MEETING
BEFORE THE
CALIFORNIA AIR RESOURCES BOARD
BOARD HEARING ROOM
2020 L STREET
SACRAMENTO, CALIFORNIA
THURSDAY, DECEMBER 21, 1995
11:40 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
Ron Roberts
Doug Vagim
Staff:
James Boyd
Executive Officer
Tom Cackette
Chief Deputy Executive Officer
Mike Scheible
Deputy Executive Officer
Mike Kenny
Chief Counsel
Bob Cross, Assistant Chief, Mobile Source Division
Sue DeWitt, Project Leader, Technology Advance Section, MSD
Kathleen Walsh, Staff Counsel, Office of Legal Affairs
Ramona Masters, Acting 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
AGENDA ITEM:
95-13-4 Continued Public Meeting to update
the Board on the zero-emission vehicle
program
Introductory Remarks by
Chairman Dunlap 2
Staff Presentation:
Jim Boyd
Executive Officer 5
Sue DeWitt
Project Leader
Technology Advancement Section
Mobile Source Division 7
PUBLIC COMMENTS:
Bernie Richter
Member
California Assembly 12
Kelly M. Brown
Ford Motor Company 20
Questions/Comments 23
Melissa Kasnitz
CALPIRG 35
Questions/Comments 45
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INDEX, continued. . . PAGE
AGENDA ITEMS
95-13-4 Samuel A. Leonard
General Motors 46
Questions/Comments 48
Dave Hermance
Toyota 68
Questions/Comments 69
Tim Carmichael
Coalition for Clean Air 70
Questions/Comments 77
John Schutz
Nissan R & D 82
Questions/Comments 84
Eric Ridenour
Chrysler 86
Questions/Comments 89
Tom Austin
Sierra Research 92
Questions/Comments 98
Peter Welch
CAMCDA 100
Ted Costa
People's Advocate, Inc. 111
Questions/Comments 114
Chuck Olson
Citizen 115
Bill O'Brien
Hawker Energy Products, Inc. 119
Questions/Comments 127
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INDEX, continued. . . PAGE
AGENDA ITEMS
95-13-4 Arthur Cartwright
SEVA 129
Stephen Heckeroth
For Supervisor Peterson
Mendocino County 131
Questions/Comments 137
Joe Caves
Union of Concerned Scientists 138
Jamie Phillips
Planning and Conservation League 143
Bonnie Holmes
Sierra Club 146
Questions/Comments 151
Janet Hathaway
NRDC 155
Michael Semmens
Electrosource 160
Questions/Comments 164
Jerry Mader
Advanced Battery Task Force 165
Questions/Comments 169
Paul Knepprath
American Lung Assn of California 170
Bill Van Amburg
CALSTART 172
David Modisette
CETC 181
Questions/Comments 183
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INDEX, continued. . . PAGE
AGENDA ITEMS
95-13-4 Anita Mangels
CAHT 184
Questions/Comments 192
Bill Wason
BAT International 194
Clare Bell
EAA 199
Lewis K. Uhler
National Tax Limitation Committee 203
Ben Knight
Honda R & D 205
Statement by Chairman Dunlap 207
Questions/Comments 209
Statement by Mr. Parnell 211
Statement by Mr. Lagarias 213
Statement by mr. Calhoun 216
Questions/Comments 217
Statement by Dr. Boston 221
Questions/Comments 222
Statement by Supervisor Vagim 222
Closing Statement by Chairman Dunlap 223
Adjournment 224
Certificate of Reporter 225
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1 P R O C E E D I N G S
2 --o0o--
3 CHAIRMAN DUNLAP: We will now come to order and
4 reconvene the second half of the December, 1995, Board
5 meeting of the California Air Resources Board.
6 Mr. Calhoun, could I get you to lead us in the
7 Pledge of Allegiance, please?
8 MR. CALHOUN: I'll be happy to, Mr. Chairman.
9 Please stand and face the flag.
10 (Thereupon, the Pledge of Allegiance
11 was recited by all in the Hearing Room.)
12 CHAIRMAN DUNLAP: Thank you, Mr. Calhoun.
13 Can I get the Board Secretary to please call the
14 roll?
15 MS. MASTERS: Boston?
16 Calhoun?
17 MR. CALHOUN: Here.
18 MS. MASTERS: Edgerton?
19 Hilligoss?
20 MAYOR HILLIGOSS: Here.
21 MS. MASTERS: Lagarias?
22 MR. LAGARIAS: Here.
23 MS. MASTERS: Parnell?
24 MR. PARNELL: Here.
25 MS. MASTERS: Riordan?
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1 Roberts?
2 SUPERVISOR ROBERTS: Here.
3 MS. MASTERS: Silva?
4 Vagim?
5 SUPERVISOR VAGIM: Here.
6 MS. MASTERS: Chairman Dunlap?
7 CHAIRMAN DUNLAP: Here.
8 There are a couple of our Board member colleagues
9 who'll be joining us shortly. They're stuck in the airport
10 or coming on their way in cars here. So, we should have, I
11 believe, nine today.
12 Good morning. I'd like to thank my Board members,
13 staff, media, and all concerned citizens for your efforts to
14 be here today. I know it was short notice, especially
15 during the holiday season, to extend this Board meeting
16 another week -- particularly during the holiday season --
17 but it was clear from the staff's presentation last week
18 that more time was needed to evaluate the volumes of
19 material the Board received, and to assess the impact of
20 many of these innovative proposals and comments that were
21 received as well.
22 And in order for us to review our progress, I'd
23 like to quickly summarize the history of this item.
24 The zero-emission vehicle component of our clean
25 car program was enacted by the Air Resources Board, along
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1 with low-emission vehicle standards, in 1990. We are, in
2 the normal course of our regulatory responsibilities,
3 conducting essentially a biennial review; except, this year,
4 I initiated an extensive review of all elements of the
5 program, as is warranted, to prepare for its launch,
6 successful launch.
7 The Board staff conducted some eight forums and
8 one workshop on this issue in which some 200 people
9 testified, offered opinions, perspectives, and data for our
10 edification. I have also spoken personally to hundreds of
11 stakeholders on this issue over the past year.
12 To augment that process, Governor Wilson directed
13 this Board to commission an independent panel of renowned
14 battery experts to investigate the status of what many
15 people feel is the essential issue for this program, and
16 that is the status of battery technology.
17 Last week, we heard from many stakeholders. I
18 believe Gary Patton, General Counsel for the Planning and
19 Conservation League summed it up best when he said -- he
20 lauded the panel, the battery panel, for its excellent work.
21 And certainly that is praise that is deserved.
22 I do not believe that this Board can ignore the
23 panel's findings, because the heart of the ZEV program is
24 its reliance on battery technology for the foreseeable
25 future.
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1 There is undoubtedly a market for electric
2 vehicles, but the range, the cost, the reliability, and the
3 durability of batteries will determine whether that market
4 is 200 or 20,000.
5 At our November 16th Board meeting, the Board
6 directed staff to prepare a recommendation that acknowledges
7 the battery panel's warning that battery technology, in
8 1998, may not meet consumer demands on these critical tests.
9 The fact that the ZEV program was the catalyst for
10 the considerable advances that we've seen, and the driving
11 force behind research into advanced batteries cannot be
12 overlooked, however.
13 What the Board proposed was the change that
14 provided more flexibility in the early years of the program
15 and a change that focused interested in advanced battery
16 development.
17 At the same time, the Board made it clear that,
18 for the sake of public health and to meet Federal Clean Air
19 Act requirements, we could not suffer the loss of even one
20 pound of emission reductions from any alternative.
21 We must ensure that, as we try to nurture battery
22 development for the future, we do not lose sight of the
23 reason for the program -- to realize clean air benefits.
24 At our December 14 Board meeting last week, we
25 heard testimony from all quarters -- I think some 45 people
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1 testified -- on this issue. But it was clear from the
2 presentation that staff had not had an opportunity to
3 analyze and synthesize the vast amount of information it had
4 received in the week prior to the hearing.
5 During the last few weeks, staff received over 250
6 different letters from concerned parties. We granted the
7 staff request for more time because this is an issue of
8 great importance, and it deserves our considered attention.
9 That is, I believe, an accurate portrayal of how
10 we arrived at this point. Our commitment to clean air and
11 our recognition of the need for additional flexibility in
12 the early years of the program have not diminished with the
13 passage of this past week.
14 So, with that,, I'd like to ask staff to make its
15 presentation to the Board on this issue, and to offer any
16 recommendations it might have.
17 Mr. Boyd, will you please introduce this item.
18 MR. BOYD: Thank you, Mr. Chairman. Good morning
19 to the Board members and to the audience. And I'll take
20 this opportunity to wish everybody a happy holiday.
21 As the Chairman has indicated, this is a major
22 milestone along the course to fulfilling our commitment to
23 the public to achieve clean air in the State of California,
24 and to bring healthful air to our citizens.
25 But it's more than just the culmination of maybe
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1 nine months of intense public review by the Board and the
2 staff. Some Board members sitting on this Board have been
3 here for the earlier biennial reviews, and some Board
4 members were there in 1990, and participated in enacting the
5 regulation, and even others were on the Board in the late
6 eighties when the concepts were initially conceived for the
7 low-emission vehicle/clean fuels/zero-emission vehicle
8 program.
9 That conception is a product of the realization of
10 the times then, that we had not achieved clean air, as
11 required by the federal law; that, in the face of the
12 incredible population growth in this State, there was a need
13 to do a lot more to provide to our citizens clean and
14 healthful air and the quality of life that they had been
15 used to.
16 Therefore, in recognition of the fact that motor
17 vehicles were then, and are today, responsible for greater
18 than 50 percent of the air quality problem in the State;
19 and, at that time, in recognition more than ever before of
20 the fact that it turns out to be that the Board's program,
21 particularly in the motor vehicle arena, was proving to be
22 the most effective program -- in fact, has to date and
23 continues to be the basis for more than 70 percent of the
24 progress that California has seen in achieving clean air,
25 again, in the face of this incredible population growth --
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1 that's, in effect, been the genesis of the program.
2 The Board and the staff have historically and
3 consistently cared about the quality of life in California
4 for its citizens, the health of the public, the quality of
5 the environment, and the health of the economy.
6 And the ARB has consistently enacted only those
7 programs that are technical feasible and that are cost-
8 effective, and have been always mindful of the fact that
9 technology changes, and have always been prepared to reflect
10 upon those changes before regulations are fully enacted.
11 Shortly, I will introduce Sue DeWitt of our Mobile
12 Source Division, whom you've become used to these past weeks
13 and months, who will give you the recommendations being
14 offered to you today.
15 The recommendations reflect the current and future
16 state of technology, particularly as it relates to battery
17 technology, and reflects heavily, completely upon the advice
18 and counsel of the Battery Panel. It reflects the current
19 climate in California as it relates to successful program
20 acceptability and successful market launch, and the program
21 meets the principles and guidance given the staff to date.
22 And with that, I'd call upon Ms. DeWitt to make
23 the presentation.
24 MS. DE WITT: Good morning. Thank you, Mr.
25 Chairman, members of the Board. And thank you, Mr. Boyd,
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1 for suggesting that anybody's ever been able to get used to
2 me.
3 I hope members of the public can see the slide.
4 I'll wait for it to come up. Great.
5 I hope members of the public can appreciate our
6 small attempt at holiday cheer.
7 As you directed staff on December 14th, we have
8 reviewed the many suggestions made by the public and are now
9 prepared to make a recommendation.
10 Briefly, we have received over 200 letters. In
11 reviewing them and reading each one, we found that most
12 simply suggest the Board stay the course. Some letters
13 provided guidelines or principles, but not specific
14 alternatives.
15 In terms of the suggestions, almost all
16 recommended providing some level of flexibility to the
17 program, especially in the early years, to help ensure a
18 successful market launch.
19 However, most also emphasize that a purely
20 voluntary program would be going too far, and that it's
21 important to have some way of ensuring commitments are kept.
22 They also suggested the importance of requiring equal or
23 greater emissions reductions from light-duty vehicles to
24 keep on track with reducing mobile source emissions.
25 Last by not least, people reiterated the need to
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1 acknowledge other advanced vehicles in any proposed
2 modifications.
3 This next slide is a repeat of one we showed you
4 last week, where we discussed the various advantages and
5 shortcomings of each of the concepts we presented at the
6 December 6th staff forum.
7 I won't go over it again, but rather tell you that
8 we used this as a guide toward a recommendation.
9 The staff proposal emphasizes these three
10 features: a market-based launch, a technology development
11 partnership between the Air Resources Board and automakers,
12 and a commitment for volume production beginning in 2003.
13 When staff says "market-based launch," we want to
14 be clear about what we mean, because this phrase could mean
15 different things to different people.
16 First, we suggest suspending the ZEV requirements
17 through 2002. Automakers could begin selling vehicles
18 tomorrow, if they so chose, or not. However, this would not
19 compromise reductions in emissions. Automakers would
20 instead be required to achieve emissions reductions through
21 the production of cleaner cars.
22 They would have to compensate for exhaust,
23 evaporative, and refueling emissions benefits associated
24 with zero-emission vehicles, plus a premium to compensate
25 for uncertainties.
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1 To keep attention focused on the advanced
2 batteries needed for market demands, staff's proposal would
3 capture elements of Concept B which provide for agreements
4 with the automakers to place over 3500 zero-emission
5 vehicles on the road in California between 1998 and 2000.
6 For those manufacturers who elect to produce
7 longer-range vehicles that use advanced batteries, for
8 example, ARB would grant extra credits. This would reduce
9 the total number of vehicles to around 2,000 if all credits
10 were taken advantage of.
11 We also propose continued biennial reviews -- in
12 1998, 2000, and 2002 -- to ensure that the program is moving
13 forward on track.
14 It's also critical to focus on how we will get the
15 volume production when the zero-emission vehicle requirement
16 would kick back in. We would expect to see manufacturers
17 ramping up in production of vehicles. And to help them ramp
18 up, staff's proposal includes extra credits for early, in
19 advance zero-emission vehicles to help soften the curve
20 toward full volume production.
21 At that point, in 2003, the mandate level of 10
22 percent would come back in.
23 Now, this package addresses the large volume
24 manufacturers really, because they were first to be subject
25 to the zero-emission vehicle program requirements beginning
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1 in 1998. We would, for the sake of clarity, point out that
2 our proposal does not alter the requirements of the
3 intermediate volume manufacturers who were, in the current
4 regulation, subject to the 10 percent beginning also in
5 2003.
6 The intermediate volume manufacturers would also
7 be eligible to take advantage of the extra credits offered
8 in this proposal.
9 This is it. Last slide.
10 You've seen the staff proposal. With your
11 approval, we would prepare a regulatory package for your
12 consideration at the March Board meeting. We would also
13 proceed with the staff work on equivalent zero-emission
14 vehicles and hybrid vehicles, and would plan to bring that
15 back for your consideration in late 1996.
16 Last, we would like to acknowledge the many people
17 in today's audience who are spending their holiday with us
18 instead of their families, and thank them for their
19 suggestions and assessments of the zero-emission vehicle
20 program.
21 Thank you, Mr. Chairman.
22 CHAIRMAN DUNLAP: Okay. Mr. Boyd or Mr. Cackette,
23 do you have anything to add?
24 MR. BOYD: No, Mr. Chairman -- thank you -- other
25 than to express my appreciation to the staff for all their
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1 hard and fine work they've done under very difficult time
2 constraints the last several months.
3 So, I really appreciate and salute them for the
4 good work they've done.
5 CHAIRMAN DUNLAP: Okay. We have some 18 witnesses
6 signed up, so what I'd like to do, at this point, is to call
7 upon them to come forward, and we'll hold the Board member
8 discussion until we've had a chance to hear from them.
9 I'd like to start off this morning with
10 Assemblyman Richter, who joined us today, and invite him to
11 come forward.
12 Following Mr. Richter, Kelly Brown from Ford Motor
13 Company, and Melissa Kasnitz from CALPIRG.
14 Good morning, Assemblyman.
15 ASSEMBLYMAN RICHTER: Good morning. Let me get my
16 pages in order here.
17 What I wanted to talk to you about today is this
18 whole question of the original mandate. And, of course,
19 you've been discussing some alternatives, and the slide
20 presentation alluded to those.
21 But I'm focusing on the original mandate, and want
22 to make some points I have attempted to make in the future--
23 or in the past here, I had some of my staff people appear
24 before this group and make some comments.
25 And I want to maybe reiterate some of those
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1 comments and make some new comments. And I guess the
2 question that I have to ask in regards to this mandate is,
3 why are seemingly intelligent and rational people
4 contemplating or were they contemplating of program of
5 mandating the production of electric vehicles in certain
6 quantities as the mandate provided, when, in fact, this
7 program won't work; when, in fact, it causes huge problems
8 and wastes resources; and when, in fact, it creates exactly
9 the opposite result of what the people who put it together
10 intended it to create -- to do.
11 And, you know, perhaps we can understand the
12 answer to this question by realizing that history -- and I
13 don't have to go back very far -- is replete with these
14 kinds of decisions that governments have made that were
15 based upon false assumptions, overwhelming ignorance, and
16 fanatical belief systems.
17 Two historical events come to my mind that remind
18 me of what's going on with this mandate. One of them -- and
19 I hate to go back this far, but it's true -- was the 1693
20 Salem witch trials in Salem, Massachusetts, where upwards of
21 30 people were hung for witchcraft.
22 And the other decision that is similar to this is
23 the decision made in 1917, at the culmination of the Russian
24 Revolution creating the Soviet State, and communizing, and
25 socializing the Russian economy.
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1 Now, it's extremely interesting that, at the time
2 of the Salem witch trials, the accusations and the evidence
3 taken for prosecuting the so-called witches came from the
4 dreams of witnesses; that is to say, witnesses testified as
5 to what they had dreamed. And this was used as evidence to
6 convict for the capital offense of witchcraft.
7 This was called "spectral evidence."
8 It's my belief that the evidence justifying and
9 warranting the ARB mandate is not nearly as good and as
10 valid as the evidence offered at the Salem witch trials from
11 the dreams of accusers.
12 In the case of the collectivization and
13 socialization and the takeover of the Russian economy by the
14 Russian State, ignorance and ideology were the driving
15 forces behind that action. Marx, Stalin, Trotsky, Lenin,
16 Kalinin, and all of their Bolshevik associates and comrades,
17 proposed to plan and operate the Russian economy serving
18 over 200 million people.
19 And yet none of these people had ever worked in a
20 factory, provided a service, engaged in trade, made any kind
21 of an investment, managed any kind of enterprise. And with
22 vast array of ignorance, they proposed to manage the economy
23 of the newly created Russian State.
24 Well, the results are in. After 70 years and 50
25 million murdered Russians, and that's their estimates today,
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1 we know that it didn't work.
2 And I'm not going to get into all of this, except
3 to say it shows the force of ideas; it shows how ideology
4 and beliefs -- how far they will carry people.
5 The bureaucrats who, in fact, propose to mandate
6 electric vehicles for California propose to tell
7 manufacturers -- and to mandate how manufacturers should
8 produce a highly sophisticated piece of machinery, which has
9 evolved over a hundred years. And they want them to
10 manufacture a type of vehicle that the manufacturers and the
11 people most knowledgeable about these questions know won't
12 work and won't be purchased by the consuming public.
13 Mandating the production of these vehicles simply
14 won't work. People won't buy electric vehicles in the
15 quantity proposed by the mandate, mainly because, and
16 foremost because people are not stupid.
17 Why would anybody buy a car costing significantly
18 more than an existing internal combustion engine car with an
19 approximate range of 80 miles at 35 miles per hour, without
20 air conditioning, without going up or down hills, without
21 stopping or starting along the way?
22 People won't buy a car that won't work. I would
23 think that if the Air Resources Board would mandate the
24 manufacture of these vehicles, that it would be perfectly
25 rational and consistent to mandate their purchases. If it
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1 is to force people to make them, it should be prepared to
2 force people to buy them.
3 I don't know how you go about forcing people to do
4 this, but surely the people who came up with the brilliant
5 idea of forcing the mandate can figure out a way to force
6 the consumers to buy them.
7 The point here is that if electric vehicles were
8 feasible, if, in fact, there was a market for them, then
9 there would be no need for the mandate. Competition would
10 require and cause them to be built.
11 The forces behind this mandate do not come from
12 the marketplace. They come from two sources. They come
13 from the ideologically driven fanatics who have in their
14 minds that, despite evidence to the contrary, that this will
15 help clean the environment and do away with air pollution on
16 the one hand.
17 And on the other hand, it's driven by the hundreds
18 of millions of dollars in government subsidies from
19 ratepayers and from taxpayers creating a huge trough of pork
20 that cause the people like CALSTART to feed at the trough
21 and to make continuing and repeated demands that this
22 wasteful trough of public money be augmented and continued
23 so they can ply their trade, which, for the most part, has
24 produced nothing but brochures, boasts, and predictions on
25 the ultimate success of their subsidized ventures.
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1 What I really want to say to you is that, I can't
2 think of many things that would be a greater disaster than
3 continuing the mandate and forcing vehicles to be produced
4 which will cause the price of existing vehicles to rise two,
5 three, or four thousand dollars a vehicle, which will, in
6 fact, cause the -- the number of old vehicles that we have
7 on the road, which are the main polluters -- you all have
8 the figures, something like 15 percent or 20 percent of the
9 vehicles creates something like 60 percent of the pollution.
10 I can't imagine that we would, in fact, cause
11 these old cars to remain on the road, which will mean more
12 pollution.
13 I can't imagine that we would introduce a mandate
14 that would cause a significant drop in sales of internal
15 combustion engine vehicles because of this increased price.
16 I can't imagine that we would tolerate the job
17 losses in distribution, and manufacturing, and sales that
18 would result.
19 I can't imagine that we would allow -- have a much
20 greater number of older, unsafe vehicles on the road, which
21 endanger people and which will create more accidents that
22 flow out of the fact that the cars are old and unsafe.
23 And I can't imagine that we would tolerate the
24 major environmental problems that will result from the
25 gigantic increase in lead-acid batteries having significant
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1 impact on accidents and disposal.
2 I would hope that these would be reasons enough
3 for us to back off of this mandate and realize that this is
4 a serious mistake; that it would hurt California; that it
5 would the cleaning of the air; that it would hurt business.
6 The notion, for instance -- it's interesting that,
7 when I brought this up in 1993, and I was attacked for some
8 people for being -- speaking for the automobile
9 manufacturers, and being their agent, and not having a
10 viewpoint of my own -- let me tell you, if I have any
11 criticisms it is of the automobile manufacturers not willing
12 to say what they ought to say and say it much stronger than
13 they have been saying it in regards to what's being
14 suggested that they do here.
15 The pusillanimousness of people in all areas of
16 industry in dealing with this irrational and destructive
17 mandate is of great concern to me. And my attitudes about
18 this flow out of my knowledge of what I know of the
19 marketplace and of the automobile industry, and what I know
20 will occur when you require people to manufacture products
21 that people aren't going to buy and won't work.
22 Now, if we want to clean the air, we have all
23 kinds of ways to do it. And it really gets down to the
24 cost. And I did some estimates back in 1993, when I
25 introduced a bill to do away with this mandate, that showed
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1 the cost of the so-called -- assuming that electric cars
2 were zero-emission, which is an assumption that really isn't
3 accurate, but let's just assume it for a minute -- that the
4 cost of reducing pollution per ton is something like a half
5 a million dollars per ton with the electric mandate versus
6 something like $900 a ton, as Arco was able to reduce
7 pollution by taking old polluting vehicles off the road in
8 their experiment several years ago.
9 I would hope that we would move in the direction
10 of reducing air pollution. I would hope that we would do it
11 rationally and constructively, and that we would make the
12 air cleaner for all Californians. This mandate is a
13 disaster. It will not do that. It will create the exact
14 opposite, and it will create tremendous damage to the
15 California economy and to the taxpayers and the ratepayers
16 of California.
17 If you have any questions, I'd be glad to respond
18 to them. That concludes my comments.
19 CHAIRMAN DUNLAP: Thank you, Assemblyman. We're
20 well aware of your continued interest in this issue. And
21 we've also seen your representatives here in the last
22 several meetings.
23 Mr. Lagarias, do you have any questions? Okay.
24 All right.
25 Mr. Brown, Ford Motor Company, followed by Melissa
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1 Kasnitz from CALPIRG, followed by Sam Leonard from General
2 Motors.
3 MR. BROWN: It'll just be a minute for the slides.
4 I'd like to present the key elements of a program
5 that the seven affected manufacturers for electric vehicles
6 have been able to come to a consensus on through no minor
7 miracles.
8 We offered a program that's in three phases. The
9 first phase, consisting of several elements, the first of
10 which -- the manufacturers would agree to meet the existing
11 NMOG curve, and this is no small task. I can't speak for
12 all the companies, but in our company, they have six major
13 new programs on top of all the programs that we have now at
14 about $350 million.
15 The AAMA member companies would commit to
16 continuing funding to U.S. ABC Phase II program, which is
17 about $120 million.
18 All affected manufacturers would commit to
19 continued individual electric R & D.
20 Selected manufacturers, based on their confidence
21 level, would commit to making EVs available for retail and
22 fleet sales starting in the 1998 model year with no volume
23 commitment. But we would have production capacity,
24 according to the figures that were given in confidence to
25 the Chairman, of about 15,000 units a year, most likely, but
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1 not limited to, lead-acid vehicles.
2 Phase II of the program consists, again, of
3 several elements. The technology partnership program that
4 would be unique to California -- and this is key, because we
5 need a national program; we can't do this in every State
6 that chooses to be a part of this. It's just too elaborate.
7 The parts are too expensive, and it's too labor intensive.
8 It would start as early as 1998 model year. Our
9 proposal would be that it would be national in scope. We'd
10 select five to ten cities and 50 to 100 vehicles per city.
11 This would meet the stated demand or requirement of the
12 staff and some of the Board members that we continue to
13 develop advanced batteries and continue the interest in
14 electric vehicles.
15 The commitment by the seven manufacturers will be
16 divided based on their California market share.
17 The other elements of the program of Phase II --
18 there would be flexibility for each manufacturer to
19 negotiate timing with CARB. This is key. While we've
20 agreed on these phases, we're still competitors, and we have
21 different programs and we have different timing needs. And
22 we can only justify those on an individual basis with CARB.
23 There would be an ongoing data sharing review
24 process to include battery technology, market acceptance,
25 infrastructure and incentives. It would be enforced by a
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1 memorandum of agreement between CARB and manufacturers and,
2 therefore, would be fully enforceable.
3 The third phase of the program is volume ramp-up.
4 The Battery Panel and most of the speakers who really
5 understand what's going on in this program, there needs to
6 be a ramp-up to high volume production. And we would commit
7 to this program if a study in the year 2000 confirms that,
8 in fact, the technology is on track and customer accepted
9 vehicles will be available.
10 The regulatory changes needed to support this are
11 suspension of the ZEV mandate during the period of the
12 partnership from 1998 to 2003; again, a commitment to meet
13 the current NMOG average.
14 The 10 percent mandate, the ZEV mandate would
15 remain in place for the 2004 model year, pending a review in
16 2000 -- the year 2000. And there would be no SIP
17 compromise.
18 The proposal we've made would be not only neutral
19 to the SIP but, if we are able to get all of the elements of
20 the program, we would be able to more than offset any
21 foregone calculated benefits that would have accrued if the
22 ZEV program had worked.
23 And, with that, I'd like to take any questions you
24 might have.e
25 CHAIRMAN DUNLAP: Supervisor Roberts, you have a
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1 question?
2 SUPERVISOR ROBERTS: I do. If you could go back
3 to your second point? It was Phase II funding.
4 MR. BROWN: Yes.
5 SUPERVISOR ROBERTS: $120 million?
6 MR. BROWN: Yes.
7 CHAIRMAN DUNLAP: For U.S. ABC.
8 SUPERVISOR ROBERTS: For U.S. ABC.
9 MR. BROWN: Yes.
10 SUPERVISOR ROBERTS: Can you tell me a little bit,
11 how does that work? Is that part of an existing agreement
12 or is that a new agreement that you'd be entering into?
13 MR. BROWN: We have - no, it's an existing
14 agreement. The reason I highlighted it is there was some
15 concern with some of the people we talked to, with the
16 uncertainties of funding in Washington, as to whether or not
17 we would continue our commitment if DOE, who's a partner in
18 the program, were forced by Congress to withdraw their
19 funding.
20 And our commitment is to continue to --
21 SUPERVISOR ROBERTS: Phase I was an equal
22 partnership between basically the Federal Government and the
23 manufacturers?
24 MR. BROWN: Yes, and the utility industry.
25 SUPERVISOR ROBERTS: And the utility industry?
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1 MR. BROWN: Yes, through our agreement.
2 SUPERVISOR ROBERTS: And the Phase II share for
3 the manufacturers was planned to be $120 million?
4 MR. BROWN: Yes.
5 SUPERVISOR ROBERTS: And even if the Federal
6 Government was not participating, then, you're saying that
7 those dollars would be there?
8 MR. BROWN: Yes, our share of the money would
9 continue to flow in.
10 SUPERVISOR ROBERTS: Is there any obligation for
11 that in the absence of Federal participation?
12 MR. BROWN: No.
13 SUPERVISOR ROBERTS: So, it's completely voluntary
14 that those dollars --
15 MR. BROWN: Yes, sir.
16 SUPERVISOR ROBERTS: -- would be made available
17 per this agreement.
18 So, where does that money come from? Is that
19 coming from all of the manufacturers?
20 MR. BROWN: The three U.S. based companies --
21 Ford, General Motors, and Chrysler.
22 SUPERVISOR ROBERTS: So, none of the foreign
23 companies are participating in --
24 MR. BROWN: No. It's a U.S. venture. The U.S.
25 and U.S. ABC is United States.
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1 SUPERVISOR ROBERTS: And that's ready to bring
2 together the battery manufacturers for research without --
3 without violating any of the antitrust laws; is that --
4 MR. BROWN: Yes. And it also gives a common place
5 for the entrepreneurs that are always talked about here that
6 have a new battery, and they say they have a better battery,
7 and they're highly confident in the battery. Each of those
8 companies can come to U.S. ABC. If they supply test
9 batteries, we'll test them. We'll test them to common
10 standards so that all the batteries are rated on a common
11 scale. And there's the three major parties, so that the fox
12 isn't watching the hen house in any case.
13 You've got the U.S. DOE, the U.S. auto industry,
14 and also every -- keeping everybody on -- fortunately, the
15 experience has been that that hasn't been necessary. The
16 people who are involved are all professionals, and there
17 really hasn't been a need to chase each other around to make
18 sure you're doing your jobs.
19 SUPERVISOR ROBERTS: And the --
20 CHAIRMAN DUNLAP: All I want to say is, Kelly, one
21 of my Board member colleagues to my left asked that the last
22 slide be put up again. I'm sorry to interrupt.
23 We didn't want to put you in the dark and surprise
24 you.
25 MR. BROWN: Yeah, I was a little confused on what
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1 else I might have had on that disk. I thought you might
2 have got my Christmas list, or Space Invaders, or something.
3 SUPERVISOR ROBERTS: That money, then, would be
4 available for research for the advanced batteries for
5 companies that qualify and are approved by that board?
6 MR. BROWN: Yes. And also one of the staff
7 members of the Air Resources Board serves on the Technical
8 Advisory Committee, Steve Albu from the El Monte staff. And
9 that money is available. And money has never been an object
10 and has never been a roadblock.
11 The critical path has always been getting enough
12 advanced batteries, even prototypes, to test.
13 SUPERVISOR ROBERTS: You mentioned that at least
14 Phase I was a three-part partnership?
15 MR. BROWN: Yes.
16 SUPERVISOR ROBERTS: And that, in Phase II at
17 least, there is some concern as to whether the Federal
18 Government will remain as a participant; but the third
19 partner, is there -- do you know whether you're going to be
20 there?
21 MR. BROWN: No. There's really -- on U.S. ABC, I
22 may have confused you with the three-pieces of our proposal
23 and the two phases of the U.S. ABC program.
24 Right now, Phase II is as far as the plan is to
25 go. There's nothing formal that I'm aware of that --
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1 SUPERVISOR ROBERTS: (Interjecting) Oh, that's.
2 No. I'm just talking about Phase II.
3 MR. BROWN: Okay.
4 SUPERVISOR ROBERTS: As I understand it right now,
5 part of your proposal is that as -- for Phase II, the
6 manufacturers will put up $120 million.
7 MR. BROWN: We would put up our share of the $120
8 million.
9 SUPERVISOR ROBERTS: Okay. That's what I'm trying
10 to pick out -- your share of the $120 million.
11 MR. BROWN: Yes.
12 SUPERVISOR ROBERTS: What is your share of the
13 $120 million?
14 MR. BROWN: I'm not sure I know that. Maybe I
15 could get back to you with it, or maybe one of the other --
16 I don't see any volunteers to help me out here.
17 SUPERVISOR ROBERTS: I don't know if staff can
18 help us with this? We're talking about a proposal. I was
19 hoping somebody might understand what we're talking about
20 here.
21 Okay. Maybe we can come back to that later in the
22 meeting when that information is available. I'm interested
23 in what is available, what we know is going to be available
24 for continuing the research program, and it wasn't clear
25 from -- I had the impression your slide and from the
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1 discussion that I've heard that we were talking about a
2 guarantee of $120 million.
3 That sounds like it's maybe significantly
4 different from that.
5 So, I'll come back to that later in the meeting.
6 Thank you.
7 CHAIRMAN DUNLAP: Kelly, if I may perhaps clarify
8 the point that the Phase II funding for U.S. ABC, does that
9 include -- the $120 million number, does that include the
10 match by DOE?
11 MR. BROWN: Yes.
12 CHAIRMAN DUNLAP: And do you know what that number
13 is?
14 MR. BROWN: It was the portion -- if I knew that,
15 I could supply that.
16 CHAIRMAN DUNLAP: Is it 50-50? What was Phase I?
17 Do you know what that was?
18 MR. BROWN: No. I could get back with you.
19 CHAIRMAN DUNLAP: Okay. Maybe we can get a note
20 sent up here or have them note it on the record.
21 Okay. Mr. Lagarias?
22 MR. LAGARIAS: Mr. Brown, since the regulation was
23 passed in 1990, there have been a number of review meetings.
24 But this is the first time that there's been a specific
25 proposal to -- as to how to approach the final numbers.
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1 Can you give me a reason for the delay?
2 MR. BROWN: Delay on our part?
3 MR. LAGARIAS: In coming up with a specific
4 proposal.
5 MR. BROWN: It took a lot of people. First of
6 all, it's no small feat getting seven fiercely competitive
7 manufacturers to lay down their arms and agree on a
8 cooperative approach, especially when we didn't have a
9 common vision as to how that should be done.
10 Second, we spent a lot of time talking to battery
11 manufacturers, some of the Battery Panel, the California
12 Battery Panel, our U.S. ABC representatives, and the CARB
13 staff.
14 And the first thing we did was to listen to what
15 we heard from the Board and what we heard from the staff
16 were the key elements of what was necessary in order -- in
17 their view, in order to have a successful alternative.
18 And the only criticism we've gotten from outside
19 agencies is -- or other businesses as to what we have done
20 is they thought we went too far. They called it a
21 responsible proposal, but we actually offered too much. And
22 I feel very proud of the proposal we put together.
23 MR. LAGARIAS: Well, in addition to your
24 experience with battery operation, and considering my
25 experience this morning, I would hope you'd be looking at
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1 the tires as well.
2 (Laughter.)
3 CHAIRMAN DUNLAP: Mr. Lagarias had a flat tire.
4 MR. BROWN: It wasn't a problem with the tire. It
5 was whatever you ran over.
6 (Laughter.)
7 MR. LAGARIAS: It went out the side.
8 And do you anticipate the lead-acid battery to be
9 the battery that would go into production in quantities in
10 the years 2003 and beyond.
11 MR. BROWN: I hope not, because what we -- unless
12 they're vastly improved. What we see from lead-acid
13 batteries today, the performance isn't good enough to
14 support high volume production.
15 In fact, what we're telling you, and we have been
16 telling you, and the Battery Panel told you is they're not
17 good enough at this stage to support even a two percent
18 production in 1998.
19 MR. LAGARIAS: Thank you.
20 CHAIRMAN DUNLAP: Supervisor Vagim.
21 SUPERVISOR VAGIM: Thank you, Mr. Chairman. The
22 original mandate called it 2003 at 10 percent. Our
23 amendment stays the course on that. And I see you have
24 2004.
25 Can you reconcile your differences?
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1 MR. BROWN: Yes, sir. Again, our proposal is a
2 national proposal. And it comes into play in two places:
3 one, technology driven -- just looking at the Battery
4 Panel's report, if we want to have a shot at some of the
5 later arriving high-tech batteries, which are one or the
6 other, or both of the lithium batteries, the later you could
7 go the better.
8 Second, in order to offset the emissions, which we
9 don't agree with, but we've agreed to accept, for purposes
10 of this exercise, that we would offset those. It isn't our
11 fault that the batteries didn't come home.
12 That program -- the only way we'll be able to
13 conceive of doing what you ask in that regard is to support
14 it with a national program, which involves making available
15 the infamous 49-State car program that we tried desperately
16 and failed miserably in the Northeast to provide.
17 We can't provide the level of support that's in
18 this program that I just listed and do a program in many
19 other States across the country. And if this is available
20 to all the other States to be adopted -- I know it's
21 Christmas time, but we just can't afford to do that, either
22 with dollars or human resources -- the advanced technology
23 piece of this program in particular.
24 It will be tough enough to support the program
25 we've outlined in California. There's no technical need to
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1 do one in every other State that wants to be a part of it.
2 That's not necessary to advance the technology, and we just
3 can't support it.
4 SUPERVISOR VAGIM: So, you think one year makes
5 that much difference?
6 MR. BROWN: Yes. The program was carefully
7 crafted over years of work with the States, and EPA, and an
8 outside facilitator. And the timing comes around. And even
9 your own staff -- Mr. Cackette mentioned the last time, as
10 far as offsets, the period of time is keyed to EPA's
11 authority in 2004, when they regain authority to present new
12 standards.
13 If it's opened up before there -- one year sounds
14 petty; believe me, I'd rather be in Florida with my family
15 than be here. It's not petty. It's a difference. It's
16 close, but no cigars. It's like almost stepping on the bag.
17 You didn't step on the bag.
18 But having said all the pessimistic side, there
19 are a lot of common elements if you pay close attention to
20 our proposal and the staff proposal, and I think it would be
21 a shame to lose the rabbit over that one year.
22 And at a bare minimum, I would hope you would
23 direct the staff to work with us to try and work through
24 that one-year problem. I think it would be a shame, not
25 only for California, but for the other States who feel
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1 they're players in this, if we went back to the old ways of
2 the sixties over that one year. We're so close. And
3 there's hundreds of millions of dollars and the seven
4 largest manufacturers in the world hoping we can work with
5 you rather than "agin' ya."
6 And I would hope you put some value to that.
7 CHAIRMAN DUNLAP: Mr. Calhoun.
8 MR. CALHOUN: Kelly, you mentioned something about
9 the year 2004. What's the significance of that?
10 Is it EPA? What happens in the year 2004?
11 MR. BROWN: The key that set up the program
12 elements and what's called the 49-State program or the OTC
13 alternative, the time period over which we would have to
14 volunteer this program -- it's the time period in which EPA
15 is prohibited from setting tighter standards than what's on
16 the books today. And that's up through 2003.
17 And so, the whole economics, the whole workload
18 issue, and everything was structured around shifting from
19 multifaceted programs of a hodgepodge of doing California
20 here and sort of California there. The States in the
21 Northeast haven't adopted the right fuels, and doing
22 something in California, and replicating anything California
23 did in any State that wanted to do it, or negotiating
24 something different, we took that whole period of preemption
25 and crafted a program that's -- it's a house of cards --
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1 that fit inside that program that's something that we can
2 contain, and allows us to build a national car that doesn't
3 require, for example, California fuel.
4 So they, I think foolishly, have failed to follow
5 your lead on that point. So, we now have the California car
6 in the Northeast, and the Northeast and the Midwest are the
7 fuel areas that are least compatible with California cars.
8 So, if you break away from that whole time period,
9 you then start the patchwork of this car's a little
10 different from that car, this car's a little different from
11 that car, and then you've got a ZEV program here, and
12 somebody else says, "I have the authority for the ZEV
13 program, but I'll take an ethanol program."
14 It's trying to get back to a national program that
15 affords us the human and financial resources to work on
16 things that make sense rather than -- essentially, what it
17 does is it puts out a sign for free money. And we just
18 can't life with it. It's not a new issue.
19 And California has the opportunity now to take
20 back its leadership position that it used to have and get
21 the program back under a California program.
22 SUPERVISOR VAGIM: Thank you.
23 CHAIRMAN DUNLAP: Thank you, Mr. Brown. We'd like
24 to get copies of those slides, if that's okay -- I don't
25 know how we do that -- as quick as we can. If you have
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1 copies, Kelly, maybe leave them with the Board Secretary.
2 Melissa Kasnitz from CALPIRG, followed by Sam
3 Leonard, followed by Dave Hermance from Toyota.
4 Good morning.
5 MS. KASNITZ: Good morning, Mr. Chairman. I'd
6 like to thank you for your early recognition of me during
7 the course of this hearing. I hope that's --
8 CHAIRMAN DUNLAP: You told everybody that I called
9 you up out of order.
10 (Laughter.)
11 MS. KASNITZ: I hope it's because you recognize
12 the importance of the position that I'm here to articulate
13 and the importance of the constituency that I represent.
14 CALPIRG has over 60,000 members statewide. It's
15 the oldest and largest environmental and consumer rights
16 organization in the State of California. And this is an
17 issue that's been of great concern to CALPIRG, because it
18 unites their various missions.
19 Number one, it deals with our environmental
20 concerns -- the rights that Californians have to breathe
21 clean air and purchase nonpolluting vehicles, and also the
22 consumers' rights that we care about. Because, while a lot
23 of this conversation has been phrased in terms of consumer
24 choice, we believe that abolishing the mandate would, in
25 fact, be devastating to the choices available to consumers
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1 in California.
2 Without an electric vehicle proposal that creates
3 a substantial number of cars with existing, enforceable
4 mechanisms to ensure their production, general consumers in
5 California won't have the opportunity to purchase
6 nonpolluting vehicles and breathe cleaner air, because
7 economies of scale will not have the opportunity to turn
8 prices down for consumers, and infrastructure to support
9 electric vehicles will not be created, and simply vehicles
10 themselves won't be available for purchase.
11 So, these are concerns that CALPIRG has, and I
12 hope that this is why you called me to testify early in the
13 hearing.
14 Of course, I hear it's because you wanted to get
15 my testimony over with quickly and get me out of the room.
16 (Laughter.)
17 MS. KASNITZ: I don't have a polished presentation
18 or slides to present, but I do have a response to various
19 concerns that have been laid out in front of me. And with
20 your patience, I'd like to go through them.
21 First of all, I'd like to start out by saying the
22 ZEV mandate that we're here to consider is not communism,
23 and it's not witchcraft. It is a technology --
24 (Applause from a segment of the audience.)
25 MS. KASNITZ: -- forcing mechanism -- it's a
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1 technology forcing regulation that is having its intended
2 effect. Through the course of these hearings, it's been
3 clearly revealed that the advances that have been made in
4 battery technology would not have happened had this
5 regulation not been in place. And we are approaching the
6 stage of critical mass where the program will be
7 unstoppable. But if we pull back now, I'm afraid that that
8 critical mass will not be achieved.
9 We need to keep an enforceable mechanism on the
10 table and make sure that that production exists and the
11 consumer information is available to push us over the edge
12 and make sure that these nonpolluting cars come to bear.
13 So, while I think that this is not communism, I do
14 have to say that the process through which this proposal has
15 been put forward today has been a little less democratic
16 than I would normally like to see. Unfortunately, there has
17 been a bit of a problem in engaging the public in these
18 public hearings. I --
19 CHAIRMAN DUNLAP: If I may?
20 MS. KASNITZ: Yes.
21 CHAIRMAN DUNLAP: The Board wouldn't take action
22 on any such proposal until the March time frame.
23 MS. KASNITZ: I certainly understand that.
24 CHAIRMAN DUNLAP: Okay. I just want you to
25 understand this isn't like a vote's going to happen today,
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1 and we're going to be on a course of action and, you know,
2 it's over with. I don't want --
3 MS. KASNITZ: I certainly understand that --
4 CHAIRMAN DUNLAP: -- to leave you --
5 MS. KASNITZ: -- Mr. Chairman.
6 CHAIRMAN DUNLAP: Another point: I take very
7 seriously the whole public participation process. And
8 there's been an awful lot of process. If you heard my
9 opening comments, I mentioned forums and fact-finding
10 efforts that we've been engaged with.
11 So, you're on tender territory there with me. And
12 I just wanted to educate you on those points.
13 (Thereupon, Board member Lynne Edgerton
14 arrived to take her place with the Board.)
15 MS. KASNITZ: I will try. However, it is the case
16 that a lot of decisions, in particular the investment
17 decisions, by small businesses, the innovative businesses
18 that have been involved in the EV industry are going to be
19 less patient than you might hope in wanting to sort this all
20 out through the public process.
21 They're going to look at the proposal that's on
22 the table and make their decisions based on whether they
23 think it's an intelligent strategy to continue to stay
24 involved on whatever the final outcome may be. The
25 uncertainty that's been generated in the investment
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1 community already is a concern, and I think it will continue
2 to be a concern that, unfortunately, I don't believe today's
3 process will really alleviate.
4 As for the proposal itself, I understand that
5 there's an extended commentary period coming up; but, in
6 fact, I hadn't seen it until just before the hearing started
7 this morning. I didn't have the opportunity to go through
8 it in great detail, but I would like to raise several
9 questions that are visible from the face of the proposal
10 itself.
11 These are cursory comments, since you understand
12 that comments of greater depth will be submitted during the
13 course of the process.
14 But just looking at the proposal, as it exists
15 here, I have to ask, number one, what are the cleaner cars
16 that would bring the State into compliance with the
17 emissions reduction that's bandied about?
18 Does this mean that there's going too be increased
19 production of cars that meet the LEV/ULEV standards, or what
20 sort of cleaner cars are there that will make sure that
21 emissions reductions take place?
22 I appreciate the stated concern for making sure
23 that the SIP is enforced. But, unfortunately, I really just
24 don't see a mechanism articulated to ensure that that takes
25 place.
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1 I'd be happy to have one presented, but it just
2 wasn't included in the one-page summary. But at this point,
3 I don't see it.
4 Also, what's the enforcement? I understand that
5 there's a memorandum of understanding, but I actually don't
6 see again how that memorandum of understanding -- or
7 memorandum of agreement, excuse me -- would be enforced.
8 What's the trigger if there's no compliance?
9 Who decides to pull that trigger? When? How? Is
10 it public? Is it private? Does it take place in the
11 courts?
12 I hope that you have answers to these questions,
13 and I would appreciate it if you do, but they're not
14 apparent on the face of the proposal.
15 Also, what numbers are we talking? We have
16 uncertainty on the page, in that a production capacity is
17 stated, 5,000 EVs in '96, '97, and 14,000 in '98, and
18 subsequent years. But the actual volume that seems to have
19 a commitment is only 750 vehicles in 1998, and then 1500 in
20 subsequent years.
21 So, are the automakers, who are so concerned with
22 their profits and losses, saying that they want to create
23 enormous volumes of excess capacity that they're then not
24 going to use?
25 Maybe there's a good explanation. It's not
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1 clearly available.
2 Moving down the page, there's a point that says
3 that vehicles manufacturers supporting media, publicity, and
4 legislative initiatives against the program would be
5 converted into support for the program. I'm glad to see
6 acknowledgments of the concerted efforts that have been made
7 against the program by these industries.
8 As I'm sure you're aware, we tried to highlight
9 that in the report that CALPIRG released last week detailing
10 $24 million of documented spending by the industries trying
11 to subvert this mandate.
12 But, to be honest, I don't know how you could
13 genuinely ensure that it would be converted to support. Is
14 there going to be a committee that ensures that? I'd like
15 to sit on it, if a committee is created, to make sure that
16 that's how it's done.
17 And finally, the last obvious question that I see
18 is the ongoing review. There's going to be a committee for
19 ongoing review. Again, who's going to serve on that
20 committee? What enforcement powers will that committee
21 have?
22 I do hope all of these questions have answers. I
23 just know we raise the questions based on the material that
24 I have here today.
25 So, that is my immediate concerns (sic) about what
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1 we have on the table, and I'd like to make sure again that
2 what comes out of this picture is an enforceable agreement
3 that has a commitment to mass production; that consumers
4 have access to electric cars, not some test program with
5 very limited access -- State-purchased cars -- and that a
6 sudden jump up to 10 percent in 2003 or 2004, at which time
7 it seems quite plausible that the industries will come back
8 and say, "We can't jump from these test programs that we've
9 been producing so far to 10 percent all at once. You need
10 to slow it down yet again."
11 These are the concerns that I have and that the
12 constituency I represent share. And I understand, Mr.
13 Chairman, that you and the Board are under intensely
14 competing pressures at this time to try to do the right
15 thing, and make sure that the implementation plan is met,
16 and that Californians do get clean air to breathe.
17 I'm certain that you have the desire to maintain
18 the traditional independence of the Air Resources Board.
19 But every indication that I've also received is that you are
20 under pressure from the Governor's Office. I understand
21 that you're concerned about these statements that have been
22 around. But a lot of pressure has been out there, and the
23 Governor's Office appears to be the point where it's
24 originating.
25 And I do hope that you, in fact, sustain your
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1 independence and do not cave in to the whims of the
2 Governor's Office. But it is a concern that has been raised
3 in the community.
4 But I understand, of course, that there are
5 competing concerns that I'm trying to articulate now, and I
6 understand the volumes of letters and phone calls that have
7 flooded into your office and the Governor's Office stating
8 similar concerns to what I've raised -- that Californians
9 want clean air and electric cars.
10 So, the public seems to be lined up on the side of
11 clean air. Certainly there are many businesses that are
12 lined up on the side of both clean air and this EV mandate.
13 These are the most innovative, technologically advanced,
14 high-tech industries in California that this Administration,
15 and indeed any Administration, wants the most to support.
16 These are companies that have relied on the
17 regulatory bargain that was created by this mandate in 1990,
18 guaranteeing a market for their products if they make
19 components or if they make cars, and guaranteeing an
20 opportunity to break into a market that has very high entry
21 costs. It's very difficult for an independent
22 manufacturers, as everyone knows, too break into the
23 personal transportation industry.
24 Capital costs are high, consumer confidence needs
25 to be gained, and this mandate really provides a mechanism
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1 to break through those entry hurdles for electric vehicles.
2 And a lot of the innovative businesses in California have
3 depended on it to make their decisions and to move forward
4 with this technology, and these are the companies that are
5 going to lose by backing down from an enforceable mechanism
6 for producing electric cars.
7 So, basically, what I'd like to make sure is that
8 everyone's intention, as they're considering these various
9 proposals, are the ideas of who wins and who loses.
10 The only clear winners from this proposal or any
11 proposal that backs away from the mandate that fails to
12 produce car considerable number of clean cars in California
13 are those with a vested interest who continue to produce the
14 automobiles that now create much of the pollution that we
15 breathe.
16 And that, of course, is the auto industry and the
17 oil companies that provide the fuel and stand to lose their
18 share of the market if electric cars indeed are successful.
19 These are the clear winners. The losers are
20 people who want to breathe clean air, the businesses that
21 want to rely on the regulatory bargain, and the small
22 businesses that want to enter this new field and provide the
23 future California technology.
24 I urge you to consider these factors, not to give
25 in to the pressure that's coming from the auto companies,
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1 from the oil companies, and from their allies -- the
2 Governor's Office -- and maintain your independence, and
3 maintain this organization's traditional support for
4 innovative means to help clear the air in California.
5 Thank you very much. I'll take any questions.
6 CHAIRMAN DUNLAP: Have you read the Battery
7 Panel's audit findings?
8 MS. KASNITZ: I'm familiar with them to some
9 extent. I don't have a strong technological background.
10 CHAIRMAN DUNLAP: There were certain findings that
11 they had relative to battery technology, for example, that
12 lend themselves to supporting a change in the mandate as
13 it's certainly structured.
14 Does CALPIRG support any change in the mandate at
15 all?
16 MS. KASNITZ: Certainly, we're willing to look at
17 changes, specifically in some numbers, according to what the
18 science dictates.
19 My understanding of the Battery Panel's conclusion
20 is that they, in fact, believe that viable technology does
21 exist today.
22 Again, my understanding is that lead-acid
23 technology would be sufficient to meet the majority of needs
24 of many Californians.
25 And that's what the Battery Panel concluded. It's
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1 only through the constant repetition by the oil companies
2 and the auto industries that this lie has come to be
3 believed as fact -- that lead-acid simply won't cut it. My
4 understanding of the Battery Panel's conclusion is that
5 lead-acid exists today and is viable, and that even better
6 batteries are around the corner.
7 And for those reasons, among others, CALPIRG
8 strongly supports keeping the form of the mandate in place,
9 even if some precise figures are adjusted.
10 CHAIRMAN DUNLAP: Any questions? Okay. Thank you
11 very much.
12 MS. KASNITZ: Thank you very much.
13 (Applause.)
14 CHAIRMAN DUNLAP: Sam Leonard, General Motors;
15 Dave Hermance, Toyota, and then Tom Carmichael of the
16 Coalition for Clean Air.
17 MR. LEONARD: Mr. Chairman, Board members, excuse
18 me if I stumble a little bit, because I do not have a
19 prepared text today.
20 My first question -- I reflect back on the
21 previous speaker, and I got to ask myself, does she think it
22 was communism if the State of California ordered her to sell
23 her house at half the cost? Because that's the effect of a
24 mandate with today's technology and today's cost process.
25 And speaking of process, as far as public process
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1 goes, and how many public hearings and how much public input
2 there's been on this process, I'd be glad to give her my
3 airline bills for the past year for all the public hearings
4 I've attended.
5 Secondly, I'd like to endorse Kelly's
6 presentation. It was a very fair presentation of the auto
7 industry proposal. We worked hard to come together as a
8 group to put that proposal together.
9 Jack Lagarias, I think, asked why we didn't come
10 together earlier. Kelly gave a pretty good answer to that.
11 But the biggest problem getting together earlier was the
12 lack of perception that the Board was ready to change with
13 the mandate still years off.
14 It's only as the mandate approaches and the timing
15 gets close that changes get made. We know that from
16 history. You know that from being on the Board. And that's
17 why the effort necessary to get a counterproposal together
18 did not take place until now.
19 Finally, as -- not finally, but as I testified at
20 least twice in the last month, we support the concept of the
21 Proposal B as they presented last week. We support the
22 concept of the proposal presented by the staff today. We
23 continue to have concerns and differences with the staff,
24 primarily over the end model year of the suspension.
25 We would like the Board to direct the staff to
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1 continue to work with us and try to come to some reasonable
2 resolution of these issues. We think that's a possibility
3 that's very strong over the next three months, and we commit
4 to working with the staff and the Board to reach that
5 resolution of that issue and the MOA issues that are bound
6 to come forth.
7 We think, and General Motors specifically thinks,
8 that electric vehicle can be made a success with the right
9 launch, the right timing. The CARB mandate situation is not
10 that. We think the concept presented today as the auto
11 industry proposal presents the best chance of the success of
12 electric vehicles. And contrary to the previous speaker, we
13 think it is a win-win-win situation for the public, the
14 manufacturers, and society as a whole.
15 And finally, I would add at the end of my
16 presentation that I do have the figures and what I believe
17 are the figures on U.S. ABC Phase II funding.
18 My understanding is that the total funding for
19 U.S. ABC Phase II is $148 million, and the domestic auto
20 industry share of that is $35 million.
21 And I'll take any questions you may have.
22 MR. PARNELL: Yes. It's been asked of other
23 speakers, but I'd like to ask you as well. The proposal
24 that the staff made maintains the mandate in 2003, the 10
25 percent.
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1 Your proposal suggests 2004. And I heard the
2 rhetoric, but I still am not able to cut to the bottom line.
3 It seems to me that we're very, very close. And my agenda
4 in all of this is to do the right thing. And I hear a lot
5 of speakers talk about a lot of things.
6 And our concern is air. And it seems to me that I
7 want to pursue whatever course of action is ultimately taken
8 with clean air in mind.
9 It seems to me that the staff's proposal is a very
10 reasonable one that maintains the mandate of 2003,
11 particularly when it says we're going to continue to do what
12 we've done historically and look at technology, make
13 decisions that are pertinent as information becomes
14 available.
15 And for some reason, I still am not clear as to
16 why your proposal insists on the moving of one year. It
17 seems to be a fine point to me. But to you, obviously, it's
18 larger than that. Help me.
19 MR. LEONARD: It's a very serious point to us, and
20 I understand your confusion. It is a difficult issue to
21 understand.
22 The first and most forcing function is the
23 rollback from 2000 to 2003 give us that much less confidence
24 that there's going to be a battery available in that model
25 year to meet the 10 percent mandate, to be able to put a
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1 vehicle on the market that we can meet a 10 percent mandate
2 in.
3 That's the first one. That's the overriding one.
4 MR. PARNELL: Okay. But let me just dialogue with
5 you as we go along --
6 MR. LEONARD: Okay.
7 MR. PARNELL: -- if I can. It seems to me that if
8 we are committed to then a review in a timely way that
9 suggests the technology's not there, then that should
10 relieve you somewhat.
11 MR. LEONARD: Somewhat, but not totally, and I'll
12 tell you why. Because under the way things are set up
13 today, we have got to make a decision in order to make up
14 the emissions, as we promised under this program -- and our
15 proposal would make up the air emissions for a delay through
16 2003. So, it is not an air quality question at this time.
17 You do make up the emissions under our proposal.
18 But, in order to do that, we have to sign up for
19 what is called the 49-State program, which is to provide
20 cleaner cars across this country. And we have to sign up
21 for it under EPA rules somewhere in the February, March,
22 April, May time frame. We have to make that decision.
23 The thing that has held us up on that is the
24 insistence on New York and Massachusetts on retaining the
25 ZEV mandates in their States. The danger we risk with going
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1 out and signing up for that 49-State program -- and the
2 duration of that program is through 2003, all the way
3 through -- is we would end with both that program and a ZEV
4 mandate in New York and Massachusetts in 2003.
5 And you say, that's not a danger, because
6 California's going to look at it and California, if the
7 mandate is not adequate and not achievable in 2003, we'll
8 move it to 2004 during the 2000 hearing.
9 Well, what is achievable as the 10 percent in
10 California -- on dry, flat ground with California climate --
11 clearly needs more technology to reach that same degree of
12 sales appeal in New York and Massachusetts, where such a
13 vehicle has got to operate in cold, severe weather with snow
14 and slush on the ground, and regardless of what you do with
15 the battery -- and even if you have a battery that's immune
16 to the cold weather itself, the range of the vehicle is
17 significantly diminished by the operating conditions of the
18 climate.
19 So, even though a ten percent might be marginally
20 achievable in California in 2003, does not mean it's going
21 to be achievable in New York and Massachusetts in that same
22 time frame.
23 MR. PARNELL: Thank you very much.
24 CHAIRMAN DUNLAP: Supervisor Roberts.
25 SUPERVISOR ROBERTS: If I could just pursue that.
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1 You know, what you seem to be telling us is that we need to
2 have some concern about New York and Massachusetts. I'm
3 having trouble keeping up with what's going on in
4 California, and I'm not sure that that's our concern.
5 MR. LEONARD: My greatest concern, Supervisor
6 Roberts, is it's the concern for New York and Massachusetts
7 that drove us back from the 2004 proposal, B, to the 2003 in
8 today's staff proposal.
9 SUPERVISOR ROBERTS: Say that again, because it's
10 not registering.
11 MR. LEONARD: I'm sorry. My biggest concern is
12 that it is -- the Administration's and staff's concern, and
13 the concerns expressed by Massachusetts and New York that
14 have moved us from the 2004 model year that was in Proposal
15 B to the 2003 model year that are in today's proposal (sic).
16 SUPERVISOR ROBERTS: Well, I understand that's
17 your concern, but --
18 MR. LEONARD: To preserve their right.
19 SUPERVISOR ROBERTS: I'm not sure that
20 Massachusetts and New York rights are really important in
21 the discussion here. That's why I'm having trouble fitting
22 that in.
23 MR. LEONARD: I concur. They shouldn't be.
24 SUPERVISOR ROBERTS: That seems to be the basis
25 for your argument from going from 2003 to 2004.
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1 MR. LEONARD: The basis of my argument is you put
2 me in an untenable situation in New York and Massachusetts
3 when you tried to commit me from -- move me from 2004 model
4 year to the 2003 model year. And that has to be a concern.
5 SUPERVISOR ROBERTS: Today, as things exist,
6 you're at the 2003 model year.
7 CHAIRMAN DUNLAP: Current mandate.
8 MR. LEONARD: Yes. Or the 1998 model year today.
9 SUPERVISOR ROBERTS: It seems like your argument
10 should be with New York and Massachusetts because of the
11 different climatology and other --
12 MR. LEONARD: Yes, and --
13 SUPERVISOR ROBERTS: -- factors, and not with this
14 Board.
15 MR. LEONARD: -- and despite reports by State
16 agencies in both States that the -- the battery technology
17 is not there, those States, there has been no action to do
18 anything about the mandate in those States. No receptivity.
19 SUPERVISOR ROBERTS: But you're coming here and
20 you're saying, "You guys, we're uncomfortable with what
21 you're doing, because you know that New York and
22 Massachusetts are following your lead, and they shouldn't
23 be."
24 Your argument should be with New York and
25 Massachusetts, not with this Board.
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1 MR. LEONARD: I'm sorry. It's this Board that
2 puts me in that position. I have got to make a business
3 decision. I have got to make a business decision on what
4 risk I can accept. That's how I can get to a 2004 model
5 year package.
6 When I go below the 2004 model year package, the
7 overall business risk becomes too great to accept.
8 I'm sorry if California and New -- or excuse me --
9 New York and Massachusetts are a part of that calculation,
10 but as a company that operates throughout the U.S., I have
11 to be recognizing of that.
12 CHAIRMAN DUNLAP: Mr. Lagarias.
13 MR. LAGARIAS: Mr. Leonard, the 98-99 time period
14 is primarily for demonstration purposes to see how the cars
15 operate, who uses them, how they will use them, and where
16 they will go.
17 The 2004 date calls for -- you recommend a 10
18 percent production level in 2004.
19 MR. LEONARD: We're willing to accept it. We
20 don't recommend it.
21 MR. LAGARIAS: What type of -- it's very difficult
22 to ramp up from a demonstration size to a 10 percent
23 production number without getting substantial cars on the
24 road.
25 Can you give me any idea of how many ZEVs might be
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1 produced in the year 2003 if a 10 percent quota was set for
2 2004?
3 MR. LEONARD: Mr. Lagarias, I cannot give you a
4 set number, because I don't know whether the battery
5 technology development curve -- and it takes invention of
6 battery (sic) -- is going to be a straight-line development
7 curve, i.e. a nice slope on it, whether it's going to start
8 low and go exponential into high at the end, or it's going
9 to start very high, get quick development, and flatten off.
10 Those three scenarios, which are all very
11 potential scenarios when you're talking invention, any one
12 of the three gives you totally different projections for
13 what your sales will be in the 2003 model year or the 2002
14 model year.
15 And I can't predict today which one of those three
16 scenarios the battery will be developed on, when the battery
17 breakthrough will come and when the cost reductions will
18 come to make it competitive.
19 MR. LAGARIAS: You're saying somewhere between 2
20 percent and 8 percent?
21 MR. LEONARD: I wouldn't -- if it's going to be --
22 if the 10 percent mandate is going to be a success, yeah,
23 there should be something in excess of 2 percent sales out
24 there in that time frame.
25 But I can't -- I can't sit here today and sign up
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1 for that, because I don't know how that battery technology
2 curve is going to work.
3 MR. LAGARIAS: Returning to Supervisor Robert's
4 inquiry, isn't the Northeast clean car program mandated by
5 the Federal Clean Air Act?
6 MR. LEONARD: The California program --
7 MR. LAGARIAS: The Federal Clean Air Act says that
8 the Northeast States can opt into the California program.
9 MR. LEONARD: Yes, it does.
10 MR. LAGARIAS: Well, isn't that where you should
11 be addressing your issue, with them?
12 MR. LEONARD: We've been addressing them for the
13 last two years, sir.
14 MR. LAGARIAS: Have they been listening?
15 MR. LEONARD: The situation we have out there is
16 nine States voted against four others to force the 13, as a
17 group, to impose California standards across the 13 States.
18 We have proposed, and EPA's accepted. that the
19 49-State alternative that we've put together would provide
20 equivalent emission reductions in those States, including
21 States that would have otherwise adopted the ZEV mandates.
22 We are in a situation where two States -- New York
23 and Massachusetts -- refused -- excuse me. Let me back up
24 just a minute.
25 The way we'd be able to fund that 49-State program
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1 and would be able to have the resources to apply for it does
2 not have to deal with 13 different jurisdictions with
3 different interpretations of the California standards,
4 different enforcement of the California standards, different
5 fuels than California for California vehicles, and instead
6 do a 49-State program. The EPA has found it equivalent.
7 The situation we have, in order to fund that, is
8 we can't afford to also do ZEVs in those areas, especially
9 in terms of the cold climate.
10 We have two States -- New York and Massachusetts -
11 who refuse to change the 49-State program for their ZEV
12 mandates in that time frame. That's the stalemate we're at.
13 And we've been at that stalemate for over a year.
14 MR. LAGARIAS: Thank you.
15 MR. LEONARD: And I'm sorry that those States do
16 not have the experience and the expertise that resides in
17 this Board and this staff to bring those negotiations to a
18 successful conclusion.
19 MR. LAGARIAS: Thank you.
20 CHAIRMAN DUNLAP: Ms. Edgerton, then Mr. Calhoun.
21 MS. EDGERTON: Mr. Leonard, I apologize -- and
22 note to the Board, I apologize for being late. My plane was
23 late.
24 If I understood correctly, 2004 is not on the
25 table anymore; it's 2003 anyway. Did I miss something?
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1 MR. LEONARD: 2004 is on the table as the industry
2 proposal.
3 MS. EDGERTON: As what?
4 MR. LEONARD: As the industry proposal, Ms.
5 Edgerton. 2003 is on the table as the staff proposal. I
6 didn't know that I was prohibited from speaking up for the
7 industry proposal and having some concerns about the staff
8 proposal.
9 MS. EDGERTON: Oh, of course, you're not. I'm
10 just trying to understand. I want to be sure that I
11 understand what we're discussing. So, you are saying, then,
12 that you still wish to see the staff's proposal -- you want
13 to see the 2003 moved to 2004.
14 MR. LEONARD: Clearly.
15 MS. EDGERTON: Well, my difficulty with that, sir,
16 is that I am not prepared to second guess Massachusetts and
17 New York, and say that they are -- and the whole Ozone
18 Transport Commission.
19 And you're asking us to say that they're all wrong
20 about what would work in their States with their
21 temperatures. And that's not our expertise. Our expertise
22 is California.
23 MR. LEONARD: No. I'm not asking you to second
24 guess New York and Massachusetts, and I'm not asking you to
25 second guess what the industry's going to accept as an
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1 acceptable business risk.
2 I'm just informing you what is an acceptable
3 business risk for the industry and what is not. And with
4 Massachusetts and New York retaining the current -- the ZEV
5 mandate, it comes very close to being an unacceptable
6 business risk to sign up for the 49-State program. And I
7 have not identified any other means by which I can make up
8 these emissions.
9 That's all I'm telling the Board. That's the
10 business situation that I am in.
11 MS. EDGERTON: Thank you.
12 CHAIRMAN DUNLAP: Mr. Calhoun.
13 MR. CALHOUN: Mr. Leonard, Mr. Parnell pointed out
14 that the major difference between the staff's proposal and
15 the industry's proposal is one year.
16 MR. LEONARD: To one year.
17 MR. CALHOUN: And a lot of work has been done in
18 the last few months, few weeks, few days, I guess, in order
19 to --
20 MR. LEONARD: Well, over the last ten years, or
21 five years in order to arrive at that position.
22 MR. CALHOUN: Mr. Brown mentioned the fact that
23 this whole thing is sort of key to the year 2004, and
24 certain business decisions have to be made, and you sort off
25 reiterated the fact that these decisions have to be made.
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1 And I can appreciate that.
2 I guess my question to you is what impact would
3 having a review in the year 2000, or some subsequent review
4 that the staff would propose, what impact would that have on
5 the business decision that you have to make?
6 MR. LEONARD: The review in the year 2000 is a
7 benefit to us and reduces, to some extent, that risk. But
8 we still have the risk that what is feasible in California
9 in 2003 is not -- may not be feasible in the climates of New
10 York and Massachusetts in that same model year.
11 That is a risk that we have got to accept upfront.
12 We will have to evaluate that risk, and we will have to make
13 our decision based on that risk.
14 MR. CALHOUN: So, you don't know at this
15 particular time. It's a risk.
16 MR. LEONARD: It's a risk and it's got to be
17 evaluated and a judgment has to be made based on the total
18 package, when we get all the details filled in, and a better
19 assessment of that risk, we will have to make that decision.
20 MR. CALHOUN: Thank you.
21 CHAIRMAN DUNLAP: Supervisor Vagim.
22 SUPERVISOR VAGIM: thank you. It's all in the one
23 year?
24 MR. LEONARD: It's all in the one year.
25 SUPERVISOR VAGIM: The 2000 review being out
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1 there, your issues are the environmental additional
2 restraints of New York and Massachusetts that you don't have
3 in California as far as the climate and that type of thing.
4 MR. LEONARD: Right.
5 SUPERVISOR VAGIM: If the demonstration project,
6 the way it's being proposed by staff, goes ahead in
7 California, won't you have more empirical knowledge that
8 Massachusetts and New York will be able to be -- or at least
9 enlightened, from your point of view, that maybe they have
10 some other issues? Wouldn't that be empirically there?
11 MR. LEONARD: Clearly the situation, Supervisor
12 Vagim, is the five year delay is a better situation than we
13 have today. The question has to be that, with us having to
14 make the business decision in the next first quarter of
15 1996, as to whether to sign up for the 49-State program,
16 whether those risks are low enough that we can do it.
17 And at this -- I am not prepared to say at this
18 time that we can do that. We've got to do a complete
19 analysis once we have the total detailed package, including
20 the details of the MOA, in front of us to make that
21 decision.
22 SUPERVISOR VAGIM: But you really don't know what
23 the 49-State car's going to look like; is that right?
24 MR. LEONARD: I'm fairly certain what the 49-State
25 car's going to look like. The notice of the proposed
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1 rulemaking is out. There's a few details to be ironed out.
2 We expect the final rule out of EPA within the next -- I
3 expected it by now as a matter of fact -- which describes
4 what the 49-State car's going to be.
5 SUPERVISOR VAGIM: Will that have its own NMOG
6 curve?
7 MR. LEONARD: It will basically be -- the 49-State
8 car will be an equivalent of a California LEV, with some
9 modifications that come from differences in the federal
10 rules and California rules, but essentially a .075 tailpipe.
11 SUPERVISOR VAGIM: And there's no discussion on
12 the zero-emission for the 49-State car program?
13 MR. LEONARD: Not in the 49-State program, no,
14 sir.
15 CHAIRMAN DUNLAP: Supervisor Roberts, then Ms.
16 Edgerton.
17 Doug, did I cut you off?
18 SUPERVISOR VAGIM: No, that's fine.
19 SUPERVISOR ROBERTS: Thank you, Mr. Chairman. I
20 don't want to -- I don't want to get wrapped up in this one
21 year, like that's a part of the program. And I want to
22 return to something that I had asked about earlier.
23 When Mr. Brown was up here, he spoke of a $120
24 million program. And when you started off, I think you --
25 MR. LEONARD: (Interjecting) It's a hundred --
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1 the latest information I have is 148.
2 SUPERVISOR ROBERTS: Okay. So, it's maybe a $148
3 million program and not --
4 MR. LEONARD: Right.
5 SUPERVISOR ROBERTS: -- 120 million, which is
6 what he showed us in the slides.
7 The existing Phase I program ran in excess $260
8 million.
9 MR. LEONARD: That sounds right, but I don't have
10 the figures.
11 SUPERVISOR ROBERTS: I understand the
12 manufacturers picked up somewhere between 20 and 25 percent
13 of that program.
14 MR. LEONARD: I believe that's correct.
15 SUPERVISOR ROBERTS: DOE was about 50 percent of
16 that.
17 MR. LEONARD: Sounds close.
18 SUPERVISOR ROBERTS: So, as part of your proposal,
19 you're saying there is no proposal as far as DOE is
20 concerned right now.
21 MR. LEONARD: There is a Phase II proposal out
22 there. The only question --
23 SUPERVISOR ROBERTS: (Interjecting) DOE has no
24 Phase II proposal from the manufacturers at this point in
25 time?
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1 MR. LEONARD: There's going to be.
2 SUPERVISOR ROBERTS: Okay.
3 MR. LEONARD: It's part of the program that we're
4 committing here to.
5 SUPERVISOR ROBERTS: And you're saying, then,
6 there will be a commitment made; that commitment will be not
7 120 million, but will be something in the $148 million
8 (sic). And you're saying that manufacturers are going to
9 pick up a similar percent as they did in Phase I, which
10 equates to about somewhere between -- I think you used --
11 MR. LEONARD: 35.
12 SUPERVISOR ROBERTS: -- $35 million.
13 MR. LEONARD: Right. Right. There's no
14 commitment to that today. That is what we would commit to
15 under the MOA.
16 SUPERVISOR ROBERTS: So, both with respect to the
17 total dollars in the program and the your share of it, those
18 are the numbers we could rely on then?
19 MR. LEONARD: Yes.
20 SUPERVISOR ROBERTS: Okay. And if DOE wasn't part
21 of that program?
22 MR. LEONARD: DOE is part of that program. Oh, if
23 they weren't?
24 SUPERVISOR ROBERTS: What if things at the federal
25 level, which we all know --
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1 MR. LEONARD: We would still commit to spend the
2 $35 million.
3 SUPERVISOR ROBERTS: Your percentage of that
4 proposal?
5 MR. LEONARD: Right, in Phase II program. It
6 would necessarily be a scaled down program without the DOE
7 funding, but we would attempt -- we would commit our 35
8 million and attempt to solicit partners amongst the battery
9 manufacturers and utilities and continue to fund as much of
10 that program as we could.
11 SUPERVISOR ROBERTS: Okay. thank you.
12 CHAIRMAN DUNLAP: Ms. Edgerton.
13 MS. EDGERTON: I don't know who on the staff has
14 been working most closely with U.S. ABC recently.
15 MR. CACKETTE: Steve Albu.
16 MS. EDGERTON: Mr. Cackette, are you the --
17 MR. CACKETTE: Steve is.
18 MS. EDGERTON: Steve is.
19 MR. CACKETTE: Steve Albu, who's not here, is our
20 technical representative on the Technical Advisory Committee
21 of the ABC.
22 MS. EDGERTON: What I don't understand is whether
23 this proposal is -- to what degree is it an increase over
24 what was already in place over a number of years for the
25 ABC, because ABC already had a Phase I-Phase II.
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1 So, I'm trying to understand what we have gained.
2 MR. CACKETTE: I think ABC had a Phase I, and they
3 are now putting together Phase II, and the parties seem to
4 agree on what Phase II is, but there's not yet an
5 appropriation of the Federal Government to provide the DOE
6 50 percent match. That's going to take some time.
7 What I think we're concerned about in this
8 memorandum of understanding was to lock in the auto
9 manufacturers' share of Phase II, whether Phase II
10 ultimately comes to reality or not, so that there would be
11 some advance work on evaluating high-tech batteries at least
12 at the 25 or 30 percent share of the total planned ABC
13 package.
14 There's also still some money left over from Phase
15 I of ABC that has not been spent. So, there's some money
16 that's keeping it going in the interim.
17 MS. EDGERTON: How much is left? Do you know?
18 MR. LEONARD: I do not know.
19 MR. CACKETTE: It was something in the order --
20 MS. EDGERTON: There's no double counting; it's
21 not rolled over?
22 MR. CACKETTE: Maybe 50 million or something in
23 that order the last time I heard.
24 MS. EDGERTON: And how long is Phase II?
25 MR. CACKETTE: '99.
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1 MR. LEONARD: '97 through '99.
2 MS. EDGERTON: So, that's about 10 million a year?
3 MR. LEONARD: Yes.
4 MS. EDGERTON: Does the proposed MOA -- do you
5 propose to support DOE appropriations?
6 MR. LEONARD: We've always supported DOE
7 appropriations on U.S. ABC funding.
8 MS. EDGERTON: Okay. That was not my question,
9 sir.
10 Are you committing, as part of this proposal, to
11 support the DOE funding?
12 MR. LEONARD: I have not asked that question of my
13 company, and I'm not authorized to answer it up here. I can
14 find that answer for you.
15 But all I can tell you is our past practice has
16 been to support DOE funding of U.S. ABC, yes. I do not
17 anticipate that practice changing. But can I stand here
18 today and commit to that? No, because I don't know.
19 MS. EDGERTON: I'd be really interested.
20 MR. LEONARD: We'll get back to you.
21 MS. EDGERTON: Thank you.
22 CHAIRMAN DUNLAP: Okay.
23 MR. LEONARD: And I certainly can't commit all
24 seven of us standing here today.
25 CHAIRMAN DUNLAP: Any other questions of Mr.
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1 Leonard? Due to the interest in your remarks, sir, would
2 you remain close at hand if we have any further questions?
3 MR. LEONARD: Can I go out and have a cigarette
4 first?
5 CHAIRMAN DUNLAP: No.
6 (Laughter.)
7 CHAIRMAN DUNLAP: Thank you.
8 MR. LEONARD: Thank you.
9 CHAIRMAN DUNLAP: Mr. Hermance from Toyota,
10 followed by Tim Carmichael, followed by John Schutz from
11 Nissan.
12 Good afternoon.
13 MR. HERMANCE: You're right. It is afternoon.
14 Actually, I thought we were moving along faster. I thought
15 it was still morning. But good afternoon, Mr. Chairman and
16 members of the Board.
17 We have just seen this morning the revised staff
18 proposal, and I need to make some very brief comments with
19 regard to that.
20 Toyota will commit to work with staff to develop
21 and define the necessary detail to implement such a
22 proposal.
23 However, it is not clear that we will be
24 successful. The change in Proposal B from a six-year
25 suspension to a five-year suspension casts doubt on
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1 industry's ability to deliver NLEV and its significant air
2 benefits. Without NLEV, it is not clear that we can
3 generate the necessary air quality offsets to make this a
4 viable program.
5 Five years versus six is a minor -- provides a
6 minor air quality benefit to California in and of itself,
7 which we would offset. But it puts the overall program at
8 risk.
9 And I'll attempt to answer the same questions that
10 have been answered by the others.
11 CHAIRMAN DUNLAP: We can suspend those questions.
12 Thank you.
13 I guess one -- did you have anything to add as far
14 as what Mr. Leonard and Mr. Brown said relative to Toyota's
15 perspective on the five year versus six? You pretty much
16 said you're in concurrence; is that right?
17 MR. HERMANCE: Five years versus six won't make
18 any difference, given the successful development scenario,
19 won't make any difference in the timing with which we
20 introduce mass-produced vehicles.
21 CHAIRMAN DUNLAP: Okay. All right. Thank you.
22 MR. HERMANCE: But it will make a difference as to
23 whether we can do the NLEV.
24 CHAIRMAN DUNLAP: Okay. Mr. Carmichael, then Mr.
25 Schutz.
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1 I want to just to comment to the audience, we've
2 got a lot of people that want to testify. The reason I call
3 the names ahead of time is so you can queue up perhaps off
4 to the right so we can move through this quickly.
5 Okay. Mr. Carmichael, Mr. Schutz, and Mr.
6 Ridenour from Chrysler will be the next speakers.
7 Good afternoon, sir.
8 MR. CARMICHAEL: Good morning -- or good
9 afternoon. My name is Tim Carmichael. I'm the policy
10 director for the Coalition for Clean Air.
11 And I have a few brief comments. Like the
12 previous speakers have commented, we've only had a few
13 moments really to review what's before us, and anticipate
14 submitting written comments in the future.
15 But based on what we have seen, the Coalition for
16 Clean Air strongly opposes this proposal. And after some
17 comments on the process, I will identify some specifics.
18 Before you, which is being distributed right now,
19 is a draft document. It's about six weeks old. It's the
20 key program elements. It identifies virtually the same
21 program that you have before you today. It was a working
22 document, I believe, between the auto industry and the Air
23 Resources Board as it shows up at the top.
24 My point in distributing this and bringing it to
25 your attention is that its date is November 13th. Today,
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1 we're at December 21st.
2 In the interim, we have had a public workshop and
3 two Board hearings. At that public workshop and at the
4 Board hearings, we heard testimony from a number of people,
5 the vast majority of which supported a proposal very
6 different from this one.
7 There are no elements -- in the proposal that
8 staff brought to you today, there are no elements which
9 incorporate the recommendations of that majority from their
10 testimony at the workshop.
11 If you go through this proposal, you will see
12 they're virtual identical six weeks ago. And my point, and
13 I think it's a critical point, is that the public process
14 has been flawed.
15 The public was not listened to. Twenty-plus
16 speakers at the last workshop identified their support for
17 the existing mandate or some minor modifications similar to
18 Concept C. There's no adjustment in this proposal you see
19 before you that reflects a move towards Concept C or a
20 pulling back towards the existing mandate.
21 I think that is a huge problem, and our opinion,
22 based on that fact alone, we shouldn't proceed with this
23 proposal. We should go back and ask the staff to present
24 you with a proposal that reflects the public process,
25 reflects the testimony of the workshops, not a proposal that
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1 clearly -- or from my perspective, clearly ignores the
2 public process.
3 Given the fact that it is before you, on a quick
4 read, we can identify several specific problems. It was
5 said earlier that a mandate would not be required, and this
6 proposal moves away from a mandate, or suspends the mandate
7 until 2003.
8 If you -- excuse me, my notes are a little bit
9 jumbled.
10 If you look at this proposal and you look at the
11 data that was presented at the workshops, we have not seen
12 any testimony that suggests or warrants a six year or seven
13 year delay in the mandate. Not even the Battery Panel's
14 review suggests that length of delay is necessary. We would
15 ask the Board to ask staff to identify what scientific data,
16 what technological data they have that we haven't seen that
17 suggests that the six or seven year delay in the mandate is
18 necessary.
19 Now, the Board has been questioning the previous
20 speakers about, you know, 2003 versus 2004. What's wrong,
21 you know, with a -- we believe 1998 can be met. Why did we
22 jump to 2003? Why did we skip over 2000 or 2001?
23 You know, in private discussions with us, the auto
24 industry indicated that -- this is from this past summer --
25 that they only needed a two-year suspension. Why, if the
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1 auto industry only needs a two-year suspension, why is CARB
2 giving them five or six?
3 And we're at a loss. We don't understand what
4 data has been presented that suggests this rollback is
5 necessary.
6 Looking at the proposal before you, what is good
7 about it for California? We can debate how severely this
8 proposal will negatively affect business in California, this
9 start-up transportation -- advanced transportation industry.
10 But there's no one arguing that this proposal is good for
11 California business. Not one person has testified to that
12 effect.
13 This proposal does not support the existing
14 industry -- the budding industry here in California. And,
15 as you've heard testimony, as we all have, over many months,
16 it's 150-plus companies and thousands of employees.
17 The second point relative to specific criticisms
18 is we are also very concerned about the enforceability of
19 this program and not clear, because there don't appear to be
20 many details on this page. Would this memorandum of
21 agreement be between CARB and a group of seven
22 manufacturers? Would there be seven memorandums of
23 agreement, one with each individual auto manufacturer?
24 Would these following volumes of 750, 1500 and
25 1500, would obviously -- they would not be evenly
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1 distributed between the seven or -- our perception is they
2 would not be evenly distributed between the seven auto
3 manufacturers.
4 Would each of the manufacturers know what the
5 competition is committing to? And we're skeptical of the
6 willingness of the auto industry to accept an uneven playing
7 field as far as their commitments to this program.
8 Again, our -- our strong support for the existing
9 mandate stems from the fact that it is a mandate, and the
10 fact that we're trying to regulate the auto and the oil
11 industry, the two sources of the majority of California's
12 air pollution.
13 If I could refer to a statement that Secretary
14 Strock delivered on November 14th, a few days before the
15 November Board hearing, he reminded us all why we should be
16 very wary of commitments from the auto industry when he
17 quoted Chrysler's Chairman, Robert Eden, who said, "Very
18 frankly, the auto industry would not have made all the
19 progress it has without being forced to do it."
20 In the same speech, Secretary Strock clearly
21 indicated the value of mandates when he cited recent
22 successes, including reformulated gasoline, unleaded
23 gasoline, catalytic converters, seat belts, air bags, and
24 child restraint car seats.
25 There's a paranoia about mandates. Mandates are
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1 required when we have two industries creating as much
2 pollution as they are creating in this State.
3 It was suggested by GM's spokesperson a few
4 moments ago that they have to evaluate what's an acceptable
5 business risk. I would submit to you that this Board needs
6 to evaluate what's an acceptable health risk. And look at
7 California and look at the impact of air pollution on
8 everyone in this State, and recognize that we need to take
9 strong steps to correct that, and not seven, or ten, or
10 fifteen years down the road.
11 The technology is there. And that is supported by
12 testimony that has come all year long. The technology is
13 there. And you know, whether it's 22,000 vehicles in 1998,
14 or some number close to that, we have not seen evidence at
15 any time that suggests that the seven auto manufacturers
16 cannot meet the existing mandate.
17 And if there is evidence presented that there
18 should be minor modifications, let's make a minor change.
19 Why leap to a suspension of this whole program till 2003,
20 and not have what we believe to be -- and have what we
21 believe to be a lack of enforceable commitments in the
22 interim.
23 A couple quick questions relative to some parts
24 that weren't clear to me on the proposal that we got. Under
25 "Features," the second point there says, "Annual production
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1 capacity of 5,000 ZEVs in 96/97."
2 There's a slash between them. Does that mean the
3 auto manufacturers are going to bring 5,000 vehicles to
4 market in 1996 and 5,000 more in 1997? It's unclear,
5 because it says annual production.
6 So, if staff or someone can clarify that for us, I
7 would appreciate it.
8 I would also echo the comments of the CALPIRG
9 representative when she identified the problems with this
10 statement near the bottom. "All vehicle manufacturers
11 supporting media, publicity," -- and so on, how do we
12 require that. Are we going to ask the auto industry to
13 submit what they spent to try and undermine this program,
14 and then hold them to spend the same amount to market the
15 vehicles?
16 You know, how are we going to gauge that they've
17 been putting the same level of commitment to supporting the
18 program in the future that they put into undermining it in
19 the past?
20 Excuse me. In the interest of time, we'll submit
21 some more detailed comments in writing.
22 But for the record, clearly, the Coalition for
23 Clean Air -- and we believe from discussions earlier today
24 and in recent weeks, the majority of environmentalists in
25 this State do not understand why CARB feels the need to
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1 suspend this mandate for six or seven years.
2 We have been to all the workshops. We have been
3 to the Board hearings. We haven't seen scientific data or
4 technological data submitted that suggests that length of
5 delay is necessary.
6 Thank you very much.
7 CHAIRMAN DUNLAP: Thank you, Mr. Carmichael. Any
8 questions of the witness?
9 MS. EDGERTON: I'll make a comment.
10 Mr. Carmichael, I agree that the proposal does not
11 adequately protect California investments in new technology.
12 And that's a tremendous concern of mine.
13 I also might mention that I don't -- personally, I
14 would be surprised if there would be an interest in changing
15 the program in any way at all, as a regulatory matter, if we
16 did not already have an upfront agreement with all the
17 details really worked out.
18 So, this is very much still a fluid situation.
19 And finally, in response to some of the issues you
20 raised about the health of Californians, I'd say that what
21 this mandate is about -- and I've spent a lot of time on
22 this Board trying to call it a program and a rule, because I
23 think it is a rule. I think there are rules for living. I
24 think there are rules for behaving toward one another, rules
25 for operating in a civil society.
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1 And those rules have to change as there comes to
2 be more and more of us and there comes to be more and more
3 pollution from the activities that all of us engage in.
4 So, I think it's well to think that this is a
5 program or a mandate to one sector of our society, the
6 automobile manufacturers who are outstanding in their talent
7 and industry, to design and develop products which
8 adequately take into account our children -- the fact that
9 our children here in California are breathing air that is
10 polluted, and that we need their cooperation, and we need to
11 have those areas of our State clean up the air so that those
12 areas can prosper and our children can grow up to be strong
13 citizens.
14 We cannot, in my view, as a State, prosper without
15 significant reductions in automobile emissions.
16 Thank you.
17 MR. CARMICHAEL: If I could just respond very
18 briefly to two comments made, one relative to the fluidness
19 of this debate. I would suggest that we're very skeptical
20 of that.
21 As I pointed out at the beginning of my
22 presentation, you have before you today a proposal that was
23 drafted six or seven weeks ago. And there was a significant
24 public testimony in the interim, and none of that is
25 reflected in the proposal. None of those changes are
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1 reflected in the proposal that you have before you.
2 So, I question whether this is still a fluid
3 debate.
4 I also am very concerned about the fact that the
5 Board seems to have accepted the automakers' framing of this
6 debate. And it's indicated by your questions over whether
7 it should be 2003 or 2004. That means you've accepted that
8 2003 is where we're going.
9 I mean, we should be, you know, looking at 1998,
10 1999, and 2000. Why have we made this leap five to six
11 years into the future?
12 Here we are in 1995, with tremendous technology.
13 CHAIRMAN DUNLAP: Mr. Lagarias.
14 MR. LAGARIAS: The time period of 1998 to 2003
15 will be a period where substantial reductions in emissions
16 will occur from the LEV and the ULEV, from the 98 percent of
17 the clean car program that will be phasing in.
18 The ZEV program is a very minor player in that
19 time period. And the reductions that we will achieve from
20 that will be met one way or another. But most of the
21 cleaning will come from the LEVs and the ULEVs and all the
22 cars that are being phased out over that period.
23 So, you're really pounding out a very small part
24 of this overall program. And I don't know how you read the
25 battery technology assessment, but I cannot come anywhere
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1 near the conclusion that you have that the batteries are
2 here now, other than the lead-acid battery.
3 MR. CARMICHAEL: Exactly. Other than the lead-
4 acid battery. Why is the Board or the staff determining
5 that lead-acid is not sufficient for a significant number?
6 The ITS study out of David determined that there--
7 you know, on the order of -- I think it was 15 percent of
8 the market for your, quote/unquote, "families" that would
9 buy a zero-emission vehicle as their next car was there.
10 MR. LAGARIAS: And that's what we want to find out
11 by actually putting them on the road. Because when you
12 forecast what's going to happen in the future, you can come
13 up with any answer you're determined to get as evidenced by
14 the proponents and the opponents to this assessment of the
15 program.
16 CHAIRMAN DUNLAP: Thank you, Mr. Carmichael.
17 We're going to --
18 MS. EDGERTON: Could I ask one question now?
19 CHAIRMAN DUNLAP: Sure.
20 MS. EDGERTON: Mr. Carmichael -- and this is in
21 response to Mr. Lagarias. I just want to have this straight
22 if you can clear this up.
23 If I understood you correctly, really, the main
24 thrust that I heard you saying is that you just don't think
25 it'll work, a huge ramp-up at the very last minute --
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1 MR. CARMICHAEL: There's no --
2 MS. EDGERTON: -- 10 percent in --
3 MR. CARMICHAEL: (Interjecting) There's no
4 indication on how CARB intends or the automakers intend to
5 go from 14,000 vehicles' commitment to production capacity
6 to a requirement to deliver a hundred thousand vehicles in
7 one year's time frame.
8 MS. EDGERTON: So, if I understand you right, your
9 concern is that you just don't think we're going to get it.
10 MR. CARMICHAEL: I don't think it can work.
11 MS. EDGERTON: And you'd like to see us take
12 little steps. I think Mr. Calhoun has been the advocate of
13 a stepped program, taking one step at a time. And I guess
14 your feeling is that -- if I understood you correctly, that
15 if we don't take one step at a time, then we're not going to
16 get across the river.
17 Thank you.
18 CHAIRMAN DUNLAP: Thanks, Mr. Carmichael.
19 Mr. Schutz, Mr. Ridenour. I have a note. Is Mr.
20 Patton here? Mr. Patton, I'm told, had to leave. He needed
21 to come up earlier. If Mr. Patton's here, he can be the
22 third speaker in the line. If not, Mr. Tom Austin of Sierra
23 Research.
24 Good afternoon, John.
25 MR. SCHUTZ: Good afternoon. Are we having fun?
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1 For the benefit of the court reporter, as it says
2 here, I'm John Schutz from Nissan R & D.
3 Nissan, in previous comments, has stated our
4 belief that in order for electric vehicles to succeed in the
5 market at anything greater than a token level, why, high
6 performance, long-life advanced batteries are required.
7 We concur with the Battery Tech Audit Panel that
8 the lithium-ion technology offers the best potential in the
9 next five to ten years.
10 Accordingly, Nissan is focusing our efforts on
11 developing those batteries for electric vehicle use. To
12 that end, Nissan has joined in preparing the proposal that
13 Kelly has described, the industry proposal.
14 With regard to that proposal, I want to stress the
15 importance of doing that as a development process and
16 dedicated to explore the full potential of the candidate
17 battery technologies for EV use.
18 That's really the mindset that we have to adopt;
19 in order to make EVs succeed, we've got to make sure we've
20 got batteries that work.
21 And so, this program has got to be treated not as
22 a numbers' game but as a development program.
23 Now, in the past weeks, a staff proposal has
24 emerged that includes many of the elements that are
25 supportive of and consistent with the development process.
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1 thus, for the most part, Nissan can accept the elements of
2 the staff proposal.
3 However, on this critical issue of 2003 and 2004,
4 Nissan shares the concerns that have been expressed by my
5 colleagues and discussed, that that one year does make a big
6 difference, not only because of the issues of being able to
7 provide proper offsets but, from our point of view,
8 primarily from the standpoint of making sure that the
9 batteries have enough time to be developed.
10 We believe that at least three iterations of pilot
11 use of the batteries will be necessary. We're talking about
12 batteries that are going to have a thousand to 1200 cycles
13 life from 100 to 150 miles per cycle. So, these could be as
14 much as a hundred to a hundred and fifty thousand mile
15 batteries.
16 It takes a long time to run realistic tests on
17 those kind of batteries to make sure that what we're putting
18 out there for the customers is going to work and is going to
19 be satisfactory and is going to be reliable.
20 So, the testing here is no small part of the time
21 required. We are also talking about significant cost
22 reductions that need to be implemented in the batteries.
23 Those reductions are going to involve changes to the
24 batteries that are going to have to be tested adequately.
25 So, our concern, primarily, is adequate test time.
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1 That's really the -- that's really the issue. We think the
2 batteries are good enough to please a lot of customers in
3 California, but we need time to make the batteries work.
4 So, we will continue to work closely with the
5 staff. We urge the Board to direct the staff to adjust the
6 timing as we've talked about. We think the 2003-2004 issue
7 should go with 2004.
8 We'll continue to work closely with staff on the
9 details, and I hope we can reach a satisfactory conclusion.
10 MR. LAGARIAS: Thank you, Mr. Schutz.
11 SUPERVISOR ROBERTS: Could I just ask a question?
12 It hasn't been clear to me what Nissan has done to
13 date with respect to testing. You said there's a lot of
14 time needed for testing. And we've evidence of some of the
15 other companies in their testing programs.
16 MR. SCHUTZ: Sure.
17 SUPERVISOR ROBERTS: Could you tell us a little
18 bit about what Nissan has done?
19 MR. SCHUTZ: Sure. Yeah, we've had -- well, to
20 start with, we've had about 30 years of experience with
21 lead-acid batteries. We've had programs going. We have
22 about 25 vehicles that we've sold in the past couple of
23 years to utility companies and the government in Japan,
24 which are operating on the street now with lead-acid
25 batteries.
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1 We've been working -- we have a couple of vehicles
2 in this country as well. We'll be delivering one to a
3 utility company next month in fact. I'm talking about lead-
4 acid.
5 SUPERVISOR ROBERTS: You're talking about two
6 cars?
7 MR. SCHUTZ: In the U.S, yes, in the U.S.
8 We have -- we have been working on the lithium-ion
9 program for three years with Sony. We have vehicles in test
10 with t hose batteries in Japan now. We have a couple of
11 vehicles actually in this country with lithium-ion batteries
12 in them that will be shown at the Los Angeles Motor Show in
13 January.
14 They will then go back to Japan for further
15 testing. But we are at the point now of having drivable
16 vehicles with full lithium-ion battery packs.
17 We expect to have another vehicle in this country
18 later this coming year, sometime midsummer, for hot weather
19 testing and cold weather testing with lithium-ion batteries.
20 That's in my project plan for this coming year.
21 We expect then to have five to ten -- or excuse
22 me, ten to twenty vehicles in 1998, in California as part of
23 its demonstration fleet with lithium-ion batteries. That's
24 our commitment for the initial year.
25 And, of course, we will proceed from there.
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1 SUPERVISOR ROBERTS: And will our staff have
2 access to testing one of those vehicles?
3 MR. SCHUTZ: Oh, I'm sure we can work that out,
4 yes.
5 SUPERVISOR ROBERTS: Okay.
6 Mr. Boyd, did you note that?
7 MR. BOYD: So noted.
8 CHAIRMAN DUNLAP: Any other questions? Thank you.
9 Mr. Ridenour of Chrysler. then Mr. Austin.
10 MR. RIDENOUR: Good afternoon, Mr. Chairman, CARB
11 Board members. Name's Eric Ridenour. I'm the Director of
12 Environmental Energy Planning for Chrysler. This is my
13 first opportunity to present before the Board. And I want
14 to thank you for the time today.
15 I won't replicate all the points that have been
16 made earlier by my colleagues and my competitors, except for
17 just a few following brief comments.
18 The industry proposal that Kelly Brown showed you
19 before has several key elements that provides electric
20 vehicles as early as the '98 model year. It provides an
21 advanced technology partnership that gives electric vehicles
22 the very best chance for success. And because of a
23 serendipitous opportunity created by the national LEV
24 program, we will provide more clean air benefits than the
25 current program, and we think that's the win-win-win we
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1 talked about before.
2 The staff proposal that was presented is similar
3 to the auto industry proposal and represents what we think
4 is a solid basis to begin finalization toward an agreement.
5 However, we have one major issue with the
6 proposal, and I think you've heard it enough times that I
7 won't even go into it, but it's the 2004 versus 2003.
8 The two key repeated themes made in all the
9 workshops and all the discussions to date have focused on
10 protecting a successful EV launch and the preservation of
11 the SIP.
12 A seemingly simple adjustment made to the timing
13 for the 10 percent mandate that's been done since last
14 week's meeting places both of them at additional risk.
15 First, the key to stabilizing the SIP has been the
16 successful introduction of cleaner burning vehicles through
17 the nationwide LEV program. And to try and minimize the
18 amount of repetitive repetition (sic) here, the program's
19 now at risk. Pertaining to the availability of the ZEV
20 mandate within the period under discussion in the Northeast,
21 which the one year does, risks getting a final agreement.
22 And it's just a risk. It's not an absolute.
23 This places the success of obtaining the migration
24 benefits from the national LEV program, which are needed to
25 maintain the SIP, into the hands of States outside of
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1 California. And retaining the 2004 model year start for the
2 program would eliminate what we think it's a major obstacle.
3 As for the successful launch of an EV, we know
4 that advanced batteries are the key. We learned from the
5 battery audit team that those batteries may be coming, and
6 that they have a chance of making EVs a success. But no one
7 can predict with certainty when they will get here, and some
8 of the more promising technologies are further out on the
9 planning horizon.
10 John Schutz just talked about one of them. It's a
11 little bit behind some of your nickel metal hydrides. The
12 battery audit team has stated that they cannot say with
13 certainty that these advanced batteries will be there in
14 2003 or 2004, just too hard to pin down exactly when you're
15 going to have the breakthrough. What they have told us,
16 though, is that the one year will greatly increase the
17 chance of success for that program, especially not including
18 advanced technologies, which moving forward may do.
19 By moving the required start date forward, we may
20 preclude the fair chance of some of those advanced
21 technologies, which may have more promise, from getting into
22 fruition.
23 In summary, the benefits of the one year pull
24 ahead are far outweighed by the risk to the successful EV
25 launch and maintaining the stability of the SIP. We urge
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1 the CARB Board to reconsider the reinstatement of the 2004
2 model year start date, which will guarantee the support of
3 the technology development partnership, the U.S. ABC Phase
4 II program, the public education. A lot of the items on the
5 list are things that we have tried to do in order to try and
6 make this program a success, and we'd like to be able to
7 continue that.
8 And, at a minimum, we'd like to make sure that
9 there's some flexibility to at least review that final date
10 before we get to the end point, which I guess now is in
11 March instead of February.
12 The current five-year suspension places the
13 national LEV program at risk and puts the success of this
14 program in California in the hands of States outside of
15 California.
16 We think you can control your own destiny on this
17 issue. We are prepared to work together in this
18 partnership. And let's the program its best chance of
19 success.
20 Thank you very much. I'll take any questions you
21 may have.
22 CHAIRMAN DUNLAP: Mr. Calhoun.
23 MR. CALHOUN: I guess I'd like to ask you the same
24 question I asked one of the other speakers.
25 MR. RIDENOUR: Uh-huh.
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1 MR. CALHOUN: And that is advantage, if any, of
2 reviewing this issue in the year 2000. The staff indicated
3 that they would have a subsequent review.
4 How would that impact the business decision that
5 Chrysler has to make?
6 MR. RIDENOUR: For the actual launch or just --
7 MR. CALHOUN: The difference between 2003 and
8 2004, the going to the 10 percent.
9 MR. RIDENOUR: There's two items. One is the
10 direct business decision. Obviously, with the 2000 model
11 year review, 2003 is going to occur quicker. We're going to
12 be further down the pathway. If it's the wrong pathway and
13 it needs adjustment, there's risk to that.
14 Where we really think the biggest risk is
15 decisions are going to be made well before that to ensure
16 we're on the right track. For instance, if we are uncertain
17 because you have to wait for the review process to end to
18 know what kind of adjustments may be made or may not be
19 necessary at all.
20 You may have to make decisions ahead of time. For
21 instance, if lithium-ion that was mentioned before has some
22 hiccups, and it gets a little further delayed, which is a
23 very real possibility -- the Battery Audit Panel said from
24 2002 to 2006, is the likely time for that to come in -- and
25 you know you need to meet a program in 2003, you're going to
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1 have to go with something else. You're going to have to
2 need the certainty.
3 That's how we got into the issue today with lead-
4 acid. We had to go with the technology we knew would be
5 there, would be cost-effective, and could be delivered.
6 So, it's the preclusion of technologies and the
7 preclusion of options we think the one year makes -- the
8 2000 review is -- is nice, because it allows you a chance to
9 make sure that we're on the right course, which you'll
10 already be on the road and will be on the direction you want
11 to be.
12 And so, I think the one year can have a very
13 serious impact, because technology -- we're waiting for a
14 breakthrough. And that breakthrough, we're going to know
15 with some amount of leadtime, but not with a lot. Because,
16 as you know, the durability and reliability data takes time
17 to develop, and failures happen. Things don't go just as
18 well as planned.
19 MR. CALHOUN: Thank you.
20 CHAIRMAN DUNLAP: Any other questions of Mr.
21 Ridenour?
22 Okay. Thank you.
23 MR. RIDENOUR: Thank you very much.
24 CHAIRMAN DUNLAP: What's the battery in that
25 computer, by the way?
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1 MR. RIDENOUR: I believe it's a nickel metal
2 hydride, and I've been sweating it the whole time that it's
3 go out.
4 CHAIRMAN DUNLAP: But it didn't, did it?
5 (Laughter.)
6 MR. RIDENOUR: No, there's two of them in here.
7 CHAIRMAN DUNLAP: Mr. Austin of Sierra Research,
8 followed by Peter Welch, followed by Ted Costa.
9 MR. AUSTIN: Thank you, Mr. Chairman. I've a very
10 brief statement this morning.
11 As you know, last week, I presented testimony on
12 several alternative control measures that our company had
13 developed in response to a request we got from Western
14 States Petroleum Association.
15 At the meeting last week and in subsequent
16 discussions, we've gotten several verbal comments on some of
17 these alternatives.
18 The alternatives included five different measures,
19 the two most significant of which were the 49-State low-
20 emission vehicle program that's been discussed earlier
21 today, and a change to the smog-check program that we were
22 advocating to look at underhood emissions.
23 All five measures together had a total of 79 tons
24 per day of smog precursor reductions, which contrasted with
25 the 14-ton per day estimate the staff has for the electric
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1 vehicle program.
2 So, we thought they'd be an especially good deal,
3 because the cost-effectiveness ratio based on our
4 preliminary calculations is that it would be at least 90
5 percent more cost-effective, 90 percent lower cost per ton
6 removed.
7 Regarding the 49-State low-emission vehicle
8 alternative, all of the evidence we think suggests that
9 vehicles will perform -- these vehicles would perform well
10 in customer service; that the Board can be certain that
11 these would be real emission reductions.
12 The emission factors model that EPA uses to look
13 the performance of vehicles like the 49-State LEVs in
14 customer service would indicate that those vehicles would
15 end up having lower emissions if they were used in States
16 like Oregon, Arizona, and Washington, where the IM program
17 is such that -- is stringent enough that we'd actually
18 expect to see emissions in customer service being somewhat
19 lower from those vehicles than EPA would predict under the
20 current California smog-check program, or the new smog-check
21 program that's going to be implemented soon.
22 I'd also like to address my attention briefly to
23 an attachment to my written testimony. I have a one-page
24 attachment where I've extracted from the Clean Air Act
25 amendments of 1990, the actual language having to do with
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1 what EPA can and cannot do with the emission standards for
2 light-duty vehicles, passenger cars and light-duty trucks,
3 by 2003 or by 2004.
4 And I'm not going to read any of this language,
5 but I think, if you look at it closely, you'll have a better
6 perspective on what some of the auto companies are concerned
7 about, and you'll also have a better perspective on our view
8 as to why we think that there's less uncertainty associated
9 with this 49-State LEV program than you might have heard.
10 There is no certainty associated with EPA adopting
11 something akin to the California LEV program by 2004. They
12 have the latitude to do it under the Clean Air Act
13 amendments, as is shown here, but the past experience that
14 this Board has had with EPA helping out by cleaning up 49-
15 State cars has been less than a smashing success.
16 EPA has typically adopted less stringent standards
17 at the national than they could have, and it's not at all
18 clear to me that they are likely to adopt standards as
19 stringent as the staff is assuming for 2004.
20 I'd also like to make a very brief comment on the
21 New York and Massachusetts issue. I haven't been following
22 this issue very closely lately. But about a year ago, I was
23 involved in it. I spent several days sitting through public
24 forums of the type that the Air Resources Board has had on
25 the electric vehicle issue.
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1 And, quite frankly, I'm glad not to be involved in
2 it any longer. It was mind boggling what we had to listen
3 to. This is a highly political issue in the Northeast as it
4 is in California. As in California, the electric utility
5 industry is heavily involved in promoting electric vehicles.
6 What's amazing is that the power plants in the
7 Northeast are absolutely filthy compared to the California
8 power plants. I can understand California utilities saying
9 electric cars are a good idea; they operate very clean power
10 plants. While charging emissions are a factor, they're a
11 relatively small factor.
12 They're not a small factor in the Northeast. And
13 the car companies have tried to explain that to New York and
14 Massachusetts, and they don't want to hear it. The
15 symbolism associated with this issue in the Northeast is
16 incredible and even though a logical case has been made for
17 why the 49-State LEV program would be in the air quality
18 interest of the Eastern States, it's not being accepted.
19 The other big alternative that we recommended was
20 a change to the smog-check program. One objective to this
21 alternative is that it's not a program that could be
22 implemented by the auto manufacturers directly. But the
23 costs of any program that's used to offset any emissions
24 lost from suspension or rescission of the ZEV mandate are
25 going to be borne by Californians. We therefore think it
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1 would be in the best interest of Californians to have those
2 reductions achieved at the lowest possible cost.
3 And to the extent that less cost-effective
4 programs are imposed on the manufacturers of new vehicles,
5 Californians are not only going to pay more for the same
6 emission reductions, but the cost of new vehicles is going
7 to be further increased and fleet turnover is going to be
8 reduced, leaving older, higher-polluting cars on the road
9 for a longer period of time. And we don't think there's
10 really any equity in that.
11 We recognize that neither the 49-State vehicle
12 emissions nor underhood emissions are properly accounted for
13 in the current emissions inventory or in the SIP. That's
14 been another issue.
15 However, we think that it doesn't mean that the
16 benefits of controlling these emissions are uncertain. We
17 think it should be recognized that the SIP contains a number
18 of errors involving both underestimates and overestimates of
19 emissions occurring in various categories.
20 And the fact that we've identified some sources of
21 emissions not previously accounted for is a poor excuse for
22 discounting the benefits of controlling them. If anything,
23 these reductions are more certain than the reductions
24 estimated for EVs. The emission reductions your staff has
25 projected for EVs are not just uncertain; in our view, they
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1 are unrealistic.
2 The assumption that EVs sold under the mandate
3 will, on average, be used just like new gasoline-fueled
4 vehicles is something we think has clearly not been
5 demonstrated.
6 In summary, we believe there are more -- there's
7 more uncertainty associated with the emission reductions
8 assigned to the ZEV mandate than to the alternative control
9 measures we have suggested.
10 We also think it is clear that the alternatives
11 will be much less costly.
12 I'd like to make one other comment on previous --
13 the previous discussion this morning.
14 I noted with interest the comments of Board member
15 Edgerton, who said, in addition to having more and more
16 people to deal with, we have more and more pollution to deal
17 with.
18 And if that's the perspective that some of the
19 Board members have, I can understand why there would be an
20 interest in trying to make some radical changes to the way
21 vehicles are manufactured.
22 But that's not the situation. We don't have more
23 and more pollution to deal with every year. We have less
24 and less.
25 This Board, under its current and past leadership,
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1 has been successful in making major progress in cleaning up
2 the air pollution problem in California. And a lot of that
3 comes from selling new cars and keeping the fleet turning
4 over, and I hope that you'll end up making a decision that
5 will continue that same progress.
6 Be happy to answer any questions.
7 CHAIRMAN DUNLAP: Thank you. Any questions?
8 Jack? I sensed a question to my left.
9 MR. LAGARIAS: Mr. Austin, when you were Chief
10 Executive Officer of this Air Resources Board, you prepared
11 estimates of emissions. How do you compare the estimates
12 that were prepared in your time compared to the emission
13 estimates that are prepared today?
14 MR. AUSTIN: How do we compare the accuracy or --
15 MR. LAGARIAS: The accuracy.
16 MR. AUSTIN: -- the total amount?
17 Well, obviously, as time goes on, I think the
18 techniques we have for estimating emissions get better and
19 better. But when you take a look at what we thought the
20 emissions were going to be -- what we thought they were back
21 in the 1970s, and what we thought they would be in this time
22 frame, we were off by 50 percent or 100 percent, or
23 something like that. We've made a lot of progress in better
24 estimating emissions.
25 And quite often, we see we're missing emissions
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1 that are really out there. And I think we still have a lot
2 of that problem with the current emission inventory. We've
3 got better inventories now, and we still have room for
4 improvement.
5 MR. LAGARIAS: And the emission inventory model is
6 constantly being upgraded to reflect these changes.
7 MR. AUSTIN: Yes. It's been changing ever since
8 I've been involved with the program. And that goes back to
9 the early 1970s.
10 MR. LAGARIAS: Thank you.
11 CHAIRMAN DUNLAP: Mr. Calhoun.
12 MR. CALHOUN: I assume, Mr.Austin, from what you
13 said, that there's a tremendous benefit for having the
14 49-State program in the other States in terms of air quality
15 benefit.
16 MR. AUSTIN: In my view, and I have studied this
17 issue quite closely, there is a significant benefit to
18 California. There is an even larger benefit to the Eastern
19 States.
20 MR. CALHOUN: And I also heard you say that, as
21 far as the Northeast States are concerned, that the desire
22 for electric vehicles is more political than what it would
23 do for air quality, because it's fuel/oil No. 2, or whatever
24 it is, is going to be more polluting than the fuel that's
25 used here in this particular State.
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1 So, in terms of air quality, it isn't going to do
2 very much.
3 MR. AUSTIN: It's not just fuel/oil No. 2. In the
4 Northeast, there's a lot of coal, Northeast and the Midwest.
5 MR. CALHOUN: Which makes it even worse.
6 MR. AUSTIN: It makes it much worse. And you can
7 make a convincing case that unless there are radical changes
8 to the controls on power plants, the introduction of
9 electric vehicles, even if the public willingly buys them
10 and uses them as much as gasoline cars, will clearly cause
11 an increase in emissions.
12 MR. CALHOUN: Thank you.
13 CHAIRMAN DUNLAP: Anything else for Mr. Austin?
14 Thank you.
15 MR. AUSTIN: Thank you.
16 CHAIRMAN DUNLAP: Peter Welch, followed by Mr.
17 Costa, followed by Chuck Olson.
18 Good afternoon, Mr. Welch.
19 MR. WELCH: Mr. Chairman, members of the Board,
20 Peter Welch, with the California Motor Car Dealers
21 Association, a statewide trade association that represents
22 California's 1700 franchise new car dealers.
23 I thank you for the opportunity to be here today.
24 If I hear correctly, under your proposal, one way or
25 another, our dealer members will be selling electric cars in
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1 model year 1998.
2 As you may recall, we appeared before this Board
3 some two years ago. I believe it was March -- or May 13th,
4 1994, at your last biennial review.
5 At that time, we made a commitment to the Board on
6 behalf of the dealer members of our association that we
7 would be willing, more than willing to go forward and
8 market, and service, and sell electric vehicles in this
9 State.
10 However, we gave you the caveat that we couldn't
11 effectively do so without a competitive product, a
12 sustaining zero-emission vehicle infrastructure, and a
13 willing consumer market.
14 We made a determination before that last review at
15 our board of directors' level -- and, in fact, made a
16 paradigm shift in our policy on the electric vehicle
17 mandate. When it was adopted in 1990, the dealers in this
18 State were adamantly against it, primarily because they
19 thought it was an improper intrusion into their market
20 industry by a regulatory agency of the State.
21 There are a number of them that are still opposed
22 to that intrusion. However, our board has taken the
23 position that because of the bloated cost for new car
24 emission systems, which is a major contributing factor to
25 spiraling new car costs, and the fact that the long-term
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1 viability of the personal transportation business -- which
2 is the business we are in -- is dependent on radical new
3 product improvements, that we were crazy to turn our back on
4 this promise of a new technology.
5 So, I was instructed to cautiously go forward and,
6 in fact, check out the market viability for electric cars
7 and prepare our dealer members for what we perceive as a
8 revolutionary change in our industry.
9 Now, during that time, I've spent a lot of time,
10 made a lot of trips. I know you all have. I've attended
11 eight out of the ten workshops. I've actually traveled
12 thousands of miles in the last year. I visited production
13 facilities, driven electric vehicles, interviewed mechanics,
14 went to EV races, talked to executives, interviewed sales
15 people about sales techniques, did a lot of things.
16 We also, as you will recall, for your March
17 marketability workshop, we commissioned J. David Power and
18 Associates to provide for us and to make an unbiased market
19 report on probabilities of the successful launch of electric
20 vehicles in model year 1998.
21 I provided copies of that report to all the Board
22 members. I hope you've had an opportunity to read it. I'm
23 sure you're inundated with all sorts of stuff to read. I
24 think it's a pretty darn good report, and I've had a large
25 number of car dealers review it. And I have interviewed
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1 them to see if they concur with it. And they concur a
2 hundred percent with it.
3 Now, I'm not going to go through the marketing
4 reasons why we think that saturating the market just two
5 model years from now with lead-acid electric vehicles is not
6 the way to usher in a relaunch of this electric vehicle
7 phenomenon.
8 And I use the word "relaunch" because in my -- I
9 thought I had seen just about everything after I got through
10 all the workshops, and we conduct field meetings throughout
11 the State on a year-to-year basis. And just last month, I
12 was up in Eureka, California, and to my amazement -- and
13 perhaps we could place it up on the screen -- I found that
14 one of my dealer members -- perhaps we can lower the lights
15 so you can look at this picture here.
16 One of our dealer members, Harvey Harper, Harper
17 Motors in Eureka, was standing next to his 1914 electric,
18 Detroit Electric five-passenger Brougham Model 52. Harvey
19 had been a car dealer for over 40 years. And like most car
20 dealers, he's a complete car nut. He has a collection of 55
21 classic and antique autos, but this is his favorite car, he
22 tells me, because he has memories of chasing it down the
23 road as a child, and late bought it from the original
24 owners, who were a couple of wealthy spinsters.
25 The Brougham Model 52 was one of the most popular
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1 EVs of its day, because it featured five speeds, a top speed
2 of 24 miles, and a range of 50 to 85 miles per battery
3 charge. It also featured a clock, a flower vase. If you
4 look at it real close, you'll see Harvey put some cut roses
5 in the flower vase that made a nice touch in the picture.
6 It had windows that could be raised and lowered
7 with a cloth strap. The body parts and panels -- or, excuse
8 me -- the body panels and battery hoods, moldings, fenders,
9 window frames, and roof were all made of aluminum to lighten
10 its weight for increased range.
11 In 1915, the Brougham 52 retailed for $3,000 f.o.b
12 Detroit, including a guaranteed nonwash lead battery
13 containing 12 cells and 15 plates; or, for an additional
14 $880, the Brougham 52 could be shipped from Detroit with an
15 Edison battery, a 54 cell iron battery -- excuse me -- a 54
16 cell iron battery developed by Thomas Edison in 1910, which
17 gave the Brougham the 85 mile range instead of the 50 mile
18 range.
19 As I talked to the curator of Harvey's little
20 museum over there and started reading some of the
21 information he had on it, it turns out -- and my research
22 shows -- that in 1990 (sic), the year 1990, 38 percent of
23 the vehicles sold were EVs. Within a few years, they were
24 virtually extinct, because of improvements in the internal
25 combustion engine were taking place, so it made EVs
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1 obsolete.
2 The cumbersome internal combustion engine crank,
3 which turned most of the women off, by the way, because it
4 was so hard to turn, was replaced with an electric starter,
5 and the rough drive of early gas-powered one cylinder cars
6 was smoothed out with the addition of more and larger
7 cylinders.
8 The Brougham pictured here again, which sold in
9 1914 for $3,000 without the super battery in it, could not
10 compete with the most popular car sold that year, which was
11 the Ford Motor Company Model T, which had a list price in
12 1914 of $490.
13 From that point until today, no EV has been able
14 to match the speed, the power, dependability, and cost-
15 effectiveness of the internal combustion engine.
16 However, spurred by this Board's ZEV regulation,
17 the odds of an EV comeback have been greatly increased.
18 However, the fact of the matter remains that -- in our
19 dealer members' opinion -- we're not yet ready for a
20 successful relaunch of the EV, primarily because of the
21 battery pack shortfalls.
22 I think that it's ironic that nearly 90 years --
23 and this was a good reminder, as I went up there -- and I've
24 driven the Impact; I've driven five of the seven
25 manufacturers' cars now -- this car was not much unlike it,
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1 certainly on the range and what not. Very interesting
2 phenomenon. It was sort of like "Back to the Future."
3 Now, we concur that it is in the best interest of
4 a relaunch that we need to make radical changes to the
5 current regulation.
6 Although the current regulation has been a
7 successful driver of EV research and development, when
8 relaunch EV rubber hits the road, its success in the
9 marketplace will be determined by California consumers, not
10 State mandated production quotas.
11 For this reason, we believe and have always
12 believed that simply mandating the production of this car
13 is not going to guarantee its market success. I think you
14 know that. I think everybody in this room understands that.
15 The key to this regulation so far -- and I think
16 Board member Edgerton has properly identified it as a
17 regulation -- is it's been a driver effect. It's the
18 proverbial gun to the head. And it has worked very
19 successful so far. And only time will tell whether it will
20 be a continued successful driver of it.
21 The fact of the matter is, California's new car
22 dealers cannot guarantee a successful relaunch of EVs.
23 Likewise, the auto manufacturers cannot guarantee a
24 successful relaunch.
25 But more importantly, the automakers, because they
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1 are -- whether we like it or not -- in charge of the
2 production, the design, the chassis control, the drive
3 train, what battery supplier they're going to use, their
4 distribution of it, their marketing of it, their franchising
5 of it, their budgeting for it, and, yes, what price they set
6 for it.
7 They're in a position, whether you like it or not,
8 that perhaps doom a successful relaunch. I don't think that
9 they will intentionally do that. In fact, just as our board
10 of directors made a paradigm shift some two years ago, and
11 decided to back off and pave the way for hopefully a
12 successful relaunch, I have seen -- although it may not have
13 been detectable to some of the people in the room here -- a
14 paradigm shift in the manufacturers.
15 And that paradigm shift, I really think, has
16 really shone its light over the last several weeks, over the
17 last several months, and maybe the last year or two. They
18 have spent millions, hundreds of millions of dollars in
19 development of this product. And I know what they may not
20 admit publicly, that they have a sneaking suspicion that the
21 relaunch of this product may just, in fact, be successful.
22 And they are very concerned, as we are -- as our livelihoods
23 are tied up in it -- that it has to be done correctly.
24 Batteries are the name of the game. They always
25 have been; they always will. We're not going to have a
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1 breakthrough, a marketing breakthrough otherwise until we
2 get something that's going to stimulate the consuming
3 public's desire.
4 Again, not to rehash all of the marketability
5 workshops -- from a simple marketing perspective on it, I
6 have come to learn that the range is perhaps not the biggest
7 problem. When we get a battery that reliably goes a hundred
8 miles or more, there is going to be a sustainable market for
9 it. It's all cost.
10 It's always been cost, and it always will be cost.
11 Just as Harvey's Brougham 52 cost 3,000 and the Model T was
12 $490, when you put that in front of consumers in the closing
13 room of a dealership, their decision is going to be real
14 simple, and I hate to reduce it down to that. I hate to
15 stand up here and say the "emperor doesn't have any
16 clothes," but that's really what it comes down to when
17 you're talking about selling electric cars.
18 Now, just as the car dealers -- and I think the
19 manufacturers -- have made a paradigm shift in their policy
20 and attitude towards this, let's face it; it's time that the
21 Board, and the Board staff, and the rest of the public make
22 a paradigm shift in their review of this.
23 And what we're going to suggest here is probably
24 just what your staff has proposed. It's time to forge
25 partnerships here. The odds of a successful EV relaunch
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1 depends on the formation of partnerships between the major
2 stakeholders. Include in that the dealers, certainly the
3 manufacturers, certainly the utility companies, certainly
4 the infrastructure people.
5 Our members say they're willing to step up to the
6 plate. Now, I'm not talking about government subsidies
7 here. Our people carry their own weight. They're willing
8 to put infrastructure in their dealerships, willing to put
9 charger stations in the dealerships, and they're willing to
10 order and stock electric vehicles if they can make a profit
11 out of it. And they will have to do that, because they're
12 in the business to make a profit. Their employees depend on
13 it. The State sales tax revenue depends on it, et cetera,
14 et cetera, et cetera, et cetera.
15 Partnerships are forged through partnership
16 agreements, not administrative regulations and mandates.
17 The large volume auto manufacturers have reached out with a
18 responsible game plan to foster advanced battery development
19 to logically stimulate and nurture a hopefully successful EV
20 relaunch.
21 Signing an enforceable partnership agreement
22 instead of promulgating ream of regulations may seem alien
23 to you, but when it comes to actual manufacturing, selling,
24 and servicing electric vehicles, you can no longer simple
25 issue regulations and then sit back and watch the industry
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1 and environmentalists duke it out.
2 You must assume a new role. You must assume a new
3 role as a partner/facilitator in addition to your role as
4 regulator, or the successful relaunch of EVs will be doomed
5 for failure.
6 Thank you. I'll take any questions.
7 CHAIRMAN DUNLAP: Thank you, Mr. Welch, for your
8 reasoned take on this issue.
9 Any questions of Mr. Welch? Very well. Thank
10 you.
11 Okay. Mr. Costa, Mr. Olson, Bill O'Brien of
12 Hawker Energy Products.
13 If I might, we're going to allow our court
14 reporter to take a break. Just a moment.
15 (Thereupon, there was a brief pause in the
16 proceedings while the court reporter replenished
17 her shorthand paper.)
18 CHAIRMAN DUNLAP: I'd like to remind the witnesses
19 that -- particularly those that have given us copies of
20 their comments -- don't feel compelled to read it. If you
21 just highlight it, and I'll assure you that I'll do
22 everything I can to encourage/make my Board member
23 colleagues read it before the day is out, and I will use
24 what influence I may have in that regard.
25 Okay. Please, sir.
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1 MR. COSTA: Thank you very much for the
2 opportunity to be here. My name is Ted Costa. I'm the CEO
3 of People's Advocate, Inc.
4 I do have a prepared statement, which I put in
5 your packets. I'm going to make some comments in
6 relationship to what I've heard here today.
7 People's Advocate, Inc. has about 320,000
8 households on its mailing list here in the State of
9 California. Of that, 171,000 of them have made
10 contributions to People's Advocate in the last two years.
11 The average contribution is about $15 or so. And
12 I can assure you what you heard from the other speakers is
13 just not true. And my briefcase isn't full of oil company
14 money, nor is automobile money, nor does Pete Wilson call me
15 up in the morning and give me instructions.
16 We are a grassroots organization. And from the
17 bottom of my heart, it's an outrageous allegation to infer
18 that because someone wants to come here and testify, that
19 they should be intimidated, that somehow they're on the
20 take. Our records are open to any of our members, to any
21 members of the Press that would like to come in and check
22 People's Advocate on that matter. And I just wanted that
23 noted here today.
24 Incidentally, the last time we had any dealings
25 with my Governor was that he was taking money out of the
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1 PERS' account, and we got a million people to sign the
2 petition, and we stopped that. haven't heard from him
3 since.
4 Anyway, I'd like to get on with the subject at
5 hand here. I think this issue -- I can see a parallel
6 between the seventies, the eighties, and the synthetic fuel
7 program. I think if you look at the basic structure, if you
8 take it and just outline it, you will see well-meaning
9 people trying their damnedest to do something about it as a
10 tremendous problem.
11 In my opinion, the problem, it just won't work. I
12 know on our board of directors of People's Advocate, we have
13 two retired college professors, one a professor economics,
14 another one a professor of management. Both of them are
15 just adamant that this program just won't work.
16 In a free enterprise system, you just cannot
17 mandate that people do things. I mean, you might take
18 control of the factory, control of the production, but it
19 doesn't work that way in a free economy.
20 I mean, we cannot give up our freedom for a well-
21 meaning program. It won't work in my very humble opinion.
22 The program really -- it tells people what to make, tells
23 them how to make it, and that tells people what to buy. And
24 that is counter to -- to the free enterprise system, which
25 made this country great.
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1 It is -- the open market system just can't work in
2 that fashion. And basically, that's the crux of what I want
3 to tell you.
4 But I do see here, since I've been involved in
5 this thing, I know in the beginning, I was trying to whip up
6 a little support here, I called the Chamber of Commerce.
7 And they said, well, they didn't know whether they wanted to
8 get involved.
9 Now, I'm getting faxes from them. They want me to
10 help them publish a thing (sic). So, a coalition is coming
11 together now, folks, and I'll tell you from -- on behalf of
12 the board of directors of People's Advocate, if we have to
13 go to the people again, we're prepared to do so. We've
14 never taken on environmental issues, but we've seen what's
15 happened in Bakersfield with one of our members, one of
16 those 170,000 people down there. And maybe the people of
17 the State of California in about 1998, should -- if they see
18 freeways that go nowhere and see a program that goes
19 nowhere, maybe they would have something to say about that,
20 to set down some guidelines, guidelines that will work.
21 In leaving, I wish you would -- if you have any
22 friends that are professors of management, I doubt that you
23 will find any of them -- that's a pretty tough statement,
24 but I'll stand by it. I doubt you'll find any of them that
25 will tell you that the program will work.
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1 And with that, I will submit the written thing and
2 thank you very much for the opportunity to be here.
3 Any questions, I'd be happy to try and answer
4 them.
5 SUPERVISOR ROBERTS: Thank you, Mr. Costa. I
6 believe we have a comment.
7 MS. EDGERTON: Mr. Costa, when you refer to some
8 of the materials about State controlled and mandated
9 production in the Soviet Union, those weren't technology
10 forcing.
11 MR. COSTA: I don't think I -- okay, it's in there
12 briefly, yeah. The point is --
13 MS. EDGERTON: I just think you ought to try to
14 get your -- some of your facts correct on that.
15 MR. COSTA: No, no, no, no. Top-down management
16 has been shown that it just doesn't work. I mean, how many
17 seven-year programs did they have in Russia? They were
18 probably very well-meaning programs. It didn't work. They
19 couldn't build enough houses. They couldn't build enough
20 cars. They couldn't do anything. They couldn't even grow
21 enough food to feed themselves with.
22 SUPERVISOR ROBERTS: I don't think -- if you guys
23 want to debate the Soviet Union, we can do that later.
24 Tony Cygon, followed by Chuck Olson.
25 UNIDENTIFIED SPEAKER IN AUDIENCE: Tony Cygon, he
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1 had to leave.
2 SUPERVISOR ROBERTS: He's not here?
3 UNIDENTIFIED SPEAKER IN AUDIENCE: He had to
4 leave.
5 SUPERVISOR ROBERTS: Okay. Chuck Olson, then
6 followed by Bill O'Brien.
7 MR. OLSON: Good afternoon, Board and staff.
8 Thank you for letting me come here. I was here last week,
9 and I realized all the stuff that I forgot to say. So, I'll
10 try and say it this time.
11 I am an individual, but I am a member of the
12 Electric Auto Association. We've been in existence 23
13 years. We had the land speed record of 175 miles an hour
14 since 1974. And General Motors took it away from us a year
15 ago March.
16 SUPERVISOR ROBERTS: And somebody's taken it from
17 them I understand.
18 MR. OLSON: What's that?
19 SUPERVISOR ROBERTS: I understood somebody's taken
20 it from them.
21 MR. OLSON: Oh, is it beyond 183 now?
22 SUPERVISOR ROBERTS: So I'm told.
23 UNIDENTIFIED SPEAKER IN AUDIENCE: It is.
24 MR. OLSON: It is, all right. I need updating.
25 Okay. And then, also, in our membership, we had a
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1 fellow with lead-acid batteries, by recirculating the
2 electrolyte, going 230 miles on one charge.
3 I think, myself, the reason the gas companies
4 don't like electric cars is the components that's needed in
5 a gas car that's not needed in an electric car. An electric
6 car, all your maintenance is cleaning the terminals off and
7 putting water in the battery. And you don't have a whole --
8 we had a whole long list of stuff that's not needed for an
9 electric car. And it was at our rally.
10 Speaking of the rally, in my car, I had four-year-
11 old batteries, and I went 70 miles. Okay.
12 Let's see. Oh, yeah. In our club, also, we went
13 from Stanford to L.A. We used silver zinc batteries. We
14 figure in a way that's cheating, because the batteries are
15 $20,000 apiece.
16 But I think the way to go is lead-acid batteries
17 that recirculate the electrolyte.
18 And then, one step further is to use a base of a
19 battery, and then just replace the single cells.
20 Essentially, you would have new batteries all the time. And
21 you could have a computer readout saying which cells to
22 change all the time.
23 Let's see. There was an electric car before a gas
24 car. That was even illustrated before. And one of the
25 engineers in the club, he said that, if you figure the units
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1 in BTUs, the gas car would have to go 200 miles to the
2 gallon in order to equal electric cars. I don't know this,
3 but this engineer said it.
4 Oh, yes. The average distance that people go in
5 cars all over the whole United States is 25 miles a day at
6 the most. So, our cars -- this last rally, they've gone 98
7 miles, 102 miles last year. My car's gone earlier 119 miles
8 in one rally.
9 That's what they mean by lead-acid batteries that
10 work today for 90 percent of most people's driving.
11 You don't need the exotic batteries. You can get
12 by with less. Now, I have a tape t hat -- it's "After the
13 Warming," James Byrd. And this was done about 15 years ago.
14 And surprising as it seems, they predicted the Gulf War in
15 this, too. And it's a projection into the future. It's
16 where you go to 2050 and see how you got there by the air
17 quality and the greenhouse effect.
18 And it's very short, just done the last part of
19 it, and I'll finish with that.
20 And if there's any questions --
21 SUPERVISOR ROBERTS: This is only a minute or so,
22 Mr. Olson?
23 MR. OLSON: Yeah, it's only about two or three
24 minutes I think.
25 SUPERVISOR ROBERTS: Well, wait a minute. Wait a
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1 minute.
2 MR. OLSON: But it's short. Actually, I'm having
3 those tapes delivered. It comes in two parts, and they were
4 supposed to be delivered this morning. And I'm going to
5 make copies of them and I'll see that the Board gets them
6 and the staff gets a copy of them.
7 SUPERVISOR ROBERTS: Okay. We'd appreciate that.
8 MR. OLSON: It's quite lengthy. That's why I just
9 picked a small piece of it. But I guess he might have a
10 little difficulty in getting it to --
11 SUPERVISOR ROBERTS: If we're going to have the
12 unedited version of --
13 MR. OLSON: Well, actually, it's just a small clip
14 that I thought the gist of the whole thing was. It was
15 rather interesting, and it puts your job into perspective.
16 You guys have got an awesome job. I wouldn't want
17 it. That air quality not only affects California; it
18 affects the whole world.
19 (Thereupon, the tape was played for a
20 short time.)
21 MR. OLSON: Really, it affects the ecology of the
22 world, the air, and you guys have got an awesome job. And I
23 want you to keep that in mind while making your decision,
24 because it -- I'd like to see the mandate in place.
25 SUPERVISOR ROBERTS: Okay. Thank you. Thank you
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1 for taking the time to join us, and we'll look forward to
2 seeing the unedited version of your film.
3 Mr. O'Brien, followed by Arthur Cartwright.
4 MR. O'BRIEN: I'm Bill O'Brien, and I work for
5 Hawker Energy Batteries. We are a manufacturer of lead-acid
6 batteries. We're part of a $15 billion organization. We
7 have factories in France and England and the United States.
8 In the United States, we employ about 50,000 people in
9 various industries.
10 What I'd like to talk very briefly today is about
11 the value of the lead-acid battery and of the testing we
12 have been doing in a program with the Department of Energy
13 and the utilities out in Phoenix.
14 The data which is up on the screen basically will
15 show you exactly what you can get from a lead-acid battery
16 in the real world, with real drivers, in hot climates.
17 Before we got involved in this program -- by the way, the
18 amount of business we would get from the electric vehicle
19 industry would represent probably less than one-twentieth of
20 one percent of our total sales.
21 So, right now, it's not a new business
22 proposition. However, we recognize that we have
23 technologies here that could support the EV industry, an EV
24 industry that is based on people who live in the L.A. Basin
25 and who do not drive more than say 40 miles a day.
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1 Now, the first slide basically is to do with the
2 vehicle emission requirements. We considered things like
3 mileage, the average mileage daily, the maximum mileage,
4 speed of the vehicle,, the payload of the vehicle, the
5 temperature, the ambient temperature. Remember, you hear a
6 lot about advanced exotic batteries. I would advise the
7 Board or anybody to question and nit-pick every single
8 statement made about any battery in terms of its future of
9 what it can and cannot do. If you do not, things sound very
10 rosy.
11 The actual lead-acid battery here is a sealed,
12 fairly advanced battery. It's the kind of battery that be
13 fast-charged in five minutes, five minutes in terms of 50
14 percent of its capacity returned; in eight minutes,
15 approximately 80 percent of its capacity returned.
16 Next slide, please.
17 The other things we looked at were the actual --
18 this was a ZEV battery. First of all, first and foremost,
19 safety. The safety issue is of paramount concern to us as a
20 manufacturer. What do we mean by safety? We mean, by
21 safety, that in the event of a crash, these batteries do not
22 spew acid in the crash area. In fact, these batteries are
23 sealed, recombining the battery, so you cannot -- acid
24 cannot spill from the battery no matter what you do in a
25 crash.
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1 The only way you can get acid out of the battery
2 is you have to rip it apart, take the separators between the
3 plates, and squeeze it, and that's how you get acid out of
4 the battery.
5 The second thing is reliability. We cannot
6 emphasize the importance of reliability. You can get all
7 the most fanciest statements and figures you want from
8 laboratory testing. But when you put your battery out on
9 the road -- and you'll see a little later in this slides --
10 and that battery's been driven by somebody who drives the
11 way they drive, it's on four wheels; it's subject to
12 environments of wind and rain, and rough conditions,
13 reliability really matters.
14 You can produce a battery and put it into an
15 electric vehicle. If that battery would not start for you
16 every day, every week, every month -- otherwise, it's not
17 reliable.
18 Now, a lot of things are said about the lead-acid
19 battery. If you really considered a lead-acid battery, if
20 you were to remove that battery from your car, or if you
21 were to remove the batteries from your planes, or from your
22 telephone systems, the whole place would shut down.
23 The lead-acid battery is a significant technology
24 and right now, it's technology which is labeled as something
25 that will deliver 60 miles between charges.
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1 The fact of the matter is that the theoretical
2 values of lead-acid battery technology have never been
3 achieved. Our company at the moment has been testing this
4 particular battery. And the battery we are testing will be
5 replaced next year with an improved design. Next slide,
6 please.
7 The battery range or the vehicle range depends on
8 the driving habits of the operator, the driving conditions,
9 the aerodynamic drag, the accessory use, the tire
10 resistance; in other words, you can lay all the problems on
11 the battery, but there are other issues associated with
12 batteries that affect the overall performance of the
13 vehicle.
14 I'll give you an example. Part of my job is to be
15 in the desert testing vehicles on test tracks near Phoenix,
16 where General Motors and Chrysler test their vehicles. On
17 one occasion, we were driving on the Interstate -- on 17
18 north of Phoenix.
19 We were following one of the trucks which we test.
20 It's a Chevy S10 pickup truck. The truck was traveling at
21 about 70 miles an hour, and suddenly he pulls off to the
22 side.
23 The reaction from the people in our follow van and
24 our follow along van was, what's wrong with the battery?
25 Well, we pulled the truck off -- when we got to the site, we
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1 pulled off, and we looked at the electric vehicle. We found
2 that there was nothing wrong with the battery.
3 What was wrong was that the temperature on that
4 day inside the hood had reached 140 degrees F., and one of
5 the switches in the control inverter had actually switched
6 off. And that's why the car stopped.
7 However, the immediate reaction was it's the
8 battery.
9 Next slide, please.
10 These are the trucks which are tested in this
11 program. There are approximately 300 of these trucks with
12 utilities right now. All these trucks carry the Hawker
13 battery. One of the things that happened was that the
14 battery will fit in these trucks, and the batteries were
15 never fully charged, and so the batteries degraded. And, as
16 a result, the reaction was the batteries weren't any good.
17 Next slide, please.
18 As you can see this slide, an example of the
19 battery. On the slide, you will see the figure 37. 37 is
20 the miles, is the range of the truck at about 2,500 miles.
21 When the truck was new, it was delivering 70
22 miles. By 2,500, it was delivering 37 miles. Again, what's
23 wrong with the battery?
24 What was wrong with the battery was that the
25 onboard charger was underpowered and the battery had cycled
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1 down.
2 Hawker had been developing for about six months a
3 new charge algorithm, and then programmed that charge
4 algorithm into the charger. The charger's built by a
5 division of General Motors-Hughes. And on the first run,
6 the battery came back and delivered -- I can't see it from
7 here exactly. I think it's 95 miles.
8 The next slide, please.
9 By the way, these tests are done on a test track,
10 at the moment a Chrysler test track. And the vehicles are
11 driven everyday in the City of Phoenix, and then at the end
12 of the month, they are tested to see how the battery has
13 developed during that week.
14 This is the same battery. By the way, this is the
15 original battery in this particular truck. And I'm talking
16 about this one, because it is the truck with the most miles
17 on it.
18 On the next one, the battery was tested at 45
19 miles per hour constant speed, and it delivered just over
20 100 miles with the lead-acid battery.
21 Next slide, please.
22 This slide shows the same battery in the most
23 recent test, which is November. The battery now has just
24 under 14,000 thousand miles on it. And on the last test,
25 which was -- the test was last -- about three weeks ago, it
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1 had run for about 96 miles in that test.
2 Next slide, please.
3 And a part of this program is to actually look at
4 fast-charging the batteries. And this particular -- with
5 this particular battery, in five minutes, 50 percent of the
6 energy returned to the battery; in eight minutes, 80
7 percent; and in 30 minutes, the battery was 100 percent
8 charged.
9 These weren't done by Hawker. These were done by
10 independent people, the utilities. This particular test was
11 done by a company in Canada. All of this, of course, is
12 verifiable.
13 Next slide, please.
14 How does all this relate to the real world? Now,
15 I made the presentation one time at one of the working
16 meetings, and this slide -- we produced this slide just to
17 relate what we're talking about here, this battery and the
18 real world of this EV.
19 That is the Los Angeles Basin. And according to
20 the Department of Motor Vehicles, there are approximately
21 4.7 million people living in there, and they have over 2
22 million vehicles. And their average daily drive is less
23 than 44 miles per day.
24 Next slide, please.
25 The battery we've just discussed -- by the way,
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1 it's a production battery. It's not a special battery, and
2 it's being operated right now, in terms of its performance.
3 And the new upgraded version of that battery will be out of
4 our factory in January. In fact, we are already in the
5 process of testing that battery with the Department of
6 Energy in January.
7 These are circles drawn around the building in
8 L.A., which is the State Building, you know, where CARB held
9 their meeting. And they are circles of 15, 30, and 40
10 miles. The battery you just heard about in either of those
11 vehicles, a small sedan or pickup truck can reach any of
12 those areas one way from that building any day, seven days a
13 week. In other words, the battery is here now that can
14 actually support at least two million of these vehicles in
15 the air basin.
16 Next slide, please. The last slide here is
17 basically a slide which indicates the production facility of
18 this battery as of this summer. As of next year, those
19 figures increase by about 50 percent.
20 The figure for the -- our 15,000 that you see is a
21 figure which will be related to a sedan vehicle. It's a 16
22 kW battery. And the other figure is for a larger battery
23 which is used in a pickup truck.
24 Next slide, please.
25 This may not come out very well. That is just a
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1 picture of the truck that we have back in our factory. That
2 truck is driven by one of our employees from Warrensburg in
3 Missouri to Lee's Summit, which is 43 miles one way. He has
4 been driving that truck since we took delivery of it last
5 July. Never once has the truck failed him in his commute
6 from Lee's Summit.
7 When the truck arrives at the factory, it is
8 charged on an infrastructure charger at the factory. And,
9 again, what this is saying is that, for all the negatives
10 about lead-acid battery, it is by far the most robust. And
11 if you don't have a robust battery, you have nothing,
12 because when people have these electric vehicles, they'll
13 forget to charge them. They're going to leave them in the
14 parking lots. And if your battery cannot stand that type of
15 abuse, then it's not going to work.
16 And thank you for your time.
17 CHAIRMAN DUNLAP: Thank you. Supervisor Vagim.
18 SUPERVISOR VAGIM: Thank you. Two quick
19 questions. You mentioned about the temperature and the
20 shutdown. What was the outside temperature?
21 MR. O'BRIEN: The outside temperature at the time
22 was about approximately a hundred and -- I think it was 111,
23 112 degrees, 112 degrees. It was a very, very hot day. And
24 one of the intentions here was challenge the limit of the
25 battery in hot climates. Because, as you know, the hot
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1 climates are terrible on batteries.
2 SUPERVISOR VAGIM: When does the hot climate
3 determine the -- 111, 98?
4 MR. O'BRIEN: No, no. It doesn't -- in terms of
5 natural temperature on that day, it is an accumulation of
6 the operation of the battery in the hot climate over its
7 cycle life. In other words, it will, in fact, shorten the
8 cycle life of the battery.
9 SUPERVISOR VAGIM: Is that 95 and over, or a
10 hundred and over?
11 MR. O'BRIEN: The optimum operating temperature
12 for this type of battery is about 60 degrees Fahrenheit.
13 So, already these batteries are operating in very elevated
14 temperatures.
15 SUPERVISOR VAGIM: And the recharge, 50 percent in
16 five minutes, what was the amp volts or kW?
17 MR. O'BRIEN: This basically -- this was a very
18 large power supply, 150 kW power supply. So, it would be
19 like an infrastructure you have standing in a corner like a
20 7 Eleven, if you have that kind of infrastructure in the
21 street. Some of you would come in, you would plug in, and
22 then it dumps a very high current of a very fast rate.
23 MR. O'BRIEN: And a three phase, a single phase.
24 MR. O'BRIEN: This is a three phase.
25 SUPERVISOR VAGIM: Thank you very much.
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1 CHAIRMAN DUNLAP: Thank you. In deference to our
2 court reporter, we're going to take a ten-minute break, and
3 come back, and we'll call -- is Mr. Cartwright here? Okay.
4 You're next up, sir. Mr. Caves? Is he here? And Ms.
5 Holmes from the Sierra Club.
6 So, about ten minutes, we'll come back by quarter
7 till.
8 (Thereupon a recess was taken.)
9 CHAIRMAN DUNLAP: If I could get you to take your
10 seats, we'll continue through the witness list.
11 Arthur Cartwright, sir, please come forward. Go
12 ahead, I'll round up my colleagues. And, if you don't mind,
13 start right now.
14 MR. CARTWRIGHT: I'd like to first introduce
15 myself. I'm Arthur Cartwright. I'm a member of the Board
16 of Directors for the Sacramento Electric Vehicle
17 Association. And, more importantly, I'm the Chairman of the
18 Clean Air Awards Committee for SEVA.
19 I've come here today to tell you that EVs do work,
20 contrary to what we've heard from several other
21 presentations earlier. And there's a huge base of customers
22 who want electric vehicles. All we need to do is provide it
23 for them.
24 These people want electric vehicles so much that
25 they're building them themselves, or doing conversions, or t
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1 they're purchasing or leasing vehicles from Europe.
2 And, as mentioned before, a large portion of the
3 commutes can be handled by the ranges of the batteries that
4 are available today, and that's not your advanced batteries.
5 That's your standard everyday, off-the-shelf batteries that
6 are sold by everyone from Die Hard to Trojan.
7 SEVA has started what's called the Clean Air
8 Awards. What they are designed to do is recognize and
9 encourage clean air commuters. It's only about a four-month
10 old program. But in that time, we have recognized a large
11 portion of our membership. We recognize them at what are
12 called milestones for literal reasons. If they commuted a
13 certain portion -- myself, I'm wearing a 5,000 mile award,
14 and I'm one of the smaller commuters in our organization.
15 We have over 100,000 miles driven electrically that have
16 been awarded.
17 And it's between two to three hundred thousand
18 that have actually been driven. They just have not been
19 presented with awards.
20 That is made up by only 41 vehicles out of our
21 association, and that is just the Sacramento area. So, what
22 I'm trying to say is that there are customers there. If we
23 get the vehicles out, the people buy. The mandate as it was
24 originally, if the cars are made available with lead-acid --
25 and I don't want to discourage battery advancements -- but
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1 lead-acid will take care of what everybody needs to do now.
2 And if -- or when the technology works its way to the point
3 where it will satisfy the larger base of people's needs,
4 then the upgrades can occur.
5 But right now, we, myself included, want to get
6 into an electric vehicle. We lease for the electric vehicle
7 that I've driven. It ended because of the mandate's
8 questions. They ended the leased because they weren't sure
9 that the mandate was going to go through. So, I lost my
10 electric vehicle.
11 I'm presently working on converting an electric
12 vehicle, converting an ICE to electric.
13 That, I think, is a large portion that should be
14 looked at, and it also, I believe, could be incorporated in
15 the mandate, that converters and powertrain sales should be
16 encouraged.
17 Are there any questions of me?
18 CHAIRMAN DUNLAP: Thank you. Any questions?
19 Okay.
20 MR. CARTWRIGHT: Thank you for your time.
21 CHAIRMAN DUNLAP: Okay.
22 (Applause.)
23 CHAIRMAN DUNLAP: Mr. Heckeroth, followed by Mr.
24 Caves, followed by Jamie Phillips, replacing Mr. Patton.
25 MR. HECKEROTH: Mr. Chairman and members of the
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1 Board. I'm here representing the interests of my company
2 MendoMotive, which makes electric vehicles. And I'm also
3 here at the request of Charles Peterson, who's a member of
4 the Board of Supervisors of Mendocino County.
5 It was last spring that I got a call from Mr.
6 Peterson -- Supervisor Peterson. He said he'd been
7 receiving a lot of mail, and he was -- the main thing he was
8 annoyed with was that it was all on bright yellow paper.
9 And you guys are probably all familiar with the mass
10 mailing. It wasn't recyclable.
11 (Laughter.)
12 MR. HECKEROTH: When these packets continued on a
13 weekly basis over a number of months -- I'm his energy
14 advisor for Mendocino County -- we set down and drafted a
15 resolution, which was presented to you in August. And he
16 asked that I resubmit that resolution. It should be in
17 front of you now.
18 And I wanted to read a statement from him.
19 On Tuesday, August 15th, 1995, the Mendocino
20 County Board of Supervisors voted to adopt the enclosed
21 resolution regarding the California Air Resources Board
22 regulations relative to zero-emission vehicles.
23 We have been appalled by the gross misinformation
24 being distributed by the California Manufacturers
25 Association about electric vehicles and relevant issues. I
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1 would like to encourage the California Air Resources Board
2 to stand by its two percent mandate in the time frame that
3 they've suggested.
4 It takes a lot of money to run for political
5 office. Supervisor Peterson is an old-fashioned kind of
6 politician, and he's never received any corporate
7 contributions.
8 So, he can be said to truly represent is
9 constituents. I think most of the politicians that come
10 before you wear their contributors' label on their lapel.
11 But I think it would be to your best interest to know
12 exactly which corporations they represent when they come to
13 you.
14 And I find it really threatening to know that most
15 of the politicians do represent corporations rather than
16 their constituents as it should be.
17 Last week, I came and presented, too. And I
18 realized that, as Mr. Richter pointed out this morning,
19 people were making life and death decisions based on their
20 dreams.
21 So, I would like to bring a bit of reality from my
22 corner of the world here today in the form of a slide
23 presentation. So, if I could have the lights.
24 I've been building and designing solar homes for
25 the last 25 years. And I'm showing these just four slides
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1 of solar homes, so that you can get a feel for what can be
2 done to save energy, which also means saving the air.
3 This is an unfinished slide (sic) taken a couple
4 years ago of a house that I built for a single woman for
5 $25,000. The entire source of its energy is the sun; that
6 little panel unit on the roof, a roof-integrated panel,
7 heats water. And there's a photovoltaic pump that's
8 integrated into that roof unit also that pumps that heated
9 liquid through the floor to heat the mass of the building.
10 And it also goes through a heat exchanger that
11 heats the domestic hot water. There's also --
12 CHAIRMAN DUNLAP: Mr. Heckeroth?
13 MR. HECKEROTH: Yeah.
14 CHAIRMAN DUNLAP: In the interest of time --
15 MR. HECKEROTH: Okay.
16 CHAIRMAN DUNLAP: -- I need you to --
17 MR. HECKEROTH: I'll move forward.
18 CHAIRMAN DUNLAP: I know solar energy's important
19 and relevant in a broader energy context, but, sir, I have a
20 lot of people I need to hear from.
21 MR. HECKEROTH: Okay.
22 CHAIRMAN DUNLAP: Okay?
23 MR. HECKEROTH: Like I said, I'm going to go
24 through this part of it real fast. This is a house that
25 uses less than 10 percent of the energy required by a normal
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1 house, which means that, in California, we could eliminate
2 the use of all fossil fuels and nuclear power plants if
3 houses were built this way.
4 Okay. That's the end of it.
5 This is my homestead. There's a three kilowatt
6 array on my barn roof, which I use to operate my whole
7 homestead, and also charge the batteries of my electric car.
8 This is my electric car charging. I've been
9 operating it with the same set of batteries for three years.
10 They're lead-acid batteries. We keep talking about the need
11 for a good lift-off for electric vehicles. This lift-off
12 was achieved three years ago in my family.
13 This is my shop at home. I've converted a
14 rototiller to electric power, and a Fiero, and several other
15 cars before I started MendoMotive.
16 This is the car that we have in current
17 production. It has a hundred mile range. It goes over a
18 hundred miles an hour. And we've done quite a few of them,
19 but each one is with a different technology in terms of the
20 controllers and chargers.
21 There's more to electric cars than just batteries,
22 and the mandate has fueled worldwide technological
23 developments in controllers, in battery chargers, and all
24 the other components that go into electric cars.
25 This is a car that won at Daytona Beach, Florida.
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1 The previous car has won every rally that it's been in.
2 These cars do what Detroit says can't be done. They're very
3 popular. And they're not that expensive. And building them
4 one at a time, I can still compete with cars that come out
5 of Detroit.
6 Another application for electrics is battery-
7 powered tractors, which make even more sense than cars,
8 because the battery weight is an added advantage with a
9 tractor.
10 They sell tractors with 600-pound wheel weight;
11 there are 600 pound weights on them and 150 wheel weights.
12 You take off the weights and add the batteries, and you've
13 got a perfect application.
14 There's a car and a tractor in front of my barn,
15 which is able to charge the cars from solar energy without
16 any use of fossil fuels.
17 There was one more slide, but it's not broken
18 down. It's a picture of a car made in Italy that went 120
19 miles in one hour. I don't know if you're familiar with
20 that one. But that's Italian technology.
21 I brought all the magazines that have come out as
22 a result of your mandate, which you are now, in effect,
23 putting off. These magazines have all come in the last few
24 years. This is one that I don't know if you're familiar
25 with. On the last page of the documents in front of you, I
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1 xeroxed the battery page out of this. This is Japanese
2 technology.
3 There's two pages of batteries that are in
4 production right now that will all service the needs of
5 electric vehicles. So, batteries is not the holdup.
6 I'm not an environmentalist. I feel that the
7 environment will be around to heal itself about 5 billion
8 years after we're gone. I am a humanist, and I want us to
9 look at ourselves and see what incredible creatures we are
10 and value that.
11 And I think that fossil fuel use is like a gun to
12 the head of humanity, and everytime we get in our cars,
13 we're putting a little pressure on the trigger.
14 So, I hope that you'll be able to maintain the
15 mandate. I don't think that two percent in '98 is either
16 soon enough or enough, and I'd hate to see it pushed back
17 any further.
18 Thank you.
19 CHAIRMAN DUNLAP: Thank you. Ms. Edgerton.
20 MS. EDGERTON: Actually my question's for staff.
21 I wanted to ask Mr. Kenny. And one of the things that came
22 to my mind about these -- you may have covered it in your
23 presentation when I was at the airport.
24 But do -- does the Board have to get -- request a
25 modification of its waiver under Section 209 --
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1 CHAIRMAN DUNLAP: Lynne, I'd like to hold that,
2 and that can be the first question up, but let's get through
3 the testimony, and we'll cover all those --
4 MS. EDGERTON: Oh, then come back --
5 CHAIRMAN DUNLAP: Yes.
6 MS. EDGERTON: -- to cover those questions.
7 That's good anyway. You'll be prepared.
8 CHAIRMAN DUNLAP: Yes.
9 MS. EDGERTON: Thank you.
10 CHAIRMAN DUNLAP: I think they're prepared on that
11 question.
12 Mr. Caves, Ms. Phillips, Ms. Holmes. Hi, Joe.
13 MR. CAVES: Mr. Chairman, members of the Board, my
14 name is Joe Caves. I work for the Union of Concerned
15 Scientists.
16 I think all of us want to get to the same place
17 here, and all of us are struggling to find what's going to
18 work. UCS and NRDC have jointly submitted a proposal that
19 we think accomplishes that and meets the requirements that
20 the Chairman laid out and that this Board is facing.
21 But that proposal apparently is not what you're
22 considering today, and we're disappointed. But we also ask
23 for time to review the staff proposal, so we can provide you
24 with some serious and detailed criticism of it before you
25 send it out for notice and comment.
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1 And I understand all the time pressures that you
2 have, but we really haven't had an opportunity to do that.
3 And I want to stress that, because I think we're at such a
4 critical point in time right now. This decision is going to
5 affect, obviously, billions of dollars in investment. It's
6 going to affect California's air quality future. So, I
7 really want to urge you to not rush this. Let's think about
8 it carefully as to what path we want to go down to make sure
9 it's getting us where we want to go.
10 I want to -- and I have to make -- I'll try to
11 make these brief. We've only taken a quick look at this
12 proposal, and evidently the car companies have spent a
13 considerable more time considering it. We really haven't
14 had that opportunity. But there is one obvious inadequacy
15 or incompleteness in this that I think is the most
16 disturbing to me.
17 And that is, and it's something that's been
18 alluded to before -- and that is, what happens in 2000 and
19 2003? What happens during that ramp-up period. One of the
20 things that Peter Welch, representing the auto dealers a
21 little while ago, was that the mandate's worked pretty well
22 so far. You've held the gun to the head of the car
23 companies and you've forced them to make this much progress.
24 And I think that's something we need to pay
25 attention to there. He also said that the car companies may
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1 not be able to guarantee that it's a success, but they can
2 guarantee it's a failure.
3 I think it's important for us to put those two
4 observations together, because they say something profound
5 about what's missing in this proposal.
6 We've had a mandate and that's clearly pushed
7 development. And you've signaled that you want to be
8 flexible, and we appreciate that. But now you're giving
9 almost complete flexibility. You're giving up your
10 regulatory hold -- your gun at the head as it were -- until
11 2003. And I think all of us have to wonder, is that too
12 much? If it is in the power of the car companies to make
13 this a failure, are we creating incentives for success or
14 incentives for failure?
15 Are they going to want to succeed under this or
16 are there reasons that you built into this proposal that may
17 lead them -- not these gentlemen perhaps, maybe not even the
18 present leadership of those companies, but down the road,
19 are we going to lead those corporations into a position
20 where it is more in their economic advantage to drag their
21 feet, to not make the investments that the Battery Panel has
22 said must be made, to not make the commitments to
23 commercialization in a timely fashion?
24 Each of those was, if you'll recall from the
25 Battery Panel's report, a critical determinant of when we're
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1 going to get advanced batteries.
2 And I would just ask you to keep this in mind and
3 consider it in your admonitions to the staff today about
4 what you want your proposal to sa y.
5 What happens in the year 2000, or 2001, or 2002 if
6 one or more, or perhaps all of the car companies have not
7 made the kind of good-faith effort, the kind of investments,
8 and the kind of commitment to commercialization of advanced
9 batteries that your staff or your technical advisors say was
10 possible?
11 What are you going to do? What are the
12 consequences when the key components to a regulatory program
13 is, there are penalties for failure? There are penalties
14 for noncompliance.
15 What you have done here is given those up. If, in
16 fact -- if a car company -- and I'm not talking about that
17 it wasn't technically possible or a difference of opinion --
18 but if they really have not complied, if they've not made
19 those efforts if at that point this Board or your successor
20 Board decides to -- if at that point you're going to oppose
21 a statutory mandate, some sort of penalties, fairness
22 demands that you tell those car companies now, fairness
23 demands that you send that signal. You make it clear that
24 there are consequences for noncompliance, and you make it
25 clear what it is you expect them to do.
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1 If, on the other hand, there are no penalties for
2 noncompliance, if, on the other hand, what happens is -- if
3 the car companies do not make good faith efforts, if they
4 have not made the investments and the commitments to
5 commercialization, if there are no penalties to that, then I
6 think that fairness demands that you send that signal.
7 There are companies that are planning to invest a lot of
8 money.
9 Your air districts are planning on this working.
10 If there are no penalties, then you've created a system
11 where every incentive for the car companies is to fail, is
12 to drag their feet, is to not make this work.
13 And, again, I don't mean to impugn the motives of
14 the representatives that have come before you, but you all
15 understand how institutions work. You all understand how
16 investment decisions are made. They will do what they have
17 to do and not more. They will do what they regard in their
18 interest, not necessarily California, unless you create a
19 system where there are clear incentives to succeed and
20 penalties for failure.
21 And I would ask that that be a part of whatever
22 proposal you ask the staff to prepare; that that is clearly
23 spelled out -- what is expected of them and what the
24 consequences for failure are.
25 Thank you, Mr. Chairman.
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1 CHAIRMAN DUNLAP: Thank you, Mr. Caves. I
2 appreciate that perspective and your counsel to us, and I
3 fully intend to expand upon that staff's presentation to the
4 Board in the discussion we'll have at the conclusion of the
5 witness' testimony.
6 Thank you.
7 Jamie Phillips, Bonnie Holmes, Janet Hathaway,
8 Jerry Mader. Again, I'd encourage -- I know there's a lot
9 of points that people want to make. I'd encourage you to not
10 go over old ground or turf. Just say, here's what we think
11 you ought to be aware of, and it's been said before.
12 MS. PHILLIPS: Mr. Chairman, members of the Board,
13 thank you for the opportunity to speak to you today.
14 I'm Jamie Phillips and I'm representing the
15 Planning and Conservation League and the Planning and
16 Conservation League Foundation.
17 We're a nonprofit alliance of environmental
18 organizations and individuals. And, as you know, I'm
19 speaking for Gary Patton who had to leave. I'm not quite as
20 capable of speaking so eloquently off the cuff as I know he
21 is; so, I'd like to try to touch on just a couple of the
22 points that I know he had hoped to make to you.
23 As a former Air Resources Board member himself,
24 Gary knows firsthand the volumes of technical information
25 that you must review. He knows the tremendous time
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1 commitment that you make to assure implementation of the
2 environmental and health measures that are critical to
3 California's future.
4 And we applaud together your efforts on behalf of
5 all Californians. We're pleased that this proposal does not
6 completely eliminate the mandate. We're pleased that it, as
7 it looks right now, appears to maintain control in 2003.
8 But we do have some concerns, too.
9 I urge you to keep an open mind in the coming
10 months to the input that you're going to receive on this
11 proposed modification. And I urge that you consider not
12 just this modification but, as Joe mentioned before me, the
13 other proposals, the NRDC and UCS proposal, which the
14 Planning and Conservation League and Planning and
15 Conservation League Foundation have supported.
16 We never thought you needed to change the mandate
17 in the first place, and we were willing to consider some
18 flexible measures. And I think we all know that
19 Californians want zero-emission vehicles.
20 With respect to this proposal, we are concerned
21 that suspending the mandate until 2003, you're simply
22 opening yourselves up to this continued political battle
23 that was, up to now, made possible by the 24 million spent
24 to date by the oil and auto industry opposition.
25 Some other points quickly that I'd like to make:
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1 You know that an internal combustion engine, no matter how
2 clean it is when it comes off the lot, is never going to be
3 as clean as the zero-emission vehicle.
4 So, the effort to make up for the emissions
5 benefits through new unidentified clean car technologies
6 raises some real questions and some concerns. We've got an
7 identified technology. It's zero-emission vehicles. We
8 need to try to bring it to market sooner and not in the
9 small numbers that appear to be proposed at least in this
10 measure.
11 We are also concerned that this proposal doesn't
12 allow for an efficient and appropriate ramp-up to the
13 production levels in 2003. You know, it's a huge leap to
14 get from a couple thousand cars to a hundred thousand cars.
15 And it's a big leap of faith that we're being asked to put
16 in Detroit.
17 We do applaud your efforts to maintain the long-
18 term benefits of the original ZEV proposal, and we simply
19 ask that you not close your minds to those other ideas,
20 those other proposals that were there, and consider
21 everything that was put forth before you.
22 And thanks very much for the opportunity to speak
23 with you.
24 CHAIRMAN DUNLAP: Thank you. Give our regards to
25 Mr. Patton, please.
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1 MS. PHILLIPS: Thank you.
2 CHAIRMAN DUNLAP: Ms. Holmes. Janet Hathaway,
3 Jerry Mader, and Paul Knepprath.
4 MS. HOLMES: Good afternoon. I'm Bonnie Holmes
5 with Sierra Club California. I appreciate the opportunity
6 to speak to you.
7 I think that we all want a real and viable
8 electric vehicle program, and not just a paper plan. But
9 today, we are very concerned that this staff proposal is
10 fraught with problems and does not live up to the spirit or
11 the intent of the ZEV requirement notice that was set in
12 motion by the Board in 1990.
13 We have been involved in the public process,
14 attended all the workshops, hearings, and we submitted a
15 written set of principles that we believe are bottom line
16 principles that were needed to develop a flexible and
17 reasonable zero-emission vehicle program that would ensure
18 success.
19 And we are disappointed that none of those
20 principles have been met with the staff proposal. We ask
21 that you maintain a regulatory program for many of the
22 reasons that were just mentioned by Mr. Caves, maintain a
23 regulatory program that includes legally enforceable
24 commitments with automakers. And we stress over and over
25 that we believe these elements are crucial to keep the
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1 pressure on the car companies and to maintain a consistent
2 and reliable program that will continue to spur the
3 investments and technology that is needed.
4 We just don't understand how an MOU can compare,
5 in terms of the enforceability, with regulatory -- excuse
6 me.
7 How can an MOU compare with regulatory actions and
8 with third-party suits for not complying, the kind of
9 deterrent that you have with the regulation, with a
10 deterrent that's applied by the courts is much stronger, we
11 believe, than what can be included in an MOU.
12 Secondly, we ask for an air pollution premium.
13 And, as you mentioned, Mr. Strock had made that point, also.
14 And we want a premium that guarantees greater emissions
15 reductions in California, and that would make up the
16 difference for any earlier flexibility that will be
17 provided.
18 And we do not believe, at this point, that the
19 staff proposal provides this. We don't see it. We don't
20 believe that the 49-State car program can be relied on. We
21 don't believe there should be credits given for non-zero-
22 emission vehicle technology, period, because those other
23 vehicle technologies cannot meet the zero tailpipe standard
24 achievable with the electric vehicle.
25 We ask you to maintain the 5 to 10 percent goals.
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1 For us, the early years -- flexibility in the early years
2 mean '98 and '99 and not up to 2003. I think that point's
3 been mentioned by other environmental representatives, that
4 we don't want to see the mandate put off to 2003. It's too
5 long.
6 We ask for a substantial market launch in '98 and
7 a guaranteed ramp-up to the 5 or 10 percent level. And we
8 don't see this being provided also in the staff proposal.
9 If you don't hear anything else I say, I would
10 like to stress one major point that I think has been
11 overworked today.
12 The Battery Panel has been floated around in
13 discussions here. What are the recommendations of the
14 Panel? What did they say?
15 The Battery Panel stressed that we must have a
16 clear enough and definite enough program to keep heavy
17 investments flowing in battery technology.
18 When you look at recommendation seven of the
19 Battery Panel, they say that most battery developers stress
20 the importance of an orderly, stable program; that there is
21 a need for stable, continuing thrust behind the ZEV program
22 like the ZEV regulation, which has been the primary course.
23 That we need to encourage the next phase of
24 investments through this stable, reliable program. That
25 without continuing strong California commitment, it may be
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1 difficult for these battery manufacturers to recruit the
2 investments necessary for continuation of aggressive efforts
3 to develop advanced batteries, and that these investments
4 are crucial to the success of our zero-emission vehicle
5 program.
6 Well, my question is: Can you tell us now that
7 you have surveyed all the 12 major battery manufacturers and
8 found that the staff proposal that's on the table today will
9 keep their interest, will spur their investment, will be as
10 good as the current ZEV mandate?
11 If you haven't done that -- and I don't believe
12 you have -- then I think it's extremely premature to move
13 ahead with the staff proposal. I don't think that you can
14 claim that this will be a viable program without doing that
15 survey.
16 And I don't believe that the staff proposal
17 includes time lines and requirements t hat are reliable,
18 stable enough, and consistent enough to keep those battery
19 manufacturers interested.
20 There's been a lot of discussion about the U.S.
21 ABC, and the Department of Energy, and the continued
22 research efforts of those bodies. But we have to remember
23 that the independent battery manufacturers together have
24 contributed more combined than the U.S. ABC -- excuse me.
25 The battery manufacturers have contributed more than the
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1 U.S. ABC and the DOE combined.
2 So, these other independent battery manufacturers
3 are crucial to the program's success. And we need to know
4 what will this mean for their continued investment?
5 So, if you haven't, you know, asked specific
6 questions of these battery manufacturers, please do that.
7 Please get any additional information you need for the
8 Battery Panel of experts that you had produced their report
9 before you.
10 And consider the 12 major manufacturers that are
11 out there. I'm honestly extremely concerned that you are
12 frittering away time talking about vague proposals while the
13 battery manufacturers may be quietly walking away from the
14 program.
15 And finally, I'd just like to stress that,
16 unfortunately, we don't have a room packed full with all the
17 citizens in California who are extremely concerned about
18 this program. But there is an extreme level of interest,
19 concern about moving the zero-emission vehicle program
20 forward. You've seen a lot of Press lately.
21 The public wants to see this program succeed. And
22 the public is behind the mandate. And I just hope that you
23 keep that in mind that you're making decisions that --
24 despite the fact that the testimony doesn't reflect the
25 broad sector of the public that's following this. The
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1 pressure is on out there. And people want to see a program
2 that works, works and succeeds, and that fulfills the spirit
3 of the zero-emission vehicle program adopted in 1990.
4 CHAIRMAN DUNLAP: Thank you. Ms. Edgerton.
5 MS. EDGERTON: Ms. Holmes, thank you for your
6 remarks. I have wondered about the effect of the proposals,
7 and I've talked a little bit with the staff about it.
8 Would you be prepared to make any comments, just
9 as a preliminary basis about the -- some of the responses of
10 the advanced battery manufacturers to a program such as
11 you've proposed?
12 MR. CACKETTE: I can give you a little insight
13 from some of the battery manufacturers that we've talked to.
14 I think, largely, how a battery manufacturer is looking at
15 the implications on investment of our program has to do with
16 when they think the battery technology that they're
17 advancing will come into commercialization.
18 If they are a battery company that is on target
19 for, you know, 2001-2002 time frame to come to full
20 commercialization of an advanced battery, then this 2003
21 mandate satisfies their needs quite well. They wouldn't
22 have a commercial product much before that anyway. And they
23 can still justify the investment.
24 If they're a manufacturer of a battery that they
25 believe will come in well before that, then there's been
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1 some concern that the market that they had established their
2 commercialization plan upon will be smaller than anticipated
3 and may jeopardize their ability to bring it to
4 commercialization.
5 So, it kind of works that way.
6 MS. EDGERTON: I also appreciate that as a
7 preliminary response, so that Ms. Holmes will know that is
8 something of tremendous concern to this Board.
9 Also, another question that's been raised -- I'd
10 just like you to make a comment on from staff's point of
11 view. What about -- what are you expecting to happen
12 between 2000 and 2003 under the proposal that you've made
13 today.
14 MR. CACKETTE: Well, as with any new products or
15 even new emission control devices, there's some leadtime
16 required to bringing a product from the prototype stage to a
17 full commercial product. And typically with a car, that's
18 around three years at least.
19 Since the evaluation of the advanced batteries
20 will be occurring in the period of 1998 to 2000, with some
21 of those advanced batteries perhaps not available till
22 closer to the year 2000, we think that the period of 2001 to
23 3, that time frame, will have two things happening in it.
24 One is it will be the time in which the new products, the
25 new EVs, with advanced batteries will be being designed and
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1 ready for commercial introduction in 2003.
2 Also in that time frame for some of the battery
3 manufacturers, advanced battery manufacturers that have
4 product before 2001 time frame -- and there are several that
5 suggest that they'll be ready before -- we would expect that
6 their products will start entering into vehicles and be made
7 available, which will help expand the market in that
8 midyear, early 2000 time frame and, we think, provide part
9 of the ramp-up that we need to get towards 10 percent.
10 So, you have some level of lead-acid batteries
11 which are going to be making continued advancements, and
12 those advancements should help expand their market. And
13 then you'll have some phase of early, probably nickel metal
14 hydride, batteries coming into vehicles, which, because of
15 their longer range, will expand the market. And then you'll
16 have in the 2003 time frame, a wave of new vehicles with a
17 multitude of advanced battery technologies, at least two or
18 three, we would expect, available in those vehicles with a
19 150 mile range as we'd expect the 10 percent mandate to be
20 met.
21 MS. EDGERTON: That's very helpful. I just --
22 CHAIRMAN DUNLAP: I've got ten more witnesses to
23 get. I've got themes to keep track of. We'll give you
24 plenty an opportunity to ask these questions. I want to get
25 through the witnesses.
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1 MS. EDGERTON: Okay. Well, thank you. It does
2 seem important to be sure that some of these assumptions are
3 addressed as we go along because they are such --
4 CHAIRMAN DUNLAP: Sure.
5 MS. EDGERTON: -- of such great concern.
6 MR. CACKETTE: Yes. Sometime we would like to
7 comment on the enforceability aspect of the MOA that's been
8 brought up by a number of witnesses.
9 CHAIRMAN DUNLAP: Enforceability, waivers, and the
10 like. We'll all have a chance to cover them.
11 Thank you, Ms. Holmes.
12 MS. HOLMES: I just want to make one quick comment
13 that, summing up, that we think that enforceable regulatory
14 requirements are needed in order to keep the interest of
15 battery manufacturers to keep the money flowing in for
16 specific numbers of vehicles.
17 CHAIRMAN DUNLAP: Sure. The whole concept of
18 enforceability's particularly important, though some people
19 seem to miss the mark on what exactly that means relative to
20 the existing mandate, and what we can enforce and what we
21 cannot. We'll make sure we clarify that in our discussion
22 with staff.
23 Ms. Hathaway, followed by Mr. Mader, Paul
24 Knepprath, and Bill Van Amburg. I trust Mr. Van Amburg has
25 his slide show ready?
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1 MR. VAN AMBURG: At your request.
2 CHAIRMAN DUNLAP: Okay.
3 (Laughter.)
4 MS. HATHAWAY: Mr. Chairman and members of the
5 Board, I actually have a slide show, too, but I'm going to
6 spare you that. I know that time is of the essence. So,
7 let me try to keep it short.
8 I, too, am very, very much a supporter of what the
9 Board has been doing to try to get advanced transportation
10 on the road. But I do have to say that the staff proposal
11 is one that NRDC has a lot of concerns about. Of course, we
12 only have an outline. We don't understand a lot of the
13 nuances because they're not explained in this outline.
14 Many of the concerns we have are shared with a
15 number of other people that have spoken to you -- Tim
16 Carmichael, and Joe Caves, and Bonnie Holmes, and others.
17 But let me just go through a couple key points.
18 The biggest concern that we have is how do we get to the
19 year 2003 with a 10 percent market launch of vehicles? How
20 do we get there?
21 Definitely, the idea of having a partnership with
22 companies, where they're committing to trying out vehicles,
23 and testing them, and examining what works and what doesn't
24 is critical. But it, by itself, is just a part of the
25 puzzle. And we think there's too much reliance in this plan
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1 on just that.
2 Another part that is very much a concern for us is
3 how these memorandums of agreement are structured, what the
4 consequences for failure would be. And I understand we'll
5 hear about that more. But we would certainly want to see
6 these enforceable by third parties, not just by the Air
7 Resources Board; have measurable commitments that outsiders
8 would be able to track whether, indeed, progress was being
9 made, because this is critical to the other investors who
10 are going to be key to your program working.
11 We're going to need to have people in many other
12 sectors also tracking what is happening with the car
13 companies to see if there's serious commitment occurring.
14 And if there's not, then you won't see the investment into
15 batteries. You won't see drive train availability in the
16 numbers that you're going to need for 10 percent.
17 So, that's why third-party enforceability is
18 critical. This is a program that's not just about car
19 companies themselves, but about all the component
20 manufacturers, battery makers, et cetera.
21 Another key issue is the emissions equivalents. I
22 made a presentation to you last week about the 49-State
23 vehicle and why we do not believe that is something you can
24 count on to get emissions reductions even in the interim.
25 And I realize that in the short time frame that we're
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1 talking about in the very early years, ZEVs by themselves
2 are not producing a huge amount of emission benefit.
3 Nevertheless, 49-State car vehicles (sic)
4 deteriorate over time. They're in-use emissions are not in
5 fact tracked by their certification being lower. This is a
6 key issue. And I don't want to see that lost, because I
7 know you do believe and want to insist on exact equivalent;
8 that we're not losing emissions here.
9 But I believe that with the 49-State car, we need
10 a lot further discussion with you all to ensure that that
11 isn't considered as something, without evidence, that it
12 indeed will give us lower emissions over time.
13 We can't have that now, because there are no such
14 vehicles, and we certainly have not seen controls that
15 ensure the in-use emissions don't deteriorate rapidly on the
16 vehicles.
17 And then I guess, most particularly, your program
18 has been such a monumental success that we're only a few
19 years away from having batteries that will satisfy even the
20 very stringent demands of the car companies. But that is
21 precisely because you have had such clear signals about what
22 you want and when you want it.
23 I think that I would most seriously recommend to
24 you that you consider putting a benchmark for the year 2000
25 or 2001, a number, a percentage -- even if low -- that you
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1 use to measure whether there is indeed progress that will
2 get us to 2003.
3 I think Mr. Lagarias said earlier, you know, in
4 asking one of the car company representatives, "What do you
5 expect in the year 2001, 2002?" Surely, not zero. You
6 know, how do you get up to 10 percent?
7 Even if we go with a low number, something
8 measurable to keep them moving that way. Okay?
9 I know that you're all -- you have many, many
10 concerns here that need to get resolved. And while they're
11 being resolved, while further discussions go on with the car
12 companies who have expressed themselves not to be fully on
13 board -- they are on board in principle I guess -- please,
14 let's not lose the possibility of other options.
15 I don't want to act like it's pride of ownership
16 or anything, but Option C had a lot of similarity to a
17 proposal that NRDC and UCS made. We are open to discussing
18 with you, modifying with you, working with you elements of
19 that plan into this plan, elements that are not in either
20 plan.
21 We have not had any response to our proposal,
22 which we made in very good faith, and have reiterated, and
23 discussed, and explored, and we really would like to see
24 something that keeps this from being a program that is very
25 easy pickings, because it's so far out there. The 10
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1 percent is so far out in the future that one of the car
2 company representatives last week referred to it as a
3 placeholder. And in speaking to car company people myself,
4 I've been told, "We're not worried about it, because it's so
5 far in the future. We don't think it really means
6 anything."
7 I think it should mean something, because if it
8 doesn't mean something to them, it won't mean something to
9 the people that have to invest to make this program work.
10 And it won't mean something to their boardrooms
11 who are going to be making the commitments about how much
12 ZEV technology is really encouraged in their companies. So,
13 even if you are tending towards the staff proposal at this
14 point, I urge you to give us some time to see more details
15 on the staff proposal, and to keep other options open.
16 Thank you very much.
17 CHAIRMAN DUNLAP: Thank you.
18 MS. HATHAWAY: And any questions, I'd be happy to
19 answer.
20 CHAIRMAN DUNLAP: Thank you, Ms. Hathaway. Mr.
21 Semmens. I know, Jerry, you're coming forward. Is Mr.
22 Semmens still here?
23 I'll ask, Mr. Mader, would you yield to this
24 gentleman who has to catch a plane? And I know, with that
25 time pressure, he's going to be very efficient in his
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1 presentation.
2 (Laughter.)
3 MR. SEMMENS: Thank you, Mr. Chairman and members
4 of the Board. My name is Michael Semmens. I'm the CEO of
5 Electrosource, and I'm pleased to have the opportunity to
6 speak to you today.
7 I'd like to speak to you as a technologist, as a
8 battery developer, one of the bad guys apparently in the
9 study, and as a businessman, and share some of my thoughts.
10 And although I did not intend to speak today, I want to
11 share my thoughts and then provide additional detail.
12 There are three areas I would like to cover.
13 First is confusion, second is a plea for balance, and a
14 third is a plea for specific direction.
15 The confusion goes to the Battery Panel report.
16 As a battery developer, I'm referring to the results, and I
17 agree with them. The data is fairly technically accurate on
18 what is being done and what is promised to be done. But it
19 says nothing about changing direction. And specifically,
20 what I read in this report is a solution exists and better
21 solutions are on the way.
22 And I believe that's true. And I believe that's
23 in a holistic program. Now, I believe that a balance is
24 required between systems performance and battery
25 performance. You have to start somewhere, and you may pause
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1 to think about why is everyone developing lead-acid when
2 there's so many other technologies available. And it has
3 something to do with the ability to manufacture them and to
4 have them perform safely.
5 And, as a developer of an advanced battery, which
6 happens to be lead-acid, we've had tremendous difficulty in
7 bringing this to a high quality manufacturing state.
8 To hang a program on the technology, which is a
9 good technology, that's never been manufactured before, to
10 handle 10 percent of the vehicle production in California is
11 a high-risk approach.
12 To defer or discourage the near-term batteries, I
13 think is also a high-risk approach. As a businessman, am I
14 going to defer part of my production line to a market which
15 is being effectively removed by agreement? And how will
16 that be viewed by my -- my investors? Clearly, I'm going to
17 delegate my production facilities to markets that I know
18 will be growing and prospering in the future, not those
19 markets which have been removed.
20 The second risk is if the mandates are moved up
21 after a great deal of investment has been brought forward in
22 the near term, and when reality hits and these new
23 technologies are coming into production, what's to prevent
24 those from being moved out again, again an element that
25 would discourage an investor from the outside.
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1 And I go to the battery report, and I only
2 received it today, and I'll study it closely. But the final
3 paragraph in the summary -- However battery develops caution
4 (sic) that the California program has been the main driving
5 force behind their development efforts for advanced
6 batteries, saying that successful recruitment of investment
7 for the upcoming pilot scale and subsequent phases of
8 batteries' development and commercialization will depend in
9 large part to the continuous and orderly California program.
10 And I believe, Mr. Chairman, I sent you a note
11 from a recent Bloomberg article, which Bloomberg is the news
12 agency of the financial community, indicating that the
13 program had been, quote, "gutted" in California.
14 I know that's not accurate, but that's what the
15 financial community is seeing.
16 These are areas of concern and difficulty. What I
17 am requesting is careful consideration to carefully
18 communicate the seriousness behind the ZEV and the
19 California ARB program, and make it clearer to the outside
20 world as well as the inside world.
21 Please also consider a progressive introduction of
22 new technologies where we can improve -- and I'd like to
23 point out that lead-acid batteries are not included in the
24 U.S. ABC. And so, funding for that technology has to come
25 from elsewhere. As I reported before, we have funded all of
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1 our own research.
2 What I am requesting is an orderly program;
3 certainly compromise is supportable. No one wants failed
4 introduction of a product. But we need a continuous and
5 firm commitment to the programs as we move to the future,
6 and a program that has enough specifics in it so people can
7 make their own evaluation of a business decision and what
8 risks they want to take and the amount of money they want to
9 put in the program.
10 As always, Mr. Chairman, you have the support of
11 Electrosource. We support the compromise program. We have
12 been supporting the program for a number of years, and tens
13 of millions of dollars. We feel we have an advanced battery
14 that can reach the hundred mile on a consistent basis
15 effectively today.
16 I think I've shared with you the story -- I asked
17 my staff -- on vehicle efficiency. How much energy do
18 vehicles use that have our batteries in them today? The
19 range was between a low 100 watt hours per mile to over 600
20 watt hours per mile. And these are small sedans, four-door
21 sedans to pick-up sized vehicles.
22 With that range in the system efficiency, you an
23 see that the balanced approach is clearly necessary. Good
24 battery development and consistent development is necessary
25 for a successful program.
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1 So with that, sir, I will take any questions and
2 keep my comments brief. And thank you very much for your
3 time.
4 CHAIRMAN DUNLAP: Thank you. Yes, Ms. Edgerton.
5 MS. EDGERTON: Could you tell me more specifically
6 what you think such a balanced approach in the regulation
7 might look like?
8 MR. SEMMENS: I believe that some confidence -- I
9 won't say specific minimum sales levels, but some confidence
10 in the volume of business that's going to be required in the
11 near term as well as the long term/ I think it's important,
12 so that some estimate of return on investment could be
13 calculated based on the program.
14 So, as some of the confusion that I'm trying to
15 sort through in my mind, if you will, is how many vehicles
16 will be sold over the next five years or three years? And
17 if I'm unable to determine that or if the sales appear to be
18 in doubt, and the program does not seem to be of sufficient
19 substance, then it's a poor business risk. And I'm asking
20 for enough volume and enough specificity in that program to
21 be able to make a business decision.
22 CHAIRMAN DUNLAP: Okay. Thank you.
23 MR. SEMMENS: Thank you.
24 CHAIRMAN DUNLAP: Jerry Mader. Thank you for your
25 patience.
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1 MR. MADER: No problem. One thing I've learned in
2 the last several months in this process. It's been a good
3 learning experience.
4 Before I make my comments, I just want to say
5 that, overall, I want you to remember that I think anything
6 you do has to be -- and any specifics, you have to think of
7 this whole enforcement issue.
8 I have had good fortune, I guess you'd say, to be
9 in this industry since 1979. I've been through three auto
10 company program close downs. And I don't think the people
11 in the auto companies are necessarily -- are devious. I
12 just think they have -- the auto industry has shown a
13 history that they have short attention spans and what's
14 today is important to them because of what you've forced
15 them to do.
16 Two years from now, they may not think that it's
17 very important. So, consequences in some of the things
18 about consequences for failure, I really agree with those
19 comments.
20 Now, over the last year, I've been representing at
21 these meetings and these hearings six battery companies; all
22 of them are non-U.S. ABC companies. AEG, Silent Power,
23 Electric Fuels, Power Cell, Electrosource that you just
24 heard from, and RCI.
25 In this process, I want to commend the staff for
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1 their diligence and their hard work in trying to come up
2 with some solutions. And I think they've done a good job
3 here in the last several weeks of working through, I think,
4 a very tough scenario situation.
5 And I think what you have on the table today
6 definitely has merit. And I also want to commend Chairman
7 Dunlap on keeping this process open and working in an open
8 process.
9 I was reading the advanced battery -- the Battery
10 Panel's report, and I wanted just to make one quote from it.
11 They had a warning in the last page, and one quote from
12 there is that care should -- you should take care too avoid
13 sending signals that would slow investment in advanced
14 batteries.
15 You just heard from the gentleman before me about
16 wanting specificity around the program. And I think that,
17 in looking at what you have on the table today, one of the
18 things we definitely need is we need the 10 percent mandate
19 in 2003 rather than pushing it back a year. I think that
20 would send a wrong signal if you push it back to 2004.
21 We need electric vehicles to be introduced in
22 1998, in some numbers and as quantifiable as you can get. I
23 think the better off the investment community will be for
24 that.
25 And we need the market, obviously, to grow from
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1 '98 to 2003 in some fashion. And that's where I believe
2 that when you develop this MOU with the auto companies, that
3 some specific language on their market development programs,
4 some thinking that really puts in place the activities they
5 need to perform in order to help grow the market will be
6 important.
7 You know, the auto companies are marketeers and
8 manufacturers. And they do a tremendous job of marketing
9 products. They're really known for that.
10 So, you want to encourage them to do that
11 marketing. And there are all types of niche market
12 development efforts that can happen -- loaner vehicle
13 programs, ride and drives, various incentives, vehicle
14 demos. I think you want to get specific about that.
15 And kind of lastly, a little concern I have was,
16 when I heard the gentleman from Ford talking earlier today
17 about linking what you do in advanced batteries in the
18 future to the U.S. ABC program. I think that's a mistake.
19 I believe you could be set up on that. The U.S.
20 ABC Phase II program is very soft. We all know we don't
21 have a federal budget today. We have huge budget deficits.
22 Everything I've heard is the Department of Energy's not
23 going to have a lot of money for a program.
24 So, I wouldn't link what you're going to do to the
25 Federal Government program. I would really keep those two
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1 things separate, especially when you realize that most -- in
2 the Battery Panel's report, most of the companies weren't
3 U.S. ABC companies. And I think competition outside of U.S.
4 ABC is very healthy for battery development.
5 Also, you know, the money that even the auto
6 companies were talking about contributing, in advanced
7 battery development terms is a very small amount of money --
8 25 million, in the order of $25 million. That comment
9 showed me they're really not that serious.
10 You know, one of my -- one of these member
11 companies, Silent Power, just -- who was dropping the
12 program, they spent upwards of 20 to 25 million a year over
13 the last five years since you've put the mandate in place.
14 And that's for only one type of technology.
15 And I would encourage you over the next -- it
16 won't happen before Christmas; it won't even happen probably
17 before you finally agree on this regulation, but I think
18 there's some work that needs to be done to look at creative
19 ways of getting more resources and investment dollars into
20 battery development.
21 And I think this State should be working on that,
22 and also to make sure that whatever you do, technologies
23 that are going to be developed in Europe for the European
24 market, that there's some prospect for bringing those
25 technologies here and demonstrating those technologies in
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1 addition to U.S. ABC technology.
2 Those are my remarks. And I'd like to wish
3 everybody a happy holiday season and a Merry Christmas.
4 CHAIRMAN DUNLAP: Thank you, Mr. Mader.
5 Ms. Edgerton.
6 MS. EDGERTON: Excuse me, did you say that Silent
7 Power -- what did you say about Silent Power dropping?
8 MR. MADER: Yeah. Their parent company, RWE, made
9 a decision of about three to four weeks ago to drop their
10 development. And I think the Battery Panel did a pretty
11 good job of identifying the reasons at the end of their
12 report.
13 And basically, it was because of this -- a big
14 contributor was the regulatory uncertainty. They saw the
15 market softening up and the fact that they wouldn't really
16 get into high volume production and get a return, as the way
17 they define, until about the year 2006, so they couldn't
18 continue to make -- they had to -- they were making a
19 decision now to put another $150 million into the battery
20 development, and they didn't think they could wait 12 years
21 to get a return on that.
22 MS. EDGERTON: So, if I understand you, the
23 uncertainty of the last few months has contributed to --
24 MR. MADER: (Interjecting) Yeah. It's
25 contributed. And I think what the Battery Panel said, I
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1 would agree with. Every -- what it did show is that every
2 company has its own financial strategies and its own
3 investment decision strategies. And what you're going to
4 see is you're going to affect it. And we've already seen
5 that by one company dropping out.
6 We've already heard, you know, from Electrosource
7 just a few minutes ago saying that if this doesn't look like
8 a pretty specific program, a pretty defined program, you'll
9 find other companies that drop out.
10 So, things have to start in 1998, and they have to
11 believe, based on what you write up, as an agreement and
12 regulation, that there's some teeth in it and that this
13 market's going to start in '98, and it's going to start to
14 grow to 10 percent in 2003.
15 If you can do that, I think the investment will
16 stay. But in the absence of that, I think you'll see other
17 casualties.
18 MS. EDGERTON: Thank you.
19 CHAIRMAN DUNLAP: Thank you, Mr. Mader.
20 Paul Knepprath, American Lung Association of
21 California, and Bill Van Amburg, David Modisette.
22 MR. KNEPPRATH: Good afternoon. Thanks for the
23 opportunity. My name's Paul Knepprath, representing the
24 American Lung Association of California. We have 18 local
25 organizations throughout the State of California that
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1 represent approximately a million and a half donors to the
2 American Lung Association in the State.
3 I will commit to providing you some written
4 comments on the proposal. Obviously, we haven't had much
5 time to take a look at it and have technical folks provide
6 us with some feedback on it. There are a few comments that
7 I would just raise just for the record, and some of them
8 have already been raised. But these are the kinds of things
9 that we'll be looking at in terms of this proposal. And
10 that is some of the uncertainty around how do we make up the
11 emission reductions that will be replacing those that the
12 mandate would have given us in those first years of the
13 requirement.
14 It says here in the summary that all the exhaust,
15 evaporative, and refueling emission reductions associated
16 with the existing mandate requirements, plus a premium,
17 would be made up by the manufacturers in production of
18 cleaner cars.
19 We'll be interested to hear from the staff and the
20 Board how that program will play out, and how many cars are
21 we talking about? What cars are we talking about? We've
22 heard about the 49-State car. Some people have raised
23 concerns about that.
24 So, that will be an issue that we'll be very
25 interested in seeing how you address that.
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1 The other is, of course -- others have said this--
2 how do we get to 10 percent in 2003 if we're not having any
3 kind of graduated step up to that if there are no
4 requirements along the way that are enforceable? How do we
5 make 2003 at 10 percent?
6 And I would again echo some of the comments made.
7 I think. I think we may be setting ourselves up for
8 delaying and setting us up for failure with this kind of an
9 approach, and we would raise a concern about that.
10 And, of course, what are the penalties for
11 nonperformance or noncompliance under this current staff
12 proposal?
13 We look forward to the continuing debate and
14 discussions around this. We'll come back to you with some
15 of our own written comments around this and, hopefully, this
16 process will remain open as it has thus far for public
17 comments and input, so that this may or may not be the
18 actual proposal that is adopted in March.
19 And we look forward to participating in that
20 process. Thank you.
21 CHAIRMAN DUNLAP: Thank you, Paul. Mr. Van
22 Amburg. I recall last week, you said you'd be working on
23 your slide show.
24 MR. VAN AMBURG: I promised slides, and I did not
25 repeal that promise.
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1 I have brought forward, however, a hard copy as
2 opposed to a computer generating copy, because the
3 technology can't work here.
4 I want to just thank you for the opportunity to
5 speak. We briefly looked over the proposal that's been put
6 out there today. I must say that we find -- and CALSTART
7 actually, interestingly, has never had a position on the
8 mandate. We're not an organization that takes positions on
9 that.
10 But we have said that we do believe that it has
11 been good for industry, and we have strongly said that we
12 think it has been a real driver for an industry moving
13 forward. Therefore, we have said we think it's a good thing
14 to keep doing for California business.
15 If we could show the next, please.
16 However, we do think that this has been an
17 unnecessary suspension of a program that was working, and
18 it's a suspension that we think was unwarranted by
19 technology or marketing realities that have come out over
20 the past year of workshops that we've all been through.
21 I think we saw this full page ad that was in the
22 paper yesterday, "California Has a Choice: A successful
23 electric vehicle launch or politics as usual."
24 And fortunately, I think we agree with the
25 automakers on that, on politics as usual. But the politics
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1 as usual are kind of the same old thing we're seeing. They
2 have often said in the past that they cannot make these
3 things work, and they will push them -- they fight them at
4 any cost.
5 It's a high waged campaign and a high cost
6 campaign.
7 Next.
8 And I think that's gotten in the way. It's been a
9 real smoke screen to good talk. I'll just show this
10 quickly. There has been no debate about whether there was
11 some type of a marketplace for these vehicles. Even the
12 automakers have acknowledged that in various points, even in
13 confidential documents.
14 Next, please.
15 In fact, that used as a challenge, and the
16 objective was to try and create a climate in which the
17 State's mandate could be repealed. And that has been the
18 $24 million campaign by the oil and auto industry. And
19 you've seen the results. You've seen the attacks on safety
20 that have been dealt with very quickly and I think very
21 forthrightly by this Board.
22 But it's been a nonstop process of dealing with
23 it. I think it's an unfortunate smoke screen that's gotten
24 in the way of the reality of what you've been able to
25 accomplish on this. And I might mention a forestful of
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1 paper that's gotten mailed out.
2 What we'd like to talk about today, though, is
3 what we're faced with, and what we're faced with is a repeal
4 or the suspension of the mandate, however, the requirement
5 that the auto and oil industry has lobbied very extensively
6 for. We have talked about modifications over the last
7 several months.
8 The program's working. It's driven forward
9 investment. It's done an awful lot. Let's modify it.
10 Let's fix it, let's make it work even better. But I think
11 what we're seeing here is a complete proposal that's been
12 thrown out the window.
13 The question is, what does it do in terms of what
14 you want to see driven forward? Because that is the bottom
15 line, what is it accomplishing for what you want to see
16 happen in California? Is there consistency and continuity,
17 which is critical to investors -- pointed out by the Battery
18 Advisory Committee? No, I don't see that in there.
19 Does it keep in place those elements that keep
20 driving technology forward, such as significant volumes of
21 vehicles, which as I've testified to you before is a prime
22 driver of the small entrepreneur's medium size companies
23 involved in this. No.
24 Does it give automakers flexibility? Yes, it
25 does, which is good. But it does require very little to be
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1 returned in that trade.
2 Now, I must say, we have been counseled by some to
3 stay out of this and not speak, because the decision's done.
4 But frankly, I have too much respect for the quality and the
5 independence of this Board to believe that is the case. I
6 think there was a proposal that's on the table, and I think
7 you are all looking at it very carefully.
8 I do believe you want flexibility. And, in fact,
9 I think there are very few people in this room that would
10 argue against that. I don't think you want finality, and I
11 think this current action ends your program in six years.
12 It ends significant progress, certainly the pace of progress
13 that you've seen for six years without the real
14 justification to do that.
15 Let me lay out what -- if I can, with this next
16 slide, kind of the picture -- if you're an investor standing
17 back and looking. This is what you said out. You had tough
18 goals. You set them out there. An investor looking that
19 said, well, that's a lot vehicles there. That justifies and
20 lowers the risk. The yellow color is basically your
21 requirement per year, and then the additional colors on top
22 are the cumulative totals of vehicles that are going to be
23 out there.
24 It made a real difference to people interested not
25 just in drive systems but also in support of such.
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1 But the next slide shows basically what you have
2 done then and what you are putting out with this current
3 proposal for investors and entrepreneurs. That's a flat
4 line. That doesn't get people very involved.
5 Now, the 2003 time frame helps. It is good to
6 have a tough target to aim towards. But the question is,
7 how do you get up to that point with the current program?
8 And we would be very concerned about the viability
9 of people staying that long in the program to develop the
10 technologies to meet that 10 percent goal.
11 If I could see the next?
12 We showed you in the past just a snapshot. This
13 was never meant to be all the investment that's gone on by
14 small companies in this State, but a snapshot of what
15 they've done a half a billion dollars to date. Those out-
16 year numbers were based on business plans, assuming that
17 there was a ramp-up of vehicles in 1998, '99, and 2000.
18 Without that, that is another billion dollars just
19 in this one snapshot of California investment that is
20 certainly at risk. And I think that's significant, and
21 that's something that needs to be seriously thought about.
22 Because one of the things you committed yourselves
23 to was protecting and recognizing the investment and the
24 efforts of California business. I don't think the current
25 plan is at all going to kill electric vehicles. I think it
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1 will hurt California business effort to make them move
2 forward, and I think it will sow down seriously the place of
3 investment in technology development. Because, frankly, a
4 lot of the technology development has come from smaller
5 companies outside of the traditional automotive industry.
6 It has not come from the U.S. ABC, where you're
7 seeing some of the best battery technologies come. But it's
8 coming from outside of that effort. And frankly,
9 competition is good for development and good for business in
10 the longer run.
11 Here's -- and one other point there that I'd like
12 to make is that I don't think this industry in California is
13 also going to go away. We won't fall into that rhetoric or
14 hyperbole. But I think there is going to be a number of
15 companies dropping out. And you've heard some of them on
16 the national scene where that's already happening.
17 These companies won't be able to last. The other
18 danger you, in essence have, if you'll excuse the analogy,
19 set up a technology olympics in 1990, and you set the bar
20 pretty high.
21 But you said that was a worthy goal; let's aim
22 towards it. And over the last five years, people have been
23 moving pretty much towards the goal and are very close to
24 reaching it.
25
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1 They have invested a lot of money. They've
2 invested an awful lot of people time that they've committed
3 to doing this. But now, as we get close to it, and people
4 say, "Well, we're close. We can't quite get the bar; how
5 can you help us?"
6 The question, are we modifying that, are we
7 lowering the bar, are we finding ways to make it easier?
8 What we're seeing is we're canceling the olympics.
9 We're putting it off from 1998 until the year 2003.
10 Frankly, the people -- especially the medium-sized companies
11 working on technologies -- cannot stay in training that
12 long. They won't be around to make this happen. And that's
13 maybe not that big of a concern in Detroit, but it's a big
14 concern to you if you want to have the support industry to
15 be making drive trains, batteries, energy management
16 systems, and the like to support your ramp-up to 10 percent.
17 It is also a concern to California, because you
18 said something that I think is even a greater danger to
19 CARB. You have asked that people meeting a tough goal. You
20 have stayed on course for five years, and you now look like
21 you're going to not modify it, but back off of it.
22 It sends a signal that this Board has to seriously
23 consider I think. Will people take us seriously in the
24 future? What does that do to our ability to regulate
25 effectively?
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1 This has been, and I have great respect for CARB,
2 one of the most creative and successful regulatory bodies
3 because of its flexibility, its technical expertise, and the
4 like. But this sends a dangerous signal to your future
5 ability to continue to do that, not only for those you
6 regulate, but potentially for those you want to respond to
7 your regulation.
8 One final point, if I can, because this has been a
9 long day for everyone. I think the Battery Technology
10 Advisory Panel wrote an excellent report. And I see it
11 consistently being misquoted as saying things aren't
12 possible that, in fact, it does not say. It is very careful
13 about how it phrases things. In fact, it finds that a
14 hundred mile electric vehicle in the marketplace at a
15 legitimate cost is possible in the 1998 time frame with
16 batteries coming on line now.
17 It also says that you need a continuous and
18 orderly California program to get what you want, to get the
19 advanced batteries out there. I am troubled that the
20 program I see on your behalf does not do what I think you
21 want it to do, and you have to be concerned about that.
22 Thank you.
23 CHAIRMAN DUNLAP: Thank you, Mr. Van Amburg.
24 Dave Modisette, followed by Anita Mangels,
25 followed by Bill Wason.
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1 We have five speakers left.
2 MR. MODISETTE: Mr. Chairman, members of the
3 Board, I'm Dave Modisette. I'm Executive Director of the
4 California Electric Transportation Coalition. Our members
5 are the five largest electric utilities in California, both
6 investor owned and municipal utilities, Westinghouse
7 Corporation, and the Advanced Battery Task Force.
8 I first want to thank Chairman Dunlap and all the
9 members and the staff for the really extraordinary time and
10 effort that you've invested in this issue. We know the
11 Board is fully committed to the successful introduction of
12 zero-emission vehicles in California.
13 And you know that we have fully supported the
14 Board's actions on this issue; in particular, during the
15 1992 and the 1994 biennial review.
16 We believe that a cooperative, good-faith
17 relationship with automakers and all parties is essential
18 for a successful ZEV program.
19 The staff recommendation is a positive step
20 towards this cooperative relationship. Utilities are doing
21 their part. We are prepared to meet the infrastructure
22 needs of our customers, to provide reliable electrical
23 service at reasonable rates, to purchase significant numbers
24 of electric vehicles in the early years. One specific thing
25 we would ask is that the determination of the cities in the
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1 technology development partnership include the flexibility
2 to consider placement of vehicles in not only the Los
3 Angeles and Sacramento areas, but also San Diego and the Bay
4 Area.
5 Our understanding of the staff proposal is that
6 smaller companies producing vehicles today and in the future
7 will remain eligible to generate and sell zero-emission
8 vehicle credits.
9 We understand that that's the intent of the staff
10 proposal. It's to foster the development of these companies
11 and their component suppliers. We would encourage you to
12 highlight this as the staff proposal evolves in the future.
13 Having already said that the staff recommendation
14 is a very positive step towards a cooperative relationship
15 which we need to build, I think it's important to say that
16 cooperation alone will not guarantee success.
17 We need an enforceable agreement with clearly
18 stated goals, measurable criteria against which -- against
19 which to evaluate progress.
20 The 10 percent requirement in 2003 provides the
21 underlying confidence that voluntary market efforts of the
22 auto industry will lead to a larger sustaining market.
23 It is also important, we think, to emphasize that
24 the staff proposal, as we understand it, would not abolish
25 the mandate in 1998 through the 2002 time period. It
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1 suspends it. And that mandate, as we understand the staff
2 proposal, can be brought back and imposed on individual auto
3 manufacturers if sufficient progress is not being made.
4 We think that's an extremely important point of
5 the staff proposal.
6 Lastly, we're concerned that the criteria for
7 success in the 1998 and early 2002 time frame needs to be
8 more fully developed. We believe that this needs to be a
9 criteria that not only involves the battery technology and
10 battery cost, but the full range of efforts that automakers
11 must make to prove to us, to prove to the State of
12 California that they really are able to ramp-up to the 10
13 percent level in 2003.
14 Just in conclusion, we do want to work with the
15 staff and all parties over the next 45 days to add specifics
16 and detail to this criteria for success.
17 Thank you.
18 CHAIRMAN DUNLAP: Thank you, Mr. Modisette. I
19 appreciate your continued involvement and interest on behalf
20 of your companies. I want you to know you've warmed
21 Supervisor Roberts' heart when you mentioned San Diego. He
22 wants the vehicles there as well.
23 SUPERVISOR ROBERTS: I had to refrain from
24 clapping, because I didn't want to interrupt your comments.
25 But I had planned in my own comments to correct this
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1 oversight. And I hope that staff will note that. At some
2 point, I suspect they're going to want all of our support.
3 I want to see this. I think it's important to expand to
4 these other two very important markets for a number of
5 reasons to show the residents in those communities, to
6 expose them to these technologies, but also because I think
7 it's going to be -- I think this is going to be a successful
8 program. And I think that early introduction is going to
9 also drive the development of infrastructure in those
10 communities when this introduction is made.
11 So, I think it's very important that those two
12 areas that have been cited be included. I'm more partial to
13 the one in the south, but I can see a strong argument why
14 the San Francisco area should be, too.
15 CHAIRMAN DUNLAP: Mayor Hilligoss and I want to
16 see Petaluma and Rancho Cucamonga added.
17 (Laughter.)
18 CHAIRMAN DUNLAP: Thank you.
19 MR. MODISETTE: Thank you.
20 CHAIRMAN DUNLAP: Anita Mangels, Bill Wason, and
21 then Clare Bell.
22 MS. MANGELS: Thank you, Mr. Chairman, members of
23 the Board. Before I begin my remarks on behalf of
24 Californians Against Hidden Taxes, I'd like to let you know
25 that I have with me a statement from the Howard Jarvis
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1 Taxpayers Association. They were unable to be here
2 personally today, but they do represent about 200,000
3 California taxpayers. They are opposed to the mandate.
4 They were in favor of the Chamber of Commerce alternative,
5 which was purely market-based, and they've asked me to
6 submit the statement on their behalf to that effect.
7 Additionally, I have a statement to be submitted
8 on behalf of the Reason Foundation. They, too, were unable
9 to be here personally, but I believe you are aware of their
10 opposition to the mandate for economic and free market
11 reasons.
12 I will also submit that at the conclusion of my
13 remarks.
14 As you know, my name is Anita Mangels. I'm
15 Executive Director of Californians Against Hidden Taxes.
16 We're a coalition representing the Howard Jarvis Taxpayers
17 Association, the National Federation of Independent
18 Business, the California Manufacturers Association, Western
19 States Petroleum Association, California Business Alliance,
20 Santa Clara Valley Manufacturing Group, Certified Grocers of
21 California, the National Tax Limitation Committee,
22 California League of Food Processors, the California State
23 Grange, and the California Farm Bureau Federation, among
24 dozens of other organizations, businesses, and public
25 officials throughout the State.
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1 Our opposition to the ZEV mandate is long-
2 standing, well-known, and well-documented. In brief, we
3 believe that the appropriate catalyst for the development of
4 electric vehicles is natural market demand, which should be
5 met by the private sector independent of intrusive
6 government mandates and quotas.
7 We strongly oppose any type of public financing of
8 the electric vehicle industry. Such direct and indirect
9 subsidization has been conservatively estimated at $20
10 billion to underwrite the forced introduction of EVs under
11 the existing mandate.
12 It defies reason that a regulatory agency charged
13 with improving air quality in our State would steadfastly
14 cling to an unfunded mandate which would, by CARB's own
15 admission, achieve less than one percent of the emissions
16 reductions required under CARB's own clean air plan, even
17 after full implementation under the existing mandate in the
18 year 2010.
19 For that reason alone, regardless of one's
20 personal philosophy on the role of government enforcing
21 technology, it should be clear that the mandate needs to be
22 repealed, not tinkered around the edges with, not modified,
23 not pushed back for a year, or two, or five. It should be
24 repealed.
25 The question then becomes, if you do repeal it,
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1 what new regulation, if any, should replace the mandate, and
2 through what process should such a replacement be
3 formulated?
4 We see many interesting proposals before this
5 Board, most of which would do nothing but rename or
6 reshuffle the narrow technological requirements, onerous
7 production quotas, and massive public subsidies associated
8 with the existing mandate.
9 The proposal recommended by staff today is no
10 exception. Now, I've noticed especially today that some EV
11 promoters have zeroed in on the catch phrase, market based.
12 And they submitted proposals which masquerade as voluntary,
13 business friendly, or flexible.
14 And the staff proposal also makes liberal use of
15 those words. However, the bottom line is that all of the
16 proposals still require the exclusive promotion of a single
17 technology, the electric vehicle, and stili include rigid
18 production quotas and stiff penalties for noncompliance.
19 Now, it doesn't matter if you call this a market
20 launch, or a public/private partnership, or 40 acres and a
21 mule. If it forces automakers to produce only one kind of
22 car and State dictated quantities by State dictated dates,
23 and if it relies on public subsidies, it's still a mandate.
24 And that is unacceptable.
25 In deliberating this matter over the coming
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1 months, we hope that you will consider the following points:
2 In the face of the undisputed fact that emissions reductions
3 from the EV mandate, even if fully implemented, would be
4 pitifully low, EV promoters are now attempting to make an
5 economic argument for retention of the mandate.
6 They've been up here begging the State not to
7 abandon what they call fledgling EV related industries which
8 depend on the mandate for their survival.
9 First of all, many of these so-called
10 entrepreneurial businesses have been heavily subsidized by
11 tax dollars from the very beginning, and their backers have
12 virtually made a career of attending public meetings, such
13 as this one, to plead for continued subsidies so they can
14 carry on.
15 If, as they continually insist, there were indeed
16 a market for these folks' products, they would be spending
17 less time here begging for public handouts and more time out
18 on the street selling cars.
19 Why should the taxpayers continue to be unwilling
20 or unwitting investors in companies which must depend on
21 government mandates to ensure its success.
22 Corporate welfare of this nature should be
23 eliminated, not encouraged. I notice Mr. Van Amburg was
24 very quick to talk about how there's been a significant
25 amount of public -- or I should say private investment in
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1 California in the industry. He neglected to mention that
2 the, quote/unquote, "public/private partnership" of CALSTART
3 is heavily subsidized by tax dollars and public funding.
4 And many of these so-called start-up business which go
5 through CALSTART would not be there without the tax
6 subsidies or funding from special interests that stand to
7 make a lot of money if EVs indeed get onto the roads.
8 So, I think it's quite a misconception to sit here
9 and talk about the industries that may go under or die on
10 the vine because of this. Any industry that needs a
11 government mandate or taxpayer guarantees to ensure its
12 survival maybe should think twice about the business that
13 it's in.
14 If there were a market, they would not need a
15 mandate.
16 Another recurring theme that we've heard is that
17 electric cars must remain the driving force behind any clean
18 air plan. Yet this irrational devoting to electric cars,
19 regardless of what euphemism is applied to their mandated
20 introduction, appears to have no rational basis, scientific
21 or otherwise.
22 We've already seen studies by credible experts,
23 such as the Reason Foundation, Rand's, Sierra Research, J.
24 D. Power and Associates, MCubed, and others that EVs as a
25 solution to air pollution are environmentally ineffective
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1 and prohibitively expensive.
2 Now, a new study by a group of scientists at the
3 Massachusetts Institute of Technology, published in the
4 January, 1996, issue of Technology Review, describes the
5 shortcomings in the justification for the existing or any
6 other mandate.
7 Of the genesis of the EV mandate, the MIT
8 scientists had this to say, quote, "One supposes that such a
9 mandate would have been preceded by a comprehensive
10 analysis, yet no investigation of the overall performance or
11 effectiveness of electric vehicles either by themselves or
12 compared with alternatives has been undertaken. Our
13 research group found that available material either deals
14 with just one element of the system, such as batteries, or
15 is obviously partisan coming from enthusiasts, such as
16 electric vehicle makers, battery suppliers, or electric
17 utilities with a stake in the outcome," close quote.
18 They went on to say, and I quote again, "The
19 electric vehicle policy defined by the California Air
20 Resources Board is neither cost-effective nor practical.
21 Electric vehicles will not contribute meaningfully to
22 cleaner air if they're introduced as now proposed. Over the
23 next decade, their affect will be imperceptible --
24 imperceptible compared with other major improvements in
25 automotive and other combustion technologies," close quote.
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1 The scientists concluded by reiterating the
2 failure of EVs to meet the needs of a mass consumer market
3 and the enormous costs of implementation.
4 By way of an alternative to the EV mandate, the
5 study's authors urged the adoption of a flexible strategy
6 that permits us to choose the most effective options as they
7 develop.
8 The California Chamber of Commerce's proposal,
9 which was the only one advocating repeal of the mandate,
10 sought to do just that. It would have made maximum use of
11 competitive forces and market-based strategies to allow the
12 private sector flexibility in satisfying the emission
13 reduction requirements of the SIP.
14 If the true goal of this Board is cleaner air, why
15 should it matter how that goal is achieved? The same
16 question applies to the EV lobby, who are fond of wrapping
17 their technological ambitions in the sanctified cloak of
18 clean air.
19 The truth is that electric vehicles, by this
20 Board's own statements in their mandated volume, will
21 achieve fewer than one percent of the emissions reductions
22 required under the State's clean air plan.
23 This is not the idle speculation of mandate
24 opponents. It is a fact acknowledged by the Air Resources
25 Board and many in the EV lobby itself.
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1 Why then is the prospect of broadening the field
2 of clean air opportunities so threatening? We all want
3 cleaner air, but the EV mandate or any skillfully recast
4 version of it is the least cost-effective way to go about
5 it.
6 The staff proposal does nothing more than cloak
7 the bitter pill of the original mandate in multiple layers
8 of sugar designed to sweeten the blow. It's still a
9 mandate. It still discriminates in favor of one singular
10 technology. It will still cost billions of dollars in
11 public funds, and it will still provide virtually no clean
12 air benefits.
13 Let's cut our losses, repeal the mandate, and get
14 down to some meaningful solutions which rely on the free
15 market, not arbitrary government mandates and coerced
16 production quotas to get the job done.
17 Thank you very much for your time.
18 MR. LAGARIAS: Thank you.
19 MS. MANGELS: Questions?
20 MR. LAGARIAS: Any questions from the Board? Dr.
21 Boston.
22 DR. BOSTON: A few years ago, one of my brilliant
23 investments was in oil well exploration. And one of the
24 enticements at that time was a tremendous tax break one
25 would get for that kind of exploration. Doesn't that kind
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1 of repulse you now to be representing the oil industry and
2 those hidden taxes that you're talking about?
3 MS. MANGELS: I suppose I could ask certain folks
4 in this room who have ties to CALSTART and Natural Resources
5 Defense Council, you know, if they feel that they have a
6 conflict of interest, but are still ruling on this matter.
7 I think what we need to do is take a look at what's on the
8 table, which today is subsidies and mandates for electric
9 vehicles which will not clean up the air.
10 You know, to go backward and look at anything
11 else, although if you like, I have training in accountancy,
12 I'd be happy to debate the point with you at some other
13 time.
14 But the issue today is whether or not we're going
15 to go forward and take $20 billion -- give or take a few
16 billion -- of taxpayer money and put some vehicles on the
17 street, for which there is no true consumer demand and which
18 will not improve our air quality any more than one percent
19 over the next 15 years.
20 And frankly, if you got yourself a tax break a few
21 years ago, more power to you. I certainly don't think the
22 rest of California would like to subsidize something that's
23 not going to help air quality.
24 DR. BOSTON: You seem to be asking for it now.
25 MS. MANGELS: I beg your pardon?
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1 DR. BOSTON: You seem to be asking for it now by
2 the people you represent.
3 MS. MANGELS: I represent people, including the
4 Howard Jarvis Taxpayers Association. As a matter of fact,
5 if you'd like, I'll read the endorsement list for you.
6 National Tax Limitation Committee, People's Advocate, 25 or
7 so California legislators, the -- gosh, I can go on and on
8 and on. Would you like the list again?
9 DR. BOSTON: No. I heard it the first time.
10 Thank you.
11 MS. MANGELS: Okay.
12 MR. LAGARIAS: Thank you. I get the impression
13 you're against the mandate; is that correct?
14 (Laughter.)
15 MS. MANGELS: Right. But I wouldn't presume to
16 tell you how I really feel, Mr. Lagarias.
17 Thank you very much.
18 CHAIRMAN DUNLAP: Thank you. Bill Wason, Clare
19 Bell, Lew Uhler. Is Mr. Uhler still here? Okay. And Ben
20 Knight. Those are the remaining speakers. If anyone wishes
21 to yield in the interest of time, I would be grateful and
22 would show my appreciation publicly.
23 MR. WASON: I won't yield. I'm Bill Wason with
24 BAT International. We're an electric vehicle manufacturer
25 in Burbank. I will yield to respond to every one of the
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1 previous speaker's allegations. But there are a couple that
2 are probably worth noting.
3 BAT is using private investment dollars to build
4 cars. We are a public corporation, and we are using
5 investor dollars that are invested to do a lot of the
6 research work. And, in fact, the joint development project
7 that we have with Acme right now is with private dollars
8 right now, and a significant share of private dollars. And
9 there are not public funds involved.
10 I think the previous speaker's point that there
11 needs to be a lot of competition within both the electric
12 vehicle manufacturing market and the battery development
13 market is critical, because if these technologies are
14 carefully controlled by a few players, it leaves you a lot
15 less flexibility in actually coming up with your end result
16 of a 10 percent mandate.
17 And I think, in looking at the staff proposal,
18 that seems to be the key modification that's necessary.
19 It's how you come up with maintaining that market
20 competition in the early years that ensures that players
21 with good technology get into the marketplace regardless of
22 whether they have a direct alliance with a major auto
23 company.
24 I think that that becomes very important, because
25 some of the technologies that are not controlled by the auto
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1 companies can, in fact, be very good solutions. I think
2 Acme's efforts are an example of that. They are not in full
3 production of a battery. This is not -- this is a
4 development project. This is not a battery that will get
5 tested in a car in three or four months, but it shows that
6 you can take an aerospace battery manufacturer, team them
7 together with an electric vehicle manufacturer, get a lot of
8 test data on batteries; the test data's very credible data,
9 and come up with some very exciting number relative to the
10 life cycle cost of electric vehicles.
11 I want to reiterate that, because I think it's a
12 critical element in your own look at whether there are near-
13 term batteries that could come into play in 98-99, that
14 would really have an affect on marketability of ZEVs.
15 I think the auto companies have said they need a
16 hundred mile car in order to be able to sell cars. If
17 that's the case, that should be a goal. And if there are
18 batteries out there that can meet that goal, there needs to
19 be a mechanism to get that battery to the market so it sets
20 a standard, so you don't step back from 10 percent in 2003,
21 so those batteries and cars get to the market, and it's an
22 open competition to sell those vehicles.
23 I think there's some room within the staff
24 proposal to do something to that effect. The more it's
25 concrete, the more there are real dollars attached to it,
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1 the more all players can get access to that type of pool,
2 the more likely it's going to succeed and maintain a
3 competitive market.
4 I think that consequences of that can be very
5 significant if you end u with a battery that lasts 10, 12
6 years, you can end up with a vehicle that lasts longer than
7 a gasoline vehicle from a realistic ownership standpoint,
8 because of a lower operation and maintenance cost because of
9 a consistent cost of ownership. And that will have a huge
10 impact on fleet markets.
11 Fleet markets are going to do a dollars and cents
12 equation on this on a per mile basis. If you change the
13 life of a vehicle three years -- Virginia Power did some
14 analysis on this at an EV conference -- you can take a
15 $26,000 Ford Ranger, electric Ford Ranger, which is our
16 current price for a Ford Ranger pickup, stack it up against
17 a $13,000 gasoline Ford Ranger. And if your life is 10
18 years as opposed to 7 years for your electric Ford Ranger,
19 your per mile cost and -- you per mile cost on the electric
20 and gasoline Ford Rangers -- even though they're 13,000
21 miles (sic) apart on the first cost -- is the same on a per
22 mile basis.
23 So, if you can extend that life two or three more
24 years and drop the price five or six thousand dollars,
25 you're talking about very competitive ZEVs in a fleet market
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1 that doesn't care whether it has a 300 mile range.
2 The reality is, if it's cheaper on a per mile
3 basis, they will use it.
4 And there are very large EPACT (phonetic)
5 requirements that are going to come into play in '98, '99,
6 2000 in federal fleets, in utility fleets that are going to
7 drive a lot of fleet purchases. And California can benefit
8 from those national numbers if they have a California
9 industry that's being fostered.
10 And that's a lot of jobs at stake and it's a lot
11 of numbers as you get into those larger years. And if we
12 can keep the field open and the investment activity
13 occurring, I think that will occur.
14 The danger you have is if you set a goal of 2003,
15 and it's purely voluntary and it's purely Big 7 driven, then
16 the ability to get that to occur in the marketplace is going
17 to be much more difficult.
18 I would say that that's probably the gist of what
19 I had to say. I don't want to go on too long, because of
20 time constraints.
21 But if there are any questions, I'd be glad to
22 answer them.
23 CHAIRMAN DUNLAP: Thank you for your perspective
24 and your counsel.
25 Clare Bell. Ms. Bell, as I recall, last week, you
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1 acquainted us with your organization and your views.
2 Do you have anything new to add?
3 MS. BELL: Yes, I do. I've submitted written
4 testimony that basically describes some of my suggestions,
5 also some problems associated with the current version of
6 the plan.
7 I just would like to say a few short points. One
8 is, the Electric Auto Association supports the statements of
9 previous pro-ZEV speakers, including CALPIRG, NRDC, Sierra
10 Club, and UCS.
11 We believe in the credibility of those
12 organizations and the results of their information,
13 especially with regards to anti-ZEV spending and what are
14 called Astro Turf groups that mask established interests.
15 Okay. The next point is we have a very strong
16 concern about equivalent zero-emissions credits.
17 Interestingly enough, the MIT Tech Review in 1994, and I
18 think I spoke of this --
19 CHAIRMAN DUNLAP: The hybrid issue?
20 MS. BELL: Not -- somewhat the hybrid issue.
21 Yeah.
22 CHAIRMAN DUNLAP: That's coming to our Board I
23 believe in January?
24 MR. CACKETTE: Late next year.
25 CHAIRMAN DUNLAP: Late next year, I'm sorry.
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1 MS. BELL: Well, I just wanted to point out that
2 today's in-use emissions do not match the results of tests
3 now being done on cars. The test procedures don't match the
4 real world driving. If that's true with today's cars,
5 what's going to be like with cars that are like today's cars
6 but have more severe control on the exhaust?
7 In-use emissions is a big problem. It results in
8 emission levels that are five to ten times above the
9 predicted.
10 And that's according to the MIT review. And
11 that's one big reason that California does have an air
12 pollution problem. Another reason that California has an
13 air pollution problem is not the older cars on the roads.
14 It turns out to be the cars -- recent model cars that have
15 suffered malfunctions in their emission control equipment.
16 That is the largest source of pollution, not the older cars.
17 Okay. Let me go back to what I was saying, and
18 that is, what guarantees that the LEVs or ULEVs will do any
19 better? Today, Californians slip through an emission
20 control method whose testing does not reflect the true
21 levels of automotive pollution and would not achieve
22 emission lowering goals in the SIP.
23 We also have concerns about substituting a
24 memorandum of understanding for what is now essentially a
25 State law. The present EV program provides penalties in the
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1 form of 5K fines per car not supplied.
2 What in the memorandum of understanding would be
3 equivalent to that kind of setup? How are you going to
4 enforce it? The most that could be done with a memorandum
5 of understanding, from my understanding, is that it can only
6 be enforced by a breach of contract, which is a civil suit,
7 not a criminal suit or the violation of a State law.
8 And it can drag on forever in the courts. So,
9 enforcement of the memorandum of understanding, as I
10 believe, is more difficult than a multistate mandate or law.
11 Okay. I'd like to say one other thing quickly.
12 I've noted that most of the emphasis on the Board seems to
13 be in the area of the large auto manufacturers; to some
14 extent, the midsize conversion companies that have been
15 incubated by CALSTART.
16 I would like to suggest that you not ignore a very
17 strong resource that could be used, and that is the small EV
18 converters and kit builders.
19 Of the two to three thousand cars on the road
20 presently, the cars that have been built by individuals from
21 kits or have built -- been built by individuals constitute
22 the majority of cars on the road right now, about seven to
23 eight hundred cars.
24 We are putting cars on the road every week. We
25 are doing it. We are using them, and we're finding it to be
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1 successful.
2 If the Big 3 or the Big 7, or whoever, cannot fill
3 in that gap, I suggest that CARB turn to the people who are
4 willing and eager to do it. And that is the people who are
5 continuing to put cars on the road for ten years. They
6 continue to do in spite of a lot of opposition, despite
7 logistical problems, financial problems, and just general
8 problems of being a small business.
9 That's why they have not grown. It's not a matter
10 of the market. There are formidable obstacles for anybody
11 who wants to buy or to sell EVs in the State of California.
12 And I've documented those in a paper that I gave to the
13 Board.
14 If those obstacles were not there, we'd have a lot
15 more EVs on the road.
16 I can also say that the failure of EVs in the
17 early part of the century was not due to technology. It was
18 due to socioeconomic factors that resulted in the market,
19 but the people who wanted EVs didn't have a voice in what
20 was going on.
21 Okay. I'd like to close by saying the market is
22 clearly there for EVs, something the auto and oil companies
23 also believe. Why else would they spend $24 million to
24 destroy it?
25 Don't let them get away with it. Stick with the
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1 mandate in its present form. I drive EVs everyday. I'm a
2 member of the Women's Electric Racing Team. I believe it's
3 going to work. Give them a chance.
4 MR. LAGARIAS: Thank you. Any questions?
5 MS. BELL: No questions?
6 MR. LAGARIAS: No. No questions. Thank you very
7 much.
8 Lewis Uhler?
9 MR. UHLER: Mr. Chairman, members of the Board,
10 I'm Lew Uhler, National Tax Limitation Committee.
11 I think I'm the last witness. It may be fitting,
12 because I've submitted a letter urging the Board to launch
13 formal rulemaking on the EV issue.
14 We've heard all kinds of claims and cross-claims,
15 and maybe it's time for the Board to go through the very
16 formal process.
17 I would call it a reality check. And it's only
18 with formal rulemaking hearings that you can be assured of
19 the propriety of your decision.
20 I think the Board's indecision, as evidenced by
21 the staff proposal with deferring of time frames, et cetera,
22 underscores the need for more clarity.
23 It's clear that we all want cleaner air. Not a
24 person in this room would suggest otherwise, but emotional
25 pleas for cleaner air simply don't cut it. We've got to get
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1 at the facts.
2 From the evidence available to most of us, it
3 looks like EVs are terribly cost-ineffective in terms of
4 cleaner air. And you may create, if you don't hold such
5 formal hearings, a perverse result, and that is that you
6 delay the cleaning up of the air by the misdirection of
7 funds toward EVs, which are not going to result in as a
8 quick a cleanup of the air as other alternative methods may.
9 Now, the question I think you have to ask yourself
10 is, is the Board in the technology forcing business or the
11 cleaner air business? I think it has to go back to its
12 roots, its legislative authority, and test whether the EV
13 order can meet the statutory test of necessity, cost-
14 effectiveness, and technical feasibility.
15 And that's a clear challenge, I think, to all the
16 members to, in your own mind, have a clear direction in the
17 future by looking at the evidence in the only way that's
18 proper, and that is a formal hearing process.
19 I would add a footnote on the staff proposal. ONe
20 element there would, to me, be a direct frontal assault on
21 First Amendment rights, where there would be some
22 contractual obligation not to say bad things about the EVs
23 of the future, even if the evidence at that time dictated
24 that one ought to.
25 So, I would simply underscore that. I'd be happy
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1 to respond to any questions.
2 CHAIRMAN DUNLAP: Thank you, Mr. Uhler. I
3 appreciate your interest and continued involvement with this
4 issue.
5 MR. UHLER: Thank you.
6 CHAIRMAN DUNLAP: Ben Knight from Honda R & D,
7 North America.
8 Mr. Knight, we are weary.
9 (Laughter.)
10 MR. KNIGHT: Well, I think I'm the last speaker.
11 CHAIRMAN DUNLAP: You are the last speaker.
12 MR. KNIGHT: And it's due to the shuffle of the
13 deck, but I'm glad to complete the deck here.
14 CHAIRMAN DUNLAP: Okay.
15 MR. KNIGHT: I'm Ben Knight, and I'm with Honda R
16 & D. I appreciate the opportunity to comment. I'd like to
17 endorse staff's proposal with modification, and summarize
18 briefly why we concluded it's the most constructive
19 direction.
20 We've been developing an entirely new purpose-
21 built electric vehicle incorporating many advanced
22 technology features to tail in to the '98 ZEV requirements.
23 Also, we've been pursuing and will continue to pursue
24 various types of demonstration programs. For example, in
25 the past one and a half years, we have ongoing programs with
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1 some utility companies. And in the Sacramento area, we
2 started a station car program with several EVs at the
3 Sacramento Airport.
4 Unfortunately, despite our R & D efforts, we're
5 forced to conclude that the performance of the '98 model EV
6 will fall far short of the minimum acceptable level as a
7 commercial product.
8 I testified at a previous workshop that our real
9 world range we're experiencing by real world usage is about
10 60 percent of the nominal or test mode range.
11 Battery technology is the limiting factor, and
12 there's many unresolved issues before EVs can be put into
13 the marketplace, particularly market acceptance issues as
14 well as infrastructure.
15 I believe the most constructive way, if not the
16 only way, to materialize the success of EVs is through
17 cooperative field trials incorporating advanced batteries in
18 real world conditions. This is suggested by the staff
19 proposal, and I would encourage CARB to take an active role
20 in oversight of such a program.
21 The cooperative program should be sized in
22 accordance with issues and objectives identified under the
23 scope of the program. I would stress quality versus
24 quantity and establish the net size. It's going to be
25 extremely important to have committed partners -- utilities,
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1 municipalities -- and have much support for the users
2 carrying through this program with a best test.
3 Also, we support the annual review of the program,
4 clear objectives, and we'd be interested in sharing those
5 results.
6 ZEV alternatives, such as EZEVs should be
7 encouraged as well as dedicated experimental offerings of
8 advanced vehicle designs.
9 We support the seven automakers' proposal to
10 suspend the ZEV mandate through 2003. Significant air
11 quality benefits to California come from the 49-State
12 program, six year mandate suspension keeps the viability, I
13 believe, and gives flexibility and a response to uncertain
14 battery situations and market acceptance issues.
15 In conclusion, we intend to participate in
16 developing this alternative. We'd like to work with CARB in
17 the most appropriate course of action to take, and to see a
18 limited number of high quality EVs in the marketplace for
19 measurable assessment is the most positive and sensible
20 approach toward successful EV commercialization.
21 Also, I'd like to express Honda's commitment and
22 sincere efforts to work on the most cost-effective,
23 practical emission control systems, including EV.
24 CHAIRMAN DUNLAP: Thank you, Mr. Knight. I
25 appreciate it. You're our concluding speaker.
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1 We appreciate Honda's commitment to this effort.
2 Okay. What I think we'll do, I'd like to make a
3 couple closing comments, then open it up for Board
4 discussion.
5 I'd ask staff to be on alert to be able to cover
6 some of the themes that were expressed today by the
7 witnesses.
8 I'd like to thank all of you that participated and
9 commented for your valued comments. We have taken
10 considerable care to ensure that interested parties have had
11 an opportunity to participate in this nine-month long review
12 process. We will continue to value your input as the
13 concepts discussed by the Board here today move through the
14 moore formal regulatory process during the next several
15 months.
16 Before I officially open it up for the Board
17 discussion, I'd like to bring to the Board members'
18 attention a letter in their package from Governor Wilson.
19 Based upon the seriousness of our action today and the
20 Governor's long-standing interest in air quality, I briefed
21 the Governor on our progress earlier this week.
22 I'm happy to report that the Governor agrees with
23 not only our critical goals of maintaining the momentum of
24 technology progress and ensuring the successful introduction
25 of ZEVs, but he is also keenly focused on our State's
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1 obligations under the Federal Clean Air Act. Since he
2 played a major role in passing the 1990 amendments to the
3 Act while serving in the U.S. Senate, Governor Wilson wants
4 to be sure any action we take to modify this regulation next
5 year conforms with both the short-term obligations under our
6 SIP and the long-term requirement to meet health-based
7 standards in the year 2010.
8 With that in mind, I'd like to open the discussion
9 to the Board members.
10 A couple things. I'll kick it off -- I don't see
11 anyone rushing to the mike -- and open it up for a few
12 themes I'd like for the staff to address or discuss.
13 We've heard much, particularly from the
14 environmental community today about the enforceability of
15 the staff proposal and what we might be bale to expect in
16 ensuring compliance with any sort of memorandum of agreement
17 or MOU.
18 So, I'd like -- I'm looking at you, Mr. Kenny, but
19 I'll defer to Mr. Boyd to see who starts this off.
20 But we need to talk about enforceability.
21 (Thereupon, there was a pause in the
22 proceedings to allow the reporter to
23 replenish her shorthand paper.)
24 CHAIRMAN DUNLAP: Mr. Boyd, enforceability.
25 MR. BOYD: We were understandably brief, but
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1 perhaps too brief in our opening presentation today on the
2 issue of enforcement, particularly since we recognize how
3 important it is to so many people. We spent quite a bit of
4 time, frankly, of late assuring ourselves that the
5 enforcement issue is addressable and that there's the same
6 degree of protection to the public and the Board's position
7 of their MOUs as there would be under the regulatory
8 approach.
9 Mr. Kenny can address that.
10 Mr. Modisette, I noticed, having done his homework
11 quite well, picked out some of the points that are inherent
12 in our proposal; that is, individual MOUs with each of the
13 seven companies relative to early or advanced technology
14 introduction.
15 Quite frankly, the failure to comply with that
16 would, for instance, probably bring down the original
17 regulation upon the company in question. That's the power
18 the Board has. Upon a finding by the Board of
19 noncompliance, that could be the order of the day; in
20 addition, all the other financial and programmatic remedies
21 that are available to the Board under any regulation would
22 be available under an MOU.
23 But I'd ask Mr. Kenny to elaborate on that.
24 MR. KENNY: Thank you. What we have been thinking
25 about was a two-pronged enforcement aspect to the MOA. the
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1 first prong would be that for noncompliance with the MOAs,
2 there would be reinstatement of the regulation, essentially
3 in full effect.
4 However, there was some concerns about how that
5 would basically occur as a result of the fact that we would
6 need to come back to the Board. Time would be involved in
7 essentially reinstituting that regulation.
8 So the other prong of the enforcement aspect of
9 the MOAs would be that the MOAs themselves would have that
10 enforcement nature to them. What we thought we could do
11 there was to put a specific clause into the MOAs providing
12 for specified monetary penalties and specified pollution
13 offsets at a minimum. And those things would come into
14 effect immediately upon a determination of noncompliance.
15 So, the combination of both reinstatement of the
16 reg and the specified enforcement provisions of the MOA
17 should be sufficient to provide for a strong enforcement
18 approach.
19 CHAIRMAN DUNLAP: Okay. Any followup questions
20 relative to enforcement?
21 MR. PARNELL: No, not on that.
22 CHAIRMAN DUNLAP: Go ahead. I don't to
23 monopolize. I wanted to get to the ramp-up issues.
24 MR. PARNELL: I was just -- I wanted to comment
25 that certain people who testified were suggesting that the
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1 automobile industry has had -- will have free ride here for
2 a period of time. And I would like to just refer to some of
3 the language, which basically says that from 1998 to 2002,
4 manufacturers would achieve a shortfall of exhaust -- would
5 have to achieve shortfall of exhaust, evaporative, and
6 refueling emission reductions associated with existing ZEV
7 requirements, plus a premium.
8 I don't know what "plus a premium" means, but I
9 assume that that's well intended and it stands on its own.
10 They will be required to make up the deficit plus
11 a premium. So, certainly, that is at a significant cost to
12 automobile manufacturers. And I would like to, for one,
13 commend the manufacturers for getting together and at least
14 come to the table and try to come to some reasonable
15 approach to the issue of this mandate that was put in place.
16 Mandating that they produce the cars is one thing.
17 We can't mandate the public buy them.
18 CHAIRMAN DUNLAP: That's right.
19 MR. PARNELL: And I think a lot of people miss
20 that point. And what we, as a Board -- or at least I, as a
21 member of this Board -- I'll not attempt to speak for all
22 members of the Board -- but I, as a member of this Board, am
23 absolutely dedicated to whatever we can do to effectively
24 clean up the air with cost-effective programs.
25 It seems to me that a well-intended pilot program
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1 that will explore technology as it becomes available,
2 explore existing technology as it's placed in platforms and
3 is used on our highways in actual use, and given the time to
4 do those kinds of things will tell us a lot as we move
5 toward the 2003 mandate.
6 So, I support what the staff has done. I've
7 articulated the concerns that I have had relative to 2003
8 versus 2004 for a variety of reason. Staff believes that
9 it's done what is absolutely essential.
10 So, I not only commend the automobile
11 manufacturers for coming together, but also staff for having
12 prepared which, in my view, is kind of a no-win. And I've
13 been in the regulation business for a long, long time. And
14 when you tend to make dissatisfied both sides of an issue,
15 you seem to have done a reasonably good job. And what we
16 want to try to do is to do the reasonable thing that will
17 ultimately lead to the cleaning of our air in the State of
18 California.
19 I believe this takes us a step closer to doing
20 that. And I just wanted to articulate that.
21 CHAIRMAN DUNLAP: Thank you, Mr. Parnell.
22 Mr. Lagarias.
23 MR. LAGARIAS: Mr. Chairman, I've been listening
24 to the audience. I find that each person seems to bring out
25 a particular target, and either supports it or beats up on
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1 it. It doesn't make any difference whether it's the
2 mandate, the cost, the technology, the taxes, the time
3 schedule, or the market. And I'd just like to comment on a
4 few of these.
5 It seems to me we have not identified the market
6 in terms of people actually using the car, how they use it,
7 and what they need it for, what the cost and performance
8 data are.
9 And until we get a demonstration of vehicles in
10 the hands of enough people, we won't have that information.
11 Now, the Sierra Club, the National Environmental
12 Defense Fund, and the other environmental groups are very
13 enthusiastically supporting this. It might help, with all
14 their millions of members, if they'd poll their members and
15 find out how many of their members would commit to buying
16 electric vehicles.
17 And the first thing they're going to say is, "How
18 much is it going to cost? What does it do, and how do I use
19 it?"
20 And we're not going to get that information
21 without the demonstration program.
22 On the second point, we heard a lot about the
23 number of investors that have gone into this program because
24 of a mandate. Well, investors go into business because they
25 see an opportunity there. And many of them are going to
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1 fail. We saw that in the automotive industry as 400 car
2 manufacturers ramped down to about five or six. And so,
3 they're always going to be at risk. There's no sure thing
4 for an investor.
5 And those that do well will do very well. But you
6 can't protect the weakest member. And the point of always
7 trying to protect the investor is not our objective, but to
8 identify the opportunity.
9 Now, regarding the technology, the Board and the
10 staff does not develop technology. It's in a position to
11 evaluate it, but it doesn't develop it.
12 And we have to depend on those people who are in
13 the market to develop the technology.
14 And the market schedule, we can only make our best
15 estimate as to when that technology can come about. So,
16 time, to my mind, should be a resource and not a constraint.
17 And the constraints we put up are target dates, but they
18 aren't necessarily fitting in with what the technology has.
19 So, I think we should be a little flexible in what
20 we can or cannot expect.
21 Now, with regard to the specific features of the
22 staff proposal, it suggests an annual production of 5,000
23 ZEVs in 96-97; 14,000 in 1998. Well, the production is one
24 thing. But what does that mean?
25 Are they going to build them or do they have the
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1 capacity to build them? And I'd like to see better numbers
2 than I'm capable of building 15,000 vehicles, but I'm only
3 going to sell ten.
4 We've got to have better numbers than that.
5 The statement that all vehicle manufacturers
6 support media publicity and legislative initiatives against
7 the ZEV program be converted to support of the ZEV program,
8 I agree, it's a violation of Fifth Amendment rights.
9 We should also say that all environmental groups
10 in support then direct their activities against it, so that
11 they'd even-handed.
12 (Laughter.)
13 MR. LAGARIAS: I think this point doesn't make
14 sense at all.
15 As for the 10 percent -- the requirement of 10
16 percent ZEVs at a given date, I'm supportive of that. But
17 I'd like to see a ramp-up, a better ramp-up of how we're
18 going to get there. We can't go from 14,000 vehicles per
19 year to a hundred thousand without better figures.
20 So, I'd like to see some numbers on that.
21 And that's all for now.
22 CHAIRMAN DUNLAP: Mr. Calhoun.
23 MR. CALHOUN: Mr. Chairman, members of the Board,
24 and members of the audience, I think what we've seen here
25 today is a recognition by the staff that the technology
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1 needed to produce and market electric vehicles isn't there.
2 And I think the staff is in character. It is
3 being consistent with what it has done in the past. In the
4 past, those of you who followed the activities of this
5 Board, will remember that the staff has a tendency to push
6 technology forcing standards, and the staff is also sensible
7 enough to recognize that, when the drop-dead date so to
8 speak, and the technology isn't there, the staff would
9 always come back and recommend some changes. So, what you
10 see here today is nothing more than what the staff has done
11 in the past.
12 Now, I would like to commend the staff for that,
13 because I think it's nothing more than a continuation of
14 what they've done in the past. I'd also like to comment on
15 a couple of other things. There does not appear to be much
16 of a difference between what the staff is recommending and
17 the auto manufacturers have proposed.
18 I'm not sure that the auto manufacturers are
19 exactly happy with everything that they've proposed
20 themselves, but it's very difficult to -- and frankly, I've
21 been absolutely surprised and shocked that the seven of them
22 have been together on this particular issue.
23 My past experience suggested it's a very
24 competitive industry, and they would go all out to be beat
25 each other.
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1 I guess one of the things I'd like to see done
2 prior to the actual regulatory proposal being -- the actual
3 formal language, I'd like to see some effort on the part of
4 the staff and industry to get together to try to resolve
5 whatever differences there are concerning the one year, 2003
6 and 2004, to see if we can't come to some resolution of
7 that.
8 And we heard comments today from GM, Ford, and
9 Chrysler, and Nissan regarding that particualr issue, and
10 they all have significant opposition -- at least it seems to
11 me there seem to be significant reasons why they think we
12 should go to the year 2004. But I think we ought to be
13 looking at that and see whatever differences there are and
14 see if we can't resolve those.
15 And, you know, there's an old story, the devil's
16 in the detail. So, I'm anxiously waiting to see the details
17 of the regulatory proposal. I'm sure the other people in
18 the audience are also. Those conclude my comments.
19 MS. EDGERTON: Mr. Calhoun, I hope it's not the
20 devil that's in the details. I hope it's God is in the
21 details.
22 CHAIRMAN DUNLAP: The issue of the ramp-up came up
23 over and over again. I'd like to ask Mr. Cackette to talk
24 about that ramp-up issue, and what you think we could look
25 for there with the staff proposal, and what are you think --
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1 you called it them key elements of that item.
2 MR. CACKETTE: I think it was the one reoccurring
3 theme that I heard over and over today. It's been one that
4 the staff has been very worried about, and one that the
5 Board has expressed concern about both previously and today.
6 Rather than try to suggest -- we think there's
7 some ramp-up there already, as we've suggested using credit
8 programs which encourage early introduction or greater
9 introduction than would otherwise be perhaps a minimal
10 effort.
11 But I think we need to go back and look at it some
12 more and see if we can't figure out a way that we can assure
13 or have greater assurance that we have a reasonable ramp-up
14 between some -- whatever number of cars are being sold in
15 roughly the year 2000 and 2003 or '04 target. That is a
16 concern. We don't want to set up a situation where we come
17 back here and have the same discussion again over the 10
18 percent number.
19 We'd like to find something that we at least would
20 hope would provide a greater assurance of success in having
21 a market takeoff during that period. And we'll go back and
22 do that.
23 CHAIRMAN DUNLAP: What, Mr. Kenny, with the March
24 time frame, there's been some discussion about -- despite
25 the fact that there were some nine forums, workshops over
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1 the last nine-month period, there was an expression of some
2 frustration about people not having a chance to sink their
3 teeth into this.
4 Talk to me a little bit about our options relative
5 to the process as a Board.
6 MR. KENNY: In terms of the process, for the Board
7 to hear this item in March, it would need to have a notice,
8 the staff report, and the actual regulatory language out on
9 the streets essentially on January 30th of 1996.
10 So, the time frame for us to get that together
11 would be short, but the requirements in our California law,
12 in terms of administrative procedures, are that the public
13 have at least 45 days to review the material that is going
14 to be brought before the Board.
15 CHAIRMAN DUNLAP: Okay.
16 And we would then have an open comment period,
17 culminating in a Board hearing where action would take
18 place.
19 MR. KENNY: That is correct. And if the Board
20 makes any modifications to the staff proposal, there's a
21 follow-up comment period that would occur following the
22 Board's decision at the March hearing.
23 CHAIRMAN DUNLAP: Okay. I want to ask Mr. Boyd an
24 important question about one of the primary premises and
25 counsel given us by the Governor and, of course, Secretary
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1 Strock and my concern.
2 Under the staff proposal, Jim, would we surrender
3 even one pound of emissions reduction?
4 MR. BOYD: No, Mr. Chairman. And we are, as I
5 said in my opening remarks in a different way, working to
6 keep faith with the principles and directions given to this
7 Board and keep faith with the SIP that was passed by this
8 Board after significant investment of time and effort by the
9 Board and by the staff.
10 So, in our opinion, the approach we've taken and
11 the approach we intend would -- through some of the comments
12 made earlier -- produce -- and I think that Mr. Parnell
13 captured it quite well. We would capture, and we would hold
14 responsible the industry for all the emissions reductions
15 that this strategy called for, and contrary to the repeated
16 assertions that this is minuscule and this is small. I
17 think we know that 14 tons is quite large, and we are
18 dedicated to achieving those 14 tons. And to the extent,
19 not through electric vehicles, those 14 tons plus through
20 the, quote, "premium." And we think we have an absolutely
21 air-tight approach to assure that.
22 CHAIRMAN DUNLAP: Thank you. Very important
23 point. I appreciate your forthright answer.
24 Dr. Boston.
25 DR. BOSTON: Mr. Chairman, I think my other board
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1 members have said most of what I feel myself, particularly
2 the comments of Mr. Parnell.
3 But I would strongly endorse this proposal, give
4 it back to the staff to refine the detail and bring it back
5 to us for action.
6 I just have one other thought, though, for Mr.
7 Kenny, and that was, when we make a regulation, we have to
8 get an economic impact. And I'm wondering when we modify a
9 regulation like this, do we also have to present an economic
10 impact with it?
11 MR. KENNY: Yes. Generally what happens is, in
12 terms of the staff report and the notice, there are economic
13 impact assessments that are required to be done.
14 DR. BOSTON: So that would be with the final
15 proposal?
16 MR. KENNY: Yes.
17 DR. BOSTON: Thank you.
18 CHAIRMAN DUNLAP: All right. Supervisor Vagim or
19 Mayor Hilligoss?
20 SUPERVISOR VAGIM: Well, Mr. Chairman, I -- you
21 wanted us to be brief. I think it boils down for me, having
22 heard all the testimony and agreeing with my colleagues in
23 the main -- I agree with Mr. Calhoun, and I'm interested in
24 what the staff, through Mr. Cackette's statements, on the
25 2003-2004. It seems to be we have a linchpin between the
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1 East Coast and the West Coast between those two years. And
2 it'll be interesting to see the dissertation and dialogue on
3 that. So, I look forward to seeing that.
4 Thank you.
5 CHAIRMAN DUNLAP: Thank you. Mayor?
6 MAYOR HILLIGOSS: I'm in favor of everything that
7 has been said so far. And the only reason I would go along
8 with it is because there will be no loss of clean air.
9 CHAIRMAN DUNLAP: And I know -- certainly from
10 your perspective on the Bay Area's Board with the ozone
11 attainment issue there, the Federal standard -- that it's of
12 paramount importance to you and your colleagues on that
13 Board.
14 MAYOR HILLIGOSS: Right.
15 CHAIRMAN DUNLAP: Okay. With that, any other
16 comments? All right.
17 I appreciate the insightful discussion, and it
18 appears at this point that we have developed a consensus
19 around the staff report recommending specific changes to the
20 ZEV mandate, which is a more market-based approach in the
21 critical early years that does not compromise in any way our
22 clean air goals.
23 I believe that this approach is the right
24 approach, and personally endorse it and find favor with it.
25 The introduction of ZEVs in California is too important not
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1 to work. It has to work. And this concept I believe will
2 ensure that it will work.
3 Unless there is an objection, I would like to
4 direct the staff to develop the necessary regulatory package
5 which reflects the staff option, as described in the
6 overview we received, the consensus changes discussed here
7 today, and the general principles outlined in the letter the
8 Governor sent us today.
9 Mr. Boyd, I would like the staff to have this
10 package ready for regulatory release in a time frame that
11 provides for the March hearing as outlined by our counsel,
12 Mr. Kenny.
13 And I'd like to wish a happy holiday to all; and
14 to all, a good night.
15 Thank you very much.
16 The December meeting of the California Air
17 Resources Board is now adjourned.
18 (Thereupon, the meeting was adjourned at
19 5:05 p.m.)
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CERTIFICATE OF SHORTHAND REPORTER
I, Nadine J. Parks, a shorthand reporter of the
State of California, do hereby certify that I am a
disinterested person herein; that the foregoing meeting was
reported by me in shorthand writing, and thereafter
transcribed into typewriting.
I further certify that I am not of counsel or
attorney for any of the parties to said meeting, nor am I
interested in the outcome of said meeting.
In witness whereof, I have hereunto set my hand
this 2nd day of January , 1996.
Nadine J. Parks
Shorthand Reporter
PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345