so we'd be able to achieve the
20 health-based standards, right? He just thinks that this
21 approach, there's a problem with it?
22 MR. LARREA: I think -- it's difficult to speak
23 for him on this issue, because my issue is electrical
24 restructuring. But he is very much -- deregulation is the
25 approach that he's taking because of what is happening
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1 throughout the State and the nation.
2 And I think his strongest opinion is that a
3 mandate is moving the opposite way of the way that the
4 economy is moving, which is to deregulate everything. And
5 he sees that -- why should ratepayers fund another mandate
6 that does not guarantee any results really in the future
7 other than minimal results when electricity, oil, gas, and
8 everything else is being deregulated, which promises to
9 bring prices down and increase not only technology but the
10 availability of energy.
11 CHAIRMAN DUNLAP: Okay. Very good. Thank you.
12 MR. LARREA: Thank you.
13 CHAIRMAN DUNLAP: Mr. Jones, Assemblyman Bruce
14 Thompson's office, following Laurie Conaty from Assemblyman
15 Bernie Richter's office.
16 Good afternoon.
17 MR. JONES: Good afternoon. How are you?
18 CHAIRMAN DUNLAP: I'm fine, thank you.
19 MR. JONES: I'd like to thank you for this
20 opportunity. I also will give you a copy of my remarks and
21 make it very brief.
22 Assemblyman Thompson is of the same opinion as the
23 other Assemblymen that have been spoken to you today. We
24 feel that the most cost-effective way is to not have the
25 electric vehicles.
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1 As we can see by the chart from our first speaker,
2 it was $200,000 per ton for 14 tons. And it was -- if you
3 add up all the other items on there, that only comes up to
4 $72,000 per ton. And I think that's a much more cost-
5 effective way, and Assemblyman Thompson feels so, too.
6 And then I'll give you my remarks.
7 CHAIRMAN DUNLAP: Thank you and thank him.
8 MR. JONES: Thank you. Any questions?
9 CHAIRMAN DUNLAP: Very well. Appreciate it.
10 Laurie Conaty, Assembly Richter. I apologize for probably
11 mispronouncing your name. Followed by Ana Arakelian from
12 Assemblyman James Rogan's office.
13 MS. CONATY: Mr. Chairman, members, I'm Laurie
14 Conaty. Almost got it.
15 CHAIRMAN DUNLAP: Okay.
16 MS. CONATY: I'm a member of Mr. Richter's staff,
17 and, as you know, Mr. Richter represents the 3rd District in
18 the Assembly. He's also the Chair of the Assembly Committee
19 on Environmental Safety and Toxic Materials.
20 And Mr. Richter has a keen interest in this issue
21 and is well-credentialed in the subject area.
22 Mr. Richter has submitted a letter to Chairman
23 Dunlap reflecting and reinforcing his previous testimony.
24 So, I'll be brief and to the point.
25 You know the Assemblyman's position on the issue.
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1 The mandate is simply wrong for a number of reasons, which
2 he and his Assembly colleagues, as well as industry experts,
3 have previously identified. From his perspective, it's time
4 to bury the concept and to seek new and more cost-effective
5 and environmentally beneficial solutions to the State
6 Implementation Plan compliance issue.
7 This is the time for constructive leadership on
8 this issue, and time to respond to the people of California
9 and recognize that the greater majority will be unduly
10 penalized by the mandate, as currently structured, for
11 little, if any, additional environmental benefit.
12 If the Board feels obligated to maintain the
13 course of the ZEV mandate in some form or another, then, as
14 he has stated in November 16th and again on December 6th,
15 Mr. Richter favors a market-based alterative without
16 production quotas and without public financing or subsidies.
17 He respectfully reminds you that consumer
18 acceptance is the most critical component of such a mandate.
19 Mr. Richter has listened to his constituents, his
20 conscience, and has read and reread the Governor's Executive
21 Order regarding cost-effective regulation, and he has come
22 to the conclusion that the promulgation of new rules and
23 regulations must be based on the following four criteria:
24 that there must be a cost/benefit analysis that is based on
25 current science and dollars; the regulation promulgated will
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1 significantly reduce human health and environmental risk;
2 that there's no regulatory alternative that is less costly;
3 and that a finding must be made that the benefits do justify
4 the costs of the regulations.
5 On behalf of Mr. Richter, I strongly urge you to
6 respect the wishes of the people of the State and revisit
7 the ZEV mandate, and concentrate upon the standards, and let
8 the market and people dictate the methodology.
9 MS. EDGERTON: Excuse me. I wanted to just make
10 one comment about the benefits and the costs.
11 MS. CONATY: Okay.
12 MS. EDGERTON: This is just a comment about the
13 things that are in my mind. I think, when you think about
14 measures that are in the SIP, we have to remember what are
15 the penalties for failing to comply with the federal
16 requirement of the SIP, such as the loss of highway funds,
17 which are very significant. We really need those for our
18 highway infrastructure. And if not equally bad or worse is
19 that we could be stuck with our businesses having to have
20 offset ratios significantly increased everytime they want to
21 expand. You have to have two for one.
22 So, the penalties for failing on that front aren't
23 just small. They are very costly themselves.
24 Thank you.
25 CHAIRMAN DUNLAP: Thank you. Ana Arakelian for
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1 Assemblyman James Rogan. George Plescia from Assemblyman
2 Bill Morrow's office next. Thank you.
3 MS. ARAKELIAN: Good afternoon, ladies and
4 gentlemen of the Board. My name is Ana Arakelian, and I'm
5 here from Assemblyman James E. Rogan's office, who
6 represents Glendale and Burbank and small portions of the
7 Los Angeles area.
8 In the interest of time, I'm here to go on record
9 to submit a letter for Assemblyman Rogan's comments and
10 statements opposing this mandate. So, if I may do that, I
11 can hand that to --
12 CHAIRMAN DUNLAP: The Board Secretary.
13 MS. ARAKELIAN: Okay. And the Assemblyman
14 accommodates any questions or comments at a later time.
15 CHAIRMAN DUNLAP: Okay. Thank you. Appreciate
16 your efficient use of time.
17 (Laughter)
18 CHAIRMAN DUNLAP: George Plescia, Assemblyman Bill
19 Morrow's office, followed by John Grimley from Senator Ray
20 Haynes' office, followed by Kevin Smith of Senator Rob
21 Hurtt's office.
22 MR. PLESCIA: Good afternoon, Chairman of the
23 Board. I represent Assemblyman Bill Morrow of the 73rd
24 District, which is like North San Diego County and South
25 Orange County. And I'll respect your wishes for short
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1 testimony, since I have a letter, and he is with the other
2 Assemblymen and women against the -- just the mandate.
3 CHAIRMAN DUNLAP: Okay. Thank you.
4 John Grimley. Kevin Smith, then I'm going to go a
5 bit out of order, and I'd ask that Jim Haagen-Smit -- is Jim
6 Haagen-Smit here?
7 VOICE FROM THE AUDIENCE: Yes.
8 CHAIRMAN DUNLAP: That is a particularly
9 meaningful name to me in particular, considering a fellow
10 with that name was the first Chairman of this Board. Are
11 you related?
12 MR. HAAGEN-SMIT: Yes, I am. I guess you could
13 call me the grandson of smog.
14 (Laughter.)
15 MR. HAAGEN-SMIT: Since he seemed to be referred
16 to as the father of smog.
17 I just wanted to come down here today as a
18 concerned citizen and owner of an electric vehicle, and
19 owner of many bicycles; that the zero-emission vehicle
20 program is important to all of us.
21 I've heard already today a lot of people against
22 it, but it certainly is important to many citizens out
23 there, and it can be very effective in the near term, and
24 much more effective in the long-term in reducing emissions
25 and dependence on oil.
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1 Electric vehicles have the opportunity to use
2 renewable energy, where regular conventional fueled vehicles
3 have a much harder time converting over to renewable fuels.
4 I don't know if there's much else to say. My
5 grandfather was concerned about when he was on the Board
6 and, as he left the Board, that it was becoming a political
7 board as opposed to a scientific board. And I'd just like
8 you to remember that he would be much happier to hear in his
9 grave that it is not a political board but a scientific
10 board.
11 So, if you have questions for me, I'll take them.
12 Thanks.
13 CHAIRMAN DUNLAP: Thank you for that perspective.
14 It's wise counsel.
15 Any questions?
16 MR. LAGARIAS: It's a very astute observation.
17 (Applause)
18 MR. HAAGEN-SMIT: Thank you.
19 CHAIRMAN DUNLAP: Okay. Did Mr. Grimley or Mr.
20 Smith -- please come forward.
21 MR. GRIMLEY: Chairman Dunlap and members, my name
22 is John Grimley. I'm an administrative assistant to Senator
23 Haynes. The Senator had hoped to make it today. However,
24 due to scheduling conflicts, he could not.
25 The Senator wrote a letter to Governor Wilson on
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1 December 12th, which we cc'd to you, Mr. Chairman. And the
2 Senator asked me if I could come to this meeting and, with
3 your permission, read his letter to the Governor into the
4 record.
5 Would that be all right, Chairman Dunlap?
6 CHAIRMAN DUNLAP: I'm sorry?
7 MR. GRIMLEY: The Senator asked me to come and
8 read the letter that he wrote to the Governor into the
9 record with your permission.
10 CHAIRMAN DUNLAP: Sure. That'd be fine. We can
11 get into the record without it being read, but if you prefer
12 to read it, I'll accommodate it.
13 MR. GRIMLEY: Thank you, Mr. Chairman, I
14 appreciate that.
15 "Dear Governor Wilson -- cc to Chairman Dunlap --
16 I'm writing to express my concerns over the California Air
17 Resources Board's current deliberations about the electrical
18 vehicle mandate.
19 "Firstly, I would like to emphasize that I'm a
20 free enterprise, pro-industry, and business legislator. As
21 you know, there are many businesses in the private sector in
22 favor of regulations which apply to their competitors, which
23 then limits their competition.
24 "There are also businesses that favor regulations
25 because it forces people to deal with their particular
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1 business. The unfortunate circumstances in California today
2 is that many regulations have strong vested interests in the
3 private sector.
4 "A good example of just such a regulation is the
5 electrical car mandate shamelessly enacted and enforced by
6 the California Air Resources Board. The mandate requires
7 that a certain number of cars manufactured for delivery in
8 California be electrical.
9 "The mandate does not require that people buy
10 these guys, only that, in order to manufacture these cars
11 and sell them, $2,000 to $5,000 will be added to the cost of
12 a gas-powered vehicle in order to subsidize electrical cars.
13 "Of course, electric companies support the mandate
14 and want to raise electric rates to finance research
15 programs to promote the policy. Oil companies and car
16 manufacturers oppose the policy. The issue is not who
17 supports or opposes the policy, but rather what advances a
18 free market economy.
19 "Production mandates enforced by government are
20 what destroyed the Soviet economy. Government bureaucrats,
21 who are not driven by cost considerations or consumer
22 preferences, are inherently poor at deciding what people
23 should buy. These bureaucrats want people to buy electric
24 cars so they in turn order someone to make them.
25 "According to these bureaucrats, if people don't
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1 buy electric cars, they are ill-informed, and ought to
2 recognize the wisdom of the bureaucrats' decision.
3 "Mandates are based on socialist economic policy
4 and in the end will fail. Interestingly enough, electric
5 companies who argue vehemently for mandates on the car
6 companies argue against the mandates which require them to
7 buy power from independent power companies at artificially
8 high prices.
9 "In fact, arguments against mandates on any
10 business is the correct position, as this policy promotes a
11 free marketplace.
12 "A number of marketplace participants produce
13 consumer goods of high quality at a price which the maximum
14 number of consumers can afford. If a company cannot produce
15 a desirable product, a quality, affordable product, it will
16 go out of business.
17 "If a government mandate is required to enforce
18 sales goals, the cost of the mandate will be passed on to
19 other products, driving people who otherwise could afford
20 the product out of the market.
21 "Again, Governor Wilson, I wish to respectfully
22 register my strong opposition to any electric vehicle
23 mandate and hope the Air Resources Board will reconsider
24 this unfortunate policy.
25 "Sincerely, Raymond M. Haynes."
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1 CHAIRMAN DUNLAP: Thank you.
2 MR. GRIMLEY: Thank you, Chairman Dunlap and
3 members.
4 CHAIRMAN DUNLAP: It's my understanding Supervisor
5 Mikels is present. Please come forward. Good to see you.
6 MR. MIKELS: Good to see you. I didn't know, Mr.
7 Chairman, if this was going to be possible. Our plane --
8 they said, at the moment, well, we're sorry, it's fogged in.
9 You're not going to get out of here. They switched planes,
10 and we made it.
11 CHAIRMAN DUNLAP: Well, good for you.
12 MR. MIKELS: Good to see you this morning, Mr.
13 Chairman and members of the Board.
14 I'd like to thank you for the opportunity to offer
15 the South Coast AQMD's perspective on your pending decision
16 here today. In short, the ZEV mandate or emission
17 equivalent, direct mobile source alternative is essential
18 for Southern California.
19 You know, it's ironic that Southern California's
20 home to the cleanest stationary sources in the nation, while
21 the air basin in which they are located is the most
22 noncomplying in the nation.
23 Cleaner fuels, smaller cars, and more efficient
24 internal combustion engines have helped, but VMT and fleet
25 growth have all but wiped out much of these gains. Motor
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1 vehicles remain the single largest source of air pollution
2 in the South Coast Basin.
3 Indirect source rules, as our experience with
4 mandatory ride sharing has amply demonstrated, are clumsy,
5 ineffective, and costly. As a result, these measures failed
6 utterly the test of public acceptance. A combination of
7 direct measures and pricing mechanisms offer the most
8 reliable method to achieve an equitable distribution of
9 responsibility.
10 Shifting the cost of economic externalities from
11 mobile sources to employers, shopping centers, entertaining
12 venues, and airports represents bad economics and poor
13 public policy.
14 But this is the only alternative currently
15 available in the South Coast District. The REACH task
16 force, and that's an acronym standing for reduce emissions
17 and congestion on highways, is a broad-based group
18 representing a wide spectrum of interests, and is working to
19 develop pricing mechanisms to replace the indirect source
20 rules that we have now.
21 Waiting in the wings is control measures in the
22 air quality management plan, but which have been put off for
23 rulemaking purposes.
24 The task force has considerable work to do before
25 a set of detailed recommendations can be finalized. We've
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1 been in existence about six or seven months now, and we're
2 working feverishly to develop some mechanisms and work
3 through the issues that those pricing mechanisms present in
4 terms of coming up with some equitable alternatives.
5 As opposition builds against both indirect and, as
6 you find today, direct measures to control mobile source
7 emissions, the potential for backsliding threatens both
8 conformity determinations and federal sanctions.
9 Simply stated, your ZEV mandate is the cornerstone
10 of the South Coast Basin's attainment strategy. Thanks to
11 your vision, substantial progress has been made toward
12 developing zero-emission technologies, such as electric
13 vehicles, advanced batteries, and fuel cells.
14 Chairman Dunlap stated the matter most succinctly
15 in his letter to the L.A. Times on December 7th. "Electric
16 vehicles are one strategy for not only cleaning the air, but
17 for developing a high technology industry that will help
18 replace the thousands of jobs lost to military base closures
19 and aerospace industry downsizing.
20 The South Coast AQMD recognizes that technology
21 rules may, in fact, require some adjustment as deadlines
22 adopted years in advance come upon us. In fact, we in the
23 South Coast have committed to such reality checks with our
24 technology forcing rules as part of our business clean air
25 partnership.
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1 However, emission reductions lost as a result of
2 such adjustments must be made up somewhere, and should be
3 made up and must be made up in the same source category and
4 for foisted upon stationary sources, which have done their
5 fair share to reduce emissions.
6 Your Board has the primary authority over the
7 biggest source of air pollution in the South Coast District.
8 Minor adjustments that retain the fundamental thrust of the
9 present ZEV program and its emission reductions potential do
10 not threaten attainment.
11 Mobile sources simply need to meet and shoulder
12 their responsibility. Your ZEV requirement has stimulated
13 zero-emission technologies worldwide. Success is within
14 reach. Your action today is necessary to protect both the
15 environment and the rebounding economy in Southern
16 California.
17 And that concludes my prepared remarks, Mr.
18 Chairman. And we would also comment with regard to what I
19 understand has been a big issue in your hearings today, with
20 regard to the -- whether or not there should be a rule or a
21 memorandum of understanding.
22 I would say that, in the absence of a rule, the
23 technology forcing impact of that rule, industry has
24 developed the technological advances that have been achieved
25 and made thus far would be placed in jeopardy (sic).
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1 Thank you for the opportunity to address you this,
2 I guess this is afternoon now. And if you have any
3 questions, I'd be happy to answer them.
4 CHAIRMAN DUNLAP: Well, first of all, maybe I can
5 start it off. I appreciate you taking the time to come up
6 here today. It means much just to have you come up.
7 A couple points I'd just like to emphasize. I
8 appreciate very much the perspective that, truly, the clean
9 air strategy for the South Coast Air District is a
10 partnership between the State and your local board. I mean
11 there's no question about that. And the mobile sources
12 account for the majority of the emissions in your area.
13 Tell me -- the South Coast has done an awful lot.
14 I've been very impressed over the years with the technology
15 advancement program where you emphasized mobile source pilot
16 projects and promoting cleaner mobile sources.
17 How do you see that? You can see that continued
18 emphasis remaining constant over the next few years? I
19 mean, are you going to be continuing to be active in that
20 area like you've been the last five or six years?
21 MR. MIKELS: Yes, Mr. Chairman. Not only through
22 our technology advancement office and the funds available to
23 that, but also through the district's allocation of 2766
24 funds.
25 Our MSRC task force has categorized into three
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1 main categories of technology advancement -- generally
2 speaking, one of the main thrusts that they also want to
3 bring into this area, along with old vehicle scrapping,
4 which was energized this year through a significant
5 allocation.
6 CHAIRMAN DUNLAP: Okay. Well, we certainly
7 appreciate that partnership and need it to continue.
8 Ms. Edgerton, do you have a question for the
9 Chairman?
10 MS. EDGERTON: Well, actually, I have a comment I
11 wanted to -- as a resident of the South Coast, was proud of
12 your comments, because you spoke very well in our behalf.
13 So, thank you very much. And I'll try to do my part here as
14 well.
15 But could you speak to your -- and more
16 specifically, the ZEV market launch program that you all are
17 working on with respect to -- where does that stand in terms
18 of the rebates to purchasers of electric vehicles?
19 MR. MIKELS: If you're talking about -- I believe
20 we were discussing --
21 MS. EDGERTON: MSRC?
22 MR. MIKELS: -- the MSRC allocation that was made
23 within the past as part of their multiple year program. I
24 can't tell you the up-to-date status, other than its
25 approval, and it was just a couple of months ago.
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1 So, they're working toward that, and they're going
2 to energize that. I have met with a number of the members
3 of the MSRC, and we just received their two-year program at
4 our last board meeting, and there was no testimony in
5 opposition to it, and support from those members from a
6 diverse membership on the board.
7 MS. EDGERTON: Thank you.
8 CHAIRMAN DUNLAP: Supervisor, I noticed you
9 provided us also with two resolutions, one from your Board
10 of Supervisors in San Bernardino, and the other --
11 MR. MIKELS: Yes, Mr. Chairman.
12 CHAIRMAN DUNLAP: -- from County of Riverside,
13 where you're encouraging this Board to hold firm to its ZEV
14 program.
15 MR. MIKELS: That's correct. Both boards
16 unanimously supported that position.
17 CHAIRMAN DUNLAP: I noticed our Supervisor Riordan
18 also voted aye for that.
19 MR. MIKELS: Not only was she an aye vote, Mr.
20 Chairman, she was a mover.
21 CHAIRMAN DUNLAP: She was a mover. All right.
22 Jim, did you have a question?
23 SUPERVISOR SILVA: Yes. First of all, I'd like to
24 say it's nice to see you up here, Jon.
25 MR. MIKELS: Thank you.
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1 SUPERVISOR SILVA: I didn't realize until
2 yesterday that you'd be here.
3 The letter that you brought up and you just read,
4 I would like to say, for the record, that I have not
5 indicated to you how I would vote on the ZEV. And I will be
6 listening to the testimony and in the future, and I'd just
7 like that for the record.
8 CHAIRMAN DUNLAP: Very fine.
9 MR. MIKELS: Thank you, Mr. Chairman.
10 CHAIRMAN DUNLAP: Appreciate it.
11 MR. MIKELS: Thank you, members of the Board.
12 CHAIRMAN DUNLAP: I hope you make it out of town,
13 Jon. Because, if not, I'll see you in the airport, I'm
14 sure, later tonight.
15 MR. MIKELS: Okay, John.
16 CHAIRMAN DUNLAP: Okay. Ben Ovshinsky from Ovonic
17 Battery Company, followed by Paul Knepprath, then Janet
18 Hathaway. And Paul Knepprath is with the American Lung
19 Association and Janet Hathaway from Natural Resources
20 Defense Council.
21 MR. OVSHINSKY: Mr. Chairman, Board, and staff,
22 I'm Ben Ovshinsky from Energy Conversion Devices. Our
23 company is the parent company of Ovonic Battery Company,
24 which has developed the basic technology of nickel metal
25 hydride and owns the basic worldwide patent to that.
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1 And I'd like to make a few comments setting out
2 the facts about electric vehicles, advanced battery
3 technologies, and mandates.
4 Nickel metal hydride batteries are a major
5 rechargeable consumer battery currently being produced at
6 thae rate 400 to 500 million batteries per year for consumer
7 applications.
8 Our company's is a volume manufacturer of hydride
9 battery materials for these batteries, which are largely
10 manufactured and sold worldwide by our licensees, which
11 include 16 of the 18 most significant manufacturers in the
12 world.
13 Due to the 1998 California ZEV mandate, we have
14 obtained substantial funding from a variety of sources,
15 including U.S. ABC and several major automotive
16 manufacturers to develop nickel metal hydride batteries for
17 electric vehicles.
18 This technology is rapidly developed to provide
19 excellent energy, power, ruggedness, durability requirements
20 to make electric vehicles a reality.
21 We are working with American European, Japanese,
22 and Korean automobile manufacturers in a wide variety of
23 current vehicle platform tests.
24 Limited range has been emphasized as being a
25 disadvantage for electric vehicles. Our battery has the
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1 highest volumetric energy density available for any electric
2 vehicle.
3 This battery has led to a variety of EV -- the
4 setting of a variety of EV range records. In test at CARB,
5 a converted Geo Metro demonstrated a range of 170 miles.
6 The General Motors Impact EV has demonstrated a range of
7 excess of 240 miles. That's all on a single charge.
8 The Sunrise EV has attained a record range of 238
9 miles in a road race.
10 Our batteries also demonstrate the ability to be
11 recharged 50 percent in 15 minutes. With one such rapid
12 recharge, the range of vehicles, such as the Impact or the
13 Sunrise -- these are purpose built vehicles now -- can be
14 extended to nearly 400 miles right now.
15 Range is not an issue with electric vehicles
16 powered by Ovonic nickel metal hydride batteries. Our
17 battery also has excellent power performance, having powered
18 the Impact from 0 to 60 miles in under 8 seconds; Saturns
19 from 0 to 80 in under 10 seconds, with top speed well in
20 excess of 100 to 110 miles per hour.
21 This powered a Chrysler van to over 90 miles an
22 hour. For over two years, it has powered a converted
23 Suzuki, through one of our licensees, over the steep hills
24 of Hong Kong. Power is not an issue with electric vehicles
25 powered by Ovonic nickel metal hydride batteries.
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1 Further, development continues. I am informed
2 today that a 91 watt hour per kilogram EV battery under test
3 now should yield a range of over 300 miles.
4 We agree with the CARB Battery Technical Panel is
5 the remaining hurdle is cost. Projected high-volume
6 production costs are already feasible and can and will be
7 lowered by further development.
8 However, actual cost can only be driven down by
9 increased volume. That's standard manufacturing operations.
10 Regardless of what the volume production cost
11 projections are, we need volume production. To be
12 successful, it's critical to be able to get sufficient
13 volume to reach our early cost goals.
14 Millions of dollars in investments have been made
15 by ourselves and others -- entrepreneurial, free-market
16 investment; I don't think we have a penny of taxpayer money
17 that I'm aware of particularly.
18 Millions of dollars in investments have been made
19 by ourselves and others to help make electric vehicles
20 technically feasible in response to the California ZEV
21 mandate, in response to the ZEV mandate.
22 We have joined with General Motors to form GM
23 Ovonic, a joint venture and commercialization nickel metal
24 hydride electric vehicle batteries at volumes of the level
25 anticipated due to the 1998 ZEV mandate.
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1 Substantial numbers of batteries on the order of 7
2 to 10,000 units per year are required by the GM Ovonic
3 business plan as it was revealed by GM Ovonic at the October
4 11th CARB workshop.
5 Even with the public uncertainty in the ZEV
6 mandate that have arisen over the last few months, potential
7 orders appear to be evaporating.
8 Elimination of the mandate or even a lowering of
9 the number of electric vehicles required can only be
10 expected to have a severe negative impact on our ability to
11 provide California with EV batteries through this newly
12 formed joint venture.
13 Ovonic nickel metal hydride is a here-and-now
14 advanced battery technology, an advanced battery technology
15 that is here now, and it's ready for ramp-up.
16 That's the end of my comments at this point.
17 Actually, I'd like to add one more comment.
18 CHAIRMAN DUNLAP: Sure.
19 MR. OVSHINSKY: I heard Bob Stemples (phonetic)
20 speak publicly at the American Physical Society convention
21 last year in San Jose, and he said -- he's the ex-CEO and
22 Chairman of General Motors. And he said that given
23 sufficient volume, EVs will not be an more -- I'm quoting --
24 not be any more expensive than a conventional ICA -- ICE
25 vehicle. That's not me.
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1 CHAIRMAN DUNLAP: Mr. Lagarias.
2 MR. LAGARIAS: On the issue of cost, how much --
3 how does the cost of ionic batteries compare with lead-acid
4 batteries?
5 MR. OVSHINSKY: Let me say that I'm in a difficult
6 position, in that I'm not a technical person. I represent
7 the parent company, which puts me two arms removed from the
8 joint venture. I'm not privy to the business plans. All I
9 can speak is in qualitative terms.
10 They will be cost competitive. It will be
11 economical. It will fulfill what Bob Stemple is talking
12 about.
13 Given volume production of the battery, the EV
14 platform will not be any more expensive than an ICE vehicle.
15 MR. LAGARIAS: We're trying to get a feel for
16 things. We know what the lead-acid battery will cost. Is
17 it twice as expensive, ten times expensive, twenty times,
18 200?
19 MR. OVSHINSKY: I apologize for having to
20 basically repeat, you know, the previous statement. That
21 kind of data, which is available, I don't have. And I'm not
22 going to make that available to you. We have been making
23 that available and will make that available to you, to the
24 staff, to the Board, to the Chairman. And it has been made
25 available. I'm not privy to it.
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1 CHAIRMAN DUNLAP: Okay. Staff's indicating that
2 they have some of the information that you're so deftly
3 sidestepping at this point. And I understand that. Thank
4 you.
5 MR. CACKETTE: Mr. Chairman, we could either
6 provide the answer to Mr. Lagarias --
7 CHAIRMAN DUNLAP: Sure.
8 MR. CACKETTE: The Battery Panel I think addressed
9 this, and we have the report.
10 CHAIRMAN DUNLAP: To the audience, too, the
11 Battery Panel also was able to acquire some proprietary
12 information, secret information --
13 MR. OVSHINSKY: Right.
14 CHAIRMAN DUNLAP: -- and we try to be respectful
15 of that. Mr. Lagarias is most of the time, too.
16 (Laughter.)
17 MR. LAGARIAS: It's going to be competitive, and
18 it brought up the issue of cost, and I just want to know
19 what he's talking about.
20 MR. OVSHINSKY: Again, you know, I'm only speaking
21 in qualitative terms. It's no more expensive than the
22 conventional ICE.
23 CHAIRMAN DUNLAP: Okay.
24 MR. OVSHINSKY: Including the battery.
25 CHAIRMAN DUNLAP: Yes, Dr. Boston.
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1 DR. BOSTON: A quick question. You mentioned that
2 one of the cars, the Impact, you mentioned has been run on
3 your metal hydride battery.
4 MR. OVSHINSKY: Sure has.
5 DR. BOSTON: If you make a car to run on the lead-
6 acid batteries, is it difficult to convert it to the Ovonic
7 battery?
8 MR. OVSHINSKY: No. One of the attractive things
9 about the nickel metal hydride technology, the Ovonic
10 technology, is that it's pretty much compatible. We've
11 slipped lead-acid out of the Impact and slipped the nickel
12 metal hydride pack in. I've got photographs of it, not for
13 display, but I have photographs in our annual report of that
14 Impact battery pack.
15 DR. BOSTON: The same size compartment requirement
16 and everything usually?
17 MR. OVSHINSKY: Basically. Considering that we
18 put out at least twice as much energy capacity per weight.
19 You could make smaller compartment. But if you want the
20 range, it'll be the same size.
21 DR. BOSTON: Thank you.
22 MR. BOYD: Mr. Chairman, we've got nonconfidential
23 data that Mr. Cross can share.
24 CHAIRMAN DUNLAP: Sure.
25 MR. CROSS: Now that we have the public version of
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1 the battery report available. The general costs cited for
2 nickel metal hydride are -- right now, it's a thousand
3 dollars per kilowatt hour, greater than a thousand. '97-
4 2001, which would be during the ramp-up that he's talking
5 about, 225 to 500. And for the Ovonic batteries
6 specifically, in '98, it's projected to be 450 to $550 per
7 kilowatt hour; in 2001, it's 230 to 250.
8 Remember, lead-acid is 150. But these batteries
9 are much longer life than the lead-acid batteries typically,
10 and then they have superior range as well.
11 MR. OVSHINSKY: Well, I want to avoid this, Mr.
12 Chairman, because I'm not a technical specialist. But the
13 data that I have from interoffice information. The cost of
14 nickel metal hydride at present is $235 per kilowatt hour,
15 and next generation at 190.
16 But I don't want to stand by those or swear by
17 those, but I'm not the technical expert. But I would --
18 we're in continued and perhaps constant communication with
19 the staff on this.
20 CHAIRMAN DUNLAP: Sure.
21 MR. LAGARIAS: You would have helped me if you
22 had-- now, these nickel metal hydride batteries are the same
23 kind that go in watches and --
24 MR. OVSHINSKY: They go in almost any laptop
25 computer, computer electronics, CD player.
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1 MR. LAGARIAS: All right, take the cost of the
2 battery that you put in a laptop computer, and ramp it up to
3 a kilowatt hour, let's see what the cost of those batteries
4 is. Thank you.
5 MR. OVSHINSKY: Thank you.
6 CHAIRMAN DUNLAP: Thank you very much.
7 MR. OVSHINSKY: Thank you, Mr. Chairman.
8 CHAIRMAN DUNLAP: Paul Knepprath, Janet Hathaway,
9 followed by Joe Caves from the Union of Concerned
10 Scientists.
11 Good afternoon, Paul.
12 MR. KNEPPRATH: Good afternoon, Mr. Chairman and
13 Board members. Paul Knepprath, here representing the
14 American Lung Association of California.
15 Thank you for the opportunity today. We'll be
16 looking forward to the next week's meeting, and I guess I
17 would just put a pitch in now, that it would be, I think,
18 very beneficial if constituent groups could get some kind of
19 a proposal ahead of time of Thursday. It would make it
20 helpful for us, be able to look at something that you might
21 be proposing for Thursday, and be able to give you some
22 reactions and responses.
23 I feel, in some manner, that I'm repeating myself
24 from our last hearing, which I'm going to, you know, state
25 basically some of our policy positions. But we certainly
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1 would be willing to look at something that would go to you
2 for next week and give you our specific responses to that
3 proposal.
4 The American Lung Association supports and has
5 since its inception the ZEV mandate, because we believe it
6 represents a regulatory approach that we need to battle our
7 serious smog problems here in California, clean up the air,
8 and make it a healthier place for people to breathe.
9 We believe that the mandate provides a ramp-up to
10 getting the electric vehicle viable as a transportation
11 option, and we are very concerned that we may be backing
12 away from the actions that we need to take that will bring
13 us this cleaner transportation.
14 If we put off the introduction of this car, we are
15 delaying the significant contributions to cleaner and
16 healthier air that is the promise of this technology.
17 And while we appreciate the remarks that have been
18 made very publicly and sincerely that the ZEV mandate will
19 not sacrifice any emission reductions, we do see a
20 tremendous future for the electric car, and want to make
21 sure that within that discussion, the electric car itself,
22 as a viable transportation option, is promoted and remains
23 on the table in a viable fashion.
24 We don't see a lot of other emission reductions
25 out there to be gotten, and note this is an important part
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1 of our long-term clean air solution.
2 And while our principal concern is obviously for
3 the breathers in California, our State's special
4 responsibility under the Clean Air Act also places in a
5 leadership position for other States throughout the nation.
6 And so, regarding that, whatever is done here in
7 California should be referable for those in other States.
8 The ALA is concerned that moving away from the
9 mandate will merely postpone our progress toward electric
10 cars that we may never ever regain the momentum that we
11 need, and we will have lost the opportunity to get the
12 significant emission reductions that this technology will
13 bring us after the initial stages of introduction.
14 For these reasons, we ask that you maintain strong
15 on this progressive regulation, and also to restate my
16 commitment that if we receive something ahead of time, we'd
17 like to get you some comments back to you before your next
18 meeting.
19 CHAIRMAN DUNLAP: Thank you. Ms. Hathaway.
20 (Thereupon, the reporter requested a
21 pause to change tapes.)
22 CHAIRMAN DUNLAP: For those who keep track of such
23 things, there have been 12 speakers thus far and 28
24 remaining.
25 MS. HATHAWAY: Well, that does put a kind of
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1 burden on me to move through this quickly.
2 CHAIRMAN DUNLAP: Just purely informational,
3 Janet. No pressure.
4 MS. HATHAWAY: Thank you, Mr. Chairman.
5 CHAIRMAN DUNLAP: No pressure.
6 MS. HATHAWAY: No pressure at all.
7 (Laughter.)
8 MS. HATHAWAY: Mr. Chairman and members of the
9 Board, my name is Janet Hathaway.
10 I'm pleased to be here to talk with you about the
11 electric vehicle program. Because we don't have a more
12 concrete a more elaborated proposal before us, I'm simply
13 going to respond to what we saw last week at the workshop to
14 try to give some detail. I hope some of this (speaking
15 slide) is legible -- it looks like it's going to be a hard
16 read -- to people as to why we strongly oppose both Option
17 A, which is really the oil industry proposal through the
18 Chamber of Commerce, and Option B, which is the car company
19 proposal, and why we propose an alternative for the Union of
20 Concerned Scientists, which is a version of Option C.
21 And you have testimony about that in more detail.
22 To begin with -- the next slide -- the ARB Concept A is a
23 little bit vague, as all of these proposals unfortunately
24 are, but what we have to do is try to piece together how
25 this could work, how could Concept A work?
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1 It is claimed to be a system that would rely
2 entirely on market forces, but we're not really sure what
3 harnesses the market to really give us emission reductions.
4 Now, if it's truly a market system, one way that
5 it could be conceived of is as a total laissez faire system,
6 everybody does whatever is in their economic interest to
7 reduce air quality. But that would violate the promises that
8 Chairman Dunlap and Secretary Strock have made to ensure the
9 equal emission reductions occur.
10 Because, in fact, trusting in the market is what
11 has brought us to this point of having the very most severe
12 air quality problem in the country.
13 So, that, we don't think, is what you really have
14 in mind. It would certainly violate both the Federal and
15 State Clean Air Acts, because it wouldn't give us measurable
16 progress to the air quality goals.
17 So, our other hypothesis, which is the next slide,
18 is that it is some form of allocation -- sorry. It's a form
19 of allocation of the emission reductions in the mobile
20 source among all the participants.
21 Trust me, this slide does say that. But it's
22 backwards.
23 It basically would require us to go into some
24 either negotiation or determination of who all the players
25 are that contribute mobile source pollution. You can see
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1 this would include the car companies that sell vehicles, but
2 it might also include the oil industry, since it's fueling
3 these vehicles, and somehow we would have to come to some
4 resolution of how you would cap emissions from the mobile
5 sector, how you could move it down.
6 Now, let me just say, this is a monumental task.
7 It's a great and radical change from anything we've done
8 before, and to even get these allocations set, I suspect,
9 would be at least as politically and technically challenging
10 as these programs.
11 So, let it just not be thought that this is going
12 to be some easy, cheap alternative to going forward with our
13 current programs.
14 Okay. Next slide.
15 What are the measures that have been suggested for
16 Concept A? Some of these you've already seen detailed by
17 Tom Austin, representing WSPA here.
18 The emission reductions that we already have in
19 the SIP are all needed, and then we need more. And some of
20 the other emission reductions that have been talked about
21 are the 49-State car, which is the first bullet up there,
22 some tougher standards for motorcycles, actually I think
23 inspection and maintenance for motorcycles, an underhood
24 test for crankcase ventilation emissions during smog check,
25 and then also repowering of off-road diesel equipment.
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1 Now, all of these measures have their own land
2 mines in getting them implemented. Some of them may be very
3 good ideas, but they certainly are not anything guaranteed
4 to be easy to achieve.
5 And certainly, one of the major problems with
6 these is that they may simply augment programs we already
7 have in our SIP, like inspection and maintenance, and may be
8 really needed to even meet our current expectations for the
9 inspection and maintenance program and, therefore, would not
10 give us surplus emissions that could be counted in any way
11 to reduce the black box of emissions.
12 Now, next slide.
13 Let's talk about in more detail about the idea of
14 a 49-State car. One thing that I think people here in this
15 room need to know is there is no such 49-State car planned
16 at this point. There is a proposal from EPA. All of the
17 Northeastern States would have to agree to it, together with
18 all the car companies before it could become an effective
19 reality, that 49-State cleaner certification could occur.
20 But even if this did occur, there is no guarantee
21 that California will find in-use emissions going down as a
22 result of the 49-State car. Why is this?
23 It's because -- and this is the second bullet up
24 there -- certification standards do not guarantee lower in-
25 use emissions. This is unfortunate, but true, that what we
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1 find -- we find that in-use emissions are not simply
2 controlled by cutting down on their initial certification
3 standards. In-use emissions are affected by a number of
4 different factors -- how quickly vehicles are allowed to
5 travel or how quickly they're driven, and that problem is
6 only going to be enhanced as our speed limit goes up. How
7 aggressively drivers accelerate, and the effectiveness of
8 the emission control systems, which again is our whole smog
9 check program.
10 Now, remember, 49-State cars -- the whole
11 assumption about getting some benefit from 49-State cars is
12 that somehow these vehicles migrating in are going to be
13 cleaner.
14 We have no way to control that. To begin with,
15 these vehicles are going to come from any State. Some of
16 these States have no smog check program whatsoever. Many of
17 them have much weaker smog check programs than do our State.
18 And even our State's smog check program, with all the
19 enhancements we've tried to put on it, does not ensure that
20 in-use emissions stay low.
21 So, finally, the last point on this slide is that
22 the California tougher in-use standards for vehicles do not
23 control these vehicles that are migrating from other States.
24 Therefore, this is not an enforceable California
25 alternative, and could not, in fact, be a SIP measure that
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1 California adopts.
2 Next slide.
3 So what more could California do? What more can
4 we do in addition to what's in our SIP? We may want to
5 undertake the underhood inspections. Maybe we want to go
6 forward with some replacement of oxygen sensors or catalysts
7 on certain vehicles. Maybe we want to have further
8 exploration of Premair catalysts or motorcycle standards.
9 But the bottom line question is, how is this going to be
10 done, who's going to bear the cost, and, of course, why is
11 this even being raised by the oil industry as an alternative
12 to ZEV?
13 I think the point was very clearly made. These
14 things may very well be needed just to meet our SIP
15 obligations under the Clean Air Act.
16 Okay. So, the next slide?
17 Some of these measures may help strengthen our
18 SIP, but they do not replace the need for ZEV. They may
19 very well augment our inspection and maintenance program, or
20 reduce the black box of currently unaccounted for emission
21 reductions needs.
22 But they can't all be an alternative to LEV/ZEV,
23 in part, because LEV/ZEV is in our SIP, and LEV/ZEV is the
24 only one of our programs that actually will reduce the
25 emissions reductions' costs over time, the only program that
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1 we can point to that could continue over time to get more
2 and more emissions reductions at a lower cost per ton. And
3 that is key.
4 Next slide.
5 What are the other effects of this Option?
6 Clearly battery research and development, which so many of
7 the automakers are looking forward to, will dry up if there
8 is no assured market and no requirement for sales of ZEVs.
9 We heard that I think very clearly from the
10 battery audit, and certainly -- I've certainly heard from
11 battery makers in Europe recently at a ZEV conference. And
12 I think that that can't be doubted. We're going to disrupt
13 investment that has been diligently pursuing a better
14 battery.
15 Next?
16 We also would find under Option A that the
17 voluntary ZEV demonstrations, which may very well be a
18 portion of and a necessary condition to creating a market in
19 ZEV, will not be a substitute for actual sales of these
20 vehicles to consumers.
21 And so, again, while it's a necessary condition
22 that's not sufficient, it's not an alternative to our
23 current ZEV program.
24 The next point, E, Concept A kills the
25 Northeastern States' ZEV programs. This is a crucial issue.
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1 The Northeastern States have worked very hard to hold on to
2 the possibility, the option, of having electric vehicle
3 programs themselves. They've had to fight very hard to
4 ensure that EPA did not come back to them, "You cannot adopt
5 California's ZEV program.
6 Then, each of those States have been severely --
7 subjected to severe lobbying, both in their legislature and
8 in their executive offices, to kill their electric vehicle
9 programs.
10 Finally, court cases that have just been endless
11 have been brought by the very people who are opposing the
12 ZEV program here against those States for their programs.
13 They've resisted. They've held on to their programs. How
14 could we possibly justify killing their efforts to clean up[
15 their air, especially when their programs to clean up their
16 air benefits Californians, because that's the only way we'll
17 have assurance of migrating vehicles being clean if some of
18 these vehicles are, in fact, being sold -- zero-emission
19 vehicles are being sold in other States.
20 And, of course, as the market increases because of
21 these States having ZEV programs, the cost to Californians
22 in purchasing ZEVs will go down.
23 And then, finally, when people say, are these
24 measures that are identified in an equivalent to the ZEV
25 program under time, remember, it's just not nonmethane
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1 organic gases that get reduced by ZEVs. That's very
2 important.
3 But it's not the only benefit we get from ZEVs.
4 We also get nitrogen oxide reductions that are extremely
5 necessary if we're going to see clean air in the South
6 Coast. Where is that going to come from if we go with
7 something in Option A?
8 The air toxics benefits, again, a very important
9 question. How do we ensure that we do see air toxic
10 reductions?
11 Carbon dioxide and carbon monoxide both -- both,
12 as you know, are major problems with our current internal
13 combustion engines. And then small particulates which are
14 very much associated with asthma problems and real
15 respiratory distress in our urban areas, what can we do that
16 is going to assure all of those benefits ZEVs continue?
17 Next slide.
18 The premise of Option A is that emission
19 reductions are really fungible, that an emission reduction
20 anywhere is the same.
21 But that's not really true. It matters very much
22 where and when emissions occur for most pollutants, and
23 vehicle emissions occur from internal combustion engines now
24 just when ozone is optimized for formation, and also where
25 people will be exposed.
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1 So, this is a very serious issue. So, to use an
2 analogy here, when we look at the electric vehicle and try
3 to find an alternative to it, let's remember that, if we
4 were stranded on a desert island, eating up all of our food
5 from a box that just happened to occur, you know, washed
6 from some passing freighter or something, is not the same.
7 It doesn't give us the same benefit as planting a crop.
8 The ZEV program is a crop that continues to reap
9 benefits for us. It gives us cheaper emission reductions
10 over time.
11 And then, finally -- so, again, another strained
12 analogy, but I just have to do it.
13 You can scrap together a number of different
14 measures to try to get yourself emission reductions, but
15 they don't add up to the ZEV program. You can look at all
16 these crushed marble stones, but you put them together, it's
17 not the Pieta. And that's really the problem we're faced
18 with now.
19 People are trying to give us a lot of different
20 things we can cobble together. They don't have the same
21 long-term effect as our current ZEV program.
22 So, let me stop at this point and thank you very
23 much for the serious efforts you're making to find what can
24 be done.
25 I hope you'll look carefully at our Option C, and
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1 we'll hear more about that from other spokespeople later in
2 the day.
3 Any questions?
4 CHAIRMAN DUNLAP: Thank you. Mr. Calhoun?
5 MR. CALHOUN: I can't resist asking this question.
6 You know, in the past, I used to sit in the audience and
7 listen to various Board members make comments. And I can
8 recall specifically one comment that was made that, "Why
9 should you be worried about what happens back East? You
10 should be worried about California."
11 And today, I hear your comments suggesting that,
12 well, we ought to be worried about it.
13 I just want to just remind you of the fact that,
14 in the past, I've heard some of the Board members say, "We
15 aren't worried about what goes on in the East." Maybe we
16 should be worried, but I don't know that.
17 I guess the other comment -- another point that I
18 wanted to make was that you mentioned something about the
19 49-State tough in-use -- enforcement of tougher in-use
20 standards. And I don't know -- and the staff can correct me
21 if I'm wrong -- if they're referring to enforcing the 49-
22 State standards by the IM program.
23 I've got the impression that the enforcement of
24 the in-use standards is to going to be just as it is now,
25 based on the very effective in-use program that this Board
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1 has, where they target specific engine families for
2 enforcement testing based on data that you get from a number
3 of sources, one of which is the in-use program.
4 So, I would think that -- I assume that that's
5 what they have reference to. I'm not sure. Is that
6 correct? That the enforcement of the 49-State vehicle in-
7 use standards is intended to be based primarily on your
8 in-use test program. I'm thinking in terms of the -- where
9 you preferentially select various engine families and test
10 those vehicles, and based on the results of testing, you
11 decide whether or not a campaign is appropriate or not.
12 MR. CACKETTE: Well, a 49-State engine family
13 would be one that was certified by EPA --
14 MR. CALHOUN: I understand that.
15 MR. CACKETTE: -- under this program. And so, we
16 would not be targeting those engines, nor would we have the
17 authority to target them for in-use enforcement actions,
18 other than smog check.
19 They'd just be here, and if EPA recalled them,
20 they would get recalled. If they didn't, they wouldn't.
21 MR. CALHOUN: So, you use that data -- or EPA
22 would use that data to test them in-use if they wanted to;
23 is that correct?
24 MR. CACKETTE: Well, in the extreme, I guess, that
25 illustrates the point -- if EPA had no in-use enforcement
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1 program and these 49-State cars came here to operate in
2 California, they would not be subject to any recall program,
3 unless they happened -- well, they wouldn't be subject to
4 any recall program.
5 We would have no authority, and there would be no
6 recall program. Now, if EPA has an effective -- maintains
7 an effective in-use program, then they would be caught by
8 the EPA program. The only program that would affect them
9 here would be smog check, which affects the owner of the
10 car.
11 MR. CALHOUN: Does this Board, as a matter of
12 policy, provide -- or maybe, of course, EPA could get it
13 themselves directly from the smog check program -- to
14 preferentially select vehicles for in-use testing?
15 MR. CACKETTE: We use that, yes. We use any
16 information we can. If I could take just a moment to
17 comment on the 49-State vehicle program. One aspect of it
18 that has not come up that is germane to its use as an offset
19 to the -- to a ZEV program, for example, under federal law,
20 a 49-State LEV program is highly likely starting in the year
21 2004.
22 That's because the law says that EPA shall do
23 another reduction in emission standards in the year 2004,
24 and they're not allowed to do it before that year, provided
25 certain things are demonstrated. One is that the
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1 technology's available and, you know, every car being sold
2 in California be a LEV. So, I think that criteria's been
3 met -- would be met automatically. And if there's a need
4 for air quality reductions in at least a few areas in the
5 country.
6 And while I can't speculate on whether that will
7 be the case, I would assume, since there are, you know, it's
8 about 50 now are nonattainment of ozone. By the time they
9 make that adoption sometime around 2000 for the standard,
10 that it would -- there would still be a need in other places
11 in the country.
12 So, if that's true, then the LEV standard will go
13 into effect nationally in at least the year 2004. After
14 that point on, under any reasonable reading of an offset or
15 an alternative program, it would not be available as an
16 alternative program.
17 So, it potentially could be an offsetting program
18 in the interim years but, at least my thinking on it is it
19 would not be available beyond 2004. And so, if there was a
20 complete offset, like in Option A where you just go out and
21 find another way of getting the tons and you chose the 49-
22 State program, that would not work after the year 2004.
23 MS. HATHAWAY: And, Mr. Calhoun, just to answer,
24 the point that I was trying to raise in my testimony is that
25 California couldn't enforce, by recalling vehicles, the
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1 higher standard that they're hoping to get, the cleaner cars
2 that they're hoping to get from these other States.
3 And that's why it wouldn't be an enforceable SIP
4 measure for California, because they'd have to rely on the
5 hope that these would stay cleaner. That's it.
6 MR. CALHOUN: Thank you.
7 MS. EDGERTON: The principle, though, is the same,
8 irrespective of whether WSPA is saying it or NRDC is saying
9 it.
10 If you're looking at the emissions reductions
11 achieved or the emissions -- you know, or the pollutants
12 contributed by out-of-state cars, you are going to find that
13 the cleaner those cars are the better off we're going to be.
14 So, if -- what cars come into our State most? I
15 don't know. From Oregon? Let's just hypothetically, if
16 Oregon adopted our standards instead of the federal
17 standards, there would be an incremental increase in benefit
18 to us. The analogy is obviously that, although New York and
19 Massachusetts seem very far away -- and I'm not sure,
20 sometimes I wonder whether the East Coast really likes
21 having us, you know, around, but -- they think we're a
22 little wacky, I think, sometimes.
23 But notwithstanding that, the cleaner their cars
24 are when they come into our State, the more -- the better
25 for our air.
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1 So, there is -- if I understood what you were
2 saying, the implication was that, if the Northeast were to
3 adopt, under the OTC, a 49-State low-emission vehicle
4 program, we would get some benefits from those migrating
5 vehicles.
6 But if the Northeast were to adopt the entire
7 California program, we would get more benefits. Is that
8 correct?
9 MS. HATHAWAY: Well, Ms. Edgerton, one small
10 caveat. It is absolutely true that if you have ZEVs in the
11 programs of other States, and some of those other State
12 residents move to California or travel to California, you
13 get some sure in-use benefits that California can see.
14 But what you don't get with the 49-State car is
15 certainty of where the in-use emissions will be. Because it
16 doesn't actually turn out that when you certify at a
17 slightly lower level, you necessarily get in-use emissions
18 that are lower.
19 It depends on how people drive and all those other
20 factors. But with ZEV, you do have that certainty.
21 MS. EDGERTON: And one question I wanted to ask in
22 terms of deterioration of the emissions control systems,
23 could you make a comment on the differential between the LEV
24 and the ZEV in terms of the stability of the emissions
25 reductions --
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1 MS. HATHAWAY: Yeah, there's a recent --
2 MS. EDGERTON: -- over time?
3 MS. HATHAWAY: That's a really difficult issue.
4 Recent studies that EPA has done and also a study from the
5 Department of Physics at the University of Michigan indicate
6 that in-use emissions of some of our cleanest certified cars
7 exceed even some of the cars that didn't ever have catalysts
8 on them. Because of the nature of their emissions systems'
9 failures, they actually have emissions that are basically
10 like the unregulated cars used to be.
11 So, if you have catalyst failures that are really
12 dramatic or if you have oxygen sensors that are not working,
13 you can see cars just as dirty as you used to have before we
14 even went to the very strong efforts that we've gone to
15 clean up emissions.
16 So, yes, LEV vehicles, or gasoline vehicles with
17 all these tailpipe efforts and catalysts and so on can
18 actually be as polluting in-use as some of our old
19 prestandard, precatalyst vehicles. Not so with ZEVs.
20 CHAIRMAN DUNLAP: Okay. Thank you, Ms. Hathaway.
21 Joe Caves, Union of Concerned Scientists, followed
22 by Tim Carmichael, Coalition for Clean Air, and Gary Patton,
23 Planning and Conservation League.
24 MR. CAVES: Mr. Chairman and members, Joe Caves,
25 representing the Union of Concerned Scientists. I will try
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1 to be brief and not go over the issues that I think were
2 just presented.
3 And I want to, first of all, raise an issue of
4 process that I think is critical. And Mr. Knepprath raised
5 it earlier. And that is, the most important thing for us to
6 be able to give you meaningful comments is for us to see the
7 proposals that are really on the table, that you're really
8 considering.
9 The difficulty we had a month ago, when you held a
10 hearing here and we believed the Chairman was going to
11 provide direction to the staff, and we basically trying to
12 make comments based on our guesses of what he was going to
13 say. "We like this. We do not like this."
14 Last week, we walked into the workshop and, for
15 most of us, we saw for the first time this document which
16 laid out these concepts. And while I think that was useful
17 and I think representing a good effort by the staff, this is
18 all the detail we've seen of those concepts.
19 And so, the difficulty for us is how do we comment
20 on those? How do we give you meaningful testimony that can
21 guide your thinking to indicate where we are, perhaps point
22 up criticisms. We assume that there will be a staff
23 proposal that will be brought forward whenever the next
24 hearing is.
25 What I'd like to request on behalf of our
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1 organization -- I think probably most of them -- is for us
2 to be able to see that in advance of our testimony, ideally
3 a day or so, but certainly -- at least so that when we make
4 our testimony, it is not made in a vacuum. It is not based
5 on what we're having to do today, which is I will -- and
6 I'll try not to repeat the comments that have been made --
7 but to try to comment on what amount to very narrow outlines
8 of proposals which may or may not be relevant to the actual
9 decision which you're going to have to make.
10 So, I would ask, Mr. Chairman --
11 CHAIRMAN DUNLAP: Sure.
12 MR. CAVES: -- that we come up with some way to
13 deal with that, so that again we're not going into elaborate
14 efforts to try to testify to things that really aren't on
15 the table for consideration.
16 I'm going to bounce around quickly. We will
17 submit written testimony. But just in the interest of time,
18 let me hit a couple of quick points.
19 I want to particularly agree with the points that
20 were made by NRDC about the WSPA testimony. Those are all
21 good measures for us to consider. Those are not measures
22 that are necessarily either achievable or reliable for
23 California.
24 I think that we had a good discussion of some of
25 the problems that exist with the 49-State car. It's not at
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1 all clear that California can enforce such a measure or,
2 even if agreements are present that would achieve a 49-State
3 car in other States, that we're going to get that kind of
4 performance and we're really getting the emissions
5 reductions from them.
6 When added into Mr. Cackette's comments that, as
7 we believe, we probably are going to see that car in the
8 very near future as a required federal measure, it doesn't
9 give us the emissions reduction that we need as a
10 substitute.
11 Further, a number of the other measures that are
12 raised, again, while interesting, are not -- some of them
13 are going to require legislation, some of them are going to
14 require significant technical evaluation before we determine
15 whether they're even practical.
16 And I would add one final point to that.
17 Interestingly, none of those are -- with the exception of
18 the 49-State car -- impose any burden on the automobile
19 industry which, after all, that's -- they're the ones who
20 have the obligation for the zero-emission vehicle program.
21 Interestingly, none of them pose any obligation,
22 financial or otherwise, on the oil industry either, who are
23 the ones that are bringing forward these.
24 I want to talk just briefly about Concept A. And,
25 again, all we've seen is this document. So, our
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1 understanding about what it represents is very limited. The
2 NRDC representative speculated as to what was really meant.
3 And I'd rather step back for a moment and just
4 talk about what the concept means. It sounds good in
5 theory to say we're going to go to a market-based system.
6 it sounds good in theory to say what we're going to do is
7 we're going to let you go out and buy emissions wherever you
8 want. And wherever you can find it the cheapest, that's
9 where you can get it and you can substitute that for
10 measures.
11 But I would point out that the reason that this
12 Board has followed the direction it has of trying to adopt
13 measures that it could clearly identify the technology that
14 would be used to satisfy those emission reduction
15 requirements is to avoid the criticisms that are going to
16 come out if you adopt this sort of market-based program.
17 If you set pure emission standards without
18 identifying the technology -- and particularly if you were
19 to do this generally -- you're going to have industries
20 coming in here in a few years saying,"How could you impose
21 these requirements on us without consideration of the
22 technologies that are required or the economics of that?"
23 And that's the flip side to trying to be sensitive
24 to technology, to saying before we adopt a measure, we need
25 to understand what's the technology and the economics of it.
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1 It's not easy.
2 The second point I want to make on the market-
3 based programs is, if we're going to put -- if we're going
4 to have a true -- and again, I'm operating off this outline
5 of Concept A -- if we're going to try to achieve equivalent
6 emission reductions to the current program -- and UCS has
7 stated clearly that we disagree with the current evaluation
8 of the staff as to what those emission reductions are.
9 And we think if you count such things as off-cycle
10 in-use emissions, marketing, other things, if you look at
11 the penetration of zero-emission vehicles that the South
12 Coast is counting on, we think the tonnage is much more like
13 40 tons per day rather than the 14 that the staff estimates.
14 You're going about a very significant amount of
15 emission reductions if you're truly going to get the
16 equivalent.
17 And, as we move to a market system, if you're
18 going to allow the auto industry to bid against the other
19 station -- the stationary sources, for example, in the South
20 Coast, including the small businesses down there, you're
21 going to drive the price of emission reductions up. You're
22 going to drive it up to a point that it has a very
23 significant economic impact on growth in that community.
24 That's another impact that's not been considered
25 with the development of this. And, again, these things
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1 sound good in theory. When you start putting that into
2 play, when you have to deal down the road with the
3 implications of stifling economic growth because the auto
4 industry has come in and bought up the available and the
5 cheaper emissions reductions, that's going to have a severe
6 political impact, and one that's going to lead, we believe,
7 back into this direction; that until you have an alternative
8 transportation technology, you do not have a real pollution
9 reduction alternative.
10 And that we think is, to a lesser extent, but
11 still true with Concept B; that while it pays lip service to
12 a number of the elements that the battery panel has
13 identified that need to be done, that need to begin the
14 process of commercialization of advanced batteries, it lacks
15 a number of key elements. And those are -- maintaining the
16 pressure where there are both benefits and penalties for the
17 failure to make for a clear progress towards the goal, the
18 goal in our mind being achieving significant commercial
19 penetration of zero-emission vehicles in that 2003 to 2010
20 time frame.
21 The gaps that are in Concept B we think are fatal
22 flaws in that approach, because the Board is giving up
23 effective jurisdiction and the ability to oversee that
24 progress and ensure that the auto companies are making real
25 progress towards that commercialization.
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1 In conclusion, I just want to say, your Battery
2 Panel was chosen by you. They represent some of the
3 preeminent experts in what everybody has identified as the
4 critical technology needed to make the zero-emission
5 vehicles work.
6 That panel clearly identified that the mandate has
7 worked to bring us this far. And the most important thing
8 we can do is not to lose that momentum. We would urge you
9 not to lose that momentum and to stay with this program.
10 Thank you.
11 CHAIRMAN DUNLAP: Thank you, Mr. Caves.
12 (Applause.)
13 CHAIRMAN DUNLAP: Tim Carmichael, Coalition for
14 Clean Air, followed by Gary Patton, followed by Sam Leonard
15 from General Motors.
16 Good afternoon.
17 MR. CARMICHAEL: Good morning (sic), Chairman
18 Dunlap and Board members. I'm Tim Carmichael. I'm the
19 policy director for the Coalition for Clean Air.
20 I have some brief comments. But before I begin
21 those, I'd just like to echo the comments of Paul Knepprath
22 and Joe Caves on the specific point that we would also very
23 much like to have a proposal in writing prior to our next
24 meeting so we can come back with some educated responses and
25 some comments on the direct that staff is advising.
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1 I'd also like to echo the comments of Janet
2 Hathaway and NRDC, specifically to the Northeast, and I
3 would ask each of you to consider a role reversal and put
4 yourself in the position of Massachusetts and New York. If
5 California was the one following rather than leading, and
6 another State had the discretion or the choice to do away
7 with your program, effectively eliminate your program, it
8 would have a, you know -- I think it would have a dramatic
9 impact on your concerns for that State or, in this case,
10 their perspective about our actions.
11 My comments today will focus primarily on the
12 process that we have undergone over the last two months. As
13 we have stated many times, the Coalition for Clean Air
14 strongly supports California's zero-emission vehicle
15 requirements as an essential component of California's clean
16 air plan.
17 The Coalition and many other zero-emission vehicle
18 supporters were encouraged by the letter which Governor
19 Wilson had been sending out in response to questions about
20 the ZEV program.
21 In that letter, the Governor states that zero-
22 emission vehicles are an integral part of the goal to
23 improve air quality. Chairman Dunlap, you echoed that point
24 at the last Board hearing on November 16th, when you stated,
25 "There's no question that the ZEV is integral to our air
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1 quality program."
2 Unfortunately, in recent weeks, the Coalition for
3 Clean Air has become very concerned that Governor Wilson and
4 the California Air Resources Board are seriously considering
5 major modifications to the ZEV mandate, a suspension, or
6 possibly even a repeal.
7 This would not reflect the widespread support for
8 the mandate, which has been clearly demonstrated at each of
9 CARB's workshops over the past several months.
10 At the last workshop on December 6th, CARB staff
11 presented a broad outline of three concepts, which staff
12 presented earlier -- Concepts A, B, and C. In addition to
13 these three, there was a proposal submitted by the Natural
14 Resources Defense Council and the Union of Concerned
15 Scientists, which was similar but tougher to Concept C.
16 I assume the Board is familiar with these
17 concepts, as familiar as we are, based on the outlines.
18 I would like to draw your attention to those who
19 supported each of these concepts at that workshop.
20 Concept A was supported by two speakers, one
21 representing the California Chamber of Commerce and one
22 representing Chevron.
23 Concept B was supported only by the seven largest
24 auto manufacturers.
25 In contrast to the limited support for Concepts A
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1 and B, more than 20 speakers representing the advanced
2 transportation industry, the business community,
3 environmental organizations, and utilities supported the
4 existing mandate or some modification similar to Concept C,
5 and the NRDC/UCS proposal.
6 It is important to note that the December 6th
7 workshop was an anomaly. That workshop reflected what we
8 have seen in most of the workshops since April, with the
9 noted exception of the oil and auto industries and their
10 anti-ZEV efforts, the vast majority of companies,
11 organizations, and individuals in California support the
12 existing ZEV mandate with some minor modifications.
13 Despite this, there continue to be strong
14 indications that CARB and the Governor's Office are focusing
15 on Concepts A and B, or some combination of the two.
16 If you do choose to pursue Concept A, Concept B,
17 or some combination, it will send a clear signal that the
18 California Air Resources Board is ignoring the results of
19 the public process and the majority opinion.
20 We have all been operating in good faith and
21 depending on Governor Wilson's commitment to the public
22 process as stated in his June 1st letter to you, Chairman
23 Dunlap, in which he instructed you to pursue California's
24 clean air plan, and I'll quote, ". . . in a manner that
25 provides affected parties with a fair opportunity to present
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1 their case."
2 The letter goes on to say, "Your process must also
3 present all parties with a fair hearing of competing views
4 and an invitation to participate in negotiations on
5 alternative attainment strategies and tactics."
6 To date, the public process has clearly shown the
7 overwhelming support for the ZEV mandate.
8 In addition, I have copies, which I submitted to
9 the Board Secretary, of resolutions in support of this
10 program from Riverside County and San Bernardino County,
11 Santa Cruz County, the City of Santa Monica, the City of Los
12 Angeles -- and the City of Los Angeles.
13 I also have copies of declarations and letters in
14 support of the mandate signed by California's major
15 environmental and community-based organizations, including
16 the California League of Women Voters.
17 On the other side, opposing the ZEV mandate, are
18 the auto and oil industries, the same two industries which
19 are responsible for generating two-thirds of California's
20 air pollution. It is time for them to share the
21 responsibility of emissions reductions and stop trying to
22 undermine programs designed to improve air quality and
23 protect public health.
24 This program can and will work for California. It
25 is a technology forcing regulation which will improve air
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1 quality, protect public health, and help California's
2 economy.
3 We urge the Air Resources Board to listen to all
4 Californians, not just the auto and oil industries, and to
5 stand firmly behind this program.
6 Thank you very much.
7 CHAIRMAN DUNLAP: Thank you, Mr. Carmichael.
8 (Applause.)
9 CHAIRMAN DUNLAP: Mr. Patton from the Planning and
10 Conservation League, and then Sam Leonard from General
11 Motors.
12 MR. PATTON: Mr. Dunlap -- Mr. Chairman, members
13 of the Board, Gary Patton, General Counsel with the Planning
14 and Conservation League.
15 I have just three points for you. Two of them
16 have already been made by my colleagues in the environmental
17 movement.
18 The first is this mandate, this ZEV requirement,
19 has worked. The Battery Panel -- and I was very uncertain
20 when, through your workshop process, you decided to appoint
21 this Battery Panel, which I thought was probably in the
22 outcome going to decide what happened to this particular
23 mandate, which I think is a wonderful and which I think the
24 evidence through the workshops has demonstrated it's working
25 very, very well.
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1 I was afraid, gee, here are going to be some
2 engineers who are going to be making decisions, and I was
3 uncertain. I'm not an engineer, I'm a politician, so I'm
4 worried about when engineers get to make the political
5 decisions. Because -- and I'm going to get into why you
6 shouldn't be afraid of making some political decisions on
7 this issue.
8 I was afraid of this. But I was terribly
9 impressed by that panel. They were independent, obviously
10 the most knowledgeable around. There was clearly no hidden
11 agenda on that panel, and they basically said, this thing
12 has worked because California, through the Air Resources
13 Board, was willing to say what we wanted to be done,
14 American industry was doing it. And that's the heroic story
15 of American know how coming through.
16 And so, it has worked and we think it will work.
17 We support -- the Planning and Conservation League supports
18 the continued ZEV requirement or mandate. We're willing to
19 have a Concept C to put in flexibility.
20 But what Janet Hathaway pointed out is, we're
21 really talking about a transition to a whole new style of
22 personal transportation. We built our civilization for good
23 and ill on the individual personal automobile. And it's too
24 late to go back in any short time frame.
25 Wouldn't it be wonderful if we could start having
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1 cars that didn't pollute. We'd still get traffic jams, but
2 at least we'd solve the air quality problem. Well, in order
3 to do that, we have to make those effective in the market.
4 We have to have people buying them. We have to have a
5 number of them out there.
6 There has to be this so-called launch. And the
7 mandate has been what's got us this far, and we think it's
8 going to take us to the place where we're going to really
9 change the way we live.
10 Again, we need to say what we want and then let
11 people do it, let industry do it. We think that the
12 evidence shows that they can.
13 The second point, and this is really responding to
14 the various legislative members who have come before you
15 through their assistants, you know, you're not going to do
16 whatever you decide to do on the basis that there shouldn't
17 be a mandate, or requirement, or regulation; that somehow
18 that's wrong, because you're in the business of setting
19 requirements, and mandates, and standards and saying, this
20 is what we need to have you achieve whether you're an
21 individual driving around in a car, or a big business,
22 you've got to achieve this. This is our mandate, and we
23 know, as the public, that if you do this, we'll have cleaner
24 air and better health, and actually a better economy.
25 You've got to stick up for mandates on that basis,
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1 and you ought to really realize as well, I hope, that so-
2 called mandates or requirements are what make the market.
3 If you think of what a market started off to be, a market
4 was at place in the city, boundaried and set aside by
5 essentially the governing people in the city, the time and
6 place where those private transactions took place that drove
7 progress.
8 And that's what our regulations do. They set the
9 market. And that's why this mandate has worked and will
10 work. It says, this is what we expect American business to
11 be able to do, and you go out and figure out how to do it,
12 and you seven auto companies compete to see who gets the
13 business.
14 The fact of the matter is you want a mandate; you
15 just want the right mandate. It would be a terrible thing,
16 and my letter to you I think confesses, we don't want -- the
17 environmentalists, PCL, doesn't want you to impose a mandate
18 which fails in this area. And we are very, very clear that
19 that is why you're deliberating; that is why you're taking
20 the time the serious steps you've been taking this year and
21 you're now taking the steps you're taking to try to do it
22 right. Because, if you did it wrong, it would really be
23 terrible.
24 But you want a mandate. The question's just what
25 mandate do you want. Let's make it the right mandate.
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1 We think Concept C, which is a mandate with
2 flexibility to make sure it works, seems to be the way to go
3 for us.
4 Now, the third thing is procedure. You've heard a
5 little bit how we'd like to have things in advance so we
6 could give you some specific feedback and, of course, we
7 would.
8 I want to just give me my own perspective of what
9 I think may be running through some of your heads at least.
10 Since I sat in an elected position for many years, and I
11 know when these big decisions come along, as they do
12 periodically, you've got to think about them in private,
13 you've got to have private discussions. You've got to talk
14 to your staff. You've got to canvass the people who are
15 going to be affected by whatever you're going to be on a
16 private basis. And then you've got a public hearing
17 process, because that's what the law requires and that's --
18 as Governor Wilson said in his letter, which was just quoted
19 to you, that's the fair way to do it.
20 I would like to suggest to you that, from my
21 perspective, your big meeting isn't today; it isn't next
22 week. It's in March or February, whenever it is you set
23 that public hearing process where you're considering a legal
24 change to the existing rule.
25 Because that's when you'll have to publish
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1 something and people will react to it, and you'll take these
2 testimonies, and I think you'll be pleasantly surprised by
3 the depth and complexity the testimony you get and maybe
4 surprised, if a mandate's on the table, what support you'll
5 see for that mandate.
6 I hope that if any one of these concepts, A or B,
7 that I don't think is the right direction, is of interest to
8 members of the Board -- and they may be, because you don't
9 want to make a mistake, I understand that -- that you will
10 not put yourself procedurally in a position next week, and
11 wouldn't have done it today, where you'll send forward for a
12 public hearing something that won't let you easily --
13 because you can always go back and start all over -- but
14 easily make a decision along the lines of Concept B.
15 So, please, give yourself that procedural room in
16 your decision, because I do think you will be surprised when
17 you really have something firm to focus on of the kind --
18 because I went to every one of those workshops or went to
19 almost every one, and I know some of you were at some of
20 them -- very rich and good testimony. And I think we are
21 going to launch a new era for California.
22 So, please, do that for us. And thank you for
23 your attention to this very important issue. Do remember
24 that you're going to ultimately say, "Here's what we think
25 we, as a society, business and individuals, need to do."
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1 And in terms of the development of a vehicle that
2 doesn't pollute we think we can do it by this date; let's do
3 it. And I know it can be done.
4 Thank you very much.
5 CHAIRMAN DUNLAP: Thank you, Mr. Patton.
6 (Applause.)
7 CHAIRMAN DUNLAP: At this point, I'd like to take
8 a five to ten-minute break -- we'll take a ten-minute break,
9 comfort break for the staff and our court reporter. The
10 Board, of course, wouldn't need that.
11 (Laughter.)
12 CHAIRMAN DUNLAP: But we'll reconvene at 25 after.
13 (Thereupon, a recess was taken.)
14 MR. LAGARIAS: I'd like to call this meeting to
15 order. Mr. Dunlap apologizes, he'll be back shortly, but he
16 asked me to continue with the meeting.
17 Before I call Mr. Leonard, our next witness, I'd
18 like to take this opportunity to address you on some issues
19 that have been bothering me. Because we have such a
20 difference of opinion among the audience, I'd like to take
21 advantage of this to address you on some comments.
22 Now, I'm not subject to the pressure or desires of
23 any special interests or groups, although I am subject to
24 the laws of science and physics, and I can't bend them. In
25 fact, I resent some of the misconceptions we've been hearing
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1 over the past few months about what we're doing, proposed to
2 do, or what actions we may have.
3 I think one of the Assemblymen's representatives
4 said that some of our actions were shameful. But if there's
5 any shameful actions, I think the oil and gasoline people
6 who send letters to their retirees urging them to send
7 letters to the Board against the ZEV program is a shameful
8 action. And I'm not too sure of the action of the
9 environmental groups who propose similar actions, talking
10 about things -- some of them which they got right, but not
11 many -- misconceptions I'm talking about, rescinding or
12 weakening these issues.
13 But what are the issues that we're talking about
14 today? And one of them is the amount of cars that we're
15 talking about, two percent, five percent, ten percent.
16 Well, in 1990, when we had this issue brought up, the two
17 percent was a number taken out of the air to give us a
18 demonstration program of how well these ZEV vehicles would
19 work.
20 The five percent was a ramp-up, and the ten
21 percent was a requirement by the year 2010, to give us the
22 air emissions that we have to have.
23 And about the deadlines of '98, 2001, and 2003?
24 Well, those -- I'd prefer to use time as a resource rather
25 than a constraint. And all of these are flexible things.
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1 And what about the technology? In 1990, the technology was
2 not clearly identified, and we've had these periodic reviews
3 to see the status of the technology.
4 But certainly, for the year 2010, when many people
5 make an example, we don't expect the electric vehicle to
6 have a range of 85 miles per charge, but we don't know what
7 the range will be required. And I think for the next
8 meeting, I'd like to see the staff tell us for the years
9 2003, what kind of range we should need from an electric
10 vehicle, how will it be used, what will be its cost and
11 performance.
12 Because now we've got enough information to give
13 us the information we need.
14 Today, we have not seen, in my mind, or identified
15 the technology that will give us the performance needed for
16 the year 2003, and the ten percent production of new cars.
17 I think we have to know what type of vehicle can meet that.
18 The '98 mandate we have essentially is to give us
19 a demonstration program to see what kind of vehicles are on
20 the road, how they will perform, who will use them, and
21 where they will go.
22 Having found that information -- without that
23 information, we can't really tell what we're going to have
24 in the year 2010.
25 And I think that we have to recognize that after
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1 we see how the vehicles perform on the road, we may have to
2 modify our projections in the future of what we will need,
3 whether we have to stand aside as the market takes over, or
4 whether we have to adjust our quotas, depending on how
5 people are using them, and where we want to go.
6 After '98, we want to continue to remain open to
7 new technologies to see whether there are other ways to go,
8 whether hybrids fit in the program, or where we should go
9 from there.
10 To those who are entering the market and are
11 saying that, "You'll pull the rug out from under us,"
12 anybody that's developing a new technology is not guaranteed
13 a market. No one is guaranteeing a market for anyone. In
14 fact, if you look at the automobile industry in its early
15 years, there were many technologies that came out too early
16 or that were never used, and the same will apply to this
17 technology.
18 And if these emerging efforts do not serve the
19 market, they won't be bought.
20 And finally, the ZEV program has been sold on all
21 kinds of bases. We started out as a vehicle for reducing
22 air pollution primarily in the South Coast. It's an air
23 pollution reduction program.
24 Since, it's become an energy conservation program,
25 an energy alternative program. It's become an economic
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1 incentive program. It's creating new business. It's all
2 things to all people. But our primary concern is clean air
3 and that is our fundamental mandate.
4 And with that, I'll turn it back to the Chairman.
5 CHAIRMAN DUNLAP: Thanks, Jack. I appreciate it.
6 Mr. Leonard. We'll get back to our witnesses.
7 Sam Leonard from General Motors, followed by Ed Maschke from
8 CALPIRG, and Bill Van Amburg from CALSTART.
9 MR. LEONARD: Thank you. Mr. Chairman, members of
10 the Board, I'd like to make a short statement today.
11 GM commends the Board for recognizing that given
12 the current state of battery technology, the current mandate
13 is a blueprint for failure.
14 The time lines for batteries presented by the
15 Battery Panel and repeated by the CARB staff today are
16 absolutely best-case, no-problem scenarios. Anyone involved
17 in a new technology knows that this is the most unlikely
18 scenario to occur.
19 Nothing goes absolutely perfectly. And,
20 therefore, advanced batteries will likely not be available
21 in production quantities until the 2004 model year time
22 frame.
23 As GM has testified in earlier hearings and
24 workshop, we are committed to making a business out of
25 electric vehicles. No one individually and perhaps no one
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1 cumulatively can match the investment that GM has made in
2 the develop of electric vehicles. And no one is more
3 committed to making electric vehicles a success.
4 But for new technology to succeed, it must meet
5 two criteria -- first, it must be technically feasible; that
6 is, it must meet customer needs and desires.
7 Second, it must be commercially viable. It must
8 be able to be sold at a price that consumers are willing to
9 pay, while providing a shareholder return on his investment.
10 I heard earlier speakers say that the mandates make the
11 market. I was always taught that a willing buyer and
12 willing seller are what makes the market.
13 Batteries remain the key element for electric
14 vehicles. That is why the current mandate is a blueprint
15 for failure. And the illusion of flexibility provided by
16 Proposal C and similar proposals by the NRDC and the Union
17 of Concerned Scientists does nothing to avert the inevitably
18 of that failure.
19 Any program designed to make electric vehicles a
20 success in the marketplace must begin by proving to the
21 public and to the manufacturer the technical feasibility of
22 the batteries. This includes the essential time-consuming
23 elements of validation and life testing of the batteries,
24 field testing and experience, the growth of the buyers in
25 the market, and continued battery development to continue
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1 making progress to bring that electric vehicle closer and
2 closer to being fully competitive with gasoline vehicles.
3 While there are aspects of Proposal B with which
4 we disagree, GM believes that Concept B holds the most
5 promise of meeting these elemental needs. It more closely
6 aligns the demands on the manufacturers with the realities
7 of battery and vehicle development.
8 Conceptually, Concept B also provides the most
9 hope of a rational compromise among the conflicting
10 interests you have heard this morning.
11 We believe Proposal B is the most likely scenario
12 to allow us to make a business out of it as we have
13 testified to many times before.
14 It recognizes that you can create a sustainable
15 EV market only through market forces, which are much more
16 effective than mandates and that we must begin to build a
17 customer base, and that there must be a new focus on
18 partnership, a paradigm shift from total command and control
19 to a partnership rather than the old adversarial approach.
20 We will continue to be fully involved in the
21 process in the coming weeks to develop Concept B into an
22 acceptable alternative to the current mandate.
23 Thank you. I'll take any questions.
24 CHAIRMAN DUNLAP: Okay. Thanks. Sure, Dr.
25 Boston.
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1 DR. BOSTON: Sam, along with your commitment to
2 make the electric vehicle work, when does GM pull off the
3 public relations campaign against it?
4 MR. LEONARD: Why did we pull off it?
5 DR. BOSTON: No, why don't you?
6 MR. LEONARD: That campaign has stopped at the
7 moment. The campaign was never against electric vehicles,
8 Dr. Boston. It has always been against the mandate.
9 DR. BOSTON: That's the way it came out.
10 MR. LEONARD: There's a difference between
11 electric vehicle success and a mandate.
12 DR. BOSTON: The letters I got didn't seem to
13 indicate that.
14 MR. LEONARD: They were meant to be against the
15 mandate, because the campaign was directed at the mandate.
16 CHAIRMAN DUNLAP: I'm not going to follow up, Sam,
17 with are you now or have you ever been.
18 (Laughter.)
19 MR. LEONARD: As a representative of a company
20 that I think is the founder of the EV mandate in the first
21 place with the Impact in 1990 --
22 CHAIRMAN DUNLAP: Right.
23 MR. LEONARD: -- I'd just as soon not answer those
24 questions either.
25 CHAIRMAN DUNLAP: Okay. I respect that.
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1 (Laughter)
2 CHAIRMAN DUNLAP: Any other questions of Mr.
3 Leonard? Go ahead, Lynne.
4 MS. EDGERTON: Mr. Leonard, Concept B --
5 MR. LEONARD: Yes.
6 MS. EDGERTON: -- one thing perhaps you can
7 explain to me -- actually, I'd just like to ask you, it
8 struck me that going from no mandate to 2004 mandate --
9 that's what you're asking for there, 10 percent in 2004?
10 MR. LEONARD: I'm asking for a six-year suspension
11 of the mandate, yes.
12 MS. EDGERTON: Do you think that -- it just
13 strikes me that it's not realistic to go from zero to have
14 10 percent in 2004. How do you envision that ramp working?
15 MR. LEONARD: I envision that ramp as being a
16 market development which neither I, nor you, nor anybody in
17 this room has any ability to predict what the absolute
18 numbers are.
19 And therefore, no manufacturer should be at a
20 penalty for failing to meet. There is a proposal in there
21 that certain manufacturers would voluntarily enter the
22 market with retail sales of those vehicles. There is an
23 advanced development project in there, where we would foster
24 the pilot production and field testing of advanced battery
25 vehicles in a significant quantity, more than enough for us
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1 to get the information we need on those advanced batteries.
2 So, the market would develop. We'd grow it, and
3 we'd know how to get there.
4 MS. EDGERTON: So, if I understand you, all along
5 the way, you'd be selling cars to get to the ten percent?
6 MR. LEONARD: Yes. Some of -- what?
7 MS. EDGERTON: To get up to the 10 percent?
8 MR. LEONARD: We'd be selling some cars, yes.
9 MS. EDGERTON: Well, 10 percent is bigger than two
10 percent.
11 MR. LEONARD: 10 percent is bigger than two
12 percent.
13 (Laughter.)
14 MS. EDGERTON: So, in effect, you'd be doing that
15 all along the way, or you'd all of a sudden have a gross
16 number of ten percent? I don't understand your proposal.
17 MR. LEONARD: I don't -- cannot predict at this
18 time, Ms. Edgerton, how that market's going to develop. It
19 may stay at a very, very low level. When the battery
20 development comes through and we have a competitive battery,
21 we may see a exponential curve.
22 I cannot plot today the growth between today and
23 ten percent in 2004. I do not know for sure, any more than
24 I did in 1990, that ten percent in 2004 is a reality. But
25 it's as good a placeholder as any for right now.
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1 MS. EDGERTON: And I appreciate your candor. So,
2 if I understand you right, it's not a commitment. It's a --
3 MR. LEONARD: It's a commitment to work towards
4 it. There's a difference between a commitment to work
5 towards it and knowledge that you're going to reach that
6 goal. And I think you'd have to admit that. We all work
7 towards goals; we don't always reach them.
8 MS. EDGERTON: That's true. So, I'm sure you've
9 been here all morning and you know that -- we know each
10 other. You know my background is law.
11 What's your -- do you have any comment on whether
12 there would be -- do you have any proposal that would be
13 enforceable as a matter of law in a SIP?
14 MR. LEONARD: Enforceable with respect to the
15 emissions?
16 MS. EDGERTON: Uh-huh The reductions in --
17 MR. LEONARD: Emission reductions?
18 MS. EDGERTON: If this is a volunteer program,
19 it's not a program. It's not a regulation. it's --
20 MR. LEONARD: The proposal to cover the emission
21 reductions is twofold. Number one, it's to meet the NMOG
22 curve, which gives you a portion of those emission
23 reductions.
24 MS. EDGERTON: But that's not -- I mean, that's
25 already there. It's not the new --
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1 MR. LEONARD: It's still a proportion of them.
2 You don't lose all the benefits of the ZEV. You don't lose
3 the tailpipe benefits, because we would have to -- to met
4 the NMOG curve, we would have to increase our production of
5 ULEVs in 2003 from about 15 percent allocated formula, under
6 the current law, to over 30 -- close to 35 percent. So,
7 there's a definite increase in commitment just in the NMOG
8 curve.
9 MS. EDGERTON: The existing NMOG curve.
10 MR. LEONARD: The existing NMOG curve. We'd have
11 to build more ULEVs.
12 MS. EDGERTON: If you didn't do ZEVs.
13 MR. LEONARD: If we didn't do ZEVs. More ULEVs
14 than current planned ULEVs and ZEVs combined. Secondly,
15 there's the national 49-State program, which EPA apparently
16 thinks is enforceable, because they're more than willing to
17 give credit to the Northeast States for it as they've stated
18 in their proposal.
19 That is a method by which we can replace those
20 lost emissions. It is a method which the Air Resources
21 Board does not have as its ability to adopt. So, it is not
22 something that can be adopted in the SIP. It is pure
23 offset, unlike some of the other types of activities that
24 we've seen, because it's not available to the Air Resources
25 Board to put in its SIP.
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1 MS. EDGERTON: What do you mean when you say it's
2 an offset? I'm sorry.
3 MR. LEONARD: It's a pure offset of the lost
4 emissions of ZEV, because it's not a program that the Board
5 by itself can adopt.
6 There's no way for the Board to get the benefits
7 of the 49 States' program, except through the voluntary
8 action of the manufacturers.
9 MS. EDGERTON: Well, it seems to me that it's more
10 in the -- it's also in the same vein as the position we've
11 taken with respect to the activities that the national
12 government's supposed to regulate. I mean, we can take into
13 account benefits that are incidental.
14 So, if there is a 49-State car, we can legally
15 take that in there.
16 (Thereupon, both speakers spoke simultaneously,
17 and the reporter was unable to capture the
18 exchange clearly, nor was the recorded exchange
19 clear.)
20 MS. EDGERTON: So, I mean, we get it.
21 MR. LEONARD: But if there is no 49-State car, you
22 can't. And the federal government, until 2004, cannot
23 reduce the federal emissions. It has to be a voluntary
24 program on the part of the manufacturers.
25 MS. EDGERTON: Well, I thought you were saying
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1 that EPA's about ready to agree --
2 MR. LEONARD: To a proposal outlining the program,
3 at --
4 MS. EDGERTON: In lieu of the petition.
5 MR. LEONARD: -- which -- at which time each
6 manufacturer would have to voluntarily sign up for the
7 program.
8 MS. EDGERTON: Uh-huh. Good. Okay. I was just
9 trying to understand a little bit better your proposal.
10 What effect, in your opinion, would Proposal B
11 have on ZEV technology investments?
12 MR. LEONARD: Given the realistic outlook for ZEVs
13 to begin with, I don't think it'll change them
14 significantly. The manufacturers will continue to invest in
15 the ZEVs. The market's not going to sell any less or any
16 more because the mandate is or isn't there. The mandate in
17 its current form was a blueprint for failure.
18 The numbers were not gong to be met, because the
19 vehicles that met customer demand were not going to be
20 there. There are going to be some vehicles available with
21 the mandate or without it. They will meet limited customer
22 demands, and they will be sold with or without the mandate.
23 MS. EDGERTON: Mr. Leonard --
24 MR. LEONARD: So, I don't see how that changes ZEV
25 development at all. U.S. ABC battery funding is still going
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1 on. We'll still go on.
2 MS. EDGERTON: Some people have suggested to me
3 that without the mandate that the ABC battery funding will
4 stop.
5 MR. LEONARD: I'm sorry. That was one of the
6 other commitments, one of the other proposals.
7 MS. EDGERTON: Was that in B?
8 MR. LEONARD: Yes.
9 MS. EDGERTON: That the auto companies --
10 MR. LEONARD: Would continue to do their share of
11 the funding of U.S. ABC through the year 2000. Second
12 phase.
13 MS. EDGERTON: Now, we were together in 1994. I
14 remember that was about five percent of the overall funding
15 was provided by the car companies, U.S. ABC battery?
16 MR. LEONARD: I think it's a little more than
17 that, but, Lynne, I can't tell you whether it's five or 50..
18 I don't know standing here.
19 MS. EDGERTON: Okay. Thank you very much.
20 MR. LEONARD: Thank you.
21 CHAIRMAN DUNLAP: Anything else for Mr. Leonard?
22 Thank you, Sam.
23 MR. LEONARD: The one thing I would say it is in
24 the tens of millions of dollars.
25 MS. EDGERTON: Thank you.
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1 CHAIRMAN DUNLAP: CALPIRG, Ed Maschke, followed by
2 Bill Van Amburg, CALSTART, followed by Cecile Martin from
3 California Electric Transportation Coalition.
4 I'd just mention to the audience we're about
5 halfway through. So, use time efficiently, please, or we'll
6 lose our quorum.
7 Good afternoon, sir.
8 MR. MASCHKE: Good afternoon, Mr. Chairman.
9 My name's Ed Maschke. I'm Executive Director of
10 CALPIRG, the California Public Interest Research Group.
11 We're a 60,000 member environmental consumer organization
12 who's vitally interested in the issue of electric vehicles.
13 I think it's interesting to note that we've tried
14 to figure out today what is before the Air Resources as it
15 seems you are trying to figure out what's before you. We
16 have what's called the oil proposal, which is essentially no
17 mandate, free market reigns, then we have what you just
18 heard from General Motors in their proposal, which is
19 essentially, "Trust me. We'll get the job done. We don't
20 need any mandates. We don't need any kind of pushing from
21 government. What we simply need is to let the market reign.
22 We can do the job. And if you want to keep a mandate out
23 there in 2004, that's fine, but then we reserve the right to
24 come back and blow that out again if we happen to lay on
25 another 10 or $20 million of advertising.
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1 CARB seems right now to be between a rock and a
2 hard place. While it appears that the Governor wants some
3 changes and that I think you are looking for some changes in
4 terms of the market acceptance and what the plan can be, the
5 difficulty is how to get there, given your staff
6 recommendations and what they have told you about what is
7 possible about the various options you have before you, and
8 implementing those so that you end up with a real and viable
9 program that promotes electric vehicles.
10 And, at least from what we've seen today, it
11 doesn't appear that you're going to be able to get to that
12 objective without some sort of mandate. That is not going
13 to make the Governor very happy. And I think that is going
14 to end up very much a political problem for this Board.
15 I think you end up, if you don't stick to the
16 mandate -- and this is the worst part for the Air Resources
17 Board -- breaking the regulatory compact that you have
18 constructed with 150 businesses throughout the State of
19 California, with literally hundreds of million dollars (sic)
20 of investment flowing in.
21 And that investment is in small business. It's in
22 businesses that are trying desperately to survive in the
23 face of huge competition. And so, your difficulty and your
24 conundrum at this part is to try and figure out how to keep
25 something in place that realistically provides them an
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1 option to stay in the marketplace while not allowing
2 predominance by the major car companies at this point.
3 And by leaning and bending to what has been an
4 onslaught of campaigning from the oil companies, from WSPA,
5 from AAMA -- you've had a report we released yesterday that
6 documented some $24 million in spending on lobbying, on
7 campaign contributions. As an aside, it's interesting to
8 note that the public officials who appeared here today
9 suggesting that EVs shouldn't get any kind of public handout
10 or any kind of subsidy are very eager to put their hand out
11 when the oil companies or the car companies wish to give
12 them political contributions, and do so on a regular basis.
13 So, you're in a hard place. And I understand that
14 place. I sat on a very controversial public board in a
15 place called Goleta, California. I was on the planning
16 commission for the County of Santa Barbara. I've sat
17 through the Exxon hearings. I've sat through the coastal
18 hearings in terms of offshore oil emissions, and the
19 problems that we've had in Santa Barbara County. So, I can
20 feel for you at this point as public officials who want to
21 try and do the right thing.
22 And I think you do. I think you've sat here for
23 six years. You've sat through these hearings. You
24 understand what your staff has gone through and the type of
25 yanking around that's gone on.
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1 But it's difficult to stand up to the kind of
2 pressure that you're feeling. And the pressure is not only
3 external in terms of the public relations campaigns that are
4 going on, but it's also internal from the person who
5 appointed you in many cases.
6 So, we're concerned at this point that the public
7 perception is that CARB is reacting in a negative fashion,
8 and that in that reaction, you're producing uncertainty.
9 That uncertainty is again going to affect EVs. It's going
10 to affect the market out there.
11 And it is not going to be the kind of regulatory
12 stability that you wish to inject into the marketplace if
13 you're going to have a growing industry.
14 I guess I would like to speak very quickly to one
15 issue that was raised by a number of speakers, and that is
16 that you're suggesting at this juncture that we have one
17 week to reprepare whatever it is that's going to be
18 suggested as the new option, A B, C, or a combination A, B,
19 C, or some other option of which we will have probably
20 noticed sometime, perhaps Tuesday or Wednesday, if we're
21 lucky.
22 And I submit to you, if this hearing's going to
23 have any meaning in terms of the public interest and
24 representing the public interest, that if you give us one
25 day notice, that'll help. If we have no notice, you can't
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1 possible expect meaningful public input.
2 And what says, if there's no notice, is your minds
3 are made up. And if that's the case, don't make us come
4 back. So, I would suggest to you and I would submit to you
5 that it would be useful to carry this item over until next
6 year.
7 I would urge you and our organization urges you --
8 we've been on the phones, and perhaps you've heard about it.
9 We've generated somewhere in the neighborhood of 2,000 calls
10 in the last four days, and we will continue to do that, most
11 of those going to the Governor's office, whose phones were
12 shut off on Sunday night after 350 calls went in.
13 We will continue to do that. We will continue to
14 mobilize the public, and we will do so in support of this
15 ordinance. And we would continue to stay on the pioneering
16 path you've been on, because your job, and it's a hard one,
17 is to protect the air of the people of the State of
18 California.
19 So, we urge you to stay on that path. Thank you.
20 CHAIRMAN DUNLAP: Thank you. Any questions? All
21 right.
22 Mr. Van Amburg. Do we have a slide show today,
23 Bill?
24 MR. VAN AMBURG: No, I've spared you that, Mr.
25 Chairman.
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1 CHAIRMAN DUNLAP: I look forward to them.
2 MR. VAN AMBURG: I know.
3 CHAIRMAN DUNLAP: I don't really want to see you
4 without a slide show.
5 MR. VAN AMBURG: I was betting on the come. I
6 just thought maybe next week there'd be another chance to do
7 this all again.
8 (Laughter.)
9 MR. VAN AMBURG: And I was right. And that's the
10 consistency. Seriously, thank you for the opportunity to
11 speak, and I think I will save most of my comments for next
12 week.
13 It's a pain to come back to the fog of Sacramento,
14 but I also actually applaud CARB taking a cautious approach
15 and, frankly, staying out of all the political mine fields
16 that are out there. I would recommend and counsel, from the
17 perspective of CALSTART and the 160 companies in the
18 advanced transportation industry that we deal with, that you
19 do take a cautious approach. And take your time to think
20 this out.
21 For five years, you've had a program that, while
22 controversial, has done what you intended to do. And I
23 think there's been great acknowledgment that that's the
24 case. The question is, where do you go from here?
25 Our concern has been that if you change
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1 substantially the ground rules you've laid to this date, you
2 may not get the outcomes you want to continue over the next
3 several years. There's been tremendous technology
4 development. There's been tremendous growth of a support
5 industry.
6 Now, I understand the sensitivity that your job is
7 not to create or support industries; your job's to clean the
8 air. But if you're going to have high technology solutions,
9 especially for transportation, you will need a support
10 industry to help the ramp up.
11 Changes that take away some of the consistency and
12 continuity that was out there will guarantee that you will
13 not have the support industry in the numbers you will want;
14 therefore, you will never be able to make the ten percent,
15 whether there is market acceptance of this or not.
16 And the main point that I'd like to make here
17 today, what has been driving entrepreneurs in this industry,
18 what it is that CARB over the past five years is simply
19 said, at a fixed point in time, there'll be a certain number
20 of vehicles. Be fruitful and multiply. And they have.
21 They've gone forth and taken that -- we've got a
22 shot. It lowers the risk. Investors are willing to take
23 part in our technology, and they can move forward based on
24 that.
25 If you take away the fixed numbers of vehicles or
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1 a tough target, whatever it may be, two percent, one
2 percent, whatever the numbers may be, tough targets drive
3 results. No tough targets means you'll probably see
4 California companies, of which there are over 300 now, maybe
5 pulling out of this business, redirecting resources.
6 You will see investment slowing down. And,
7 frankly, I think the greatest concern to you folks is that
8 you'll see technology improvement dropping off.
9 You've had tremendous success in the history of
10 CARB for setting tough goals, sticking to the course, and
11 seeing results. It goes back to catalytic converters. I
12 think you're seeing it with reformulated gas. And I think
13 you're seeing it with your ZEV program, part of your LEV/ZEV
14 program.
15 And our caution to you would be, if you want to
16 continue to see the results you've engendered to date and
17 the ability to make the goals you want to make tomorrow, you
18 have to keep the consistency of approach that you've
19 maintained to this point.
20 I think you want to fix it; you don't want to nix
21 it. I think that's a key point to make.
22 So, with that, I will return next week with a full
23 slide show for your enjoyment.
24 CHAIRMAN DUNLAP: We'll look forward to it. Thank
25 you, Bill.
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1 Any questions? Okay. Cecile Martin, followed by
2 John Weber, SoCal Gas, and Lloyd Dixon from Rand.
3 MS. MARTIN: Good afternoon, Chairman Dunlap and
4 members of the Board.
5 My name is Cecile Martin. And today, I'm
6 representing the California Electric Transportation
7 Coalition. I think you're familiar enough with our
8 organization after these frequent workshops and hearings.
9 I do represent the fuel providers for EVs, one of
10 the zero-emission vehicles that we hope to see in the
11 future.
12 Along with everyone else, we attended the workshop
13 last week, and, you know, I think we echo some of the
14 sentiment that you've heard today that it's been very
15 difficult to prepare, I think, and to do our best work for
16 some of these workshops, because of not being fully aware of
17 what we were going to face.
18 I think we're used to the traditional Air
19 Resources Board process where we get a staff report, and
20 we're kind of commenting on specifics. So, bear with me
21 again if I'm repetitive.
22 But we did feel, I think all of us there who tried
23 to speak to these -- and I don't think that this varies,
24 depending on what position you take, is that the concepts
25 were sketchy at best. And yet, we were asked to weigh in on
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1 the general direction that we'd like to see staff and the
2 Board move.
3 But I do want to say that at the workshop, there
4 was overwhelming support for something like Concept C. And
5 I've provided the Board with a summary document of that
6 workshop that lists the supporters for the various concepts.
7 And I think that illustrates what I'm saying.
8 And because Concept C is a sketch again, it's not
9 to be taken verbatim that this is support for the staff
10 Concept C, but rather it's just the approach that seemed to
11 fit what most people were thinking.
12 Now, we supported the principles in Concept C, and
13 we also offered a detailed presentation of options for
14 flexibility, market, and marketing incentives, and kind of a
15 change in the slant of the ramp to ten percent in 2004. And
16 in the earlier package that we distributed, I've also
17 provided the Board with a full copy of our testimony.
18 But right now, I'd like to summarize our position
19 on the three concepts that we were presented with. We
20 believe that Concept C is on the right track. It assures
21 the mission benefits and it assures the SIP commitment. And
22 I'd like to reference again Mr. Strock's comments. And I
23 think this discussion of a premium which -- emissions
24 premium, which has never really been defined, and one way we
25 tried to define it in our presentation was to say that,
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1 since electric vehicles don't degrade over their lifetime,
2 that that's more -- you know, more of a benefit than a
3 gasoline powered vehicle that does have some degradation,
4 and that that should be taken into account.
5 And then we also believe that EVs have other
6 benefits that are not really part of your regulation, but
7 are a bonus that comes along.
8 There's lower CO2, less toxic exposure, and no
9 refueling emissions. So, we say, yes, to what Chairman
10 Dunlap offered as the three measures that he was considering
11 today. You will get the tons here.
12 We think that within Concept C, you can provide
13 flexibility, and we've suggested flexibility again in the
14 ramp, credits for early vehicles, sales, and advanced
15 technology. We're hoping that this approach or something
16 that would be developed from this principle would allow
17 manufacturers individualize their marketing strategy.
18 And we also feel that something like this approach
19 would allow a ramp that takes battery manufacturers from
20 pilot to full commercial production. So, I think that this
21 aspect or this principle does support battery manufacturer,
22 or excuse me, Battery Panel recommendations.
23 And that was the second, I believe, of Chairman
24 Dunlap's points.
25 We also think that Concept C supports
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1 infrastructure development, which requires a lot of planning
2 and coordination, building codes, which we've just gotten
3 approved, safety training, which we're just beginning, and
4 training for vehicle support as well as recharging.
5 And that requires planning and understanding of
6 what cars are going to be in the market, where they're going
7 to be introduced, and where public charging is most likely
8 to be located.
9 We also believe that something like Concept C
10 supports California business, EV industry, and investment by
11 maintaining a clearer regulatory signal than the other
12 options. And this, we believe, is the yes to the third
13 point that Chairman Dunlap mentioned, which is the very
14 important link between regulation and economic opportunity.
15 And I believe it was in a previous Board meeting
16 that Ms. Edgerton mentioned that the winner of the Nobel
17 Prize for Economics this year won that prize based on his
18 theory and one that his wife contributed to, that regulation
19 does spur economic growth, and that there is a positive
20 relationship there.
21 Now, we feel that Concept A goes way too far. It
22 really only offers -- although it's hard to understand how,
23 because, again, the language is vague, and so I don't want
24 to do injustice to this, but it offers only partial
25 emissions reductions. It discusses nothing of the premium
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1 and the other benefits that were lost. And, again, if it
2 looks at fleet averaging, it's only looking at NMOG, and we
3 lose that NOx benefit, which is so critical in the South
4 Coast and so critical in Sacramento.
5 It does not offer credits that advanced
6 technology, and I did have the benefit of seeing the chamber
7 proposal as it was sent to some of the businesses that we
8 work with closely. And there seems to be a
9 misunderstanding, in my mind at least, in the language of
10 the proposal, about how credits are generated.
11 Certainly, in order to generate a credit, my
12 understanding is that we have to exceed a standard.
13 Thereby, we have to do more.
14 So, I would agree with the earlier speaker that
15 we're not going to be able to generate credits unless we
16 have some technology that offers us lower emissions.
17 There's no provision in A for infrastructure. As
18 I mentioned earlier, it requires planning and coordination.
19 We cannot expect infrastructure to just appear.
20 And we believe that this measure results in a
21 dramatic loss of investor confidence. And, as we've said
22 before, we're already seeing the results of the mixed
23 messages. We are already seeing businesses turn from this
24 area of development.
25 So, I don't think it measures up on delivering the
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1 tons, Chairman Dunlap, as you had mentioned. I don't think
2 it's very -- makes a very clear link between environmental
3 regulation and economic opportunity. And it certainly does
4 not support the Battery Panel recommendation that we need to
5 keep going no matter what the ramp.
6 And then, finally, Concept B we don't think goes
7 quite far enough. The emissions offsets are uncertain after
8 2003, and there's already been some discussion about the
9 emissions offsets. Again, you get NMOG and not NOx, and
10 that continues that question for districts that are quite at
11 risk in that area.
12 As far as -- I also know there's no commitment at
13 this time to a 49-State car, and while I think we would
14 receive some benefits, I'm not certain about using all of
15 our future options against an existing regulation and losing
16 additional benefits that we so very much need.
17 Also, while we think demonstrations are very good
18 and, you know, our industry has played a very key role in
19 this State with demonstrations, most recently with General
20 Motors' Impact. They are very expensive, these
21 demonstrations, and we have a lot of data from that that we
22 are happy to share. We think demonstrations of advancing
23 technology do need to continue, but we don't think a
24 demonstration alone makes a program.
25 And we know that demonstrations keep costs high
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1 and volume low. We would see limited infrastructure
2 progress here, I believe, because the numbers of vehicles
3 are very low. And there is some uncertainty here, unless we
4 could rely on some level of market launch.
5 And I think a voluntary program is not quite
6 enough; that we would like to see some form, some mechanism
7 that CARB has at its disposal to require some level of
8 retail launch to be in the form of a binding agreement.
9 And I know that there has been mention here today
10 that companies, you know, they aren't owed anything. And I
11 think that's true. But I think there's a misconception here
12 that the auto makers are the only companies that need to be
13 in existence to have a successful EV industry.
14 And, for example, there may be companies that own
15 their own suppliers, but a brand new supplier network is
16 being created. And that network is not necessarily going to
17 be available without some market signals. And I believe the
18 mandate was the market signal. I don't think any company
19 put all their eggs in that basket. But I think a delay of
20 eight years is going to very difficult and if any company is
21 looking at making a profit, for certain they'll divert some
22 of their resources away from this important work.
23 So, we think that tons are uncertain during the
24 SIP years and a little bit uncertain in the near term. We
25 don't think this proposal assures a ramp to meet the Battery
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1 Panel recommendations, and we think it creates a potential
2 disconnect between economic opportunity and regulation that
3 we think would be very beneficial for California.
4 That's really the end of my comments today. I
5 guess I would like to echo what other people said, is that,
6 really to get the best work from us, we need a little
7 notice. And I know that the Board has been under a lot of
8 pressure, and there's been a lot of attention to public
9 process. And we've participated in all of it.
10 But, as we move closer to getting a staff
11 proposal, I think we'd like time to have really well thought
12 out responses.
13 And in addition to that, we have submitted a
14 proposal formally during the workshop, and we're hoping to
15 hear soon from CARB staff about what you think of it.
16 Thank you.
17 CHAIRMAN DUNLAP: Okay. John Weber, SoCal Gas,
18 followed by Lloyd Dixon.
19 MR. WEBER: Good afternoon.
20 CHAIRMAN DUNLAP: Hello.
21 MR. WEBER: I appreciate the opportunity to be
22 here and provide some comments on behalf of Southern
23 California Gas to Chairman Dunlap and the Board.
24 My name is John Weber. I am the General Manager
25 of Transportation at Southern California Gas Company. My
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1 previous experience, by the way, was at General Motors as
2 director of the powertrain product planning activities.
3 Combined with my current responsibilities at SoCal
4 Gas to build and develop the market for natural gas powered
5 vehicles, I think provides me with a unique perspective.
6 But, again, I thank you for the opportunity comment on the
7 possible amendment to the California low-emission vehicle
8 program.
9 As you know, the primary supplier of stationary
10 source fuel in the South Coast Basin is the Gas Company.
11 And we are concerned that a fair share of necessary emission
12 inventory reductions from mobile sources are achieved as
13 well as we go forward.
14 The emission reductions to be achieved from the
15 current LEV program are important towards California's clean
16 air attainment goals. And, as such, the Gas Company
17 supports the alternative program concepts that were
18 presented by the staff that include the requirement that the
19 emissions reductions beyond the current LEV program must be
20 achieved.
21 And most importantly, these equivalent reductions
22 must be achieved using control methods that are not already
23 included in other California State Implementation Plan
24 control measures.
25 We recognize that there is a possibility that you
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1 may be pushing back or delaying the ZEV program in some
2 form. We just want to assure that you that Southern
3 California Gas requests the opportunity to work
4 cooperatively with the staff as they develop optional
5 approaches. We think, for example, that there are a number
6 of possible approaches that will allow you to continue to
7 gain the full emissions reductions benefit under the
8 California SIP program even if the ZEV program is moved out
9 in time.
10 Some of those may be an acceleration of the
11 existing low-emission alternative fuel technology vehicle
12 classes, for instance. It may be a combination of a new
13 standard that would recognize the cleanliness of other fuels
14 that happen to be significantly cleaner than the ULEV
15 standard that may allow you to document and book those
16 emissions reductions.
17 We believe there's a combination of many
18 approaches that will allow you to still obtain the emissions
19 reductions necessary.
20 It is interesting to note that there are 31
21 original equipment manufacturers that are offering factory
22 developed and warranted natural gas vehicles and/or heavy-
23 duty engines in the marketplace.
24 These are basically internal combustion products,
25 not necessarily alternative propulsion driven machines, but
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1 let me assure you that there has been a quiet multiyear
2 development going on in the area of natural gas vehicle
3 technology. And it gets cleaner and cleaner year by year.
4 And that includes many worldwide automakers as
5 well.
6 Southern California Gas specifically commits to
7 work with the ARB staff to assure that a carefully developed
8 alternative results -- would result in an early introduction
9 of cleaner vehicles, like NVGs, so that the 1994 SIP
10 emission reductions are achieved.
11 So, thank you for your attention, and I'm happy to
12 address any questions that you might have.
13 CHAIRMAN DUNLAP: Thank you, Mr. Weber, appreciate
14 it. Mr. Dixon from Rand, followed Kelly Brown from Ford
15 Motor Company.
16 MR. DIXON: Hi. My name is Lloyd Dixon. I'm an
17 economist at Rand Corporation in Santa Monica. We're a
18 private nonprofit firm that does research on public policy
19 issues.
20 Today, I want to tell you some additional findings
21 from a study we're doing on the ZEV mandate. The study's
22 a part of a year-long study on California's ozone attainment
23 strategy.
24 What I first want to do is just tick down our main
25 findings so far, and then spend a few minutes -- a few
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1 minutes describing each one of them, and you have the more
2 detailed description of my comments today in your packets.
3 Our findings -- the first of our findings is that,
4 based on the reviews of the literature that we've been able
5 to do, it looks like the ZEV mandate will be expensive
6 during the first five years. But, of course, in evaluating
7 the ZEV mandate, you want to look its cost-effectiveness
8 over the long run. And based on what we know now, the long-
9 term cost-effectiveness of the ZEV mandate could be just
10 about anything.
11 Now, this doesn't mean that California
12 policymakers should turn their backs on ZEVs, because there
13 are very unattractive outcomes possible without the ZEV
14 mandate. And finally, that this enormous uncertainty
15 suggests certain principles should be used in designing the
16 policies for ZEVs.
17 And those are the policies that enable learning
18 about ZEV technical and the alternatives, not be susceptible
19 to disaster, and that they avoid the worst of the worst
20 scenarios, and that are flexible and can be tailored as new
21 information becomes available.
22 Next slide.
23 On our first conclusion, we look -- we've been
24 able to suggest that the cost of ZEV mandate in the first
25 five years for California will likely lie somewhere between
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1 2.3 and $8.6 billion. And if you add in the mandates in
2 Massachusetts and New York, this could rise to 3.5 to $13
3 billion.
4 Now, long term -- next slide, please.
5 The long-term effectiveness of ZEVs depends on how
6 those costs decline over time as well as the emissions
7 reductions that are generated. And we've simulated long-
8 term cost-effectiveness using parameters -- using ranges
9 into which the important parameters that determine cost-
10 effectiveness are likely to fall.
11 So, we've used different assumptions for the cost
12 during the first five years, high and low assumptions of
13 fast and slow decline for costs after that. And we have
14 different assumptions of what the ultimate fleet penetration
15 would be as well as what the emissions avoided, or emission
16 reductions produced by ZEVs are.
17 And those determined by how effective the ZEV
18 control strategy is. And with those, we calculate long-term
19 cost-effectiveness, both for vehicles produced between 1998
20 and 2010, which is the second to the last column there as
21 well as the long-term cost-effectiveness for vehicles
22 produced after -- electric vehicles produced after 1998.
23 And we find that cost-effectiveness grounds -- the
24 ZEV mandate could be a great success or could be a great
25 failure. If initial costs are low and they decline quickly,
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1 the long-term cost-effectiveness of ZEVs could be very low,
2 even if the emissions avoided fall in the midpoint of our --
3 of the range.
4 On the other hand, if the emissions reductions are
5 high and they don't decline very quickly, we could see a
6 very high cost-effectiveness number for ZEVs in excess of a
7 hundred thousand dollars and indeed, in some scenarios,
8 excess of $500,000 per ton reduced.
9 Now, given this uncertainty, this uncertainty does
10 not imply that we should turn our backs on ZEVs, because
11 undesirable outcomes are possible without ZEVs.
12 Consider the following pessimistic, but not
13 implausible scenario, the ZEV mandate's not repealed, ZEV
14 technology doesn't develop as fast as it would otherwise, it
15 turns out that our ICE controls strategy is disappointing
16 and that we're short of compliance in 2010.
17 Then we may have to turn to very expensive
18 control, alternative control, mechanisms, such as
19 transportation control measures.
20 Now, this is a scenario you want to avoid, and it
21 presents us with a very challenging policy question. And we
22 don't think -- we don't see any easy answers to this, and we
23 think that the uncertainty should be acknowledged and
24 incorporated into the decision-making process rather than --
25 rather than just ignoring it.
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1 And so, based on that, we've developed four
2 different principles that we think should be used in
3 redesigning or changing the ZEV policy.
4 The first is, we aren't sure whether ZEVs are a
5 corner-- or should be a cornerstone of California's long-
6 term strategy at this point based on what we know. But we
7 think that these policies should enable us to learn more
8 about whether it should be or not; i.e. we need to learn
9 more about the technology, its cost, availability, and
10 performance. We need to know more about how the remaining
11 measures of our ICE control strategy are going to work, and
12 we need to know more about what other measures, outside
13 mobile sources are possible and their costs (sic).
14 While we are agnostic about whether EVs should be
15 long-term -- or cornerstone of California's long-term
16 strategy, we think it's important not to adopt near-term
17 policies that somehow hinder our ability to use EVs in the
18 future.
19 And those threats are both marketing and political
20 in nature. On the marketing side, I might imagine an early
21 roll-out of disappointing EVs may sour consumers on electric
22 vehicles and make it difficult to market EVs even if well-
23 performing EVs are available in the future.
24 On the innovation side, we want to make sure we
25 don't do things that discourage innovators from investing,
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1 and that requires balancing flexibility as well as some kind
2 of predictability in the mandate.
3 Third, we think it's important to accommodate a
4 broad range of vehicles and innovators in the policies, for
5 example, to see whether small nontraditional vehicles can
6 make an important contribution to California's ozone
7 reduction strategy rather than relying on electric vehicles
8 that look very similar to the ICEs on the road today.
9 And finally, I wouldn't be an economist if I
10 didn't point out that we should try to do these --
11 accomplish these things at least cost. For example, can we
12 learn more about advanced batteries and their capabilities
13 without fielding large fleets in the early years?
14 Can we learn more about what consumers need from
15 EVs and what they want without fielding a large fleet in the
16 early years that may be expensive?
17 Thank you.
18 CHAIRMAN DUNLAP: Thank you, Mr. Dixon. Ms.
19 Edgerton has a question for you, sir.
20 MS. EDGERTON: Thank you. I'm trying to
21 understand from your report whether you did any independent
22 research on costs, did you?
23 MR. DIXON: We relied mainly on available
24 information and studies. We did talk to various
25 stakeholders and how to interpret that information, and what
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1 the numbers meant. But we rely mainly on available
2 information.
3 MS. EDGERTON: That's what I deduced from looking
4 at this. On page 11, it said the information available on
5 the fixed cost is very sketchy. Our upper and lower bounds
6 should therefore be interpreted as tentative.
7 MR. DIXON: Right.
8 MS. EDGERTON: I mean, if I understand you right,
9 that's tentative. And then when you reach your conclusions,
10 you say, the first five years of the ZEV mandate will be
11 costly.
12 MR. DIXON: Right, well --
13 MS. EDGERTON: That's "will be." That's not
14 tentative, isn't it?
15 MR. DIXON: Yeah. Based on the information that's
16 not available; that's our best guess of the plausible range
17 in which they will fall in the first five years. We have to
18 acknowledge that.
19 MS. EDGERTON: So, if I understand you right,
20 it'll be costly because the studies that you reviewed, some
21 of them were really costly.
22 MR. DIXON: Right.
23 (Laughter.)
24 MS. EDGERTON: Some people say it will be really
25 costly.
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1 MR. DIXON: No. Our contribution is that we did
2 evaluate these studies, and we didn't accept information
3 that we thought had no basis that -- you know, that we
4 reviewed studies to see if, you know, if they were
5 consistent. They told us what they were doing; that we
6 could understand it, and it made some plausible sense to us.
7 But, you know, we can't audit, for example, the
8 numbers on which some of these studies are based. And so,
9 we have to report what we see based on our evaluation of
10 whether it seems to be consistent and make sense.
11 MS. EDGERTON: Well, to whom are they going to be
12 costly? This report is very obscure on that.
13 MR. DIXON: That's a very good question, and
14 that's an issue that's dealt with in our full report that's
15 not dealt with here. What you see here is the -- these are
16 costly in the sense that this is the incremental cost of
17 electric vehicles over the internal combustion vehicles.
18 So, we're assuming that the same number of
19 vehicles are sold and they're driven the same amount, and
20 that, you know, you just have to pay this extra amount to
21 produce them.
22 Now, in the full report which we hope will be out
23 in January, we do a lengthy analysis of who bears these
24 costs, how much is borne by Californians, how much is borne
25 by automakers, how much is borne by EV -- what are the
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1 benefits of the EV buyers and the cost to ICE buyers?
2 And so, we address that issue more.
3 MS. EDGERTON: Well, I don't understand why the
4 incremental costs of EVs over ICEs in your analysis would be
5 so much more. Did you assume that -- you do have
6 assumptions in here that indicate that you're assuming that
7 there'll be progress.
8 MR. DIXON: Right. Well, the reason that the
9 numbers are high in the first five years is that you're
10 talking about new technologies, and you're talking about not
11 large production scales. And that's what's driving the
12 cost.
13 Also, on the high end of their estimates and
14 what's driving that is that the automakers plan to produce,
15 from what w can tell, vehicles that are comparable in
16 performance, except for range, as ICEs. They've got air
17 conditioning. They handle well. They got power steering.
18 And that is really expense.
19 Now, one of our points is that maybe that's not
20 the only way to meet the mandate, but that's what they seem
21 to be planning to do.
22 And if they do that, that's expensive. So, that's
23 what drives the upper end of our -- of our bounds. And
24 then, we make estimates. There's incredibly little
25 information on how those costs will come down after the
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1 first five years.
2 And we basically used estimates of how costs
3 declined in other industries after the first five years to
4 do our sensitivity for the cost-effectiveness numbers.
5 MS. EDGERTON: So, if I understand you right,
6 what's happened to the money that's already been invested?
7 Is that in the costs?
8 MR. DIXON: Yeah. That's another good --
9 MS. EDGERTON: Well, frankly, I don't understand
10 your report. The assumptions are not clear.
11 MR. DIXON: Well, there's a real difficulty in
12 presenting what is a 300-page report in --
13 MS. EDGERTON: Yeah. I understand.
14 MR. DIXON: -- a 20-page briefing and have five
15 minutes to talk about it. So, I can't cover all the points.
16 Clearly, from a policy point of view, a lot of
17 these costs are already sunk. You know, they should not,
18 you know, that's gone. You know, that's not something that
19 should enter into your policy decisions.
20 Now, some of those costs have been spent. It was
21 very hard to figure out how much of them had been spent.
22 But, by no means have all of them been spent on the fixed
23 costs, you know, because we're still three or four years
24 away from, well, whatever it is -- three years away from
25 actual introduction.
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1 So, I can't really answer your good question of
2 what percent of those fixed costs have already been
3 incurred. But my sense is that it's certainly not over 50
4 percent.
5 MS. EDGERTON: And what price did you assume that
6 people would pay? I mean, is this the cost without anybody
7 buying anything?
8 MR. DIXON: This is assuming -- so, interpret this
9 as this is the resource cost. This is the cost to society
10 of producing these vehicles.
11 Now, how much consumers pay for these determines
12 the distribution of those resource costs to society. So, it
13 determines whether it's the ICE -- you know, how much the EV
14 buyers pick, how much ICE buyers pick up. And so, that's
15 really the distribution of how those costs to society fall.
16 And then we deal -- that's something we address.
17 I mean, I can tell you there's a fundamental issue
18 who bears these costs, and that issue focuses on how
19 automakers place their vehicles, and economic reasoning
20 would suggest that automakers should increase the prices of
21 their California ICEs to compensate for these extra costs of
22 the electric cars.
23 And so, there's good reason to think on economic
24 grounds that the cost of ICEs is going to go up as a result
25 of the electric vehicle mandate.
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1 However, the real world doesn't necessarily seem
2 to work that way in the sense that automakers do seem to
3 spread the cost over the entire national fleet for many
4 things, such as the emissions controls. You know, it's a
5 hundred dollar markup in California, and that doesn't
6 correlate very closely to the actual cost of the emissions
7 devices.
8 And so, if that's the case, then the burden on
9 Californians would be much less, and it might be
10 insignificant on Californians.
11 MS. EDGERTON: Let me ask you, if it's the cost to
12 society, is it -- I don't see in here anything about the
13 benefit to society. Do you discount any emissions benefits
14 or the cost of air pollution in the South Coast, for
15 example? I mean, your total figures for four years, you
16 have a range of 2 to 8 billion. And you say it's going to e
17 costly. But we know that the health studies -- which you're
18 very familiar with, I know that -- are 9 billion a year
19 cost.
20 MR. DIXON: What we did, we did what's commonly
21 done, the cost-effectiveness ratio, the dollars per ton
22 removed. We discussed some about the dollar benefits and
23 how you translate tons reduced into dollar benefits, which
24 is a very difficult problem, and the estimates out there
25 probably incompletely measure what the dollar benefits of
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1 tons reduced are.
2 But, you know, we stuck with tons reduced, because
3 our thinking was that, at this point of the project, which
4 is -- which is, we're not looking at the overall stationary
5 sources and non -- and heavy-duty vehicles at this point.
6 But given you want to get this many tons out of
7 light-duty vehicles, what's the most cost-effective way to
8 do it? So, that's why we stuck with cost per ton removed.
9 So, our benefits are tons, which enter our long-
10 term cost-effectiveness.
11 MS. EDGERTON: Well, how much did you assume it
12 was going to be costly -- you said it's costly to society.
13 How costly to society? How did you calculate how costly to
14 society ICEs are?
15 MR. DIXON: Well, what we did was -- what we did,
16 we figured out the incremental cost, how much more the
17 production of ZEVs was going to be, rather than not having
18 the mandates. So, it's sort of with and without the
19 mandate. What are the costs? Okay.
20 And that's what that first one was on the cost
21 during the first five years.
22 And then the benefits are how many tons reduced
23 you get out of that, which we -- which was the basis for
24 those long-term cost-effectiveness numbers, which could be,
25 under some scenarios, you know, moderate.
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1 And so, that's how we have used the benefits in
2 there.
3 MS. EDGERTON: When you were looking at the costs
4 to society, for example, for the EVs, did you look at the
5 emissions from the power plants?
6 MR. DIXON: We assumed that those were not
7 significant for the South Coast; that those wouldn't affect
8 our -- would affect very little. So, we did not add the
9 increased emissions from actual electricity generation.
10 MS. EDGERTON: Thank you. Did you include the
11 emissions from refineries and refueling and evap emissions?
12 MR. DIXON: Right. We did do that, yes.
13 MS. EDGERTON: All of those?
14 MR. DIXON: Uh-huh.
15 MS. EDGERTON: Well, I look forward to receiving
16 your report.
17 Who paid for your report?
18 MR. DIXON: This was jointly sponsored by an
19 upfront grant from the California Manufacturer's
20 Association, as well as internal funds from ORAD. And Rand
21 is very concerned about maintaining the independence and
22 objectivity of work and we made sure that this project
23 conforms to that. We have final say over publication and
24 what's in it and when it's released.
25 CHAIRMAN DUNLAP: Mr. Dixon, you're going to
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1 provide us the full report, right?
2 MR. DIXON: Yeah, certainly.
3 CHAIRMAN DUNLAP: Okay.
4 MR. DIXON: We hope that's out in January.
5 CHAIRMAN DUNLAP: Okay.
6 MS. EDGERTON: I just want to caution that the
7 word "costly" is so subject to misinterpretation, and such a
8 value laden word --
9 MR. DIXON: Your decision as policymakers should
10 be based on the long-term cost-effectiveness of EVs. Those
11 are the things that we say could be low, could be high.
12 However, you may also be concerned about, you know, what you
13 have to invest upfront. You know, what kind of money you're
14 talking about upfront.
15 For a number of reasons, it's going to be
16 expensive in the first five years, and you know, you've got
17 to have stamina to get through those first five years if you
18 want to see this thing -- if you want to see it pay off.
19 This is a long-term investment that's got upfront costs that
20 may pay off. I don't know if it will. But if it pays off,
21 will pay off in the long run.
22 MS. EDGERTON: Just one final question. On your
23 ICE, what ICE did you assume?
24 MR. DIXON: Well, we had a couple of different
25 assumptions on the four. Our assumption of low emissions
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1 reductions due to EVs, we used the CARB estimates for a ULEV
2 that are forecast in 23 -- 2003, I think it is. And for our
3 high emissions reduced, we used the emissions -- the current
4 estimates of the emissions of the California '93 vehicle.
5 And so, in effect, you might think that that California '93
6 vehicle saying that all these incremental policies, OBD,
7 smog check, the NMOG standard, will not reduce emissions
8 from what we're currently seeing from California vehicles.
9 So, in that sense, that's a pessimistic assumption
10 of how the ICEV control program works.
11 Now, on the other hand, there's a lot of concern
12 that our current estimates of the emissions from ICE
13 understates true emissions. And so, you know, that's why we
14 don't know if, you know, how pessimistic that -- using a
15 California '93 as a basis for emissions reductions.
16 MS. EDGERTON: I just want to make sure I
17 understood you correctly. You're comparing the ULEV and
18 1993 --
19 MR. DIXON: What we did --
20 MS. EDGERTON: -- to -- the ULEV standards, which
21 would go into effect in 2003 as if it were 1993?
22 I am sorry. I didn't follow the --
23 MR. DIXON: Right. Well, first, we -- we looked
24 at the effectiveness for vehicles sold from 1998 and after.
25 Okay. So, it's not just -- I mean it's -- EVs 1998 to the
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1 indefinite future. They're sold at 10 percent forever.
2 MS. EDGERTON: Yeah, but I'm talking about the
3 five years.
4 MR. DIXON: Right. And so, our low estimate --
5 yeah, for one end of our extreme, we use a ULEV for that
6 whole period, right.
7 MS. EDGERTON: So, for the ICE standard that you
8 compared high and low the other studies. You picked CARB,
9 and you got all those -- all that stuff.
10 MR. DIXON: Right.
11 MS. EDGERTON: Your baseline is your ULEV that we
12 will require in 2003.
13 MR. DIXON: Right. Now, some --
14 MS. EDGERTON: Even though during that period of
15 1998 to 2003, we don't require it?
16 MR. DIXON: Well, I mean -- that doesn't really
17 matter, because of the NMOG standard, because of the NMOG
18 standard, there's no exhaust emissions benefits from EVs
19 under one set of scenarios, because more EVs -- less EVs
20 mean the ICEs, remaining ICEs have to be cleaner under the
21 NMOG standard.
22 So then, you have to look -- well, how do the
23 evaporate emissions and the market emissions differ? And
24 so, the answer may not be as -- it may not be as bleak as
25 your -- it may not be as extreme as you're -- as you're
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1 hinting, because you don't have the evaporative -- I mean
2 you don't have the exhaust side of it.
3 MS. EDGERTON: Well, I apologize for taking so
4 much of your time. I have a lot of respect for you and our
5 work. And I'm just trying to understand some of the
6 principles.
7 Thank you.
8 MR. DIXON: Okay.
9 CHAIRMAN DUNLAP: Thank you, Mr. Dixon. Kelly
10 Brown, followed by V. John White of the Sierra Club,
11 followed by Dave Hermance, Toyota Technical Center.
12 MR. BROWN: Due to the lateness of the hour, I'll
13 keep my remarks brief, and it looks like we're going to have
14 a chance to do this weekly anyway, so anything I don't do
15 today, we'll do either here, or next week, or the Christmas
16 show.
17 (Laughter.)
18 MR. BROWN: Mr. Lagarias covered a lot of the
19 things that were on my mind listening to the talk today, so
20 I'll just focus on a couple of them I think maybe he didn't
21 elaborate on enough.
22 During the course of the workshops and the
23 hearings that we've had over the last few months, the debate
24 always seems to slip back to an issue of whether or not you
25 have a ZEV mandate, and the fate of the Western World seems
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1 to turn on that.
2 I don't think it's necessarily an issue of just
3 that simple, of either ZEV mandate or no ZEV mandate, or
4 it's not like "save the whale" or "Remember the Maine." We
5 agree that the Battery Panel did point out that the mandate
6 did stimulate a lot of progress. And I wouldn't argue with
7 that.
8 But the Battery Panel and others have also pointed
9 out that it's time for a change, and that if we stay the
10 course, in '98, things aren't going to work out well, and
11 that will be the death knell, I'm afraid, of electric
12 vehicles.
13 The mandate, we don't need to go back and decide
14 whether you people or your predecessors were right or wrong
15 with the mandate. I think it's sufficient to say that it
16 appears to about lived its usefulness.
17 And we need a different course. During the course
18 of the discussions, we were asked during the public process
19 at the workshop to do several things. One was prepare an
20 alternative, and we did that. Within the alternative, we
21 were asked to make sure that there was continuing progress
22 on technology. And I think we did that.
23 We were asked, rightly or wrongly, to make sure
24 that there was an offset and premium offset. And we did
25 that. We were asked to make sure that there were no gaps in
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1 ZEV availability, and we did that.
2 I think, overall, to the amazement of some, seven
3 fiercely competitive companies agreed to all those different
4 things and found ways, with differences, company to company
5 that we could do that.
6 One of those pieces got a lot of attention today
7 and a lot of misinformation I think we shared. The value of
8 the 49-State program -- one, as Mr. Leonard said, it won't
9 be available unless the seven manufacturers agree to make it
10 available. So, as Mr. Cackette said, up to 2003, that's a
11 true offset.
12 All of the offsets to date that have been brought
13 forward seemed to get sucked up in the black box, so I don't
14 know how we would offset the ZEV benefits if there are no
15 programs that are available for offsetting.
16 There was also a question, in particular by the
17 NRDC, about the viability, because California can't enforce
18 in use. If we sign up to the 49-State program, EPA would
19 enforce it just like a legitimate program. We would have a
20 contract with them, and it would be enforceable.
21 The fact that California doesn't enforce it is no
22 different than the action taken by this Board just recently
23 on heavy-duty engines, where we volunteered to agree with
24 EPA and CARB to do heavy-duty engines requirements earlier.
25 They're also covered by the preemption in the Act. And the
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1 benefits primarily from 49-State trucks migrating into
2 California are booked in the California SIP.
3 Our 49-State concept is no different. If it
4 doesn't work there, it doesn't work on the heavy trucks.
5 I think -- just one last thing. It seems to be
6 taken for granted our offer to match the NMOG curve, as if
7 that's simple. And even in our discussions with the staff
8 who know our business pretty well, you fall into a trend of
9 saying that all these vehicles are on the shelf; that all
10 you do is slide it from the year 2000 back to 1998. There's
11 no work to that. It's just sliding something from one end
12 of the shelf to the other.
13 In Ford's case, that commitment would mean six
14 major new vehicle programs and at least $350 million worth
15 of investment.
16 With that, I'll take any questions.
17 MS. EDGERTON: Thank you. And I hope nothing I've
18 said indicates that I think it's easy, anything's easy.
19 What's the old saying? Everything's difficult before it's
20 easy.
21 MR. BROWN: No, I think it's nothing's impossible
22 if you don't have to do the work.
23 (Laughter.)
24 MS. EDGERTON: So, the question I want to ask
25 again about this 49-State car.
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1 Where are you in that process with EPA?
2 MR. BROWN: Nowhere. Their rulemaking is out, but
3 more importantly, the talks with the States in the Northeast
4 have stalled. And it stalled, I think, waiting to see what
5 happens with the ZEV mandate.
6 My personal perception is it's probably more a
7 political issue than a technical issue. Unfortunately, you
8 know, some have alleged that's happening in California, too.
9 I don't know what's going on here.
10 But the talks in the Northeast have stalled, and I
11 think the program -- we've lost most, if not all of '97
12 model year already. I'm not sure if it will go forward.
13 This program that we've offered here in California
14 I think is the last shot to make it work. That's my
15 personal opinion. And I've been involved in the discussions
16 in the Northeast for quite a while.
17 MS. EDGERTON: So, if I understand you right,
18 you're saying that the 49-State car is dead in the
19 Northeast, but if we agree to it, you'll get EPA to enforce
20 it and California will have saved the 49-State car?
21 MR. BROWN: Believe it or not, that makes sense to
22 me. Yeah, I think what actually happened is the stumbling
23 block in the Northeast is the ZEV mandate. Two of the
24 States have a ZEV mandate, and we've been unable to work
25 that out. They are willing to give up their program.
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1 MS. EDGERTON: But if there's no ZEV mandate for
2 98-99, for example here, then they don't have one either,
3 right? Because they have to adopt our program. So, then
4 why would you offer the 49-State car to them to get out of
5 the mandate if there were no mandate that they could adopt
6 the California had?
7 MR. BROWN: You know, I think I understood that.
8 (Laughter.)
9 MS. EDGERTON: I'm counting on you.
10 MR. BROWN: It might be time to go to the Rubicon.
11 (Laughter.)
12 MR. BROWN: The 49-State car, we told the States
13 in the Northeast that we would make the 49-State program
14 available there, and we would devote the resources of those
15 programs provided we didn't also have to do a parallel
16 program on electric vehicles. We couldn't do both.
17 If the electric vehicle program goes away, either
18 because those States agree to or because California moves
19 the ZEV program, then it makes our offer feasible.
20 MS. EDGERTON: So, if I understand this, it's --
21 we're -- if New York and Massachusetts agree that they don't
22 want to have the ZEV mandate, then you'll probably -- you
23 would have gone forward -- maybe that's -- is that still a
24 good offer on the 49-State car, and California will also get
25 the benefits of in-migration of the 49-State car.
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1 MR. BROWN: But one key thing we've got to that
2 point -- it's almost a year to the day that we got to that
3 point. And we haven't gotten past the ZEV mandate piece.
4 MS. EDGERTON: Uh-huh.
5 MR. BROWN: And I think everybody's waiting to see
6 what happens in California.
7 MS. EDGERTON: Okay. But conversely, if
8 California, I mean, keep this mandate, they don't get the
9 49-State -- well, they get -- I see. So, it's divide and
10 conquer.
11 Thank you.
12 MR. BROWN: No. I don't agree with that. I don't
13 agree with that.
14 MS. EDGERTON: Correct me then.
15 MR. BROWN: No, I think it's win-win for
16 everybody. If we can get through the ZEV mandate problem in
17 the Northeast or through California, it would facilitate the
18 49-State car. The auto companies are on the track where we
19 know we've got a product plan that we can actually build,
20 that satisfies our customer needs. It's a win for the State
21 of California, because you get your emission benefits. It's
22 a win for the Northeast because they get their emission
23 benefits. Everybody wins.
24 MS. EDGERTON: One final question, then.
25 Are you saying that if they -- if California and
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1 New York did not keep the ZEV mandate, that you would not
2 oppose our having it?
3 MR. BROWN: You're California I think.
4 MS. EDGERTON: I know.
5 MR. BROWN: You meant New York and Massachusetts?
6 MS. EDGERTON: If New York and Massachusetts
7 passed on it, would you stop opposing it here?
8 MR. BROWN: It's -- that wouldn't make the
9 batteries work.
10 MS. EDGERTON: All right. Thank you.
11 CHAIRMAN DUNLAP: Thanks, Mr. Brown.
12 V. John White, followed by Dave Hermance from
13 Toyota, followed by Paul Pulliam.
14 MR. WHITE: Mr. Chairman, members, John White,
15 representing the Sierra Club.
16 When the "grandson of smog" appeared this morning,
17 I thought back to my first ARB hearing. And I think it was
18 at Cal Tech in 1972, and I think the subject was vacuum
19 spark advanced disconnect.
20 Mr. Calhoun may remember that situation. This is
21 another case where we thought we knew what we were doing but
22 didn't.
23 And I think that it caused me to think about the
24 rich history and tradition of this Board and all of the
25 accomplishments that have come about, and I appreciate the
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1 Chairman and the staff taking some time for us all to
2 reflect and maybe take a deep breath.
3 This a very important process that we're engaged
4 in, a very important product. And I think -- I don't know
5 if I can be here next week, because I had some other plans.
6 There are other environmental issues that I work on, even
7 other air quality issues.
8 I would love to have all the help on smog check
9 that we've been having on the ZEV thing, because I think
10 that smog check is a program that illustrates why we have to
11 have the ZEV program.
12 And so, if you'll bear with me, Mr. Chairman, I'd
13 like to reflect both on the process and the substance. We
14 have generally been associated with the fine work that's
15 been done by the Natural Resource Defense Council and the
16 Union of Concerned Scientists on the technical issues and
17 the options. We've also contributed to the effort to
18 organize the public on this issue. And I think one of the
19 difficulties that nobody's known, maybe even this Board,
20 exactly where this issue is at a given moment, given the
21 rumors and the conversations that are going on, and I think
22 that -- I wanted to reflect a little bit on how we got to
23 this point and maybe offer some suggestions.
24 But I couldn't help but think about when Ms.
25 Edgerton was questioning the Rand speaker and then Mr.
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1 Austin's early remarks.
2 When we start looking at costs and benefits of
3 this program, I think we've got to be careful of the
4 criticism -- I don't know who it's from or who it's directed
5 towards, but I always like the way it sounds. And people
6 that know the cost of everything and the value of nothing.
7 And I think in the case of this ZEV technology leap that
8 we're trying to undertake, there are some intangibles here
9 that are both qualitative and quantitative that aren't
10 specifically in this Board's specific jurisdiction.
11 So, I don't want to get off point and try to have
12 you pay attention just to the intangibles, but I think that
13 when we look at just these narrow cost/benefit analyses that
14 only look at NMOG and only look at these incremental
15 differences, we're missing the point of what I think this
16 mandate has come to mean and why it has so much weight
17 attached to it.
18 And that is that our in-use vehicle program
19 continues to be a failure. It has gotten better, but it is
20 a failure, I&M is an enormous administrative and financial
21 burden. It is unfair inherently to somebody. It is
22 inherently imprecise in terms of the benefits. The data
23 keeps coming in. Our friends in the remote sensing
24 department are finding criticisms now of their work that a
25 given vehicle on a given day can pass the remote sensing and
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1 fail the next day.
2 We haven't had the political will to do the EPA
3 or the Sierra Research design I&M program, and haven't been
4 there when none of these other people, except the staff,
5 were there. Mr. Austin was there, also.
6 I&M is not an easy issue to do right, because of
7 who it affects and the business and the economics.
8 The other thing is our friends in the car
9 companies have to acknowledge that they have yet to offer
10 cradle to the grave, lifetime emissions warranty on
11 condition, where it doesn't matter who owns the vehicle;
12 that they warrant that the vehicle will perform over its
13 life, not its useful life as we arbitrarily define it, but
14 over its life.
15 That's the standard that the ZEV met. And despite
16 the enthusiasm we now have elicited from the electric
17 utility industry, the electric utilities weren't even in the
18 room in 1990, when this deal got done. Okay?
19 This deal was done and I'm proud to have been
20 there. We were fighting about other things at the time.
21 Actually, nobody really focused on the ZEV requirements. We
22 were focusing on ULEV and the availability of alternative
23 fuels.
24 But the reason we were there and here today is
25 because of that need to get to zero and stay at zero,
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1 because that's what the population of this State's growth
2 requires. It's what the limits we have found on the
3 stationary source side of the program. We can only go so
4 far. We very much need this set of technologies.
5 That having been said, I also have come to be
6 concerned and to realize the importance of a successful
7 launch. And there was a number of very constructive
8 conversations beginning to happen, and I hope it can still
9 happen. I think you've seen from Ms. Hathaway, and Roland
10 Wang, and others some very constructive contributions
11 towards flexibility from the environmental side.
12 Some of us thought we were making a mistake
13 tactically by surfacing anything other than two percent down
14 the line. But we began to see the need to look at
15 flexibility.
16 And yet, I think that one of the disturbing things
17 that's happened in the last several weeks is that Option A
18 has come out of nowhere to have a dominant role in the
19 discussion. And to the extent that the Governor and the
20 Administration is unhappy with the criticism they receive --
21 there's a lot of loose talk now about people not being
22 welcome. The Governor, you shouldn't oughta (sic) done this
23 and made these wild accusations. The reason that climate
24 has existed is because, having participated in this process
25 throughout, the oil companies have been existing primarily
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1 outside this process.
2 I don't know that Doug Henderson's even ever
3 addressed this Board or a workshop on this subject. We've
4 gone from the Citizens Against Hidden Taxes in the workshops
5 to now the esteemed Mr. Austin presenting his alternatives.
6 But the oil companies have been very present in
7 other places. We've even heard them to report, "Don't
8 bother with ARB and the staff. The action's elsewhere."
9 And it's that sense that the action may be
10 elsewhere that has caused us to view with great concern the
11 sudden elevation of an option that is nowhere found to be
12 supported that is nowhere found to be supported anywhere in
13 the record of the workshops or the work that has been done.
14 But because it's coming from the Chamber and the
15 oilers (sic), it's got some legs. And now, it looks like we
16 have artificially winnowed the process down. Instead of the
17 existing law, existing 2 percent, which is what to me ought
18 to be the base case, Option C, which is an Enviro, utility,
19 flexible option, which some of us had to be dragged
20 screaming -- not kicking, but, you know, just -- it's a
21 reluctant concession to reality, or Option B, which is the
22 car companies', I think quite responsive, effort to get back
23 to us all with their first serious proposal.
24 It's a little late, but they did something. And I
25 don't think in the response to the criticism that we should
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1 ignore the fact that there has been some movement from their
2 side that I think is encouraging.
3 But I think the process broke down for a couple of
4 reasons. One, I think the arbitrary decision that Mr.
5 Brown's earlier discussion reflects of, well, just throw the
6 Northeast over the side and do for them what they couldn't
7 do for themselves, which is to recognize what's in their
8 interest and take the 49-State car, and go home and leave
9 the real work to us.
10 The folks in the Northeast said -- I've worked
11 with them and proud to work with them on both the
12 environmental, Governor Weld, Governor Pitaki (phonetic),
13 have really worked hard. They want this technology, too.
14 And I think the shift from the two percent mandate
15 to a staff/car company (sic) version of Option A and C, some
16 combination, that explicitly cut the Northeast out created
17 two problems. One, it set of a reaction back East,
18 understandably of, you're screwing us, you know? Are you
19 screwing us or is it just the staff? You know, so, these
20 people have worked really hard.
21 Some of them are here today. They 're good folks.
22 They've actually done a terrific job of taking the best that
23 Mr. Brown and his folks have to offer and survived with a
24 bipartisan political support for this technology.
25 The second thing is that I think the apparent
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1 willingness to move off of a regulatory mandate with some
2 adjustments to a full voluntary, early year launch created,
3 I think unintentionally, uncertainty about the will of this
4 organization to go the distance to bring this technology to
5 fruition.
6 And I think that's an important variable. It's an
7 intangible. It's not something you can quantify. But I
8 think there is a lot riding at this moment on the signal
9 that is felt in the private sector about your willingness to
10 stay the course, not stay the course in a literal,
11 prescribed fashion that ignores Jack Lagarias' well-founded
12 and well-expressed concerns.
13 I think that whatever the process is we're now in,
14 that the process of discussion of evaluation of options
15 needs to keep going on. I know the channels are hard to
16 find that don't get disrupted by the Press or other means.
17 But I would urge to keep at it. And I appreciate
18 the response that seems to have been reflected in the sort
19 of not getting buffaloed. But I'd be very cautious about
20 this pressure that we're seeing from one particualr sector
21 here. Because I don't think it fits with the rest of what
22 else is going on.
23 And it's something we're going to react to,
24 because we have dealt with these people before. We have
25 dealt with phony Astroturf groups. Mr. Woodward was here
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1 today, even Mr. Henderson. But Bob Woodward was here today,
2 because this is a big account for him, and this may turn
3 into an initiative, too.
4 But that is all free speech. That's First
5 Amendment, can't do anything about it. But it does elicit
6 from us in the environmental community a particular
7 reaction, because we have some intangibles, too.
8 We have the situation of the gentleman that was
9 executed in Nigeria directly for working on oil. We have
10 the situation in the Alaska National Wildlife Refuge. We
11 have the Intergovernmental Panel on Climate Change just
12 coming out with reports.
13 All of these things point to the need to move us
14 beyond petroleum. And the oil industry, I think, can make a
15 contribution to that process with the cleaning up of
16 gasoline and the offering of pointed and effective
17 criticisms of the work that we're doing. But they need to
18 be in the process more and less outside trying to juice the
19 situation through the political process if they want us to
20 step up to the table and take things at face value.
21 Lastly, with respect to the car companies, the
22 reason that we have reluctance in the environmental
23 community with respect to a trust me option is that we have
24 some unfortunate history in that department.
25 The experience recently with the Cadillac emission
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1 system being deliberately bypassed for the air conditioning
2 system. You saw the story in the Bee this week. When the
3 air conditioning runs, the Nox is higher. Gee, that isn't
4 in the model.
5 And yet, who isn't using the air conditioning in
6 Southern California or the Valley in the summertime? I
7 means our in-use emissions don't track in-use emissions that
8 are actually occurring.
9 And we have had some mixed signals in the past
10 when they had asked for incentives on fuel economy, and
11 we've given them an incentive approach, we got the same
12 answer.
13 So, I think there's some work to be done in that
14 department. I think that also -- the last point I want to
15 make is that the staff and the Battery Panel's emphasis on
16 the promise of advanced batteries, I think, has missed a
17 little bit of the flavor that is out there in the experience
18 at SMUD and in other places -- that folks that are given the
19 lead-acid products, even with the range less than 100 miles
20 we think can still find a practical use and a willingness to
21 buy these cars.
22 As Mr. Brown said, something sounds easy when you
23 don't have to do it. And I appreciate that point. But I
24 think we have to be careful that the advanced batteries
25 don't be the enemy of the good. And I think we have a
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1 terrific amount of companies' involvement in the lead acid
2 technology and in the near-term market.
3 I don't know what the numbers are. I can stand up
4 here and say that 2 percent needs to be unchanged and that's
5 the only definition of success.
6 But practically speaking, I think there are
7 elements of success that can be adapted from a number of the
8 discussions that have gone on. But the integrity of the
9 process, the integrity of this Board I think is an issue
10 that I want to see come out of this restored and renewed. I
11 think the actions that you're taking today, the way you're
12 going about it today is a good sign. But, you know, this is
13 high stakes. There's a lot of money riding on this.
14 There's a lot of public confidence, a lot of public support.
15 We're trying to be responsible and yet critical when we see
16 the need.
17 We'd like to see this move forward in a way that
18 can be successful for everybody. And we wish you well, and
19 we'll do our best to contribute constructively as we go
20 forward.
21 Thank you.
22 CHAIRMAN DUNLAP: Thanks, Mr. White. Dave
23 Hermance from the Toyota Technical Center, followed by Paul
24 Pulliam.
25 MR. HERMANCE: Let's see, is it either afternoon
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1 or evening? I'm not sure which.
2 In any event, good afternoon, Mr. Chairman,
3 members of the Board. I am Dave Hermance, General Manager
4 of Powertrain with Toyota's Technical Center in Los Angeles.
5 Because of the hour, and because several others
6 have already spoken, I had thought maybe to not speak, but
7 then when I heard that we were counting votes for how many
8 people spoke for each proposal, I decided probably I ought
9 to anyway.
10 Toyota has participated in all the workshops and
11 hearings leading to this point. Further, we have met
12 individually with ARB staff and three chairpersons over the
13 last four years to review ZEV progress since the advent of
14 the mandate, and the challenges remaining, and also related
15 issues with regard to the LEV/clean fuel piece of the
16 situation.
17 We have also, as Kelly mentioned, worked with
18 other automakers in the recent time frame to develop what we
19 regard as a viable alternative to the current ZEV sales
20 mandate.
21 Proposal B, while not perfect and certainly not
22 yet fully defined, provides a framework which, with further
23 negotiation to develop sufficient detail, will provide the
24 highest probability of a successful market launch of ZEVs.
25 We look forward to working with staff to finalize a viable
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1 ZEV alternative.
2 Now, I feel compelled to make at leas one or two
3 observations about another proposal.
4 Proposal C requests or suggests the scaling back
5 in various and sundry ways, depending upon which version of
6 C you look at, for two or three years to at least starting
7 at one percent, and maybe creating some incentive.
8 Please remember the Battery Technology Assessment
9 Panel timing for the availability of production quantities
10 of advanced batteries is 2000-2001, and that is a best case
11 scenario.
12 Further, remember, that in the marketing, at least
13 those people who routinely market vehicles had estimates of
14 market volume demand, free market demand in '98,
15 substantially less than 1 percent, more on the order of a
16 quarter to a half a percent.
17 Any alternative which has substantial numbers of
18 vehicles for sale, mandated for sale in '98, with batteries
19 not yet ready is a likely scenario for a lack of successful
20 launch. Therefore, we regard C as nonviable.
21 In deference to time, I am done.
22 CHAIRMAN DUNLAP: Okay. Thank you for that
23 perspective.
24 Mr. Pulliam. Thank you for your patience.
25 MR. PULLIAM: Mr. Chairman, I'll keep this as
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1 short as possible.
2 I'm Paul Edison Pulliam. I'm the senior member of
3 IEEE. The initial cars in this nation were direct current
4 powered with DC motors. Henry Ford years ago got the patent
5 for automobiles. He and George Montgomery -- Westinghouse
6 is the right name -- were DC and AC powered deals, and they
7 were buddies that took their vacations together.
8 I'm the fourth president historically of the
9 Electric Auto Association. I didn't stay in one chapter
10 very long, because I was going for AC motor propulsion of
11 vehicles. Everybody around me was going DC.
12 And the two mixed ideas didn't gel too well. The
13 fellow that was seated to your left said that in the year
14 2010, there should be 10 percent zero-emission vehicles.
15 From my viewpoint, the other 90 percent will be hybrid
16 vehicles. They use a DC powered motor, and the call it a
17 starter. That makes the whole thing a hybrid.
18 Now, then, point I wanted to raise is that from
19 Folsom to Sacramento was the first long-distance electric
20 transmission line in this whole nation. The AC came here
21 and was changed to DC to run the streetcar system. And now
22 we're trying to get the best we can of propulsion of our
23 vehicles without having excess exhaust emissions. In the
24 papers I had passed out, says that there's two cars
25 functioning using an alternating current motor to drive an
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1 alternator to provide the power for AC electric motors. The
2 missing link in that statement is that there is something
3 called a wound rotor motor that can be used as a rotary
4 transformer. It can take the standardized voltage as it
5 comes off of the high line or from an alternator and turn it
6 to zero amplitude and increase it gradually to full rated
7 voltage of the AC motors.
8 In doing this, it causes propulsion that is using
9 one-fifth of the horsepower that is used by the Michigan
10 production of cars. The other four-fifths goes in the
11 mechanical transmission from the motor through the
12 transmission, through a power shaft, trough the
13 differential, to the rear wheels; four-fifths of the power
14 is wasted in moving those things to different speeds.
15 So, we do have now -- one at McClellan Air Force
16 Base, one at another location in the vicinity -- two cars
17 that use one-fifth of the possible power with an electric
18 drive. AC motor with electric drive.
19 The key factor there is that the voltage applied
20 to that motor can go in amplitude from very low, medium to
21 high, to higher amplitude per alternation and get the job
22 done.
23 I'm going to have a better writeup for you on the
24 21st of January (sic).
25 Thank you.
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1 CHAIRMAN DUNLAP: Okay. Very good. Thank you for
2 your interest, sir.
3 John Schutz from Nissan, followed by Jerry Cole
4 from the Advanced Lead-Acid Battery Consortium, followed by
5 Stephen Heckeroth. John, thank you for your patience. I
6 know that you're going to use the few minutes you have
7 allocated wisely.
8 (Laughter.)
9 MR. SCHUTZ: Well, with that lead-in, good
10 afternoon.
11 I am John Schutz of Nissan Research and
12 Development from Los Angeles. In previous workshops and
13 events, Nissan has presented material on the status of
14 technology. We have talked about the detail of our work
15 with lithium ion batteries, our assessment of the market
16 potential for EVs.
17 I won't go into the details, just summarize
18 briefly.
19 We do believe the market acceptance of EVs will be
20 severely limited unless their range in typical urban driving
21 exceeds 120 miles, and their cost approaches that of
22 comparable conventional vehicles.
23 We remain convinced that in order for EVs to
24 succeed in the general market, they must also meet or exceed
25 customer expectations for convenience, performance,
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1 reliability, and durability.
2 For the market to develop, the first retail
3 customers must be absolutely delighted with their EVs. The
4 word of mouth will be the most important method of
5 attracting additional buyers. If the first buyers are
6 disappointed, well, the long-term success of the EV market
7 will be seriously undermined.
8 Now, with regard to the status of EV and battery
9 technology, we agree with the conclusions of the Battery
10 Technology Panel that advanced batteries are essential for a
11 broad market acceptance vehicles.
12 And we agree with their conclusion that the
13 lithium ion technology offers the greatest potential over
14 the next five to ten years.
15 Thus, Nissan plans to continue focusing our
16 efforts on the lithium ion project. There are many
17 remaining tasks, confirming performance, durability, safety,
18 reliability. However, the main issue to be resolved is
19 cost. Challenges include materials issues, improving the
20 separator in the electrolyte and finding an acceptable
21 substitute for cobalt, as well as reducing manufacturing
22 complexity.
23 The research and development time, which by the
24 way is just another way of saying trial and error, required
25 to complete the optimization process cannot be precisely
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1 estimated.
2 These activities are primarily the battery
3 manufacturers' responsibility, although they are likely to
4 require additional vehicle adaptation and further
5 confirmatory testing.
6 So, we want to stress now that we cannot predict
7 the time of successful commercialization of the lithium ion
8 battery for use in EVs. We will begin small scale tests in
9 California, we expect, in 1998, with 10 to 20 vehicles in
10 the first year, continue our efforts toward a marketable EV.
11 Now, we do accept that the mandate thus far has
12 helped to accelerate process of EV development. We do
13 believe that it's now time to collectively acknowledge the
14 next step is to follow the development tasks identified by
15 the Audit Panel. This needs to be carried out in an orderly
16 manner.
17 And we believe that Concept B comes closest to
18 meeting the -- providing a framework for seeing that
19 through.
20 Nissan wants to compliment Chairman Dunlap, the
21 Board, CARB staff for your efforts and patience thus far in
22 seeking a workable alternative.
23 We will continue to take part in the discussions
24 on alternatives and be back next week.
25 CHAIRMAN DUNLAP: Thank you, John.
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1 Mr. Cole, followed by Mr. Heckeroth from Homestead
2 Enterprises, followed by Reg Modlin from Chrysler.
3 MR. COLE: Thank you, Mr. Chairman.
4 Chairman Dunlap and members of the Board, my name
5 is Jerry Cole. I serve as president of the Advanced Lead-
6 Acid Battery Consortium, which is known by the acronym of
7 ALABC, which is a research program supported by 47 lead-acid
8 battery producers and suppliers to that industry from around
9 the world, with several members here in California.
10 Over the past four years, ALABC has devoted nearly
11 $20 million toward research efforts aimed at improving the
12 life, the range, and the reliability of lead-acid batteries
13 for EV use. We took up this effort in large part because of
14 the California mandates. And these mandates ensured, we
15 thought, that there would be a market to justify that
16 investment.
17 Without question, the ZEV mandates have been a
18 major factor in stimulating the acceleration of battery
19 technology development, all battery technology development,
20 including our own program.
21 Without the mandates, it's doubtful that progress
22 anywhere near the degree of progress made during the last
23 four to five years would have occurred. And similarly, if
24 the mandates are dropped, we strongly think that further
25 investment will simply dry up.
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1 In industry, just as in government, there are
2 always competing demands for funds. The mandates give
3 reasonable assurance that a market would be there,
4 justifying the investment.
5 If we now go into a period of maybe we will, maybe
6 we won't, the driving force for investment in EVs will, I
7 think, be lost. Therefore, as you consider how to change
8 the mandates, we ask that you at least ensure the
9 continuation of the mandates in some form, particularly the
10 current midpoint and the end point goals.
11 We think that Option C, as presented to the CARB
12 staff last week, is the best option to ensure continued
13 investment and economic growth, while meeting clean air
14 goals.
15 Regarding the changes in the mandates, we
16 understand that CARB is considering granting multiple
17 credits to auto manufacturers, depending on the type of
18 battery technology that they employ. We're very concerned
19 about this issue, and we think that if differential credits
20 are employed, the level playing field, which is so important
21 to a market-based approach, will be lost.
22 We strongly urge you not to implement a system of
23 differential credits for different battery technologies.
24 All EVs are emission free, and that's really the bottom
25 line. If, however, credits must be part of the program,
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1 then they should take into account the concept of cost and
2 the principal performance parameters rather than to rely
3 simply on the choice of chemistries.
4 In making your -- what I consider to be a
5 profoundly important decision on the future direction of
6 these mandates, we know that you're concerned not only about
7 California's air quality, but also California's economy.
8 And please keep these factors in mind.
9 California's the world's EV leader. The
10 technology developed here can form the basis for a totally
11 new industry, and California's the natural home for that
12 industry. And batteries, particularly lead-acid batteries,
13 are currently being produced in California in great numbers.
14 With EVs requiring even more batteries, the industry will
15 surely grow, and for a variety of practical and economic
16 reasons, these batteries will certainly be made in
17 California.
18 Finally, California's regarded as a leader in
19 environmental regulations. Our industry has sometimes felt
20 the brunt of California's leadership in this area. But
21 whether we liked it or not, we always knew that California
22 would stand its ground. Therefore, we urge you to stand
23 your ground now.
24 Certainly make adjustments that are necessary and
25 practical, but don't throw away the mandates that have
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1 resulted in so much progress and so much promise for the
2 future.
3 On a separate note, I'd like to address the issue
4 of how misperceptions on the State of battery technology,
5 especially lead-acid, have driven the debate on EV mandates.
6 Doubts as to the technical and economic
7 practicality of the mandates are consistently linked to the
8 so-called shortcomings of battery technology. As we've said
9 to CARB and to the CARB staff in the past and will continue
10 to say in the future, advanced lead-acid batteries can
11 support an EV with adequate range, acceptable cost, and
12 reliability in a time frame consistent with the current
13 mandates.
14 Thank you.
15 CHAIRMAN DUNLAP: Thank you, Mr. Cole. That's
16 important for us to hear. I appreciate the way in which you
17 presented that.
18 MR. COLE: Thank you.
19 CHAIRMAN DUNLAP: So, lead-acid's here, and it can
20 used, and it can work, right?
21 MR. COLE: Correct.
22 CHAIRMAN DUNLAP: Okay. I don't have any
23 questions for this gentleman, do you? All right. Mr.
24 Heckeroth, Homestead Enterprises.
25 MR. HECKEROTH: Mr. Chairman, and hardy members of
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1 the Board. My name is Steve Heckeroth. I've a degree in
2 architecture, and environmental design. What I have to say
3 comes from my heart, not from my pocketbook. I have come
4 here at my own expense from Mendocino County to thank the
5 Board to creating a zero-emission mandate, which I believe
6 has fueled electric vehicle research and development
7 worldwide.
8 It is my hope that you will uphold the mandate.
9 As a designer and builder for the last 25 years I have
10 dedicated my wife to finding ways to live without using
11 nonrenewable energy resources.
12 The articles that I hope you have in front of you
13 describe some of my most recent projects toward this end.
14 I've built homes that convert direct to solar energy to the
15 heat and electricity needed for the occupants.
16 But over the last few years, I've realized that
17 transportation uses about four times the amount of energy
18 that we use in our homes, and it creates about ten times the
19 amount of pollution that is created by energy needs of our
20 homes, because this is total reliance on petroleum.
21 So, I've shifted my focus to building electric
22 vehicles. Our own home that we live in has a roof
23 integrated three kilowatt photovoltaic array that provides
24 all our electricity and charges the batteries of my electric
25 car.
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1 The inefficiency of batteries is often used as an
2 excuse for our continued reliance on fossil fuels. But
3 let's take a look at the efficiency at the battery we are
4 currently using, the Earth. It took 3 billion years of
5 plant growth and decay to create the pool of energy, which
6 we know as fossil fuel. For the last 600 million years,
7 this pool has remained mostly undisturbed. But then, in the
8 last hundred years, we've used up over 50 percent of the
9 petroleum resource, a nonrenewable resource.
10 To better understand the time line I'm talking
11 about, this equates to 100 years of charging being used up
12 in two minutes. I would like to challenge anyone who wishes
13 to water down the mandate to do a range test against my
14 electric car that I built in my garage.
15 The only requirement is that the exhaust from both
16 vehicles be terminated in a sealed cab.
17 (Laughter.)
18 MR. HECKEROTH: Under these circumstances, the
19 driver of a pre-70s car from Detroit would not make it out
20 of the driveway. An ultra-low emission car might have a
21 five-mile range. My electric Carmen Ghia has a 60-mile
22 range.
23 Just as surely as exhaust in a cab will kill, will
24 cause death, exhaust in the atmosphere will cause
25 extinction. It seems like a heavy price to pay for short-
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1 term economic gain.
2 Please stay the course. Thank you.
3 CHAIRMAN DUNLAP: Thank you for your time and
4 interest.
5 (Applause.)
6 MR. HECKEROTH: If here's any questions about the
7 articles I've given you, I'll be happy to answer them next
8 week.
9 CHAIRMAN DUNLAP: Okay. Thank you. Okay. Reg
10 Modlin from Chrysler Corp., followed by Bruce Parmenter from
11 EAA, and Clare Bell from Electric Auto Association.
12 MR. MODLIN: Good evening. Thank you very much
13 for letting me have a couple minutes of your time this
14 evening.
15 My name is Reg Modlin. I'm Chrysler's Manager of
16 Environmental and Energy Planning. As you're well aware,
17 Chrysler has not been shy in expressing our support of
18 developing electric vehicle technology and our opposition to
19 forced government mandates, like the California ZEV
20 requirement.
21 We've also been very openly stating our
22 willingness to work with you to resolve what has become a
23 very pointed policy debate, one that has diverted all of our
24 attention from the missions of our respective organizations.
25 In CARB's case, crafting a realistic public policy
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1 that improves air quality -- for example, in our case,
2 building vehicles that truly meet customer expectation.
3 Through this process, we have told you that we are in
4 support of developing electric vehicles. In fact, just this
5 week, we announced our intent to produce our all new Epic
6 electric minivan, which is an acronym for Electric Powered
7 Interurban Commuter.
8 We made this announcement at the EVAA conference
9 in Atlanta. This vehicle got an overwhelming reaction,
10 positive reaction from the EV community. We are tooled up,
11 have signed up all of the necessary suppliers, and we are
12 ready to produce this vehicle on the very same assembly line
13 as our gasoline powered minivans at our Windsor, Ontario,
14 Canada assembly plant. This is not a glider. This is not a
15 conversion.
16 We also announced in Atlanta that we have resolved
17 some of the industry conflicts on plug designs and charging
18 protocols by joining with Ford to endorse a conductive
19 charging system. And we continue to support and invest
20 millions of dollars in industry and government research on
21 further developing advanced battery technology through the
22 United States Advance Battery Consortium.
23 We want to abe in the EV business when the battery
24 technology is in line with customer expectations, not when
25 arbitrarily mandated to do so by government.
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1 In other words, we continue to stand against
2 government mandates of any kind. Our Chairman and CEO,
3 Robert Eden, said as much last month in a speech given in
4 Sacramento when he asked CARB to reevaluate the mandate.
5 And his words, I'll quote, "We have a role to play in
6 cleaning the air, a reasonable proportional role, and we are
7 prepared to play it."
8 That's why I'm here to reiterate today. Chrysler
9 is convinced that the path to resolved this issue rests with
10 the outline of Concept, which was outlined last week and
11 also earlier today.
12 This eliminates the near-term sales mandates,
13 provides an exhaustive review in 2000 for long-term
14 strategy, brings a voluntary offer for sale of electric
15 vehicles, subject to consumer demand; and, most importantly,
16 meets all of California's clean air requirements by
17 emphasizing the importance of a national clean car program.
18 The staff's Concept B is not perfect in our
19 estimation and will prove to be extremely costly and
20 technically challenging for the industry. But it does
21 provide California with its needed clean air benefits,
22 provides an avenue for the continued development of electric
23 vehicles, and the associated elusive battery -- advanced
24 battery development.
25 More importantly, it puts aside the mandate
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1 argument for several years. For Chrysler, if you want to
2 fix a problem, the basic concepts or the staff's Concept B,
3 have all the elements to work out a solid plan of action.
4 Pursuit of technologically sound, commercially
5 viable products appears to be the focus of a concept. We
6 are prepared to work with you on this endeavor, because it
7 is common sense and will benefit all parties. Most
8 importantly, it will benefit the citizens you represent.
9 Thank you. And I will take questions.
10 MS. EDGERTON: Thank you. Are there any questions
11 by members of the Board?
12 Thank you. Will Bruce Parmenter from EEA please
13 come?
14 CHAIRMAN DUNLAP: Following Bruce, we'll hear from
15 Clare Bell, and then Sonia Hamel from the Commonwealth of
16 Massachusetts.
17 MR. PARMENTER: Hello, Chairman, Board. My name
18 is Bruce Parmenter. I'm a public citizen that also has a
19 lot of activities working with electric vehicles. I own an
20 electric Blazer conversion, had it for three years. I'm a
21 member of the San Jose Chapter of EEA. I'm one of the
22 officers with that chapter.
23 I also spend six to eight hours every single night
24 helping the world with electric vehicle information for
25 free. I have my day job. I have no other funding. Because
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1 there is such a demand for information. It is true that
2 there is the Horizon battery and the new batteries coming
3 out with the longer ranges. But right now, the wet cell
4 technology, there is a tremendous demand for people that
5 want that.
6 Today, in and out of this meeting that's happened,
7 I've talked to four people who want to know how to get one
8 of the vehicles that are parked out there in the street. I
9 think that your mandates are right in line with the amount
10 of people that want electric vehicles. Not everybody wants
11 to go 500 miles. Because if you had a 500-mile vehicle,
12 you'd need a 500-mile outlet that would be able to charge
13 it.
14 Most people have a regular routine, and they need
15 an electric vehicle that is less maintenance, costs less per
16 mile, doesn't drip on the ground, blah, blah, blah, you know
17 all about this.
18 What I'm here today is as a private citizen who's
19 very active with electric vehicles. I see a tremendous of
20 input, because I take my own personal money, which I've done
21 today, my own personal vacation to come here. I hauled my
22 vehicle here so that I can drive electric for other purposes
23 besides, not to tell you I'm here; I will be electric, but
24 also the fact that I will be able to leverage off of what
25 SMUD's done. I did the same thing last week when I was down
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1 in L.A. for your meeting that was down there.
2 I drew a tremendous amount out of my own pocket,
3 because somebody's got to do it. As you can see, there's so
4 much millions of dollars being spent to kill it, because
5 they don't want to do it. The only reason we have safety
6 belts and everything else is because you forced it. I say
7 I'm here right now as a citizen saying, please, continue,
8 have teeth, don't shorten your sword.
9 The public wants electric vehicles. It might
10 start out with a certain range and increase. They need to
11 learn how to make electric vehicles, because they've never
12 done it. They've always made concept cars.
13 If the automakers do not want to make it, my
14 American automakers that I can't buy from today, then there
15 are outside companies that are selling them. They will make
16 that available. I don't want to do that. I want to have it
17 made here in California. I live in Sunnyvale, which is
18 about an hour south of San Francisco. I've come all the way
19 here for that.
20 At this point, I'd like to make sure that you
21 understand that I don't represent the EAA, except that I'm a
22 member. I have Clare Bell here that will speak on behalf of
23 the board.
24 But I know that there's a tremendous amount of
25 organizations, and I speak also for the free time that I
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1 spent on the electric vehicle list, which is on the
2 Internet. We have about a thousand people that are
3 networkers themselves feeding to other publications and
4 other types.
5 There is a tremendous amount of interest in this
6 that's happening. It's increased. I applaud. I look
7 forward to changing my wet cell batteries out and getting
8 nickel metal hydrides in the future.
9 But what will I do with that longer range? I will
10 continue to do what I'm doing, which is to make my time and
11 my money available to go out and show people, yes, you, too,
12 can plug into the wall while you sleep and get a full charge
13 and continue doing what you've already been doing. My
14 electric blazer has a 40-mile range. That is my set of
15 clothing. That's all I really need, because I'm in the
16 Santa Clara Valley, and I charge, and I do my regular
17 routine, even extend my range off of opportunity charging
18 with an infrastructure that we set up.
19 We have people and places. The public is very
20 accommodating. Everybody likes these vehicles. Is it for
21 everybody? That's a different issue. There is a
22 percentage; it will increment (sic) just along the lines of
23 your mandate. It's perfect. I can't see anything wrong
24 with it. I look forward to promoting everybody, which is
25 what I do. I promote the regular automakers, the battery --
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1 you may have seen some of those that I promote, all the
2 industries that are out there to try to get the information
3 out available for people so they can make wise choices.
4 If you give them all the information of who to go
5 to, and you give them a tool set of what it is they can go
6 to see what their needs are, then they can make a wise
7 decision as to whether or not an electric vehicle would work
8 for them.
9 And that's where I'm at right now. I have no
10 prepared notes. I have no funding coming from anywhere, and
11 I haven't submitted a hundred copies to you. But I am open
12 to questions.
13 CHAIRMAN DUNLAP: Thank you. We appreciate your
14 commitment and your enthusiasm for this program. Well said,
15 even without notes.
16 (Applause)
17 CHAIRMAN DUNLAP: Clare Bell. Clare Bell from the
18 Electric Auto Association, followed by Sonia Hamel from
19 Massachusetts, and then Chuck Olson. Hello, Ms. Bell.
20 MS. BELL: Hello. I remember you from the meeting
21 before last.
22 I'm here both as a private citizen and as a
23 representative of the Board of Directors of the Electric
24 Auto Association.
25 I will try to keep this as short I can. I do have
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1 some information for you. I'll try to present it later in
2 written form, so I don't have to go over it a lot here.
3 Just in short, the EAA Board voted to support you
4 in the two percent mandate, and saying that it will help us
5 to continue what we've been doing. We have been putting EVs
6 on the road. We are putting EVs on the road. We're talking
7 to people about them. We've probably put close to 3,000
8 cars on the road in California. That's more -- well, that's
9 a lot more cars than any other organization that I know of.
10 They're coming on the road one by one. Individual
11 citizens are doing it. And that brings me to the point that
12 people want these cars. Why aren't there more of them?
13 Because there are obstacles to putting EVs in the market.
14 And they're not obvious obstacles either.
15 I'll just touch on a few of them, and I'll give
16 you a list later. One of which is the small companies that
17 are presently developing EVs, do not have the financial
18 resources to deal with things such as -- well, financing,
19 liability laws, a number of other difficult things, that
20 when you're a small business trying to compete with a larger
21 corporation, you -- it's hard to get started.
22 We have people that build kits for these cars and
23 sell them to individuals who then build them into real cars.
24 Why don't we have more people that build the cars
25 themselves? Because there are obstacles. Financing is an
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1 obstacle. People who buy EVs buy them out of their own
2 pocket. They have a difficult time financing them.
3 My suggestion to the car companies is, if you just
4 helped us finance the cars, you wouldn't have to build any
5 of them. You'd put a lot more of them on the road. That's
6 one thing.
7 Another thing is -- hand on a minute. It's been a
8 long day, and I came from that storm in Santa Cruz. I
9 personally have built three EVs. The reason I did it was
10 because of the ZEV mandate that was put into place. I
11 believe it. I work as an editor for EAA newsletter, a
12 publication. I was also very dismayed to learn via the
13 Press -- and that source is not always reliable, but the
14 Governor's Office indeed has been putting pressure on the
15 Board, and we really hope that you don't knuckle under to
16 it.
17 I have some suggestions from the board and that
18 is, one, please concentrate on enforcement. We need a law
19 that can be enforced. We cannot depend on the promises of
20 the industry. We've had the track record. And as we all
21 know, that air bags, catalytic converters were brought in
22 because there were laws that required them.
23 Nothing says that corporations have to do things
24 for the public good, unless -- not that they don't, but
25 there's nothing that requires them to do so. And that's why
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1 governments and laws exist.
2 Okay. I'd like to make another comment, and this
3 may be some interesting information for you. It goes back
4 to the comments about the emissions testing, and whether it
5 reflects the true emissions during driving. According to a
6 study by MIT, the federal test procedures do not reflect the
7 realities of driving. The reason being is that when cars --
8 okay, cars rely on feedback from an oxygen sensor to sense--
9 to let the catalytic converter get the optimum mix to be
10 able to handle it, not let exhaust out the door.
11 Sorry, I'm kind of tired. But to be able to do
12 that, they have to have that feedback loop. When you stomp
13 on the gas in any modern car off the showroom floor, that
14 oxygen sensor link is bypassed. Okay? It says, each second
15 of driving with the pedal down corresponds roughly to 30
16 minutes of carbon monoxide emissions and one minute of
17 hydrocarbon emissions.
18 That may be one reason why we can't meet our --
19 the requirements that the federal government is asking for.
20 If the tests don't reflect what the cars are really putting
21 out, I think that's an important cause of the difference.
22 It also points up even more strongly the need for electric
23 vehicles. And I may point out that some of the ULEVs and
24 some of the LEVs may be subject to the same types and the
25 same kind of design problems that the modern cars have.
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1 So European automakers have already taken this
2 into account and designed around it. Their cars don't do
3 that. American cars do.
4 I can give you more information about this. I'm
5 sorry, I've gone on a bit too long.
6 Okay. And we are very much aware what kind of
7 pressure's been brought. We know how much people have
8 spent. We know how much political pressure's been exerted.
9 We know how much bad science has been done in the name of
10 overturning the ZEV mandate. But what we want to say is we
11 want your help. We're doing what you want us -- you want
12 Californians to do. We're putting cars on the road.
13 We want to be able to do it faster, better, more
14 effectively. We want to be able to put those cars out with
15 American stickers on them, not from overseas. And we ask
16 your help in supporting the ZEV mandate, the two percent
17 Concept C. We also ask that you look specifically at
18 enforcement. Don't rely on promises. And we will do
19 everything in our power that we can to help you in terms of
20 information or support.
21 And I thank you for letting me speak.
22 CHAIRMAN DUNLAP: Thank you for your comments. I
23 appreciate your insight, and keep on doing what you're
24 doing, putting cars on the road.
25 Okay. Sonia Hamel. Good evening.
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1 MS. HAMEL: Chairman Dunlap and Board members,
2 thank you very much for letting me present a few points that
3 I'd like to make today.
4 I am the Director of Air Policy and Planning for
5 the Commonwealth of Massachusetts, and am here representing
6 Secretary Trudy Cox, who is the Secretary.
7 It's very unusual actually for me to come to
8 another State and to testify in front of a Board that
9 represents another State's interest. But these are unusual
10 times. And, as you know, the Clean Air Act grants
11 California the right to have a program that's more stringent
12 than the federal program.
13 Other States don't have that right unless they
14 adopt California's program. And we have significant air
15 quality problems in our State.
16 And we have been very careful to adopt
17 California's program and to adopt it exactly. Ours needs to
18 mirror yours. We've been acting in good faith as has the
19 State of New York in adopting your program to date. And,
20 therefore, we're inextricably tied to whatever you do.
21 We don't want to interfere with California
22 decisions. We just want -- I want to make the Board very
23 aware of what our interest is and what the implications are
24 of the kinds of decisions that you're going to be making
25 here.
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1 I also want you to know that in Massachusetts,
2 although our problems are not as bad as some of the areas of
3 California, we do have 750,000 people who've got respiratory
4 problems, chronic respiratory problems and related problems,
5 which are all worsened by ozone. We do have significant
6 ozone problems in our State. We also receive a lot of air
7 transport. And you combine New York and Massachusetts,
8 there are over 3 million people that are affected with
9 respiratory diseases.
10 We have the California LEV program in place right
11 now. It was implemented last year in our State. The cars
12 that we receive now, if you buy a car in California -- in
13 Massachusetts, you get a California car.
14 It's having visible impact. It's having
15 noticeable impact as our fleet begins to turn over. And
16 we're enthusiastic about that connection. And we definitely
17 want to keep that connection.
18 I have to say that, although some people have
19 suggested that there should be no reason for us to consider
20 each other in making decisions or maybe for you to consider
21 us, I think there actually are benefits for California
22 citizens in keeping our two programs connected. And I think
23 that there are economies of scale. You're a very big State,
24 but I think it helps to have a larger market, and I think,
25 in the long run, that that's going to reduce the cost that
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1 your citizens will incur in having a ZEV program and having
2 ZEV vehicles sold here.
3 I think that we have a serious long-term
4 commitment, so you can count on us to be with you and to be
5 at the table. and I think that our program, in fact, will
6 work as well -- a ZEV program would work as well in the
7 Northeast, because our densities are much more accommodating
8 in some ways to the ranges that are available, especially
9 the early ranges that are available.
10 An average commute in Boston is about 9.8 miles.
11 People don't do 40 miles a day. It's very different. I
12 know here you can take -- it could be ten miles to get a
13 carton of milk, at least in the L.A. Basin it certainly can.
14 I think that, in many ways, we are very well
15 suited, and our cities are very well suited -- Manhattan is,
16 Boston is -- to the short-term ZEV reality, and then
17 certainly to the long-term ZEV reality.
18 I guess I'm watching the devolution of regulations
19 from the federal government down to the States. And there's
20 a big movement to give the States back rights and to give
21 the States back responsibilities for regulating themselves.
22 And that creates some new realities in terms of States
23 seeing each other as partners, and not as rivals and being
24 able to prepare to bring forward environmental programs.
25 I don't think we can rely on the federal
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1 government and nor should we. So, I think that it's
2 important for us to maintain partnerships, to start them, to
3 keep them strong, and we're certainly ready to do that. And
4 I come here wanting to do that.
5 California's pivotal to whatever happens. I know
6 that it took an enormous amount of courage originally on
7 this Board when this program was enacted. And we remember.
8 We always remember that. The staff at California Air
9 Resources Board is very highly valued. We use your work all
10 the time.
11 We are always making reference to the work that
12 you do, and we appreciate you. And we remember that the
13 Board's early leadership, in spite of a lot of the
14 innovation that we've heard about today, a lot of-- the fact
15 that the car makers are saying that they are beginning to be
16 ready, and that certainly a lot of independent producers of
17 vehicles are ready to take on the challenge.
18 And I guess what I'm asking is that you continue
19 with the same kind of courage that you've had in the past.
20 It was a very hard decision. I know that people are acting
21 ont his Board in good faith to try and evaluate what the
22 likelihoods are. You're dealing with many, many
23 uncertainties. And I really do appreciate your process.
24 But I also encourage you to be courageous.
25 I'm here if there are questions. I'm available.
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1 CHAIRMAN DUNLAP: Thank you very much for your
2 interest and for making the trek out to California. I had a
3 chance to speak to Sonia last night for a few short while,
4 and I know firsthand of their commitment to work with us in
5 California and to ensure that we are focused on the same
6 goals.
7 And I appreciate again the spirit in which you've
8 come. Thank you very much for that.
9 Chuck Olson, followed by Peter Barnes, and Leo
10 Heagerty from U.S. Electricar.
11 Good evening, sir.
12 MR. OLSON: Good evening, Mr. Chairman and Board,
13 and the executive staff. My name is Chuck Olson. I'm here
14 as an individual, but I am a member of the Electric Auto
15 Association. I've driven an electric car for 13 years.
16 It's met my needs all the time. The only is that
17 I have to do the work on it myself. Well, I take that back.
18 We have some fellows in my club that do take it.
19 But anyway, I better get to my point here, the
20 things I wrong down. I was going to fax this letter to
21 Governor Wilson, but the hour got too late last night, so I
22 had to get up early to get up here.
23 All right. It says, no group can be expected
24 willingly to surrender a profitable monopoly position, even
25 in the global interest, unless forced to do so. Example:
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1 seat belts, air bags, et cetera.
2 If you judge electric vehicles with the source of
3 electricity, you should also judge gas vehicles with the
4 refinery, which they haven't cleaned up.
5 Okay. And then, there's a couple of items that I
6 personally found out through my own self now. This could be
7 considered hearsay, but when you have your friends tell you
8 these things, you think they're pretty true.
9 Well, you know, General Motors bought 51 percent
10 of Saab. But this was after Saab took a car that they were
11 going to build in the future, and all of a sudden Saab
12 didn't put that car out. And then, another company would
13 get one feature. Another car company would get another
14 feature. They would spread the wealth so to speak.
15 So, that's car companies.
16 Now, my personal experience -- I was a
17 construction electrician. We doubled the size of Standard
18 Oil Refinery. While we were waiting in gas lines, we got
19 friendly with people up there at the refinery. They told us
20 that the oil and the gas was so full in the tanks, they were
21 overflowing.
22 They said that there was tankers in the Bay, so
23 many of them, it was a navigational problem. They had to
24 put them in the ocean.
25 That oil crunch, when we were waiting in the gas
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1 lines, was pure and simple orchestrated. Now, that's the
2 people you're dealing with.
3 Now, if you don't force this mandate, you're not
4 going to have it. Any questions?
5 MS. EDGERTON: Are there any questions from any of
6 the Board? Thank you very much. Mr. Barnes, Mr. Peter
7 Barnes, are you here? Thank you. Then, after Mr. Barnes,
8 Mr. Leo Heagerty.
9 MR. BARNES: Ladies and gentlemen, thank you for
10 the opportunity to speak before you and for your early
11 insightful decision on electric vehicles.
12 I would like to speak for somebody who can't be
13 here today, and that's my grandson, my grandson Jacob, and
14 emphasize that there are things beyond the market forces.
15 I'm very concerned about the quality air that he will
16 encounter during his lifetime. And I ask you to consider
17 his needs for cleaner air, even though he can't be here, and
18 the need for us to move in that direction as quickly as
19 possible.
20 Electric vehicles are, in my opinion, a part of
21 the solution. They are part of the solution that you have
22 moved further towards reality. I ask you not to bow to the
23 strong lobbying interests of people who are very concerned
24 about market forces, and don't have such a long-term view.
25 I believe it is your responsibility to have this
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1 long-term view for our State.
2 I'm a geologist and very familiar with the Earth,
3 climate change, petroleum resources. Further, I'm used to
4 viewing things in a very long time frame. And in the long
5 term, my grandson will be better served in his health and
6 home with your decision to move us towards electricity,
7 which is also moving us towards a very clean environment
8 with energy sources of hydro, wind, solar.
9 I consider you as representatives for Jake and
10 myself on this issue as we do not have the resources to fund
11 lobbyists, 800 numbers, newspaper ads. And so, Jake and I
12 are counting on you to ensure that EVs are available and not
13 sometime in the future, but within a couple years or so.
14 And that will not happen with a strong zero-
15 emission vehicle mandate in place. Because your early
16 foresightful decisions, I purchased an EV three years,
17 anticipating replacement with a mass-produced electric
18 vehicle in 1998.
19 I have learned since that time that even with a
20 hand-built state-of-the-art EV, they are practical and meets
21 all the needs. And I've moved it from being a second
22 vehicle to my primary vehicle. I don't consider a second.
23 I do have a second vehicle, but it's used for secondary
24 activities, not primary.
25 The most common question I get, of course, is where
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1 do I buy one. And that's where I see you guys coming in and
2 helping us moving in that direction. I don't see the public
3 concern about public acceptance.
4 You have the opportunity to move us in a positive
5 direction. Please keep the ZEV mandate in place. Your
6 original foresight was correct. Thank you.
7 MS. EDGERTON: Before you leave, Mr. Barnes, could
8 you tell me where you live?
9 MR. BARNES: In San Carlos.
10 MS. EDGERTON: In San Carlos.
11 MS. BARNES: Just south of San Francisco.
12 MS. EDGERTON: Okay. I was just curious about
13 your commute.
14 MR. BARNES: It's about a 12-mile commute on a
15 freeway in the hills.
16 MS. EDGERTON: In the hills.
17 MR. BARNES: In the hills.
18 MS. EDGERTON: Thank you. Are there any
19 questions?
20 MR. CALHOUN: Where did you buy your electric
21 vehicle?
22 MR. BARNES: I bought -- it's a conversion. It's
23 a converted Rabbit pickup.
24 MR. CALHOUN: Thank you.
25 MS. EDGERTON: Thank you very much.
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1 I'll now ask Leo Heagerty from U.S. Electricar to
2 give testimony. And after him, Mr. Tom Gage from AC
3 Propulsion. Thank you.
4 MR. HEAGERTY: Good evening. Thank you for this
5 opportunity to speak to you. My name is Leo Heagerty. I'm
6 with U.S. Electricar. We're a San Francisco based EV
7 manufacturer. Well, I must be one of the -- first, I want
8 to say that we're here. I represent U.S. Electricar to let
9 you know that we support very much the mandate, at least two
10 percent or some reasonable figure within that and some
11 regulatory participation.
12 I think beyond that, I must be one of the
13 impossibilists that you've heard about earlier this evening.
14 And maybe this is a report from the field versus my planned
15 comments. But just very briefly, what I'm hearing today and
16 what I've heard in the course of the conversations and the
17 debates over the last months is increasing amounts of debate
18 about the technology and the availability of it. And
19 there's no doubt there's a long way to go.
20 However, I can tell you, as an EV manufacturer and
21 a marketer of EVs in the United States and internationally,
22 that the market is there, and that the technology is there.
23 It certainly is not a blanket technology, but it's
24 significant niches, and I think particularly in a place like
25 California, you can find tremendous application.
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1 We're finding high levels of interest in short
2 commute areas, urban areas with heavy pollution, those type
3 of things where we're really going to see the greatest
4 benefit of EV technology anyway in comparison to the fossil
5 fuel or the internal combustion technology anyway.
6 I think that's an important thing to keep in mind.
7 There's a lot of ways to market this. This is primarily a
8 marketing challenge. It's not a technology challenge. The
9 technology will come. There's absolutely no doubt in my
10 mind about that. And I think you're seeing that in spades
11 by how your -- how the CARB mandate has stimulated
12 technology development.
13 I think the point also should be made that looking
14 forward, we enjoy a position of leadership right now. We
15 find it -- we've gone offshore increasingly to international
16 market our product. I think we enjoy a position of
17 leadership, both in technology and market position at this
18 point.
19 That's beneficial in a number of fronts, not only
20 in marketing sales, but also in funding. Frankly, we're a
21 case example, a case in point of a company that raised in
22 excess of $50 million towards development of our company,
23 and subsequently hit a bump in the road, as they say, or a
24 hole in the road, and ran out of money. And I think one of
25 the compelling reasons that occurred was the change in the
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1 congressional mandate in November of '94. The
2 antienvironmental attitude put anxiety in financial markets.
3 My point here is that I think we'll increasingly see that in
4 California if we back off from this.
5 I know your mandate is clean air. There's no
6 doubt we can do that, but let's just say that the economic
7 aspects have been serendipitous. There's a benefit you're
8 getting, and let's not lose it.
9 So, I would strongly urge you to stay the course.
10 There's got to be some rational way to get us to more
11 efficient modes of transportation. And I think we recognize
12 the inevitably of this industry. Thank you.
13 CHAIRMAN DUNLAP: Thank you, sir. Tom Gage. I
14 think we have three speakers left. Tom Gage, AC Propulsion,
15 William Craven from Electrosource, Inc., and Matthew
16 McKinnon from the Machinists Union.
17 If I could get you gentlemen to queue up, I think
18 we can finish this up in the next few minutes. And thank
19 you for your patience.
20 MR. GAGE: Chairman and Board members, thank you
21 for the time. I have a 12-page package. I'm culled out
22 about four or five slides I'd like to share with you. And
23 if my remarks interest you, I hope you'll take the time to
24 look through the whole package.
25 My name is Tom Gage. I'm an independent
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1 consultant. I'm representing AC Propulsion, which is a
2 California Company that invents, develops, and manufacturers
3 advanced electric vehicle powertrains.
4 I'd like to talk to you about a CARB EV
5 demonstration program. Slide, please.
6 For some background, the mandate missed the
7 market. The goal was to improve air quality by reducing
8 tailpipe emissions. The approach was to replace IC miles
9 with EV miles, and the requirements are the production of
10 EVs, the purchase of EVs, and the use of EVs.
11 The mandate stopped at the production of EVs. And
12 I think I can say and maybe it's one of the statements made
13 today that can't be disputed, is that cleaning up the air
14 requires the purchase of EVs and the use of EVs, and they be
15 used frequently, and they must be used year after year.
16 But that's all hindsight.
17 Next slide, please.
18 Now, it sounds like we're talking about a more
19 balanced program that will mix EV demonstrations with
20 mandates or other kinds of programs to bring EVs to market.
21 What I suggest is that as part of this program, part of the
22 revised ZEV program, CARB must lead its own EV
23 demonstrations. The reasons are several.
24 EVs are in California's interest, not the OEMs.
25 Other States already sponsor EV demonstrations --
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1 Connecticut, Massachusetts, and New York, to make three.
2 Technology forcing, the tool that CARB has used very
3 successfully over the years won't work when the customer has
4 a choice. And as long as the mandate is less than 100
5 percent, the customer will have a choice.
6 An independent program, not a program run by the
7 OEMs or other parties, is necessary to provide objective
8 information.
9 Next slide, please.
10 I believe an open demonstration will open minds,
11 and that is the biggest barrier to EV success. Consumers
12 have an awful lot of questions about EVs and they need to
13 have them answered before they spend their money on them.
14 An open demo will answer consumer concerns. It will
15 spotlight innovative technology. It will discover market
16 niches. It will compare EV designs, and it will explain
17 successes and failures in the market.
18 CARB, EV manufacturers, and the public will all
19 benefit from an inclusive and objective demonstration
20 program.
21 Next slide, please.
22 The first aspect of the program would be a
23 demonstration program. The State would provide a small
24 fleet of EVs from OEMs and qualified converters. Qualified
25 applicants would get a two-week demo at no cost. The State
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1 would maintain the vehicles, monitor the usage patterns, and
2 the reactions of participants. A 100-car fleet would yield
3 2500 in-depth exposures and responses per year.
4 The demonstration program would be augmented by a
5 lease program -- I won't discuss it in depth. It would
6 allow customers who are interested to lease EVs from the
7 State for a short term to really find out how they like
8 them, without having to commit to a full purchase of an EV.
9 Next slide, please.
10 To summarize, CARB leadership is required. CARB
11 must seek out and actively promote contributions of EV
12 innovators, not just rely on the products being offered by
13 the OEMs.
14 CARB should cooperate and help OEMs, but should
15 not rely completely on their demonstrations. CARB should
16 focus on the long-term air quality benefits of EVs. This
17 has been pointed out earlier today. No deterioration of
18 emission performance, no off-cycle emissions.
19 The short-term gains from the mandate are of less
20 importance. CARB must make EV demonstrations to serve
21 California's interest.
22 Thank you. Lights, please.
23 Earlier today, Mr. Lagarias said some words that I
24 agree with strongly. He felt that he personally -- and I
25 suspect the entire Board needs more information and
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1 understanding of the EV market. He then went on to shame
2 the oil companies for some of the misinformation that
3 they've spread about EVs. He shamed the environmentalists
4 for some of the misinformation they have shared.
5 I would like to suggest that, if the Board is
6 actually committed to EVs, and you're unwilling to lift a
7 finger or spend a dollar to make the EV market, that's shame
8 on you.
9 Thank you.
10 CHAIRMAN DUNLAP: Thank you for your comments. I
11 can assure you we're interested in the zero-emission vehicle
12 technology being successfully introduced. That's very
13 important to us. We need for a lot of the obvious reasons.
14 But I, again, appreciate the spirit in which you've offered
15 that little sound bite.
16 MR. GAGE: Thank you.
17 CHAIRMAN DUNLAP: William Craven, and Matt
18 McKinnon. Is Matt McKinnon still here?
19 VOICE FROM AUDIENCE: He left.
20 CHAIRMAN DUNLAP: Okay. You may be the last one.
21 MR. CRAVEN: Oh, thank you, for all of us. That's
22 an unfortunate position to be in.
23 Mr. Chairman, Board members, my name is Bill
24 Craven. I'm vice president of sales for Electrosource,
25 Inc., a manufacturer of advanced lead-acid technologies,
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1 battery technology.
2 I have three simple points. I submitted a written
3 statement to you, so you'll have it to read later on this
4 evening in detail.
5 The first point is a solution does exist today.
6 the CARB Technology Advisory Panel report confirmed that
7 advanced batteries, lead-acid batteries will be available by
8 1998. And I'm here to emphasize that advanced lead-acid
9 batteries can and will take a vehicle over a hundred miles
10 in range. It depends upon the vehicle.
11 The second point, and it is really near and dear
12 to me, is indecision about the mandate has already had an
13 effect upon the EV industry and, in particular, I bring to
14 our company. We are already reallocating resources that we
15 once focused on electric vehicles, on safety issues, on
16 educational issues, educational programs, technical issues.
17 we are reallocating those resources to other market areas
18 where our battery is going to be marketed or is in existence
19 and is being marketed today.
20 So, it's' already in effect. I would suspect that
21 if you asked the esteemed Battery Panel to go around and ask
22 the same questions to the battery industry, even though
23 those questions were asked just 60 days ago, because we
24 didn't realize the changes may be so severe, I assure you
25 the answers would be different, and certainly would be
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1 different from our battery company.
2 The third and final point is -- what would be
3 extremely helpful -- and I know you're trying to get this
4 (speaking to reporter), but I'll just say it anyway -- we
5 need a definable program as soon as possible. We are
6 shifting and changing; we've suspended some things. But if
7 we had something we knew what your goal was, we could then
8 and do want to assist you in achieving that goal and
9 objective.
10 So, finally, please stay the course.
11 CHAIRMAN DUNLAP: Thank you, Mr. Craven. I
12 appreciate that message.
13 MR. CRAVEN: Thank you.
14 CHAIRMAN DUNLAP: Is Mr. McKinnon here? All
15 right.
16 That concludes we received for today. I'd like to
17 make a closing comment, and then wrap up the meeting.
18 I'd like to thank all of you that have stuck with
19 us today that have provided testimony. We appreciate the
20 time and effort you put in to be here and to help us reach
21 an informed decision.
22 I would like to reiterate that staff will spend
23 the next week refining our options and will make a
24 presentation to the public and to the Board on Thursday,
25 December 21st, here in this very room.
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1 I want to stress that it is not an action to be
2 taken lightly by anyone. These is a very serious public
3 policy issue and we take it seriously.
4 When the Board does make a final decision, I want
5 to assure you it will be a responsible decision, a decision
6 made for one purpose only, which is to improve California's
7 air quality and protect public health.
8 The Board has not and will not violate the public
9 trust. Our final Board decision will be made in public next
10 year, early next year before March concludes. And again, I
11 want to assure you there will be no loss of emission
12 reductions.
13 Such reductions are the primary reason that we're
14 here today to fulfill the obligation we've made, this Board
15 has made, and this Administration has made to the people of
16 California as put forth in the Board's State Implementation
17 Plan.
18 So, we'll look forward to seeing you next week. I
19 am planning to have that meeting next week begin around the
20 noon hour, in the neighborhood of 11:00, 11:30, and I will
21 make sure that people are aware of that.
22 Mr. Kenny.
23 MR. KENNY: We just need to specify a precise for
24 when the meeting's going to begin.
25 CHAIRMAN DUNLAP: Why don't we say 11:30.
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1 MR. KENNY: Thank you.
2 CHAIRMAN DUNLAP: So with that, unless my Board
3 member colleagues have anything to say, I think we'll
4 adjourn the meeting.
5 This, the December meeting -- well, actually,
6 we'll continue. Excuse me. I don't want to pound the gavel
7 too much. We will continue this meeting till next week,
8 next Thursday. We will conclude the testimony and the
9 discussion at this point.
10 Thank you.
11 (Thereupon, the meeting was continued to
12 December 21, 1995, at 6:25 p.m.)
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1 CERTIFICATE OF SHORTHAND REPORTER
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4 I, Nadine J. Parks, a shorthand reporter of the
5 State of California, do hereby certify that I am a
6 disinterested person herein; that the foregoing meeting was
7 reported by me in shorthand writing, and thereafter
8 transcribed into typewriting.
9 I further certify that I am not of counsel or
10 attorney for any of the parties to said meeting, nor am I
11 interested in the outcome of said meeting.
12 In witness whereof, I have hereunto set my hand
13 this 26th day of December , 1995.
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16 Nadine J. Parks
17 Shorthand Reporter
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