MEETING
BEFORE THE
CALIFORNIA AIR RESOURCES BOARD
HEARING ROOM
CALIFORNIA AIR RESOURCES BOARD
2020 L STREET
SACRAMENTO, CALIFORNIA
THURSDAY, MARCH 28, 1996
9:40 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
Barbara Riordan
Ron Roberts
James W. Silva
Staff:
Jim Boyd, Executive Officer
Tom Cackette, Chief Deputy Executive Officer
Mike Scheible, Deputy Executive Officer
Mike Kenny, Chief Counsel
Peter Venturini, Chief, Stationary Source Division
Dean Simeroth, Chief, Criteria Pollutants Branch, SSD
Gordon Schremp, Associate Energy Specialist
Tom Jennings, Staff Counsel
Bob Cross, Assistant Chief, Mobile Source Division
Tom Evashenk, Staff, MSD
Jack Kitowski, Chief, On Road Control Regulations, MSD
Catherine Lentz, Staff, MSD
Kathleen Walsh, Staff Counsel
Patricia Hutchens, Board Secretary
Wendy Grandchamp, Secretary
Bill Valdez, Administrative Services
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I N D E X
PAGE
Call to Order 1
Pledge of Allegiance led by Ms. Edgerton 1
Roll Call 1, 2
Opening Remarks by Chairman Dunlap 2
AGENDA ITEMS:
96-2-1 Public Meeting to Update Board on
Status of California Cleaner Burning
Gasoline Regulation Implementation
Efforts
Introductory Remarks by
Chairman Dunlap 3
Staff Presentation:
Jim Boyd
Executive Officer 3
Mike Scheible
Deputy Executive Officer 4
Questions/Comments 11
Closing Comments by Mr. Boyd 15
96-2-2 Public Hearing to Consider Amendments
to ZEV Requirements for Passenger
Cars and Light-Duty Trucks
Introductory Remarks by
Chairman Dunlap 16
Staff Presentation:
Jim Boyd
Executive Officer 18
Tom Evashenk
Staff
Mobile Source Division 24
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INDEX, continued. . . PAGE
AGENDA ITEMS:
96-2-2 Tom Cackette
Chief Deputy Executive Officer 40
Kathleen Walsh, Esq.
Staff Counsel 47
Tom Evashenk
Staff, MSD 49
Written Comments Entered into the
Record by
Jack Kitowski
Chief, On Road Control Regulations, MSD 50
Questions/Comments 51
PUBLIC COMMENTS:
John Schutz
Nissan Motor Limited 57
Questions/Comments 61
John Grimley
for Senator Ray Haynes 71
Questions/Comments 76
Valory Brown
for Assemblyman Steve Baldwin 79
Jerome F. Cole
ALABC 80
Questions/Comments 84
Janet Hathaway
Natural Resources Defense Council 89
Questions/Comments 95
Eric Ridenour
Chrysler Corporation 106
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INDEX, continued. . . PAGE
AGENDA ITEMS:
96-2-2 Questions/Comments 116
Luncheon Recess 128
Afternoon Session 129
CONTINUED PUBLIC COMMENTS:
Andrew Frank, Ph.D.
U. C. Davis 129
Questions/Comments 133
Presentation of Resolution to Honor
Don Drachand on his Retirement
Division Chief, Mobile Source Division 136
CONTINUED PUBLIC COMMENTS:
Cecile Martin
CalETC 140
Questions/Comments 145
Judy Mikels
Southern California Association
of Governments 147
Questions/Comments 148
Lloyd Dixon
Rand 150
Questions/Comments 156
Tim Carmichael
Coalition for Clean Air 157
Questions/Comments 161
Dave Hermance
Toyota 169
Questions/Comments 170
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INDEX, continued. . . PAGE
AGENDA ITEMS:
96-2-2 Joe Caves
Union of Concerned Scientists 176
Questions/Comments 182
Mike Miller
California Motor Car Dealers Assn. 208
Questions/Comments 214
Marc Chytilo
Environmental Defense Center
CalPIRG 217
Questions/Comments 230
Kelly Brown
Ford Motor Company 232
Questions/Comments 234
Stephen Heckeroth
MendoMotive 235
Questions/Comments 240
Doug Henderson
WSPA 242
Larry L. Berg, Ph.D.
Ballard Power Systems 245
Questions/Comments 249
Ben Knight
Honda 259
Questions/Comments 261
Jamie Phillips
Planning & Conservation League
for Gary Patton 264
Rock Zierman
for Assemblyman Tom Bordonaro, Jr. 266
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INDEX, continued. . . PAGE
AGENDA ITEMS:
96-2-2 Paul Haluza
MEMA 269
Richard E. Wilmshurst
Forty-Niner Sierra Resources, Inc. 274
Daki Venetolis
Berkeley 277
Barbara George
Peoples Energy Matters 281
Jerry Mader
Advanced Battery Task Force 286
Paul Knepprath
American Lung Association 290
Questions/Comments 294
John W. Burton
Integral Design 295
Ed Maschke
CalPIRG 299
Questions/Comments 305
Jason Grumet
NESCAUM 308
Questions/Comments 314
Samuel A. Leonard
General Motors 319
Tohru Aihara
Mazda 322
Questions/Comments 323
V. John White
Sierra Club California 336
Anita Mangels
Californians Against Hidden Taxes 348
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INDEX, continued. . . PAGE
AGENDA ITEMS:
96-2-2 Questions/Comments 358
Paul Edison Pulliam
Citizen 360
Bill Wason
BAT International 363
Record Officially Closed to
Await Notice of 15-day Comment
Period 369
Ex Parte Communication Disclosures
by Board Members 369
Evening Recess 377
Reporter's Certificate 378
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1 P R O C E E D I N G S
2 --o0o--
3 CHAIRMAN DUNLAP: Will the March meeting of the
4 California Air Resources Board please come to order.
5 Would the audience please rise and join Ms.
6 Edgerton as she leads us in the Pledge of Allegiance.
7 (Thereupon, all those in the hearing room
8 rose to recite the Pledge of Allegiance.)
9 CHAIRMAN DUNLAP: Thank you, Lynne.
10 Would the Board Secretary please call the roll?
11 MS. HUTCHENS: Boston?
12 DR. BOSTON: Here.
13 MS. HUTCHENS: Calhoun?
14 MR. CALHOUN: Here.
15 MS. HUTCHENS: Edgerton?
16 MS. EDGERTON: Here.
17 MS. HUTCHENS: Hilligoss?
18 MAYOR HILLIGOSS: Here.
19 MS. HUTCHENS: Lagarias?
20 MR. LAGARIAS: Here.
21 MS. HUTCHENS: Parnell?
22 MR. PARNELL: Here.
23 MS. HUTCHENS: Riordan?
24 SUPERVISOR RIORDAN: Here.
25 MS. HUTCHENS: Roberts?
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1 SUPERVISOR ROBERTS: Here.
2 MS. HUTCHENS: Silva?
3 SUPERVISOR SILVA: Here.
4 MS. HUTCHENS: Vagim?
5 Chairman Dunlap.
6 CHAIRMAN DUNLAP: Here.
7 All right. Good morning. I would to remind those
8 of you in the audience who would like to present testimony
9 to the Board on any of today's agenda items to please sign
10 up with the Board Secretary.
11 If you have a written statement, please give 20
12 copies to her, and she sits on our left.
13 I'd like to give some instructions to those of you
14 in the audience. Please save the middle front row seats for
15 the speakers who will be presenting testimony today. We're
16 planning to call your name in groups of four or five to
17 await your turn at the podium.
18 After you turn, please leave the front row seats
19 available for the next speakers. We're expecting a pretty
20 good crowd over the next two days. And because there's
21 limited space here in the hearing room, we would like those
22 not addressing the Board to consider moving to one of the
23 listening rooms on the first through the fourth floors.
24 They've been prepared for your use today.
25 Please ask one of the hall guides or guards to
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1 direct you, and they can also provide information about
2 restrooms and drinking fountains.
3 So, I'd ask your consideration in that regard.
4 The first agenda item today is 96-2-1, public
5 meeting to update the Board on the status of the California
6 cleaner burning gasoline regulations implementation efforts.
7 For this item today, staff will provide us with a
8 status report on the transition to cleaner burning gasoline.
9 As of March 1st, all gasoline produced for use in our State
10 must be cleaner burning gasoline.
11 Because of the great interest in our second agenda
12 item, this report will be quite brief, and staff will
13 provide us with a more detailed update next month in April.
14 Before hearing from staff, I want to note that the
15 transition to cleaner burning gasoline is proceeding
16 extremely well. All of the affected refiners produced the
17 fuel ahead of or on schedule, and they have been shipping to
18 the terminals and service stations.
19 About one billion gallons of cleaner burning
20 gasoline have made its way into the distribution system
21 since March 1st. And at this point, I'd like to ask Mr.
22 Boyd to talk about the successful implementation program.
23 Mr. Boyd.
24 MR. BOYD: Thank you, Mr. Chairman. Good morning,
25 Board members. Good morning to our audience. Welcome to
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1 this, the March Board meeting.
2 Today, we want to provide to you, the Board and
3 the audience, only the highlights of the transition to
4 cleaner burning gasoline.
5 I've provided each of you members of the Board
6 with a more comprehensive memorandum on the subject that I
7 believe is in the material you have before you.
8 Mr. Mike Scheible, my Deputy Executive Officer,
9 will present the update. I want to echo the Chairman's
10 remarks, in that the transition is proceeding as planned and
11 smoothly. But I knock on wood -- there's wood under this
12 plastic somewhere -- because there are always unanticipated
13 contingencies.
14 The next two dates in the program are April 15th,
15 when terminals in California will have had to completely
16 transition to cleaner burning gasoline; and, finally, June
17 1st, when service stations will have to have completed their
18 transition to the fuel.
19 As you will hear from Mr. Scheible, March 1st date
20 has gone quite well. But with that, I'll turn it over to
21 Mr. Scheible to give you the details.
22 Mike?
23 MR. SCHEIBLE: Good morning, Chairman Dunlap and
24 members of the Board.
25 Today, I'm just going to give you a brief
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1 presentation on what has happened to date with the
2 transition to cleaner burning gasoline. As is our habit,
3 the next slide will show an overview of the presentation.
4 We'll cover briefly performance, supply and demand, price,
5 our public outreach effort, and a summary, which Mr. Boyd
6 said -- so far, so good.
7 We can't be complacent at all about the program,
8 but it's gone about as well as we can could have hoped for
9 to date.
10 On the first issue, performance, the major point
11 to note is that we have observed no problems we can take
12 back to the cleaner burning gasoline. We are watching the
13 situation closely. We receive a few calls on our
14 information line about people who are concerned about
15 performance.
16 Several of the oil companies have issued warnings
17 on their pumps that there could be a problem, and they are
18 also dealing with the issue.
19 We've investigated fears of claims and, to date,
20 have not found any problem. But we continue to watch this
21 closely to make sure that there's no unknown out there.
22 In terms of our comprehensive evaluation that we
23 performed last year, we have now completed our performance
24 report. It is available, and we are sending it out to all
25 parties that desire it.
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1 Again, the bottom line is that our testing showed
2 that cleaner burning gasoline performs just the same in
3 terms of fuel system reliability and driveability as the
4 fuel it replaces, and with a very minor, about 1 percent,
5 change in fuel economy.
6 The next slide deals with the supply and demand
7 situation. All of the refiners that were scheduled to
8 produce cleaner burning gasoline -- which are all the majors
9 and one small refiner in California -- successfully made the
10 conversion by March 1st and have been putting cleaner
11 burning gasoline out since that date.
12 In reality, many refineries put out fully
13 complying fuel or nearly complying fuel for a good part of
14 the month of January and for much of the month of February.
15 The pipeline system is distributing the fuel
16 throughout the State. All the terminals, with the exception
17 of one, are fully complying by today's date in terms of the
18 flush-through of the older fuel in the system.
19 We have gone out and confirmed that at the retail
20 level it is relatively difficult to find fuel that doesn't
21 comply with our limits. There'll be some improvement in
22 fuel quantity as the remaining older fuel is flushed out of
23 the system.
24 About 35 million gallons of cleaner burning
25 gasoline are being produced daily, which is very important
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1 from a fuel supply standpoint. As of March 1st, we were
2 within the historical average of supply for that date, but
3 on the low side.
4 In the intervening month, the refiners have been
5 successful in building up supplies; so that, as of last
6 week, we actually were above the historic high average for
7 the period. So, the supply situation looks very good.
8 Another thing we've learned from our experience to
9 date is that the flexibility that the Board provided in
10 terms of the averaging and the predictive model are paying
11 off greatly. The majority of refiners in the State are
12 using the predictive model in order to qualify batches of
13 gasoline.
14 We have gone out and done enforcement efforts and
15 found out that they are doing so very successfully.
16 And now to the next issue, which is price. If any
17 of you have bought gasoline in the last month or so, you've
18 probably noticed that there's been a substantial price
19 increase at the pump. This is reflective of the wholesale
20 increase in price.
21 The price at wholesale in the last week was about
22 73 cents a gallon. That's up 8 cents a gallon over the past
23 month. That compares to an average of about 68 cents a
24 gallon in other markets where Federal reformulated fuel is
25 sold. So, there seems to be about a five cents differential
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1 between the California market today and the other markets,
2 such as Milwaukee, or Chicago, or Philadelphia where Federal
3 reform is sold.
4 Historically, our market's been two three cents
5 above that. So, we haven't seen a big differential built
6 in. At retail, as of the end of last week, the average
7 statewide was $1.26 a gallon, up about 10 cents.
8 So, the bad news is the prices have gone up. The
9 good news is that, by and large, the price increase has not
10 been a reflection of a differential because of cleaner
11 burning gasoline.
12 For the same period of time, the price of crude
13 oil, if any of you have been watching that, has hit a record
14 high since the Gulf War, and is up more than 10 cents a
15 gallon.
16 Nationwide, prices were reported up last month by
17 five cents a gallon. So, what we're seeing is that we had
18 the unfortunate coincidence of introducing our new fuel at a
19 time when the base thing that drives gasoline prices, crude
20 oil, is also going up.
21 The good news is that most analysts think that
22 this is a temporary situation. There is no structural
23 reason in terms of worldwide supply as to why that should
24 continue. So, hopefully, as the summer comes, we'll see
25 some retreat in the crude oil price and gasoline prices will
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1 go down.
2 We still don't know how much of the cost, which we
3 estimated to be 5 to 15 cents a gallon, depending on the
4 refiner, will be reflected in the final price of cleaner
5 burning gasoline.
6 To date, we haven't seen a reflection of too much
7 cost because of our program. Most of the increase in price
8 that we've seen at the retail level is tied more to the
9 crude prices.
10 In terms of public outreach, again, we believe our
11 program has been very effective. We have had stories in
12 virtually every major newspaper. All of them have, in our
13 view, been very balanced and positive on the program. The
14 public is getting a good description of the facts.
15 We've had editorials written by the majority of
16 the major newspapers in the State. All but one were very,
17 very supportive of the program.
18 Our information line has been busy. We've handled
19 to date approximately 1400 calls. In peak weeks, we've
20 handled 200 to 300 calls. The calls follow a pattern very
21 much of coming in shortly after a newspaper article, or
22 Motorland, or an oil company makes a mailing where they give
23 out our 800 number.
24 Staff on the line say they have a very high
25 success rate with providing people with information they
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1 need. So, if they call up with concerns, after the phone
2 call, they seem to feel much better.
3 Many of the concerns are about the testing of the
4 fuel and, "What effects will it have on my car?"
5 Again, when we relay to them the extensive testing
6 program and the results, we seem to be doing a good job with
7 satisfying their fears. We're continuing the outreach
8 effort. We've to date gone out and briefed all of the prime
9 audiences -- the air pollution districts, the business
10 groups, and others that we intended to reach, and we're now
11 doing followup.
12 We're now going out and extensively trying to
13 reach out towards mechanics. We have a mechanics video
14 that's oriented to their questions and the questions they
15 could get from their customers on the fuel.
16 So, in summary, again, so far, so good. We remain
17 ever diligent on the program, are closely watching prices
18 and supply situations. But the transition has proceeded
19 smoothly to date, I believe, in making the transition.
20 At the refinery level, we did the hardest part of
21 the job in terms of no technical glitches in producing
22 enough fuel.
23 There's been no performance problems, despite the
24 fact that clearly hundreds of millions of gallons of this
25 fuel have been delivered at the retail level to the State's
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1 24 million vehicles.
2 The supply is adequate. The price increase to
3 date related to our fuel has been well within the range that
4 we expected, and our outreach efforts are continuing.
5 If the Board members have any questions, I and
6 staff are here and available to answer them.
7 Thank you.
8 CHAIRMAN DUNLAP: Supervisor Roberts.
9 SUPERVISOR ROBERTS: Thank you, Mr. Chairman.
10 Not a question, but I wanted to thank Mike. He
11 recently came to San Diego and made a presentation for the
12 air pollution control district board, and I think was very
13 helpful.
14 There's still a lot of people that aren't aware of
15 what's going on, and we were not only able to have that
16 presentation at the meeting, but it went out over our local
17 cable service, and I think helped to reach a lot of people
18 and helped them understand that there is indeed a major and
19 significant improvement that's going to occur in air quality
20 because of these efforts.
21 So, I appreciate. You did a very good job
22 representing the Board.
23 CHAIRMAN DUNLAP: Thanks for hearing that. I
24 appreciate the chairman of that board inviting him as well.
25 Thanks, Ron.
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1 SUPERVISOR ROBERTS: He's a good friend.
2 CHAIRMAN DUNLAP: Yes. Supervisor Riordan.
3 SUPERVISOR RIORDAN: I just would like to echo
4 Supervisor Roberts' comments. We appreciate what the staff
5 has done to do the outreach. And I think people are
6 absolutely overwhelmed and amazed at the significance of the
7 change and what it will mean for the improvement in the air
8 quality, particularly for my region in Southern California.
9 So, we very much want to thank you on behalf of
10 Southern California for the outreach that you've done in the
11 last few weeks.
12 CHAIRMAN DUNLAP: Thank you.
13 MR. SCHEIBLE: Just a little bit of good news that
14 we've seen to date. We get very detailed information from
15 the refineries in terms of what they're producing, because
16 when they declare a batch as a predictive model or
17 averaging, the have to give us exactly what they made.
18 To date, we're seeing benzene levels down around
19 the half percent; whereas, the reg requires one percent.
20 So, we're expecting bigger benefits for some aspects of this
21 regulation.
22 The predictive model comes in with some of the
23 pollutants being two, or three, or four, or five percent
24 better than required by the regulations. We're going to go
25 back and do an analysis and see whether or not it's possible
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1 to quantify the better-than-expected benefits of this
2 program.
3 CHAIRMAN DUNLAP: Okay. I don't want to put my
4 colleagues on the spot, but Mr. Lagarias and Mr. Calhoun
5 have participated and led the Advisory Committee effort, and
6 it's my understanding that the cooperation's gone quite
7 well.
8 I wonder if either of those two gentlemen would
9 want to say a word or two about that.
10 Jack?
11 MR. LAGARIAS: Well, I've been impressed with the
12 manner in which all the affected organizational groups have
13 worked together to see that we get this cleaner burning
14 gasoline program off successfully. And this includes the
15 environmental groups, the public interest groups, the
16 automobile manufacturers, the refinery owners, and the
17 general -- interested public organizations -- the Energy
18 Commission as well as the Air Resources Board.
19 And to see all of them at the same table trying to
20 make a program come off successfully is a truly remarkable
21 situation. And I and Joe have been impressed with this.
22 I do have one question, though. I think the
23 public outreach program has been quite successful in many
24 ways. The Press response has been very positive.
25 When I go to service stations and I ask the
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1 jockeys that pump -- the people pumping the gas, what they
2 think about the cleaner burning gasoline, they're either not
3 knowledgeable about it, or they have some wildly distorted
4 stories of what they've heard.
5 And I think we still have to get to the people
6 that work at the service stations to make them understand
7 exactly what is coming about.
8 MR. SCHEIBLE: We'll follow up on that, and get
9 back to you on what we learn and what the companies are
10 doing. I know a number of the companies have education
11 efforts, but the reality is the fuel's flowing through the
12 system faster than required. And I think it's pushing some
13 people's schedules.
14 CHAIRMAN DUNLAP: Yes. Ms. Edgerton.
15 MS. EDGERTON: I wanted to reflect on -- when I
16 joined the Board in 1993, and was originally briefed as to
17 this particular program and the likely introduction of
18 reformulated gas in 1996, it was right on the heels of the
19 diesel fuel introduction.
20 And I was very impressed to see a tremendous
21 determination on behalf of the staff and all of the affected
22 industries to make this work differently.
23 I'd like to thank the staff, but I'd also like to
24 thank the petroleum industry for working with us and for
25 putting your shoulder and enormous talents to the wheel.
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1 CHAIRMAN DUNLAP: Great. Mr. Calhoun.
2 MR. CALHOUN: I have one question. Did I
3 understand you to say that all of the refiners are using the
4 predictive model?
5 MR. SCHEIBLE: Virtually all the refiners are
6 using the predictive model or using the averaging provision
7 of the regulation.
8 MR. CALHOUN: That's interesting. Thank you.
9 CHAIRMAN DUNLAP: Okay. We have no witnesses that
10 have signed up to speak to us today.
11 Were there any letters that need to be summarized?
12 Mr. Simeroth? Mr. Scheible?
13 MR. SIMEROTH: no.
14 MR. SCHEIBLE: I'm not aware of any letters that
15 came in on this issue.
16 CHAIRMAN DUNLAP: Okay. Nothing.
17 Mr. Boyd, any final comment before we move on?
18 MR. BOYD: Mr. Chairman, just to echo all that has
19 been said, the cooperation -- frankly, the partnership that
20 has existed between this organization and the oil industry
21 on this issue has been outstanding and precedent setting.
22 And we look forward to seeing more of that in the future.
23 One has to remind oneself again of the incredible
24 significance of this issue. I know our media and our
25 educational material talks about being equivalent to 3.5
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1 million cars being removed from the road.
2 But when you think about the tons that are removed
3 by this program, it's hard to think of anything in the last
4 two decades or anything perhaps since the catalytic
5 converter that has the emissions reduction potential of this
6 program.
7 And the beauty of it all is it's instantaneous.
8 There's no two- to three-year leadtime waiting for product,
9 you know, products to change as within some stationary
10 source and in the vehicular emission controls. It's there
11 when you start fueling your vehicle.
12 And we look forward to some significant
13 improvements in air quality.
14 CHAIRMAN DUNLAP: Okay. Very good. Thank you,
15 Mr. Boyd.
16 With that, we'll move on to the second item, and
17 I'll ask staff to give up their seats and let the ZEV team
18 come forward.
19 Again, just to remind those of you in the audience
20 that wish to speak or that have written statements, please
21 provide them to the Board Secretary, who sits to the left of
22 the Board.
23 The second item on the agenda today is 96-2-2, a
24 public hearing to consider amendments to the zero emission
25 vehicle requirements for passenger cars and light-duty
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1 trucks.
2 Today, the Board will hear the staff's proposed
3 changes to this zero emission vehicle program. This meeting
4 represents the culmination of an enormous amount of work
5 over the past year on the part of many people to ensure that
6 California remains on the path to clean air.
7 I think the most significant aspect of this
8 process has been the commitment of people from all sides of
9 this issue to bring forward critical information regarding
10 zero emission vehicle technology and the prospect for its
11 implementation.
12 I want to thank each and every one of you that has
13 participated in this effort in good faith.
14 The staff last came before the Board on this
15 subject at the December, '95 meeting. At that time, the
16 staff recommended a general concept for program
17 modifications to ensure the long-term success of the ZEV
18 program.
19 This recommendation was based on the findings of a
20 series of public forums and stakeholder meetings held during
21 1995, and the results of an expert Battery Technical
22 Advisory Panel that the Governor directed us to convene.
23 The Board directed staff to develop a proposal
24 based on this general concept, with the stipulation that no
25 emission benefits shall be lost.
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1 Since the December meeting, the staff also met
2 with automakers to negotiate agreements which will result in
3 the introduction of ZEVs later this year, and a continuing
4 of fast-track advanced battery development.
5 Most importantly, the agreements also contain
6 automakers' commitments that assure the equivalent emissions
7 reductions from national low-emission vehicles or
8 alternatives that will be fully achieved to address the
9 enforceability of these MOAs, or contracts.
10 The staff has included provisions that specify
11 damages for violations. Furthermore, not only can heavy
12 damages be imposed if a manufacturer fails to demonstrate
13 good faith in implementing the agreement but, as the
14 agreements recognized, they retain the authority reinstate
15 mandated requirements, if that is deemed necessary, to
16 assure electric cars and clean air for California are
17 achieved.
18 With that, I'd like to ask Mr. Boyd to introduce
19 this item and begin the staff's presentation.
20 MR. BOYD: Thank you, Mr. Chairman. As the
21 Chairman indicated, today's -- I think I'd have to call it
22 "momentous" -- Board meeting does represent the culmination
23 of an enormous amount of work.
24 However, the work for some of us began actually in
25 the 1980s when the initial concept for the ARB's low-
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1 emission vehicle, zero-emission vehicle, and clean fuels
2 programs were formulated.
3 In response to this Board's own findings that more
4 emission reductions were needed from motor vehicles in
5 California if there was to be any hope of obtaining the
6 public health-based ambient air quality standards in the
7 State of California, in the face of what was proving to be
8 incredible growth in population and equally incredible
9 growth in the number of vehicles, which tracks the
10 population directly, and the almost doubling rate of growth
11 of the vehicle miles that are traveled and the number of
12 trips that the citizens of this State were taking in those
13 motor vehicles, the Board responded to that particular
14 challenge with the passage of the low-emission vehicle and
15 zero-emission vehicle program requirements in 1990, finding
16 that not only did we need to reduce the emissions of the
17 California vehicle fleet, but that some fraction of that
18 fleet would have to be virtually pollution free -- or ZEVs,
19 in effect, zero-emission vehicles.
20 Hence, the goal of two percent ZEVs in 1998 was
21 born. What many seem to regularly lose sight of is the fact
22 that, in 1990, the Board recognized the magnitude of the
23 technological challenge it had presented to the automobile
24 industry with this low-emission/zero-emission vehicle
25 program.
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1 At that time, the Board requested staff to
2 undertake biennial reviews of the progress of development of
3 both low-emission and zero-emission vehicle technology, and
4 to assess the ability of the automobile industry to meet the
5 requirements.
6 As you know, reports were presented to the Board
7 first in 1992, and again in 1994. And a virtually
8 continuous review was undertaken throughout 1995,
9 culminating this 1996 Board meeting.
10 The continuing series of workshops and forums in
11 1995, accomplished their goal of obtaining information and
12 presenting information both to and from concerned parties on
13 specific issues relating primarily to the zero-emission
14 vehicle program and the requirements of that program.
15 This information has been utilized by the staff,
16 first, in reaching the conclusion: Although incredible
17 zero-emission vehicle technological progress has been made
18 since enactment of the ARB program, it was doubtful that the
19 two percent in the 1998 goal could be met in a manner that
20 would not jeopardize the future of the program.
21 In other words, the lack of sufficient advanced
22 technology batteries in 1998 and the succeeding early years
23 of the program could result in a less than acceptable
24 product or less than acceptable products, frankly, being
25 forced onto the market, and a potentially resultant public
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1 backlash or, frankly, disenchantment with perceived inferior
2 products.
3 So, reinforced by the findings of the battery
4 panel, staff felt that short-term challenges were
5 acceptable, since long-term stability was the need, was the
6 goal. We had to change the program to save it.
7 The information gained from our workshops was also
8 used to formulate three alternative approaches that were
9 presented to the Board for discussions last fall. And with
10 directions from you to formulate a recommended approach that
11 we reviewed with you in December, this in turn led to your
12 request that we develop in detail and bring forward to you
13 at this meeting a program proposal.
14 And we have done that. We believe that there will
15 be more winners with the scenario we are recommending than
16 within any other possible.
17 While any change is perceived by some as bad, the
18 reality is evident only if we look at the facts. Some who
19 oppose the staff's recommendation utilize as the basis of
20 their analysis the original 1990 goal, two percent in 1998.
21 But in spite of the fact that more technological
22 advances have been made in battery and electric vehicle
23 technology in the last five years than the previous 95
24 years, reality is reflected in the technology assessments of
25 the battery panel and the ARB staff.
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1 We sincerely believe that the recommendations we
2 have presented to you for consideration today provide for a
3 successful future for the zero-emission vehicle program,
4 particularly in the context of today's world.
5 We have moved from a situation where the affected
6 regulated industry, the auto industry, has changed from the
7 position of being an active and vocal opponent to the ARB's
8 program requirements, ostensibly over the issue or the
9 principle of a numerical mandate in the early years of the
10 program.
11 They have changed to a posture of agreeing to
12 produce and sell electric vehicles in quantities sufficient
13 to meet public demand or market demand, as is stated, in the
14 early years.
15 They have agreed to market EVs actively and
16 positively. They have agreed to enter into binding
17 contracts that assure that electric vehicle research and
18 development activities will be continued; that advanced
19 battery technologies will be demonstrated; that technical
20 information -- some of it confidential -- and access to
21 facilities will be provided to ARB staff to help us assess
22 if contract commitments are being met and if good-faith
23 efforts are being made to meet market demand and to ramp up
24 to year 2003 requirements.
25 They have committed to take steps to assure
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1 California that the air quality goals that we established
2 for the ZEV program would be met, and that is through the
3 introduction of the national low-emission vehicle program.
4 They have agreed to stringent noncompliance
5 penalties. And I could go on and on, but you'll see that in
6 the staff report.
7 The point I'd like to make is that, in other
8 words, the auto industry's offering to join with us in a
9 positive, cooperative partnership to make the ZEV program
10 succeed rather than continue to actively resist and possibly
11 to succeed in having rescinded this important air quality
12 program.
13 And I might note here the efforts that have
14 already been initiated by the companies upon learning of the
15 intent to recommend change. They have initiated steps to
16 sell EVs. And, as you know only too well, one major company
17 announced its intention to begin marketing their EV this
18 year, with others following close behind with comments on
19 the availability of their own EVs. And I just invite your
20 attention to the parking lot to see evidence of that.
21 I see this partnership and these marketing
22 announcements as a win for California.
23 With that, Mr. Chairman, I'd like to introduce the
24 staff presentation. It's a fairly comprehensive
25 presentation. It'll be initiated and led off first by Mr.
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1 Tom Evashenk of the Mobile Source Division, but Mr.
2 Cackette, my Chief Deputy, and Kathleen Walsh of our Legal
3 Office will also have comments to make during the course of
4 the presentation.
5 With that, I'd like to call on Mr. Evashenk to
6 begin the detailed presentation.
7 MR. EVASHENK: Thank you, Mr. Boyd.
8 Mr. Chairman, members of the Board, the staff
9 today proposes modifications to the ARB's requirement that
10 the seven largest automakers produce zero-emission vehicles,
11 or ZEVs, beginning in 1998. This requirement, as part of
12 the larger low-emission vehicle regulations which the Board
13 adopted in 1990, is a cornerstone of California's plan to
14 attain healthful air quality in our State.
15 It has been the impetus for a number of
16 technological advances, including the rapid acceleration of
17 developments in batteries and other zero-emission vehicle
18 technologies, such as fuel cells.
19 The staff believes that the proposal before you
20 today will strengthen the long-term viability of the ZEV
21 program and provide for these vehicles in the marketplace.
22 The proposal allows for market-based introduction,
23 coupled with a commitment by manufacturers to demonstrate
24 advanced vehicles in the near term, while still retaining a
25 long-term requirement for manufacturers to produce ZEVs.
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1 Today's presentation will begin with background
2 information related to the ZEV program. A review of the
3 activities that have occurred during the year leading up to
4 today's hearing, a description of the proposed regulatory
5 changes, and a summary of the elements within the proposed
6 memoranda of agreement. The presentation will also
7 summarize additional nonsubstantive changes the staff is
8 proposing today before concluding with staff's
9 recommendations.
10 As previously mentioned, the zero-emission vehicle
11 program is part of the ARB's low--emission vehicle
12 regulations. This program establishes an increasingly
13 stringent fleet average emission requirement for nonmethane
14 organic gases, as shown in this group, for the years 1994
15 through 2003, and beyond.
16 To meet this requirement, the regulations allow
17 manufacturers to offer any mix of new vehicles listed on
18 this slide. However, the regulations do require that the
19 seven largest auto manufacturers also produce and deliver
20 for sale two percent of their 1998 model year light-duty
21 fleet as ZEVs.
22 This percentage increases to five percent in the
23 2001 and ten percent in 2003. Intermediate volume
24 manufacturers are subject to the requirement at the 10
25 percent level beginning in 2003.
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1 Although the primary technology to meet the ZEV
2 requirement in the early years is expected to be
3 battery-powered electric vehicles, over the long term, other
4 alternatives -- notably, fuel cell vehicles -- have a strong
5 potential to command substantial market share.
6 From its adoption, the requirement to produce ZEVs
7 has been controversial, not only because it is technology
8 forcing, but also because it is perceived to be
9 qualitatively different from other mobile source regulations
10 previously adopted by the Board.
11 The impetus for its adoption, however, was the
12 Board's realization that with ever-increasing numbers of
13 cars on the road, each driving more and more miles each
14 year, ZEVs would be essential to obtaining the long-term
15 emission reductions needed from the mobile source sector.
16 The introduction and commercialization of ZEVs is
17 necessary if California is to meet both Federal and State
18 ambient air quality standards.
19 When the ZEV requirement was adopted in 1990, the
20 Board was aware of the General Motors' stated plans to
21 introduce a commercial electric vehicle based on the Impact.
22 To pull additional vehicles and technology into the market,
23 and to develop the infrastructure needed to fully
24 commercialize the technology, the Board established
25 percentage requirements for the largest vehicle
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1 manufacturers.
2 Because there were questions regarding technology
3 and implementation issues, the Board included the
4 requirement with the understanding that it could be modified
5 at a later date if necessary.
6 To remain fully aware of the technological and
7 implementation status of new vehicle technologies, the Board
8 directed staff to present biennial progress reviews
9 beginning in 1992. Progress towards commercializing the
10 technology was found to be on track for the 1998
11 introduction during reviews in 1992 and 1994.
12 However, as 1998 neared, greater attention and
13 resources were committed to fully evaluate technology and
14 commercial readiness.
15 I'd now like to discuss the process we have
16 undertaken during the past year to arrive at the proposal
17 before you today.
18 At the end of the May, 1994 review of the ZEV
19 program, the Board directed the staff to pursue a number of
20 implementation issues that had been raised. To address
21 these issues and to obtain the most detailed and relevant
22 information possible, the ARB staff held eight public forums
23 during 1995.
24 Shown here are the major topics of each forum.
25 These forums provided the ARB staff with a large volume of
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1 information regarding the key aspects of the ZEV program.
2 In addition to the forums, the ARB established a
3 Battery Technology Advisory Panel, which was comprised of
4 four experts with extensive experience in science and
5 battery technology development.
6 The purpose of the panel was to evaluate the
7 readiness of battery technology for the 1998 implementation
8 of the program. The main findings of the panel were:
9 That the ZEV regulation had substantially
10 accelerated investment and progress in developing advanced
11 batteries; that while lead-acid batteries will be available
12 for use in vehicles in 1998, automakers believe that their
13 limited energy storage capabilities will restrict them to a
14 market share less than required by the current regulations;
15 that advanced batteries are on the immediate horizon; pilot
16 quantities are expected by 1998, and barring unexpected
17 development programs, production quantities could be
18 available in 2000 to 2001 time frame; and, finally, that
19 pilot-scale production of these batteries is needed to
20 refine production processes, and in-vehicle testing is
21 needed to evaluate the performance, reliability, safety, and
22 life of these batteries while in use.
23 In late 1995, after assimilating the vast amount
24 of information received through the public forums and the
25 battery panel report, the staff provided the Board with
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1 several informational updates.
2 At the conclusion of the November meeting, the
3 Board directed the staff to solicit public comment on
4 alternatives to the existing requirements that would ensure
5 the long-term success of the program.
6 The staff returned to the Board in December to
7 update the Board on this last forum and to present a
8 conceptual outline of the staff's proposed changes to the
9 ZEV program.
10 In considering potential changes to the existing
11 program, the staff strived to promote flexibility, ensure
12 ongoing ZEV development, ensure that the emissions benefits
13 are realized, use market-based strategies, and send clear
14 signals to technology developers regarding the ARB's strong
15 commitment toward ZEVs.
16 At the final public forum in early December, the
17 staff heard proposals that would achieve these objectives.
18 Three general concepts were presented to the Board at the
19 December meeting, and the Board directed the staff to fully
20 develop one of these into the proposal I will now describe.
21 I would now like to address the key components of
22 the staff's proposal.
23 The staff's proposal is comprised of two main
24 elements. First, the staff proposes regulatory changes that
25 would modify the ZEV program for the 1998 through 2002 model
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1 years and, second, the staff recommends the ARB enter into
2 memoranda of agreement with the major automakers to ensure
3 that no emission benefits are lost, to promote a market-
4 based introduction of ZEVs, to accelerate the
5 commercialization of advanced battery technologies, and to
6 work cooperatively on implementation issues.
7 Specific to the regulatory modifications, the
8 staff proposes to amend the LEV regulations to eliminate the
9 percentage ZEV requirements for 1998 through 2002 model
10 years. The 10 percent ZEV requirement would be retained for
11 2003 and beyond.
12 The staff also proposes to amend the regulations
13 to allow manufacturers to earn multiple ZEV credits for
14 producing longer-range vehicles or vehicles that use
15 advanced batteries prior to 2003.
16 These credits, as illustrated in the following
17 table, could be used to meet the percentage ZEV requirement
18 in 2003 and beyond.
19 By allowing multiple ZEV credits, the regulations
20 would provide incentives for manufacturers producing
21 efficient vehicle designs. The credits proposal could also
22 help secondary vehicle manufacturers who have been advancing
23 technologies that increase vehicle range.
24 This proposal is consistent with the staff's
25 belief that, while advanced batteries are needed to fully
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1 develop the consumer ZEV market, well-designed vehicles
2 using lead-acid batteries can meet the needs of many
3 consumers.
4 To draw these vehicles into the marketplace, early
5 vehicles could receive two to three credits depending on
6 range as shown in this table.
7 the proposed amendments would also provide
8 multiple ZEV credits for vehicles using batteries with
9 greater specific energy to incentivize their early use.
10 Under either credits scenario, when combined with incentives
11 already contained within the ZEV program, ZEVs produced
12 prior to 2003 could generate up to 6 vehicle credits for use
13 in 2003.
14 I will now present a summary of the key elements
15 within the memoranda of agreement.
16 In addition to the proposed regulatory changes
17 just described, the staff proposes that the ARB enter into
18 memoranda of agreement, or MOAs, with each of the seven auto
19 manufacturers subject to the 1998 through 2002 ZEV
20 requirements.
21 These MOAs would ensure that the emission benefits
22 of the existing ZEV program are maintained, while allowing
23 for a market-based introduction of vehicles in the early
24 years.
25 Provisions within the MOAs also commit
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1 manufacturers to accelerate the commercialization of
2 advanced battery technologies and to work in cooperation
3 with the State to ensure the smooth implementation of ZEVs.
4 To maintain the emission benefits of the current
5 ZEV program, the MOAs include a commitment by the automakers
6 to produce and sell cleaner cars nationwide beginning with
7 the 2001 model year.
8 This is three years before the United States
9 Environmental Protection Agency can require introduction of
10 cleaner vehicles under Federal law. California would
11 benefit from the sale of these vehicles nationwide as out-of
12 state residents move and register their vehicles in
13 California.
14 By participating in the national low-emission
15 vehicle, or NLEV, program, manufacturers would agree to meet
16 California exhaust standards and achieve a nationwide annual
17 fleet average value equal to 0.075 grams per mile nonmethane
18 organic gas for passenger cars. These vehicles would be
19 about 60 percent cleaner than vehicles currently meeting
20 Federal requirements.
21 As I just mentioned, California will ultimately
22 benefit from the sale of cleaner cars nationwide as these
23 vehicles migrate to California. The staff used historical
24 data to estimate that 18 percent of all new registration
25 transactions in California for the years 2001 to 2003 will
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1 be from vehicles that originate outside the State.
2 This estimate is the average of the percentage
3 migration into California during the period 1980 to 1994.
4 This slide illustrates several important points.
5 The graph compares the annual emission benefits of the
6 original two, five, and ten percent ZEV program with the
7 annual emission benefits of the staff's proposed program
8 that incorporates the NLEV program plus the introduction of
9 10 percent ZEVs in 2003 and beyond.
10 Some important points to note: In the early
11 years, the NLEV program does not fully substitute for the
12 ZEV benefits lost. However, by 2006, the benefits of the
13 NLEV program have reached parity with the ZEV benefits. And
14 by 2010, the NLEV benefits exceed the benefits of the
15 original ZEV program by approximately 20 percent, creating
16 the annual emissions premium that Secretary Strock has
17 emphasized in many of his remarks.
18 To determine if the cumulative benefits of the
19 staff's proposal are equivalent to the benefits of the
20 original program between 1998 and 2010, the staff also
21 analyzed the area under the curves and determined that the
22 program staff is proposing today will maintain the emissions
23 benefits of the original ZEV program.
24 It should be noted that t his analysis is not a
25 ///
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1 true apples-to-apples comparison, because the power plant
2 emissions associated with EVs are included in this analysis,
3 while the refinery and other upstream emissions associated
4 with conventional vehicles are not.
5 However, power plant emissions are so small that
6 they do not significantly bias the comparison of the
7 benefits attributable to ZEVs.
8 The technology development partnership is a key
9 element within the MOA. Under this partnership, the
10 automakers have agreed to provide continued funding for
11 advanced battery technology research and development;
12 demonstrate EVs powered by advanced batteries.
13 Each manufacturer will be required to introduce
14 their pro rata share of 750 advanced battery-powered ZEVs in
15 1998, and 1500 advanced battery-powered ZEVs in 1999 and
16 2000.
17 While multiple credits for better performing
18 battery technologies could reduce this total to 1275
19 vehicles, the staff expects that at least 2,000 vehicles
20 will participate in the program.
21 And, finally, the partnership will provide 19
22 million towards Phase II of the USABC's battery technology
23 program.
24 Given today's staff proposal for a market-based
25 introduction of zero-emission vehicle technology, it is
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1 important to note that several manufacturers have already
2 announced plans to market vehicles within the next few
3 years.
4 These include the General Motors EV1, a two-seat
5 sports car that will debut in late 1996 in four cities;
6 electric versions of the Chevrolet S-10 pickup, the Ford
7 Ranger electric truck, and Chrysler's EPIC electric minivan.
8 In addition, up to 3750 vehicles using advanced
9 battery technologies will hit California roads beginning no
10 later than 1998 as manufacturers meet the requirements of
11 the technology development partnership.
12 These vehicles may include the Honda CUV4, shown
13 here, and the Toyota RAV4 electric sedans equipped with
14 advanced batteries.
15 It is expected that secondary manufacturers will
16 also continue to develop and offer products for sale.
17 Products from companies such as Solectria, BAT
18 International, and Electricar will provide additional
19 options to both demonstration programs and consumers.
20 Under both the existing and proposed ZEV program,
21 secondary vehicle manufacturers could generate marketable
22 ZEV credits toward the 10 percent requirement in 2003.
23 The staff believes that market forces and
24 technology development will stimulate the introduction of a
25 wide variety of vehicle technologies from manufacturers as
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1 well, such as the Solectria Sunrise shown here, a composite
2 body electric vehicle.
3 Other technologies include hybrid-electric
4 vehicles, demonstrated here by the Volvo Environmental
5 Concept Car; extensive research and development of fuel
6 cells for passenger car use.
7 This slide does demonstrate a Ballard fuel cell
8 stack used in a bus, as well as a vehicle using the Ballard
9 fuel-cell technology shown in this slide.
10 To acknowledge the environmental benefits of these
11 technologies, the staff has committed to return to the Board
12 later this year with a proposal to properly address advanced
13 vehicles not powered by electrochemical batteries.
14 Specifically, the staff's proposal to provide ZEV
15 credit to vehicles capable of meeting power plant emission
16 levels will open up the regulations to alternatives such as
17 fuel cell powered vehicles with on-board reformers.
18 To assist in the commercialization of electric
19 vehicles, the MOAs also commit the ARB to work with the
20 State, and local governments, and others to help ensure the
21 development of ZEV infrastructure and the removal of
22 barriers to ZEV introduction. These activities include
23 working with industry and other government agencies to
24 assist in the development of battery recycling programs,
25 work with local governments to plan for and permit public
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1 charging, and remove potential institutional barriers
2 pertaining to insurance and financing.
3 In addition, the ARB would also continue to
4 participate in and support the efforts of the Infrastructure
5 Working Council, continue to work with the State Fire
6 Marshal and other emergency response officials, maintain the
7 commitment to observe the activities of the USABC regarding
8 the development of advanced technology batteries, and
9 support the development and implementation of reasonable
10 incentive programs that enhance the near-term marketability
11 of ZEVs.
12 To provide an early market-based ZEV launch,
13 manufacturers will offer ZEVs for sale according to their
14 estimate of market readiness. To very progress toward the
15 2003 requirement, manufacturers will provide the Board with
16 annual reports containing information regarding the purchase
17 of advanced battery prototypes prior to 1998, and the number
18 and types of vehicles placed each year, including battery
19 specifications and performance.
20 The ARB staff will also conduct onsite reviews of
21 activities and hardware related to the manufacturer's
22 program. Every two years, manufacturers will submit ZEV
23 product plans for model years through 2003, including
24 information regarding model types, vehicle features and
25 specifications, production capacity, prospective battery
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1 suppliers, capital allocation, and vehicles that will be
2 produced for 2003.
3 The benefits contained within the MOAs will be
4 achieved only if all signatory manufacturers strictly adhere
5 to the provisions of the agreements. Since failure to
6 comply with these requirements will compromise the overall
7 effectiveness of the MOAs and jeopardize air quality, the
8 MOAs establish significant consequences for noncompliance.
9 Substantial liquidated damages may be incurred for
10 failure to meet any of the requirements of the MOA. The
11 maximum amounts specified in the agreements include a pro
12 rata share of $100 million for failure to implement the NLEV
13 program, $93,750,000 for failure to place vehicles in
14 demonstration projects, and $19 million for failure to
15 continue ZEV-related research and development.
16 The MOAs also include penalties for failure to
17 provide annual and other reports which include
18 manufacturers' production plans for the years leading up to
19 2003.
20 The staff believes the amounts established will
21 ensure that manufacturers meet their commitments. Moreover,
22 the Board retains its authority to reinstate the ZEV
23 requirement if a manufacturer fails to meet its obligations
24 under the MOA.
25 Any amount paid under these provisions would go to
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1 a third-party escrow holder approved by the ARB and be used
2 to fund projects to develop a sustainable market for ZEVs.
3 The staff projects the proposed amendments will
4 have both adverse and positive impacts to industry. If
5 manufacturers produce fewer ZEVs in the near term, economic
6 growth in California's advanced transportation industries
7 may be slowed and some small businesses may suffer.
8 However, the staff believes that, in its current
9 form, the ZEV program may not result in a successful ZEV
10 launch, which could also slow the growth of these
11 businesses.
12 The staff believes that the proposed modifications
13 to the ZEV regulation are likely to have overall beneficial
14 impacts to manufacturers subject to the regulation and
15 California consumers.
16 By providing added flexibility regarding when and
17 how ZEVs are introduced to the California market, the
18 proposed modifications would reduce total program costs by
19 allowing manufacturers to avoid the product costs of
20 near-term technologies, improve manufacturing processes, and
21 achieve greater economies of scale.
22 Though it is possible that certain small
23 businesses may be adversely affected by the proposed
24 regulatory action in the short term, the staff anticipates
25 no broad negative impacts on employment and the
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1 competitiveness of California businesses overall.
2 The long-term potential for economic benefits and
3 job growth still exists, and should be more certain due to
4 the increased market potential of higher-performing ZEVs.
5 MR. CACKETTE: Mr. Chairman and members of the
6 Board, during the development of the memorandum of
7 understanding and the regulatory proposal that you're
8 considering today, a number of issues repeatedly came up,
9 and I'd like to address the first two of these, and then Ms.
10 Walsh will address the third one dealing with
11 enforceability.
12 The first issue that came up was: Will the
13 proposed action lead to a sustainable market for ZEV
14 technologies? And this was sometimes referred to as the
15 ramp-up issue.
16 Staff believes that the proposal being considered
17 by the Board today offers the best chance for development of
18 a sustainable market for ZEVs. We base our conclusion on
19 the following considerations:
20 First, market development and growth depends on
21 the availability of good vehicles which meet consumer
22 demands. You saw in our presentation and out in the parking
23 lot today some examples of good electric vehicles.
24 However, we believe there is too great a risk that
25 these limited-range vehicles will fail to find a market for
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1 either two or five percent of new car purchases in the late
2 nineties and early 2000 time period. Forcing too many cars
3 on consumers who are not ready for them or seeing these
4 vehicles sit on the showroom floors unsold could poison the
5 car buyers' interest in zero-emission vehicles.
6 The softer and more flexible launch of ZEVs into
7 the marketplace that we are proposing today will help keep
8 consumer demand and vehicle supply in proper balance, help
9 assure consumer satisfaction, and pique buyer interest.
10 A positive ZEV owner experience spread through
11 word of mouth helps fuel a growing market for ZEVs.
12 The technology partnership we are proposing in the
13 MOA well also help assure and accelerate the offering for
14 sale of advanced emission vehicles whose longer driving
15 range capabilities will meet the needs of a growing number
16 of car buyers. This is essential to achieving a sustainable
17 market for ZEVs.
18 The proposal also focuses the energies of the
19 vehicle manufacturers on marketing zero-emission vehicles
20 and developing new models for introduction. It is hard to
21 imagine a market for ZEVs growing if the negative campaign
22 against the ZEV program we experienced last year were to
23 continue.
24 Over the past year, we've seen a growing interest
25 by vehicle manufacturers around the world in electric
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1 transportation. You may recall the comments of Robert
2 Eaton, the CEO of Chrysler, made last year here in
3 California, which went something like, quote, "Honk when you
4 pass an electric vehicle, and you will be passing them."
5 As he explained, that we would all be paying huge
6 subsidies to support the introduction of zero-emission
7 vehicles. In a recent interview in automobile magazine, Mr.
8 Eaton offered a very different view in response to a
9 question on how cars will differ in the year 2006. And I
10 quote, "You will start to see electric vehicles, most likely
11 with lithium batteries. The internal combustion engine
12 isn't going away. It will be used in probably 75 percent of
13 cars."
14 The suggestion here is that by the year 2006, one
15 in four new vehicles sold will be propelled by other than an
16 internal combustion engine, and that many of these will be
17 zero-emission vehicles.
18 The proposal that you have before you today
19 capitalizes on this fundamental shift in thinking of the
20 automobile manufacturers by providing the flexibility and
21 the time to bring the new and exciting products that Mr.
22 Eaton and others have in mind to market.
23 Finally, it's been suggested by some that from now
24 through 2002, the vehicle manufacturers may do little to
25 encourage a developing market for ZEVs.
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1 As I mentioned previously, we think the key to the
2 growing market is the availability of good and exciting
3 vehicles that consumers will want to buy.
4 To provide the Board and the public with
5 information on whether manufacturers are developing these
6 types and a variety of vehicles needed to reach the 2003 ten
7 percent requirement and to reach a sustainable market for
8 ZEVs, the MOA that we are proposing requires the
9 manufacturers to share their product plans and their
10 business with us every two years.
11 We won't be able to tell you publicly what
12 specific models they are working on due to confidentiality.
13 But we will be able to tell you whether they are taking the
14 right steps to produce a growing number of ZEVs.
15 We will verify our findings with site visits as
16 provided for in the MOA. We are confident we'll be
17 providing you with a positive report. But if we are wrong,
18 you will know that, too, and you can consider what further
19 steps should be taken.
20 The second issue is: Will the proposed -- this
21 came up many times during the development of the MOAs. Will
22 the proposal assure no loss of emission reduction?
23 The Board and others in the Administration made it
24 clear to us that proposed changes to the current ZEV program
25 must not decrease emissions or put approval of the SIP in
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1 jeopardy.
2 We believe the staff has met these objectives with
3 the proposal that you are considering. As explained in the
4 presentation, we have calculated the loss of emission
5 reductions resulting from suspension of the 1998 through
6 2002 ZEV production requirements.
7 Working with the vehicle manufacturers, we
8 identified a program which will fully offset the lost
9 emission reductions. That program is the National LEV, or
10 low-emission vehicle program, and it's called NLEV for
11 short, which the vehicle manufacturers have agreed to
12 implement three years in advance of potential Federal
13 requirements. The staff report provides a detailed
14 explanation of how we determined that no loss in emission
15 reductions will result from implementation of the proposal
16 being considered today.
17 As you may hear in the testimony today, not
18 everyone agrees with your staff's analysis. Most troubling
19 are suggestions that we fabricated an analysis to fit the
20 desired result. I'd like to address that first.
21 The analysis we performed is fully explained in
22 the staff report. We used the same modeling tools --
23 namely, MFAC 7F, which were used to develop the State
24 Implementation Plan, which you have approved, and we have
25 addressed all the subsequent questions posed regarding this
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1 analysis.
2 The only fabrication seems to be the allegations
3 that our analysis is other than what we have put forth in
4 the public record.
5 We have also received comments that the
6 assumptions we made are too optimistic and less optimistic
7 assumptions would show there is a loss of emission reduction
8 from this proposal. There is always room for legitimate
9 debate and disagreement when assumptions are involved --
10 which, in this case, has been occurring. However, rather
11 than enter into a defense of the assumptions we made, I
12 would like to share with you how we looked at the
13 sensitivity of our assumptions to determine whether they are
14 critical to the end result, which is to assure there is no
15 loss of emission reduction.
16 An example helps illustrate this point. Eighteen
17 percent of all new registrations in California each year
18 involve cars originally sold in another State, which do not
19 meet the California emission requirements.
20 The migration of these cars to California will
21 provide an emission benefit if the vehicles are NLEVs rather
22 than the dirtier Federal cars, with NLEVs being 60 percent
23 cleaner than the current U.S. EPA requirements.
24 The rate at which these out-of-state cars have
25 been migrating to California has been decreasing over the
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1 past ten years. And some have argued that we should have
2 used the lowest rate of migration to represent the future.
3 We used the average rate of migration instead.
4 Had we used the lower rate, which is about 14 percent
5 instead of 18 percent, our analysis would change as follows:
6 The NLEV program would continue to fully offset
7 with a premium lost ZEV reductions in the year 2010, the
8 attainment deadline.
9 Thus, there is no implication on SIP
10 approveability. With respect to the analysis of cumulative
11 reduction from between the years 1998 and 2010, the NLEV
12 program would offset about 80 percent -- 85 percent of the
13 lost ZEV benefit instead of the 104 percent based on the
14 staff's assumptions.
15 To put this in perspective, the lost emission
16 reduction from the five-year suspension of the ZEV
17 production requirement averages about one and a half tons
18 per day of smog-forming precursors on an annual basis. If
19 the actual migration rate of out-of-state vehicles is less,
20 about 20 percent less than we have assumed, the actual
21 reductions achieved by NLEV would be about 0.3 tons per day
22 less.
23 Generally, the staff does not devote significant
24 resources to sources with emissions of less than one ton per
25 day, and most control measures considered by the Board
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1 provide emission reductions of 10 to 50 tons per day in
2 contrast to the uncertainty we're discussing here, which is
3 0.3 tons per day.
4 Thus, we concluded that reasonable differences in
5 assumptions were not critical to the policy issues at hand,
6 nor did they merit a feedback provision to ascertain if the
7 NLEV program is producing exactly the emission reductions
8 expected.
9 Kathleen?
10 MS. WALSH: Mr. Chairman and members of the Board,
11 as legal counsel to the staff, I want to address the
12 question of MOA enforceability. This is an issue that was
13 first raised back at the Board hearings in November and
14 December, and has been echoed in many of the written
15 comments that we've already received on today's proposal.
16 The MOAs are enforceable under State law as
17 contracts. In much the same way that we would approach
18 enforcing new motor vehicle standards or other regulatory
19 requirements, staff will monitor the manufacturers'
20 activities under the MOAs to determine whether they are
21 meeting those commitments and will be doing that on an
22 ongoing basis throughout the term of the agreement.
23 The reporting and onsite access provisions of the
24 agreement that were earlier described by Mr. Evashenk are an
25 important part of this activity, but we also have existing
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1 provisions in our regulatory programs that will provide us
2 with information that's relevant to this determination.
3 If staff determines, based on information that it
4 receives or is in possession of, that a company is not
5 complying with one of the commitments in an MOA, we would
6 notify the manufacturer of our determination and give them
7 an opportunity to make a response.
8 After considering the company's response, the
9 Executive Officer would make a final determination as to
10 whether there was an noncomplying situation, and we would
11 again notify the manufacturer of that determination.
12 At that point, the manufacturer has the option of
13 proceeding to this Board to get a review of the Executive
14 Officer's determination. And once you've made a decision as
15 to whether the manufacturer is taking good-faith efforts to
16 comply with each and every commitment in the MOA, the
17 manufacturer at that point has an obligation to comply with
18 your final determination or to challenge that determination
19 in court.
20 This is, in all relevant respects, similar to the
21 way we would handle regulatory compliance issues.
22 Finally, as mentioned by Mr. Evashenk and as
23 recognized within the terms of the MOA itself, this Board
24 always retains the regulatory authority to reinstate the ZEV
25 production requirements should you determine that that's an
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1 appropriate response to an noncompliance situation.
2 MR. EVASHENK: In addition to the proposed
3 regulatory changes just described, the staff also proposes
4 15-day changes for several nonsubstantive modifications to
5 the ZEV program. These include modifying the standards and
6 test procedures to be consistent with the Title 13
7 amendments, moving the test procedures cited in Section
8 1960.1 to the standards and test procedures, and adding the
9 definition of zero-emission vehicle to Section 1976.
10 In conclusion, the staff recommends that the Board
11 modify California Code of Regulations Title 13 to eliminate
12 the percentage ZEV requirement for the 1998 to 2002 model
13 years, and provide additional ZEV credits for the early
14 introduction of vehicles with greater range or battery
15 specific energy.
16 The staff also recommends that the Board direct
17 the staff to enter into a partnership with the automakers
18 through the commitments contained in the memoranda of
19 agreement.
20 In summary, the staff believes that the proposal
21 meets the directives provided by the Board and confirms the
22 Board's commitment to a sustainable long-term ZEV market.
23 Before we conclude staff's presentation, we would
24 like to enter into the record correspondence from
25 individuals not able to testify today.
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1 MR. KITOWSKI: Thank you. As of this morning, we
2 have -- over 1,000 people have provided comments on this
3 regulation. The majority of those -- 91 percent, in fact --
4 were against the proposed changes and wanted to retain the
5 original ZEV requirement. Three percent supported the
6 proposed changes, and six percent fell into an alternate
7 category.
8 Of those that were against the changes, 702 were
9 concerned about the changes protecting the clean air,
10 health, and the environment. 303 related concerns that the
11 MOA was not enforceable, had loopholes, or had inadequate
12 ramp-up. 65 cited the importance of the zero-emission
13 vehicle regulations towards job benefits or economic
14 developments in California.
15 Others expressed concerns related to energy
16 diversity and security and the desire to buy an electric
17 vehicle themselves.
18 Of those that fell into the other category, about
19 half, or three percent, were against tax subsidies and any
20 EV mandate. And a smaller number were requesting that the
21 ARB push for EV incentives and economic development of
22 electric vehicles.
23 This concludes the staff's presentation. We'd be
24 happy to answer any questions.
25 CHAIRMAN DUNLAP: Thank you. Mr. Boyd, before I
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1 ask my colleagues on the Board if they have any questions,
2 do you have any final comments?
3 MR. BOYD: No. Thank you, Mr. Chairman. I stand
4 by the staff's recommendation --
5 CHAIRMAN DUNLAP: Okay.
6 MR. BOYD: -- and look forward to an interesting
7 discussion.
8 CHAIRMAN DUNLAP: All right. With that, Ms.
9 Edgerton.
10 MS. EDGERTON: Mr. Chairman, respected members of
11 the Air Resources Board, members of the professional staff,
12 and ladies and gentlemen of the audience, I appreciate this
13 opportunity to share with you a few of my thoughts.
14 First, I urge environmentalists here today and
15 around the world to recognize and accept the fact that every
16 single member of this Board -- from the Chairman to each
17 Board member, to each and every staff member -- wants to see
18 the successful introduction of zero-emission vehicles in the
19 State of California.
20 Chairman Dunlap, this Board and our staff have
21 very courageously faced the tremendously difficult challenge
22 of creating a new path for California to follow into the
23 21st Century.
24 And while I am disappointed with some aspects of
25 the program, I am not disappointed that we are making a
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1 change. I want it understood that I fully supported the
2 Chairman and staff in their decision to hold last year's
3 series of workshops. Indeed, I recall pushing hard, very
4 hard for agency -- for the agency to take up the myriad
5 issues needing resolution in order for the ZEV program to
6 work.
7 I agreed with the Chairman last fall and I still
8 do that the combined private institutional opposition of the
9 auto manufacturers to the two percent ZEV mandate was so
10 strong, uniform, concerted, well-funded, and unyielding that
11 it would have been foolhardy to proceed without some course
12 correction.
13 Indeed, frankly, it seemed likely to me that some
14 stakeholders might have spent more money and time in 1995
15 blocking the mandate than on succeeding in their underlying
16 ZEV programs.
17 And most certainly, the new electric vehicle
18 technologies inspired a massive campaign from a petroleum
19 industry determined to protect its domination of the
20 transportation sector well into the 21st Century.
21 And while I made it clear to the Chairman that my
22 first preference was for a program which resembled Option C,
23 reducing the mandate requirements to approximately one
24 percent in 1998 to 2000, I also give him my opinion that the
25 likelihood of the ZEV program success would be improved even
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1 with Option B over what it would have been had we left the
2 program untouched.
3 And furthermore, I want it understood that while I
4 am concerned about the wisdom of certain minor provisions in
5 the MMOA (sic), and I may raise those concerns over the next
6 two days where appropriate, I firmly believe that the
7 likelihood of success of the ZEV program has been increased,
8 even if this proposed Board action goes forward today
9 utterly unchanged, over what it would have been had we left
10 the program unchanged.
11 CHAIRMAN DUNLAP: Thank you, Lynne. I appreciate
12 your comments.
13 Any other questions of staff or comments? Mr.
14 Lagarias.
15 MR. LAGARIAS: Thank you, Mr. Chairman.
16 I don't have a prepared speech, but I certainly
17 concur with Ms. Edgerton on her remarks. I think they're
18 quite appropriate. I do have a couple of questions.
19 But before I ask them, I'd like to note that one
20 of the pioneers in this program who has worked very hard in
21 Southern California for ARB is retiring next month, and I
22 think we should acknowledge Don Drachand's sterling efforts
23 in this entire program.
24 Thank you, Don.
25 (Applause.)
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1 MR. LAGARIAS: Specific question's to the MOA --
2 CHAIRMAN DUNLAP: Jack, if I may interject, right
3 before lunch, we're planning to recognize Don and give him a
4 token of our appreciation. And hopefully he won't forget
5 the Board as he moves on down that retirement path.
6 But we'll be hearing from Don a little bit later.
7 MR. LAGARIAS: Oh, great.
8 Now, my specific question's on the MOA regarding
9 the credits that would be applied. Would those be over and
10 above the requirements that the MOA calls for during the
11 1998, '99, 2000 year period?
12 Bob?
13 MR. CROSS: We were deciding here who was going to
14 answer. The answer is yes.
15 MR. LAGARIAS: How's that?
16 CHAIRMAN DUNLAP: It's yes.
17 MR. CROSS: The MOA vehicles are not part of the
18 credit program that is applicable to the 2003 model year, if
19 you will.
20 In other words, they have their own internal
21 credit program, which is satisfied by using advanced
22 batteries.
23 When you exceed the number of vehicles in the MOA,
24 then those vehicles generate credits, and they can either be
25 used for hydrocarbon or for compliance with the NMOG curve
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1 when they're generated, or between that time and 2003, or
2 they could be used as ZEV credits, if you will, in 2003 to
3 reduce the amount of ZEVs that need to be sold.
4 MR. LAGARIAS: Well, isn't the '98 and the 2001
5 period the time that we would expect to find how vehicles
6 would be used, where they would be applied, what kind of
7 difficulties they face, and what kind of infrastructure
8 issues we would be facing?
9 Isn't this one of the main purposes of this time
10 period?
11 MR. CROSS: Yes, it is. And we believe that the
12 manufacturers will be putting substantial numbers of
13 vehicles into commerce.
14 MR. LAGARIAS: Over and above the MOA
15 requirements?
16 MR. CROSS: Over and above the MOA requirements,
17 absolutely.
18 MR. LAGARIAS: All right. Thank you.
19 CHAIRMAN DUNLAP: Mr. Roberts, did you have any
20 questions yet or do you want to hold them?
21 SUPERVISOR ROBERTS: I'd like to hold them. I do
22 have a number of questions.
23 CHAIRMAN DUNLAP: Okay.
24 SUPERVISOR ROBERTS: I'm not prepared to make a
25 speech yet.
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1 CHAIRMAN DUNLAP: Okay. All right.
2 SUPERVISOR ROBERTS: I'd also, Mr. Chairman, we
3 have certain rules for divulging meetings.
4 CHAIRMAN DUNLAP: Yes.
5 SUPERVISOR ROBERTS: And I didn't know at what
6 point you were going to be --
7 CHAIRMAN DUNLAP: We'll get to that in a little
8 bit, the ex parte. The "Mr. Kenny component" as we call it.
9 (Laughter)
10 CHAIRMAN DUNLAP: Okay. With that, if there are
11 no other questions, Mayor, Supervisor, do you have any
12 comments down there of staff? If not, we'll go right into
13 the witness list then.
14 What I'd like to do is to call those that have
15 signed up, the witnesses.
16 How many do we have thus far? What's the total?
17 Do we know?
18 MR. VALDEZ: 30.
19 CHAIRMAN DUNLAP: 30 thus far. Okay. I'd
20 encourage those in the audience that wish to testify to get
21 on the list, because we want to manage our time wisely here.
22 I'd also like to ask those in the audience, staff
23 that's in the audience that aren't involved with this item,
24 if they would move to one of the conference rooms so that
25 the seats can be given to those from external groups or organizations.
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1 I would be appreciative if that would occur.
2 Why don't we go to the witness list, then. We'll
3 start off with Valory Brown from Assemblyman Steve Baldwin's
4 office.
5 I'll read five names. I would ask you to come to
6 the front row and take a seat, and then we'll have you queue
7 up and we'll just begin following the order I outline.
8 Valory Brown, John Grimley from Senator Ray
9 Haynes' office, George Plescia from Assemblyman Bill
10 Morrow's office, Bob Ham from Assemblyman Conroy's office,
11 and Beau Biller from Assemblyman Jan Goldsmith's office; if
12 you'd come forward, please.
13 I don't see any movement. Okay. All right.
14 John Schutz, Nissan, followed by Jerome Cole,
15 ALABC; Janet Hathaway, NRDC; Andrew Frank, U.C. Davis; and
16 Cecile Martin, CalETC.
17 Good morning, John. You seem to be the lead-off
18 hitter this morning.
19 MR. SCHUTZ: Well, that's a privilege. I wasn't
20 expecting it, but I will take the opportunity.
21 By the way, I will say that for future
22 presentations, Tom, we'll get you a picture of one of our
23 cars.
24 (Laughter.)
25 MR. SCHUTZ: Good morning. I'm John Schutz of
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1 Nissan Research and Development, Los Angeles office. I'm
2 here representing Nissan Motor Limited of Japan to give
3 brief comments on the proposed changes to the LEV (sic) regs
4 that have been described by staff and the proposed
5 memorandum of agreement between CARB and the seven auto
6 manufacturers, of which, of course, Nissan is one.
7 I've been part of this negotiating process, and I
8 must say it has been lengthy. It's been exhaustive. It's
9 been very thorough in the details. And we've done, I think,
10 quite a -- quite a good job.
11 Nissan wishes to commend the CARB staff, both
12 technical and legal, for their effort and patience in
13 working out the details of this MOA and the regulation
14 changes.
15 We urge the Board to approve the MOA and the
16 regulations changes as have been presented. Not everyone
17 involved has reached this point fully satisfied with every
18 detail of the agreement. But on the whole, we have come to
19 realize and recognize this as the best achievable
20 compromise.
21 The agreement recognizes the limits of the
22 technology that were brought into focus by the battery
23 technology audit panel, as mentioned earlier.
24 The MOA and the revised regulations will maintain
25 the product-for-sale requirement in the year 2003, which
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1 thus continues as the motivating force behind the costly
2 test-and-development phase for the advanced technology EVs.
3 We hope, along with others, that some evidence of
4 a sustainable market with EVs will emerge as we proceed
5 through the advanced battery technology development program,
6 so that the produce-for-sale requirement becomes irrelevant.
7 In the meantime, Nissan will commit to the terms
8 of this agreement and will continue our concerted effort
9 towards commercially viable EVs.
10 Today, as has been mentioned, you've had an
11 opportunity to see a number of vehicles outside, including a
12 Nissan Avenir EV on display beside the building.
13 Our vehicle is currently undergoing testing on
14 public roads in several areas of California by my staff. In
15 fact, it just came back from San Francisco.
16 It is identical to about 25 other Avenir EVs that
17 are in operation with several utility companies in Japan and
18 in the U.S., including Southern California Edison.
19 Although the Avenir EV is equipped with current
20 technology lead-acid batteries, which limit its range, it
21 does have state-of-the-art electronics and powertrain
22 components, which give it excellent performance, smoothness,
23 and ease of driving.
24 Nissan, in cooperation with Sony Corporation, is
25 developing lithium-ion advanced technology batteries for use
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1 in EVs that offer up to three times the range and cycle life
2 of current technology batteries.
3 At this year's Los Angeles Auto Show, this past
4 January, Nissan displayed two fully functional lithium-ion
5 equipped EVs, the FEV-II concept car, and a Nissan Prairie
6 Joy EV minivan. In fact, that minivan was driven after the
7 show by Jim Boyd and Steve Albu of staff.
8 Because of scheduling conflicts, we were not able
9 to bring either of these vehicles to Sacramento for this
10 event. Later this year, however, Nissan plans to bring a
11 similar lithium-ion equipped Prairie Joy to Los Angeles for
12 more extensive testing.
13 It'll go to our Arizona proving ground first for
14 some hot weather testing, and then will be around Los
15 Angeles for some time.
16 Further, as a part of Nissan's commitment under
17 the proposed MOA, we plan to bring additional lithium-ion
18 equipped minivans to California in '98, the first year of
19 the advanced battery technology development project.
20 So, in conclusion, I would like to emphasize again
21 that Nissan strongly supports the proposal before the Board
22 here today. We believe these changes are what are best for
23 our customers, best for the citizens of California, and will
24 give the emerging EV technology the best opportunity for
25 success on the market.
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1 Thank you very much.
2 CHAIRMAN DUNLAP: Thank you, Mr. Schutz.
3 Any questions? Mr. Lagarias.
4 MR. LAGARIAS: Will you be able to supply more
5 than the MOA requirements if there's a demand for your
6 electric vehicle in the ensuing period between now and the
7 year 2003? Or will you limit your efforts to just what the
8 MOA requirements would put on your company?
9 MR. SCHUTZ: To be perfectly honest with you, Mr.
10 Lagarias, the number of vehicles we build is strongly
11 dependent on the progress of the cost reduction efforts on
12 the battery.
13 We, I think -- in general, I could say we would
14 not limit our production if things looked very, very
15 promising and if the battery development comes along as we
16 expect it will.
17 In the first couple of years, we will adhere to
18 the MOA requirements. But, as we get close to 2003,
19 obviously, if we are ready to expand the pilot production of
20 the batteries significantly at that point, why, the number
21 of vehicles could increase.
22 So, I really can't commit at this point.
23 MR. LAGARIAS: Thank you.
24 CHAIRMAN DUNLAP: Okay. Thank you, Mr. --
25 MS. EDGERTON: Can I ask --
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1 CHAIRMAN DUNLAP: Yes, Ms. Edgerton.
2 MS. EDGERTON: Yes. I just wanted to ask you,
3 could you tell me -- I think this was part of what Mr.
4 Lagarias was asking, but what is your best guess? This is
5 outside of the terms of the MMOA (sic). What can you tell
6 the California public about how many cars you expect --
7 electric vehicles you expect as a minimum or a maximum for
8 your company to bring to California between now and 2003?
9 MR. SCHUTZ: Well, the MOA provides for about a
10 hundred and twenty dollars as Nissan's share, provided that
11 our battery meets the specific energy requirements that are
12 in the MOA.
13 We'll certainly do that. Now, beyond that, as I
14 said, it's difficult to predict. We aren't in a position to
15 commit, because the -- because the battery needs to go
16 through a couple of iterations of development. We're going
17 through some materials changes in the battery materials to
18 reduce the cost. And the success of those changes needs to
19 be measured in a lab first, and then phased into production.
20 And it's hard right now to predict how quickly
21 that will happen.
22 MS. EDGERTON: Well, when do you think that might
23 happen?
24 Since I've been on the Board, there's been a lot
25 of emphasis put on the advanced -- the need for the
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1 automobile companies to have leadtime.
2 MR. SCHUTZ: Uh-huh.
3 MS. EDGERTON: Because you make your production
4 decisions several years in advance.
5 MR. SCHUTZ: Yes, yes. Well, in this case, of
6 course, it's not really an automobile manufacturer's
7 leadtime issue. It's a battery manufacturer's issue on
8 developing new materials, substitute materials, and
9 developing the -- making sure that the performance and
10 reliability are not unduly affected by substituting --
11 frankly, the material that is specifically in the battery
12 that we're working on is cobalt. That is quite expensive.
13 And nickel is a viable substitute and so is
14 manganese. Sony is working very hard on these -- on the
15 chemistry involved in making those substitutions. And they
16 are optimistic about nickel. They are not so optimistic
17 about manganese at this point.
18 MS. EDGERTON: That's very helpful. Well, perhaps
19 you could help me understand the car that you brought up
20 here today.
21 Does it have lead-acid batteries in it?
22 MR. SCHUTZ: Yes, it does. They are--
23 MS. EDGERTON: It's a very cute car
24 MR. SCHUTZ: Yeah, they are sealed lead-acid.
25 MS. EDGERTON: Right. Now, if I understand what
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1 you're saying to me, your company has no intentions of
2 marketing -- no present intentions of marketing that car?
3 MR. SCHUTZ: No. The vehicle that we have out
4 here is purely a test car. It has the batteries above the
5 floor, and it was intended to develop the powertrain and
6 the control systems. And it's done very well at that.
7 The vehicle that we bring here in 1998 will be a
8 Prairie Joy, or a similar vehicle to the Prairie Joy I
9 should say.
10 You like the name, "Prairie Joy"?
11 MS. EDGERTON: I do. I like it a lot.
12 MR. SCHUTZ: We begged the marketers to take the
13 word "Joy" off it.
14 MS. EDGERTON: I like it.
15 (Laughter.)
16 MS. EDGERTON: It would make me joyful if you
17 brought it in.
18 MR. SCHUTZ: No. The vehicle we bring in '98, it
19 will be a -- will be a fully developed vehicle for the U.S.
20 market with lithium-ion batteries in it.
21 MS. EDGERTON: In 1998.
22 MR. SCHUTZ: In 1998.
23 MS. EDGERTON: But that's your demonstration
24 vehicle.
25 MR. SCHUTZ: But that will -- but that still will
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1 be a very limited production, because of the -- because of
2 the prototype developmental nature of the battery.
3 The vehicle will be a functional vehicle, but the
4 batteries will be a functional vehicle, but the batteries
5 will still be very expensive. And that's really the
6 limiting factor when we come right down to it. It's the
7 cost of the developmental batteries.
8 And until the substitution and the process changes
9 have been worked out by Sony, why, it's going to be
10 difficult to bring more than the required number of
11 vehicles.
12 MS. EDGERTON: So, if I understand you correctly,
13 your company has no intentions of marketing any electric
14 vehicles with lead-acid batteries?
15 MR. SCHUTZ: Yes, that's correct. We do not. We
16 feel that our efforts are best focused on bringing the
17 lithium-ion to the market. We think that is, long term, the
18 way to success in the market.
19 MS. EDGERTON: So, if I understand you correctly,
20 we'll see nothing from you until the lithium-ion battery or
21 some equivalent is in production quantity?
22 MR. SCHUTZ: Yeah. That's right. That's right.
23 And, as I said, we will have lithium-ion equipped
24 vehicles here on test within a few months, actually there'll
25 be a vehicle here in August.
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1 MS. EDGERTON: Well, good. Now, let me ask you
2 one more question. And I apologize for one more question.
3 With respect to the ramp-up provisions and the
4 product plan provisions, which are in the MMOA, would it be
5 correct for me to assume that what you're going to be
6 telling us is your plans for ramping up and producing
7 demonstration vehicles as opposed to vehicles for the
8 commercial market initially?
9 MR. SCHUTZ: Yes. Initially, that's right.
10 MS. EDGERTON: Within the next five years?
11 MR. SCHUTZ: Well, let's see. 2003 production, we
12 would have to have firm plans in place by, say, '99 or so.
13 So, I think, by the 2000 review, we should have a pretty
14 thorough plan laid out.
15 Now, in the meantime, of course, we are going to
16 be giving you a lot of information about how development on
17 the batteries are coming and where that goes.
18 And, obviously, that's going to be the controlling
19 factor for the next several years.
20 MS. EDGERTON: Thank you.
21 MR. SCHUTZ: Okay.
22 MS. EDGERTON: Supervisor Roberts, then Mr.
23 Parnell, then Dr. Boston.
24 SUPERVISOR ROBERTS: Thank you. Lynne started to
25 get at it a little bit, but let me ask -- it sounds like the
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1 commitment I'm hearing is 120 vehicles through 2003?
2 MR. SCHUTZ: Yes. That's what's provided for in
3 the MOA.
4 SUPERVISOR ROBERTS: Okay.
5 MR. SCHUTZ: That's correct. And actually,
6 though, that 120 vehicles would be during the period
7 provided in the MOA.
8 So, it would be '98, '99, 2000, with the
9 possibility of 2001, if we have some good reason for a
10 delay.
11 SUPERVISOR ROBERTS: It sounds like you're in a
12 position slightly different from maybe some of the other
13 manufacturers with respect to focusing on a particular
14 battery with a particular -- maybe a development agreement
15 with Sony?
16 MR. SCHUTZ: Well, I'm not sure what you're
17 asking. But, yeah, specifically, we are the only ones right
18 now. We have a development agreement with Sony. That's
19 right.
20 SUPERVISOR ROBERTS: Okay. Now, what happens if
21 the lithium-ion battery doesn't come along in its
22 development phases as quickly as you're hoping that it
23 might?
24 MR. SCHUTZ: Well, Nissan, of course, is well
25 aware of other battery development that is going on. And we
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1 have -- certainly, the nickel metal hydride batteries look
2 very good. There's -- in fact, there's a vehicle sitting
3 outside here that performs very well with nickel metal
4 hydride batteries.
5 We have -- we have an interest in that. If the
6 development of the lithium-ion -- the performance of the
7 lithium-ion so far is excellent. So, performance is not an
8 issue.
9 But cost is the issue.
10 SUPERVISOR ROBERTS: Okay.
11 MR. SCHUTZ: And, certainly, we would be faced
12 with a difficult decision if we saw others able to come to
13 the market with viable vehicles and we're stuck in a very
14 high-cost position. Unless we had significant performance
15 advantages, why, we'd have to make some choice.
16 SUPERVISOR ROBERTS: So, in 1999, you're going to
17 have to make a decision with respect to the year 2003?
18 MR. SCHUTZ: Yeah, that's about the time frame.
19 SUPERVISOR ROBERTS: And it's at that point, then,
20 if the lithium-ion battery didn't perhaps have the promise
21 it appears to have today with respect to cost and other
22 issues, then you'd be prepared to switch over to some other
23 battery to be able to meet the requirements in 2003?
24 MR. SCHUTZ: Well, I'm not going to speculate
25 about what we're prepared to do at that point. But,
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1 certainly, the assessment of the battery audit panel and our
2 assessment is that lithium-ion is going to be the best
3 overall compromise.
4 And I think the likelihood of getting it down to a
5 point where the life cost -- that is, the lifetime cost over
6 the life of a vehicle -- if that cost is down at the USABC
7 midterm level and comparable with other batteries, why, I
8 think it'll go.
9 SUPERVISOR ROBERTS: I guess I'm not sure I'm
10 hearing -- I'm wondering if the commitment is to producing
11 the required cars in 2003 with whatever battery, but it
12 sounds like your commitment is to pursuing the lithium-ion
13 battery until it works.
14 MR. SCHUTZ: Well, sure. I guess, obviously, we
15 have to make decisions as we approach 2003. And right now,
16 we are very optimistic about lithium-ion, even though the
17 cost is high, because the performance is excellent.
18 So, we would prefer to concentrate on bringing
19 that into a cost-effective state. So, at this point, that's
20 what we're focusing on.
21 Now, if we reach 1998-1999, and it's obvious that
22 that's not going to work, we're certainly going to be in
23 here talking in great detail with your staff and make a
24 decision as to how best to proceed.
25 I think that, long term, based on what the battery
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1 audit panel has reported, why, lithium is seen as, long
2 term, the best candidate for the next, say, 10 or 15 years.
3 And if we and everyone else are wrong about that, why, we're
4 going to have to rethink it a bit.
5 At this point, we don't think we're wrong. We
6 think it's going pretty well.
7 SUPERVISOR ROBERTS: I don't have any further
8 questions.
9 CHAIRMAN DUNLAP: Mr. Parnell.
10 MR. PARNELL: For my own discussion, it seems to
11 me that a lot of the questions are focused on what Nissan is
12 going to be doing outside the mandate in the agreement.
13 And it would seem to me -- and I wonder if you
14 concur -- that the real issue here is electric vehicles are
15 going to become a reality, and we all realize that, with
16 some kind of battery in it.
17 And given that costs and reliability issues are
18 satisfied, that it behooves Nissan and other automobile
19 manufacturers to be first in, to be able to grasp that
20 market share.
21 And you're going to be looking at that as well as
22 the technology as you proceed down this path. Competition
23 still is the driving force out there among and between
24 automobile manufacturers.
25 And so, while you're talking currently and have
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1 had this discussion on technicalities, realistically, your
2 company, as well as all others, would like to be into this
3 market in a favorable way, as early as possible, to be able
4 to get -- to obtain your market share.
5 MR. SCHUTZ: You'd said it very well. This a very
6 competitive business. We want these vehicles to be part of
7 our profit-making lineup. And we are doing our best to
8 differentiate ourselves from the other companies to reach
9 that end.
10 And so, you're right.
11 MR. PARNELL: Thank you.
12 CHAIRMAN DUNLAP: Dr. Boston.
13 DR. BOSTON: Mr. Schutz, I think you partially
14 answered the question I had when Supervisor Roberts was
15 talking to you.
16 But my question was about the commitment between
17 your company and Sony. Is that a wedded agreement? We get
18 information here that there are many companies working on a
19 lithium-ion battery that indicate they're very close to a
20 viable battery for a car.
21 If another company came up with such a battery,
22 would your company be able to use that? Or are you strictly
23 wedded to Sony's development?
24 MR. SCHUTZ: I guess I can characterize that a
25 little bit. I mean, we are the only company with a
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1 development agreement with Sony. We are certainly not the
2 only company that has talked to Sony. And Sony is willing
3 to sell batteries to anybody.
4 They don't have the development resources to go
5 through an in-depth development program with more than one
6 manufacturer at a time. And that's why we're the only ones
7 with a development agreement right now.
8 We have talked to other battery manufacturers
9 around the world who have other batteries available. And at
10 this point, we believe Sony is further along. And so, at
11 this point, we're going to stay with them.
12 CHAIRMAN DUNLAP: Okay. Thank you, John.
13 John Grimley from Senator Ray Haynes' office?
14 Good morning.
15 MR. GRIMLEY: Good morning, Chairman Dunlap and
16 members.
17 The Senate's presently in session, and Senator
18 Haynes asked me to come here and, with your permission, read
19 a statement of his to the Board.
20 (Reading) When I was told last December that the
21 Air Resources Board had decided to revise its zero-emission
22 vehicle regulations, I thought the Board had, in fact, taken
23 the volumes of evidence against this classic unfunded
24 mandate to heart.
25 Unfortunately, I was sadly and profoundly
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1 mistaken. The much touted delay of electric vehicle
2 production and sale quotas from 1998 through 2002 amounts to
3 no less than a smoke screen concealing that the most
4 stringent quotas, 10 percent per year beginning in 2003,
5 remain intact.
6 This minor rollback represents a mere 15 percent
7 reduction from approximately 1.3 million electric cars under
8 the original mandate to 1.1 million under the proposed
9 version being discussed today.
10 It is the fine print of the provisions calling for
11 the so-called voluntary introduction of electric vehicles in
12 the years subsequent to 2003 that I find most onerous.
13 Therefore, I submit to you, if there is to be
14 voluntary EV production, why is any mandate needed? In
15 exchange for the voluntary production of an unspecified
16 number of EVs by major automakers -- for which even the Air
17 Resources Board itself admits that there is virtually no
18 market -- CARB is seeking to create a market for these
19 vehicles where none exists.
20 CARB's obligations under the proposed memoranda of
21 agreement are far flung and ambitious indeed, and will
22 require massive taxpayer subsidies to fulfill.
23 Firstly, CARB promises to support the development
24 and implementation of incentive programs to enhance the
25 near-term marketability of ZEVs. This proposal is nothing
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1 more than a euphemism for taxpayer giveaway schemes to
2 induce consumers to buy overpriced, substandard performing
3 electric cars that would not otherwise -- that they would
4 not otherwise choose to purchase.
5 An example of one such incentive program is the
6 $10,000 in taxpayer funded breaks currently touted by
7 General Motors in marketing its $35,000 electric EV1.
8 CARB also commits, by implication, to coerce the
9 Department of Insurance into establishing reasonable rates
10 for insuring new electric vehicles, and to work with the
11 Department of State Banking to assist in securing financing
12 for the purpose of ZEVs.
13 This proposal would lead one to believe that
14 regardless of the level of risk involved in purchasing or
15 driving EVs, they will be insured and financed at attractive
16 rates, subsidized by the vast majority of consumers who
17 choose to purchase safer and less expensive conventional
18 vehicles.
19 Further, CARB promises the automakers that it will
20 facilitate the purchase of ZEVs by selected State agencies.
21 This clearly means the taxpayers will be forced to purchase
22 for government use expensive electric vehicles which they
23 themselves would not choose to buy for their own families.
24 CARB conveniently neglects to disclose how much
25 all this will cost or who will pay for it. However, CARB's
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1 willingness, even eagerness, to commit the State to
2 subsidize -- to subsidies and other preferential treatment
3 for the breadth enumerated in the contracts clearly
4 demonstrates there is no desire on the part of the private
5 sector to seriously invest in EV technology. And there's no
6 market demand to induce them to do so.
7 Whenever government presumes to anoint any
8 technology or product over another, the public surely loses.
9 I'm reminded of the Department of Energy's synthetic fuels,
10 or syn fuels program, which cost taxpayers tens of billions
11 of dollars and succeeded in achieving nothing but a larger
12 Federal deficit.
13 The proper function of the Air Resources Board is
14 not, as this Board seems to believe, to serve as an
15 industrial politburo. Rather, the Air Resources Board
16 should focus on setting reasonable emission standards based
17 on sound scientific assumptions which can be met by the
18 private sector in the most cost-efficient and practical way
19 as possible.
20 Many members of the California Legislature have
21 taken a keen interest in the unfunded mandate and have taken
22 time on several occasions to make their opposition known to
23 the members of this Board.
24 Regrettably, it appears our concerns have fallen
25 upon deaf ears. Once again, I urge you to repeal the
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1 unfunded ZEV mandate in favor of market-based clean air
2 solutions, which require neither technology mandates nor
3 public financing.
4 Thank you for your consideration.
5 CHAIRMAN DUNLAP: Thank you for your comments, Mr.
6 Grimley.
7 If I might, just as a point of perhaps education
8 on your part, in September -- I think it was September of
9 '94, we had an executive order from Governor Wilson.
10 Tom, can you speak to that? Familiarize Mr.
11 Grimley as to the parameters of that, so we might have a
12 more complete rounding out of the story.
13 MR. CACKETTE: I think the Governor issued
14 Executive Order 100-94. And the purpose of it was to lay
15 out his desire of how to effect the energy policy -- I don't
16 remember the exact name of it. But it's called the EPACT
17 Act, which is a bill dealing in part with alternative fuel
18 transportation and requiring fleets to buy alternative
19 fueled vehicles.
20 And in that, he identified what the requirements
21 of the EPACT law were, and indicated that, with the
22 appropriation of the necessary funds, that the State would
23 purchase ULEVs and ZEVs for the State fleet at a rate of
24 about 10 percent of State purchases from 1996 and beyond.
25 And this was seen as both fulfilling the
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1 requirements of Federal law and also consistent with the
2 Board's action to encourage these very low-emission vehicles
3 as well as alternative fuel vehicles.
4 MR. GRIMLEY: Chairman Dunlap, I'd be happy to
5 pass that along to Senator Haynes.
6 CHAIRMAN DUNLAP: Yes. And if you'd like a copy,
7 we'd be happy to get it for you.
8 I just wanted to make sure you had a more -- you
9 were able to round out the story and understand our role
10 relative to the EPACT requirements.
11 MR. GRIMLEY: Thank you, Chairman.
12 CHAIRMAN DUNLAP: Okay.
13 MR. GRIMLEY: And I'll -- on behalf of our staff,
14 I'll contact your staff and pass along anything you'd like
15 to have Senator Haynes' view.
16 CHAIRMAN DUNLAP: Sure. That's be fine.
17 MR. GRIMLEY: Thank you, Chairman Dunlap.
18 CHAIRMAN DUNLAP: Thank you.
19 MR. GRIMLEY: Thank you, members.
20 CHAIRMAN DUNLAP: Mr. Lagarias -- Mr. Grimley,
21 before you stray too far, Mr. Lagarias had a question or a
22 comment.
23 MR. LAGARIAS: I'd like to comment to you on the
24 question you raised. Why is this mandate needed?
25 The Clean Air Act requires us to adopt regulations
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1 through a State Implementation Plan. To do that, we adopt a
2 number of regulations reducing emissions. EPA will not
3 accept a promise that I'll do this or do that in a State
4 Implementation Plan.
5 So, to achieve the air quality standards by the
6 year 2010, we adopted this program. And in the process, we
7 recognized there were technological and scientific issues
8 still to be resolved, which we are addressing at the current
9 time.
10 But the point is, we're in a Catch 22. We have to
11 meet the air quality standards. This is one approach, and
12 it's one of a very small part of a total clean fuels/clean
13 air/clean car program. And that's why we have taken the
14 route that we have taken.
15 MR. GRIMLEY: Thank you, Chairman Dunlap.
16 CHAIRMAN DUNLAP: All right. Thank you. Thanks,
17 Jack.
18 I apologize to the witnesses I have queuing up.
19 There are some that have arrived that I originally called.
20 So, indulge me for a moment if you would.
21 Valory Brown from Assemblyman Baldwin's office I'm
22 told is here. I'd invite her to come forward, and then
23 we'll follow up with Mr. Cole, Mr. Ridenour, Ms. Hathaway,
24 Mr. Frank, and Ms. Martin.
25 Good morning.
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1 MS. BROWN: Good morning. I have a statement from
2 Mr. Baldwin.
3 (Thereupon, the microphone was adjusted for
4 the witness.)
5 MS. BROWN: This is from Assemblyman Baldwin.
6 (Reading) I have expressed my opposition to the
7 electric vehicle mandate on several occasions. The proposed
8 revisions to this unfunded mandate have given me no reason
9 to soften that opposition.
10 As a matter of fact, the revised EV regulations
11 have confirmed my previous opinion that this mandate will do
12 nothing but prop up a struggling technology at taxpayer
13 expense, all the while providing little public benefit.
14 Under the cloak of environmental concern, the EV
15 mandate would force automakers to produce and sell electric
16 vehicles at a cost two to three times more than their
17 conventionally fueled counterparts, while performing at a
18 significantly inferior level. It is my contention that the
19 taxpayers would be forced to subsidize those EVs with
20 billions of dollars worth of State fleet purchases, rebates,
21 incentives, and other so-called tax breaks.
22 CARB's mission to efficiently and cost-effectively
23 clean California's air needs to be the focus of CARB.
24 Obligations assumed by CARB in the MOAs, such as those
25 described above, are patently inappropriate. They must be
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1 taken off the table as CARB has neither the authority to
2 undertake nor the means to fulfill them.
3 Frankly, it is time for CARB to get back to basics
4 and focus on achieving cleaner air by cost-effective means.
5 That means repealing the zero-emission vehicle mandate all
6 together, and replacing it with reasonable air quality
7 standards that can be met by the private sector in the
8 quickest, most economic, and efficient way as possible
9 without production quotas and without subsidies.
10 Sincerely, Steve Baldwin.
11 CHAIRMAN DUNLAP: Thank you.
12 MS. BROWN: Thank you.
13 CHAIRMAN DUNLAP: Okay. Mr. Cole from ALABC.
14 Good morning.
15 MR. COLE: Good morning. Chairman Dunlap and
16 members of the Board, my name is Jerry Cole. I serve as
17 president of the Advanced Lead-Acid Battery Consortium,
18 ALABC, which is a research organization which, over the past
19 four years, has devoted about $20 million toward research
20 efforts aimed at improving the life, range, and reliability
21 of lead-acid batteries for electric vehicle use.
22 It's been a privilege for us to work with you and
23 the talented CARB staff over the last six months or so to
24 help modify the mandates to better reflect the realities of
25 the marketplace.
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1 Our ultimate objective throughout this process has
2 been to ensure that the modifications to the mandates would
3 in no way diminish enthusiasm for EVs. While we believe
4 that this goal has been more or less accomplished, we're
5 concerned that too much emphasis has been placed by the CARB
6 staff on specific energy, your energy density, as the sole
7 criterion of battery performance.
8 As you know, specific energy is the only basis for
9 awarding ZEV credits under CARB's advanced battery
10 technology demonstration program.
11 Now, comparing batteries purely on the basis of
12 range seems appealing on the surface, because it allows
13 comparison by means of a single figure. Seemingly,
14 batteries offering higher specific energy are better than
15 those offering less specific energy.
16 Importantly, however, cost of the battery and life
17 of the battery are of equal, if not greater, importance to
18 the consumer's purchasing decision. A battery with a high
19 specific energy and a very short life will not succeed in
20 the marketplace, nor will a battery with a high specific
21 energy and a high cost.
22 ALABC, with the goal of maximizing the appeal of
23 EVs to eventual consumers, suggests that you consider a
24 different approach to evaluating battery performance. We
25 suggest that CARB incorporate specific energy into a, quote,
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1 "battery value," or BV, which allows a single figure
2 evaluation of different batteries while taking into account
3 vital parameters, such as cost and life.
4 Battery value could be calculated by measuring the
5 specific -- or by multiplying the specific energy in watt
6 hours per kilogram times the life and cycles, and dividing
7 that by the cost in dollars per kilowatt hour.
8 Our suggested approach combines three critical
9 parameters that exercise a vital influence on the
10 acceptability of a battery into a single expression, the
11 value of which could be used to compare different batteries.
12 Battery value would be increased by increasing the
13 specific energy and the life and by decreasing cost.
14 Clearly, the higher the BV, the better the battery.
15 Now, it's our view that the battery value approach
16 is a significant enhancement to the specific energy only
17 criteria incorporated into the memoranda of agreements with
18 the automakers.
19 Now, we realize the difficulties that would be
20 associated with renegotiating the credits issue with the
21 automakers. However, the use and reporting of our suggested
22 approach to assess battery performance during the
23 demonstration program would provide valuable information to
24 CARB and ultimately to the consumers on the performance of
25 EVs.
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1 In earlier discussions with the CARB staff,
2 they've agreed that our suggestion has merit and that they
3 would measure and report battery performance as we've
4 suggested throughout the demonstration period.
5 On a separate note, I'd like to update briefly the
6 Board on the outcome of a recently held meeting of the
7 ALABC's members and contractors that we held here in
8 Sacramento last month.
9 The purpose of the meeting was to review our
10 accomplishments and to discuss where we go from here. As
11 we've testified previously, our research endeavors over the
12 last four years have yielded significant improvements to
13 energy density, rapid charging and also the cycle life of
14 lead-acid batteries.
15 Although the range of lead-acid powered EVs is
16 less than gasoline powered vehicles, the range of an
17 advanced lead-acid battery powered EV in 1998 will be more
18 than adequate for drivers whose daily commutes are a hundred
19 miles or less.
20 Further, with advanced rapid charging techniques,
21 which we've developed, the refueling necessary to drive a
22 lead-acid powered vehicle beyond the single charge range can
23 now be accomplished in a very short time with virtually no
24 inconvenience to the driver.
25 We look forward to being an active participant in
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1 CARB's advanced battery demonstration program. We're
2 planning, during the next phase of our research program, to
3 sponsor the research and demonstration activities needed to
4 qualify as an advanced technology battery in CARB's
5 demonstration program.
6 And we're specifically planning to continue our
7 program to achieve further improvements in specific energy
8 and cycle life that will enable advanced lead-acid powered
9 EVs to be cost competitive with gasoline powered vehicles.
10 That concludes my remarks, and I'd be happy to
11 answer any questions that you might have.
12 Thank you.
13 CHAIRMAN DUNLAP: And I'm sure we may have a few.
14 I just wanted to comment and thank you for the
15 conference, or the meeting as you called it, that you put on
16 here last month. I know I was able to spend some time with
17 you all and I appreciated the way in which you presented not
18 only the capability of your product in today's marketplace,
19 but also what your short and long-term plans were.
20 It did a lot to educate us. I know that staff has
21 spent some time with you to try to accommodate your request
22 relative to participation in some of the demonstration work
23 of this proposed change to the ZEV program.
24 And I appreciate it. I think you came a long way.
25 Did you come from North Carolina, is it?
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1 MR. COLE: Yes, that's right.
2 CHAIRMAN DUNLAP: Well, appreciate the time you
3 spent here in California.
4 Mr. Calhoun, did you have any comments? And
5 Supervisor Roberts will follow.
6 MR. CALHOUN: I think you indicated that the staff
7 has stated that it would consider incorporating a battery
8 value in their report. Would that satisfy your concern?
9 MR. COLE: Well, yes. It would satisfy us. We
10 would have preferred that the battery value, the concept of
11 including life and cost, would have been included in the
12 credits issue.
13 We understand that that has some practical
14 difficulties associated with it. But we think if the -- if
15 the battery value concept can be included in the reporting
16 as the demonstration program moves along, then there will be
17 ample ability of the ARB and also the public to understand
18 the differing values of different kinds of battery
19 technologies that'll be included in the program.
20 MR. CALHOUN: I think the idea of incorporating
21 that in the report would be a good idea. And, as you
22 indicated, so the public can see what is actually happening
23 from that. And that could ultimately precipitate some
24 changes to -- at least in the mind of the person who's going
25 to buy a particular vehicle.
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1 MR. COLE: Right. Correct.
2 MR. CALHOUN: Thank you.
3 CHAIRMAN DUNLAP: Any staff response to that good
4 idea, Bob?
5 MR. CROSS: Just very quickly. We met with these
6 folks yesterday, and we think that -- we wish we thought of
7 the battery value idea. Technically, it's a very good idea,
8 and we look forward to using it as part of our reporting
9 from here on.
10 CHAIRMAN DUNLAP: Okay. Supervisor Roberts.
11 SUPERVISOR ROBERTS: I was going to comment that I
12 like that idea, and I was hoping that staff was prepared to
13 incorporate that.
14 The other thing I was curious about was the
15 improvements in the charging that you referred to. And I
16 wonder if you could just share with us what you see coming
17 by 1998.
18 You kind of touched on it, but. . .
19 MR. COLE: Well, with regard to rapid charging,
20 about four years ago, it was assumed that you needed to take
21 several hours -- up to eight hours to recharge a lead-acid
22 battery.
23 Over the intervening years, our research has shown
24 and demonstrated quite clearly that a battery can be
25 recharged from say 80 percent depth of discharge -- almost
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1 flat -- back up to full charge in a matter of 10 minutes if
2 you do it right.
3 And by that I mean you have to use pulse charging,
4 pump in the power in a way, using specific charging
5 algorithms. But it can be done. And interestingly enough,
6 it also seems to be beneficial to the life of the battery if
7 you do it that way. At least that's what our research as
8 shown so far.
9 We are hopeful of working with the ARB and at
10 least one of the California utilities to bring that rapid
11 charging technology here over the next couple of years.
12 SUPERVISOR ROBERTS: And you also mentioned that
13 you expect that the range is going to be in excess of a
14 hundred miles by 1998?
15 MR. COLE: Yes. We believe. Our batteries that
16 we will have available beginning in June -- now, these
17 admittedly are prototype batteries that are being optimized
18 at the present time -- will have a specific energy in the
19 range of 45 to 50 watt hours per kilogram. And we believe
20 that, with appropriate vehicle designs, you should be able
21 to achieve a hundred mile range with those kinds of
22 batteries. Yes.
23 SUPERVISOR ROBERTS: Thank you.
24 CHAIRMAN DUNLAP: Before you leave, Mr. Cole.
25 Supervisor Silva?
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1 SUPERVISOR SILVA: What would be the cost of
2 converting a home charging station, so it would be able to
3 take a quick charge?
4 MR. COLE: We don't envision the rapid recharging
5 or rapid charging station to be home type chargers.
6 When people are home, they would likely use their
7 regular house current to charge the batteries. Where we
8 think these rapid recharging stations would be useful would
9 be out in the field, perhaps at service stations, places
10 like that, because that can be properly equipped to handle
11 it.
12 You do require a rather special service line for
13 these kinds of chargers. But it would give the consumer, I
14 think, a lot of confidence, a lot more confidence than they
15 have now if they knew that they could pull into a rapid
16 charging station, maybe pay a little bit more than they
17 would for their charge overnight at home, but still have the
18 ability to get a charge in ten minutes and be on their way.
19 SUPERVISOR SILVA: Thank you.
20 CHAIRMAN DUNLAP: Thank you, Mr. Cole.
21 MR. COLE: Thank you very much.
22 CHAIRMAN DUNLAP: Ms. Hathaway, followed by Mr.
23 Ridenour.
24 Janet, we haven't seen you move that slow in a
25 long time.
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1 MS. HATHAWAY: (Walking with aid of cane) I'm
2 trying for the sympathy vote here.
3 (Laughter.)
4 MS. HATHAWAY: My name is Janet Hathaway. I'm an
5 attorney with a national nonprofit environmental
6 organization, the Natural Resources Defense Council.
7 As the Chairman and members of the Board know,
8 NRDC has a number of offices, including ones on the East
9 Coast, all of which are working on this electric vehicle
10 issue, because of energy and air quality benefits that we
11 see as coming from these technologies.
12 Because of the long history of discussion between
13 NRDC and the Board about this change of regulation, I'm not
14 going to go into great detail about our concerns. I think
15 you know that we're gravely disappointed with the suspension
16 of the sales requirements until the year 2003.
17 While we supported the idea of flexibility in the
18 early years, we didn't feel the necessity of such a large
19 extension of the period of just negotiation and cooperative
20 procedures with the car companies. We felt it was very
21 important to have clear benchmark ramp-ups to the 10
22 percent.
23 But that's behind us. And what we think is
24 important now is that the Board implement this agreement in
25 a manner that does get us to the 10 percent in the year
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1 2003. And I was pleased to hear in the staff remarks that
2 that is an essential part of what the ARB intends to be
3 doing.
4 The signal that we're now in a mode of working
5 toward marketing these vehicles I think is a really
6 remarkable change and shift. It's very beneficial to us in
7 California to be operating with the goal -- shared with car
8 companies -- that now the task is to find ways to overcome
9 hurdles to marketing.
10 This is very different from last year's debate.
11 It's very different from the discussion that we heard when
12 the car companies were telling us that electric technology
13 was something way off in the future and not something viable
14 for California consumers.
15 All of this is extremely heartening, but I think
16 that we have to look very seriously at how we make this a
17 reality. And one of the ways that I would strongly urge the
18 Board to proceed at this point is to take seriously the need
19 for a great amount of public involvement in making this
20 project work. What the Board has done on the cleaner
21 burning gasoline -- which I happen to be a task force member
22 on -- is I think a paradigm of cooperative building of
23 relationships that span the spectrum of interests. And this
24 is exactly what we need with the new electric vehicle
25 program.
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1 We need to make sure that we identify problems
2 collaboratively; we figure out what can be done at different
3 levels, at local levels, at State levels, to overcome
4 problems. We need to find ways to get information that
5 people have confidence in about the progress of the car
6 companies, and also about the ways in which perhaps
7 technology is not being fully utilized.
8 So, that, as a paradigm, I think is something that
9 gives me a lot of optimism that we can work through these
10 problems without a lot of distrust, without the distance
11 that seems to occur when we have a particularly adversarial
12 relationship. And I really urge that we take this
13 opportunity very soon to form such a task force on electric
14 technology.
15 Let me say that that process issue is something
16 that I think would have benefited the MOA. I mean, had
17 there been somewhat more openness in the discussions that
18 could influence the MOA, I think that a number of the flaws
19 that environmental groups see as undermining our confidence
20 in the MOA could have been resolved.
21 One very particular one that I would just urge
22 that people consider, and that is national low-emission
23 vehicle is something good. We'd like to see it. But it
24 seems unfortunate that California has taken the position
25 that, in order to get it, we had to give away our sales
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1 program for electric vehicles all the way until the year
2 2003.
3 I just want to read to you from the Massachusetts
4 Attorney General's statement to the Board about the electric
5 vehicle regulatory changes.
6 He states, (reading) the first problem with
7 California's relying on the NLEV, or the 49-State vehicle
8 program, is that the program will happen or not regardless
9 of California's actions. Thus, California could enjoy the
10 benefits from the NLEV while keeping the sales mandate. In
11 other words, California is not trading the ZEV sales mandate
12 for a 49-State vehicle program; rather, California is
13 trading something for nothing.
14 And I think that's the crux of the problem that we
15 see, is that -- perhaps it's overstating to say we're
16 trading something for nothing. What we're trading for is a
17 more cooperative relationship, as I see it, with the car
18 companies.
19 But the 49-State vehicle, unfortunately, is not
20 something car companies are promising to do in the
21 Northeast. They are still combatting the States that have
22 electric vehicle programs, and saying that they will not
23 build the 49-State vehicle unless and until those States
24 withdraw their ZEV program.
25 So, I think it would be very good if the car
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1 companies here would make a firm promise that they are going
2 forward with a 49-State cleaner vehicle. And, in addition
3 to that, I'd like to say that California could have had
4 both. We could have had flexibility in the early years,
5 more cooperative relationships with the car companies, and
6 we could have had a 49-State vehicle had we chosen to go
7 that route.
8 I would hope at least that we do get the NLEV.
9 And I think there is ambiguity that many people read into
10 the memorandums of understanding. Let's make sure we get
11 49-State vehicles. If the car companies balk and do not
12 produce those vehicles, I do hope the Board will reconsider
13 going back, even to a sales mandate of the type we had from
14 1990 on just to show that we are really serious about these
15 air quality needs.
16 They are not optional. They are not just
17 something we'll get if the car companies feel comfortable
18 about delivering them.
19 And then, a final point, and that is, this has
20 been a very, very contentious process. And I know that
21 people may feel somewhat bruised by the criticisms that have
22 come from environmental groups. But people must understand
23 that we are only bringing these criticisms up because we
24 feel that the importance of this is monumental.
25 ///
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1 The public health concerns about air quality are
2 not going to get less. They're going to get greater. As we
3 look more and more at the health data, we certainly have
4 greater reason to be concerned about the pollution that
5 comes from automobiles.
6 So, we are taking this not as an issue of trust,
7 not as an issue of wanting to work with car companies, and
8 wanting to be cooperative. That really is not the point.
9 The point is, what do Californians do if the car
10 companies fall short of their promises? We breathe dirtier
11 air. That's what will happen. And so, our serious efforts
12 here are not to be difficult with you, not to be name
13 calling about the intentions of people and car companies.
14 They are making good products; they will continue to make
15 products when that is profitable.
16 And I'm very pleased to hear Nissan and others
17 talking in a way that indicates they believe that the
18 electric vehicle will be profitable. But what we need is
19 agreements that will shore up the air quality benefit.
20 And, Chairman Dunlap, if you could simply speak to
21 that issue of what do we do if 49-State vehicles are not
22 produced by the car companies, and what do we do if, in
23 fact, even with the 49-State vehicles we don't get all the
24 emissions benefits?
25 Will the Board step in and will we collect that
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1 residual of emissions benefits?
2 And with that, I just want to thank you all for
3 the hard work that went into this and pledge to you that I
4 want to work very cooperatively with car companies,
5 utilities, fleet managers, whoever, because I think this
6 technology is a winner, and I think that we can show them
7 ways in which they can benefit both economically and
8 environmentally from this technology.
9 Thank you.
10 CHAIRMAN DUNLAP: Thank you for your comments. As
11 usual, you hit the hot button issues in your remarks.
12 We, of course, will not sacrifice air quality with
13 any revision of this program. And so, as we hear from the
14 remaining folks, the witnesses, we will come back and have a
15 discussion about what happens if the national LEV doesn't
16 come on line as we need it to, and what recourse we have.
17 We tried to have the staff presentation reflect
18 much of that, but we can cover some ground again if you'd
19 like.
20 One comment from, I guess, my vantage point about
21 the national LEV. I certainly know there's been a lot of
22 negotiation and discussion in various venues around the
23 country on behalf of the automakers with the various States
24 about that program.
25 But, Janet, I have to disagree with that Attorney
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1 General's comments about the fact that the NLEV was coming.
2 This program, as I understand it, brings the NLEV forward
3 nationally three years earlier. And we're proud of that
4 fact.
5 And we, of course, will benefit from that here, as
6 will other States. And it's particular important for that
7 fact to be known, because we have taken -- and it may be, of
8 course, some sensitivity on my part -- some criticism from
9 other States that think that a change here might
10 disadvantage them. And we have to disagree with that.
11 We think there's enough benefit in this provision
12 that California not only retains its leadership here in the
13 State but nationally as well.
14 MS. HATHAWAY: Mr. Chairman, on that point, I
15 think it's important for me to respond that, though it's
16 correct that EPA could not have mandated a national lower
17 emission vehicle program until three years later than
18 California's getting it, in fact, the car companies have
19 offered and offered years ago a willingness to do a
20 voluntary program with the Northeastern States at a faster
21 time schedule than California is talking about if the
22 Northeastern States would all agree not to implement a ZEV
23 program.
24 So, a cooperative, voluntary program on the same--
25 with the same goals, getting a cleaner vehicle, was
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1 something that was being offered by car companies because
2 they wanted to get out from under faster, tougher regulation
3 in the East.
4 And that was going to happen, and it will happen
5 if the East cooperates with the car companies. It was
6 irrelevant that California got involved.
7 So, the fact was we could have had an NLEV
8 program, and we could have had sales mandates both in
9 California. Because the motivating force for the car
10 companies to implement a 49-State vehicle is that the
11 Northeastern States have gotten together in a collaboration
12 called the "Ozone Transport Commission," and they agreed to
13 a tougher, faster schedule implementing California's low-
14 emission vehicle program, including allowing States to
15 implement a ZEV program.
16 So, that was the motivating force that got the car
17 companies to talk about the 49-State vehicle, not this
18 discussion that has occurred subsequent to our decision here
19 in California to move away from regulation.
20 CHAIRMAN DUNLAP: I appreciate that perspective,
21 and we'll hear more about that later. I'll ask staff to
22 respond as we conclude the witness list, Janet.
23 There were a few that wanted to speak. Supervisor
24 Roberts, and then Ms. Edgerton, then Jim.
25 SUPERVISOR ROBERTS: While I'm interested in that
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1 part of it, I didn't want to lose the other suggestion for
2 the cooperative task force that apparently contributed in a
3 significant way, or at least the model of which contributed
4 a significant way, to the success of the clean fuels
5 program.
6 And I didn't know what it would take to have part
7 of that -- while there appears to be a spirit of cooperation
8 on both sides, I'd like to see that somehow
9 institutionalized, if we could, in a task force so that we
10 don't feel compelled that the truth squads that were out on
11 the road last year have to be the way that we approach the
12 year 2003.
13 I'd like to think that we could engage people in
14 not only the manufacturing side and the environmental side,
15 but the governmental agencies are going to have to make
16 changes to prepare the way for these vehicles.
17 So, I'd like to come back to that later. But I
18 think that's a real positive suggestion, and I hope we can
19 move forward on that, too, and incorporate it into this
20 agreement.
21 CHAIRMAN DUNLAP: Good point. I think Ms.
22 Edgerton had similar hopes as well. Lynne?
23 MS. EDGERTON: Ms. Hathaway, you correctly state
24 that there was an offer on the table of a 49-State car to
25 the Northeast. I would be remiss if I didn't ask whether it
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1 had been accepted.
2 MS. HATHAWAY: It has not been accepted at this
3 point, because one of the contingencies is still in debate,
4 and that is the 49-State car, according to the car
5 companies, will not be implemented if there are States that
6 persist in their current electric vehicle sales programs.
7 Now, the States -- there are several States that
8 have adopted legislation to mimic California's, or actually
9 to draw over California's electric vehicle program into
10 their States.
11 Those States are undercut by this regulatory
12 change, but some of them are insisting on going forward,
13 which we really strongly applaud. They do need to do so for
14 their air quality reasons, and the State of Massachusetts
15 and the State of New York have both indicated a desire to
16 continue with their electric vehicle program.
17 So, currently, there is a question mark over
18 whether a 49-State vehicle will be a reality.
19 MS. EDGERTON: Well, I appreciate that. And I
20 want to go back, though, again to this point. Isn't it
21 true that California is the first State to accept the offer
22 of the 49-State car?
23 Isn't this the first real deal, and don't we
24 therefore get credit for it?
25 MS. HATHAWAY: Well, Ms. Edgerton, I would like to
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1 give credit, but I think there's a major loophole in the
2 memorandum of agreement that California has reached with the
3 car companies. And this I've discussed with the Chairman
4 and the General Counsel here.
5 As we read it, the memorandum of agreement states
6 that California is expecting, or the Board is expecting from
7 the car companies the national low-emission vehicle program
8 or whatever other program is deemed by the Board to be
9 equivalent in emissions reductions.
10 I don't have the language in front of me, and I
11 see Mike Kenny does. But that is what worries us, is that
12 the possibility remains out there, without violating the
13 agreement at all, that car companies will come forward with
14 a package of emission reduction measures that they say,
15 "Certify this, please. We think it's equivalent to what
16 NLEV would given us."
17 That's a lot more uncertain, particularly if it's
18 not new car emission technology.
19 So, that's something that we think is a flaw in
20 the way the draft memorandum agreement was presented, and
21 one that could be a serious one if car companies aren't
22 sincere in their effort to really follow through with their
23 promise about NLEV.
24 CHAIRMAN DUNLAP: On that point, Mike, I'll ask
25 you and your team to deal with that later as one of the
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1 items we address.
2 Lynne, anything else?
3 MS. EDGERTON: Uh-huh. I want to say that I agree
4 that the contractual approach of the MMOAs was used instead
5 of a regulatory approach because the automakers do want to
6 circumvent Section 177 of the Clean Air Act, which was
7 Congress's explicit intention for other States to be able to
8 follow California's lead with respect to new motor vehicle
9 standards.
10 And I will say that it has been less clear to me
11 exactly how California citizens or businesses benefit in any
12 significant way from this particular automaker maneuver,
13 because we area dependent on national standards in making
14 our SIP.
15 I question whether it's not in our interest to do
16 everything we can to help other States has stronger
17 programs, which the whole net result is to lift up the
18 standard to generally.
19 MS. HATHAWAY: Ms. Edgerton, I couldn't agree with
20 you more on that point. I mean, California only loses if
21 the market for electric vehicles is initially very small.
22 Because one of the things that the battery audit
23 panel pointed out is that economies of scale that really
24 reduce costs occur after you're talking 40,000 units and
25 more. That's where you really start to see cost savings.
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1 So, it's very beneficial for California to see
2 States like Massachusetts and New York persist with their
3 electric vehicle program to bring those costs down for our
4 citizens. Because while things stay at a pilot level
5 production, as they will under the MOA for the first few
6 years, costs will be higher than they otherwise would be.
7 So, that's one of our concerns.
8 MS. EDGERTON: Well, I want to ask you to submit--
9 I appreciate that, and I'm finished. If I just could get
10 you to -- I want to follow up on what Mr. Roberts has asked.
11 I would appreciate sometime in the next day, if
12 you have specific thoughts on what sort of authorities would
13 be -- the kind of authorities you think would be helpful in
14 going ahead.
15 As you quite well put it, now that's behind us.
16 Now, let's see what's before us. And if you have specific
17 comments about authorities and criteria, or organizational
18 structure and procedures that you think would be
19 constructive, it sounded like Mr. Roberts would like to hear
20 them, and certainly I would.
21 MS. HATHAWAY: Well, I'll get those to you --
22 MS. EDGERTON: Thank you.
23 MS. HATHAWAY: -- right away. I'd love to see
24 those implemented.
25 CHAIRMAN DUNLAP: Please, Lynne, don't invite her
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1 to do that. She does it all the time anyway.
2 (Laughter.)
3 MS. EDGERTON: She just gives you her thoughts.
4 She doesn't always give me --
5 CHAIRMAN DUNLAP: She does. Mr. Lagarias, then
6 Dr. Boston.
7 MR. LAGARIAS: Ms. Hathaway, it's very refreshing
8 to see you being not opposing to our issues and being very
9 constructive. And we're very pleased to see this direction.
10 And, as we found on the advisory committee for the
11 cleaner burning gas, that when people having opposing views
12 get together, you find they don't all have horns, and that
13 we can work to a common objective.
14 MS. HATHAWAY: So, I take it -- what you are
15 saying is you've discovered I don't have horns.
16 (Laughter.)
17 MR. LAGARIAS: If you say so.
18 MS. HATHAWAY: No. I appreciate very much what
19 you're saying. I think it's time for us to work for
20 solutions. And I could, you know, detail criticism after
21 criticism, but what is the point of that, when what we need
22 is the electric vehicle in the hands of consumers.
23 MR. LAGARIAS: Yes. All right. Well, in your
24 specific comments on the MOA, you expressed a concern that
25 the automobile people might come up with an alternative to
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1 the 49-State NLEV.
2 Well, don't you think if they could come up with
3 anything like that, we'd take it out of the black box and
4 add it to our additional regulations?
5 MS. HATHAWAY: That would delight me. My worry,
6 though, is that the way the MOA is termed, that would
7 satisfy their obligation under that agreement.
8 And though --
9 MR. LAGARIAS: It's unrealistic to conceive of
10 anything other than the NLEV program.
11 MS. HATHAWAY: Well, I think that there are people
12 who speculate that maybe people -- people in the automobile
13 industry, if they are really serious about avoiding the
14 NLEV, would come up with some very ingenious schemes,
15 including things that we don't think could really work in
16 the end.
17 MR. LAGARIAS: Perhaps. But in the past, the
18 country has adopted the California approach to most of these
19 regulations.
20 And if the LEV is successfully introduced in
21 California, I don't think there'll be any problem in
22 creating a demand for an NLEV program.
23 MS. HATHAWAY: I have to agree with you that, you
24 know, my concern as a lawyer is to look for where things
25 could go wrong.
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1 My concern as a citizen is to look for what could
2 go right and try to be there to make it right. I mean, my
3 view is the 49-State vehicle is important. It will benefit
4 the other States, but not if it has to undermine the ZEV
5 programs of other States.
6 MR. LAGARIAS: You've explained something to me.
7 You lawyers are always looking for something that can go
8 wrong. We're looking for things that can go right.
9 MS. HATHAWAY: Yeah, we look for trouble.
10 (Laughter.)
11 CHAIRMAN DUNLAP: Dr. Boston.
12 Thanks, Jack.
13 DR. BOSTON: I was just wondering, Ms. Hathaway,
14 if we could arrange it, I think it would be very interesting
15 if you'd have lunch with Senator Haynes and Assemblyman
16 Baldwin.
17 (Laughter.)
18 MS. HATHAWAY: Interesting for whom?
19 (Laughter.)
20 MS. HATHAWAY: Thank you.
21 CHAIRMAN DUNLAP: Thank you, Janet.
22 Mr. Ridenour, followed by I guess Mr. Ham from
23 Assemblyman Mickey Conroy's office is here. Okay.
24 Eric, it will take just a moment for our court
25 reporter.
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1 (Thereupon, there was a pause in the
2 proceedings to allow the reporter to
3 replenish her stenograph paper.)
4 MR. RIDENOUR: Good morning. No? No, I missed
5 it. Sorry. Good afternoon.
6 I would like to thank the Board for the
7 opportunity to present our views this afternoon. My name is
8 Eric Ridenour, and I'm the Director of Environmental and
9 Energy Planning at Chrysler Corporation.
10 The Board's being asked today to approve the staff
11 recommended changes to the ZEV mandate. And then, as a
12 companion to the revision, each of the seven affected auto
13 manufacturers will sign a memorandum of agreement that
14 commits us contractually to the partnership on electric
15 vehicles.
16 We believe this is an historic partnership. We
17 think it will help usher in a new era, hopefully, of
18 cooperation and trust between the Board and the auto
19 industry. Chrysler strongly endorses the recommendation to
20 approve these changes as written. And we want to make the
21 following comments for the public record.
22 First off, we'd like to thank the Chairman and the
23 Board for this last year. It's been an intense effort and a
24 whole lot of time and energy of the staff and others to try
25 and bring this together and to hear about the feasibility of
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1 this regulation prior to its coming into force so we make
2 sure we do the right thing.
3 We think the changes today present three important
4 objectives. It gives electric vehicles their best chance of
5 success. It gives Californians a certainty of clean air,
6 and it precludes forcing a product on Californians that does
7 not meet their needs or their pocketbooks prematurely.
8 We think it gives the electric vehicles their best
9 change for real success because manufacturers are committed
10 to getting cars on the road. Chrysler has committed to
11 having its Epic minivan that's outside today available by
12 1998. We're looking to see how soon we can get it. We're
13 working very aggressively. But we are committed that it
14 will be on the road by '98 model year, which is just a
15 little more than a year away.
16 We have brochures and pictures outside for
17 everyone who wants to see it. We've started sending out
18 already marketing things to all the fleets that we currently
19 sell our CNG vehicles to, considering those are the prime
20 candidates for these type of vehicles.
21 So, we've already started the marketing efforts on
22 those. We, as a group, have committed to the capacity in
23 place by '98 of 15,000 vehicles a year if the demand
24 warrants it.
25 If that happens, and we get anywhere near that,
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1 there'll be a lot more capacity that goes in place in order
2 to meet the continuing ramp-up.
3 Third, we think the industry has committed to
4 pursuing the battery technology needed for success, and that
5 is a low cost, high performance battery.
6 We've committed to continuing to purchase and test
7 those advance battery prototypes and to continuing our share
8 of the USABC Phase II program on battery research and
9 commercialization.
10 Fourth, the industry's committed to the 3750
11 vehicle advance battery demonstration program, and to get
12 those vehicles on the road by the year 2000. We've been
13 collecting data on many of these vehicles and will be able
14 to use this extensive database to determine usage patterns,
15 performance characteristics, durability, and reliability of
16 components and, most importantly, consumer acceptance.
17 We'll be able to get to see the advantages and
18 disadvantages and get to those crucial customer tradeoffs of
19 performance versus size, versus range, versus cost. All
20 those have to be put into a box together in order to get
21 customer utility in order to get customer utility.
22 These vehicles will not be cheap, because the high
23 level batteries are going to be very expensive. The
24 battery panel has told you that, and we know that for a
25 fact. And the volume commitments we made are many times
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1 more than what we would have done if we were just going to
2 test and develop the technology for ourselves. But we
3 agreed to the additional units in order to demonstrate a
4 commitment to the EV development and show that commitment in
5 a clear way.
6 This proposal also ensures that manufacturers will
7 have the production capacity and the product programs in
8 place to meet the 10 percent mandate in 2003, and this is
9 significant.
10 We will need to begin to design and testing these
11 products prior to the 2000 biennial review. As you heard
12 from John Schutz earlier, the leadtimes of the industry
13 means that we'll have things that you'll see before we go to
14 that biennial review, which we think will be a key one
15 because we'll have data in hand of vehicles on the road.
16 We're going to be spending significant capital to
17 put the productive capacity in place by 2003; so, during
18 that whole period, there will be an aggressive ramp-up of
19 research and development and dollars going into EVs.
20 We have pledged to provide you our EV business
21 plans and to give you access to our facilities, our advanced
22 facilities. First time we've done that. We have let you on
23 the thing, but this is the first time contractually we've
24 committed to do that.
25 There is some who want more sooner. Everyone
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1 would like more sooner; doesn't matter what the quantity is.
2 As the battery panel pointed out, the high level
3 batteries are very expensive. Higher volumes of these
4 advanced batteries will simply not be commercially feasible
5 until these batteries are ready for full production to get
6 down to those lower costs.
7 The battery panel testified that the earliest the
8 advanced batteries may be available is 2001 or 2002 model
9 year. Remember, the battery panel works in calendar years.
10 You lose a model year. You lose a year when you go to model
11 year.
12 And that's an all home run scenario. And those of
13 us who are in this business, we know that very few new
14 technology ballgames are won with all home runs. There's
15 going to be a few singles along the way, and that will cause
16 some delays.
17 But more importantly, they also told you that
18 there were technologies that may even have more promise that
19 sit just behind these lead technologies, about 18 months
20 behind for some of them that we think are very promising.
21 We believe that 2003 is the earliest anyone should
22 plan for production of these advanced batteries for volume
23 production, and that a solid case could be made for a later
24 date as we told you in December when we came before you.
25 That's a speculative thing, but we've committed to doing
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1 that.
2 What we don't want and we don't think is in
3 anyone's interest is to preclude promising technology
4 strictly to meet some sort of arbitrary time line.
5 We're going to have lots of access and lots of
6 discussion. People are going to know what's coming and
7 where they are.
8 That's not to say that there won't be significant
9 volumes of EVs prior to 2003 model year. Manufacturers will
10 have a variety of lead-acid vehicles for sale with
11 sufficient capacity to fully meet market demand. And some
12 manufacturers may choose to go with those earlier technology
13 batteries, and therefore may be on the road prior to 2003 if
14 the home runs work out.
15 If the market is ready, competitive aspects will
16 ensure that there's significant volume. And that's the
17 first "if."
18 On the subject of clean air benefits, I would like
19 to give you credit. We did not ever get an agreement on the
20 49-State program, as we call it, the national LEV program.
21 We do and have committed to the 2001 and beyond.
22 The only thing up for discussion in the Northeast remains
23 those earlier ramp-up vehicles, which you already get.
24 So, the 2001 and beyond, we've committed to you.
25 That's the LEV program.
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1 We believe that, as a matter of principle, though,
2 we would like to diverge just a little bit and talk about
3 the strategy of technology forcing does place California on
4 the cusp between success and failure whenever you push
5 technology.
6 Fortunately, we've had more cases of successes
7 than failure, and that's good for everyone. But sometimes
8 technology forcing will fail. We think that this whole
9 experiment was that; that it was not ready, and it wasn't
10 time. That's what the -- this isn't a trade for an early
11 mandate for a later mandate. This, in fact, is the original
12 program wouldn't have worked as planned, and this is a
13 modification to make it a workable program. And I think
14 that's important.
15 Because we don't believe, both as a matter of
16 principle and as precedence, that on this or other ones,
17 there should be an automatic manufacturer pays if the
18 technology fails.
19 We think that that risk is more properly assumed
20 by the agency that decides it's a strategy to work on
21 technology forcing. But in this one instance, because of
22 the serendipitous events, as I mentioned before, with the
23 49-State, which was on the table that nobody had accepted
24 yet, it allowed us to offer that vehicle to California and
25 California took us up.
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1 As the staff explained, through the mechanism of
2 migration, this will more than exceed the theoretical clean
3 air benefits of the EV program during the '98 to 2002 time
4 frame.
5 And in CARB's own analysis, it shows that this
6 program -- so much for technology. (Remarking on a
7 microphone's failure)
8 CHAIRMAN DUNLAP: We have another one waiting for
9 you, though, Eric. We're running through mikes today.
10 UNIDENTIFIED SPEAKER: Battery.
11 (Laughter.)
12 MR. RIDENOUR: Okay. They got a new battery in
13 it.
14 The main important point is that this keeps the
15 SIP whole and that's good for California.
16 And the other thing that wasn't really brought up
17 is that these benefits continue well past 2010. The model
18 stops at 2010, so you really can't see that. But this thing
19 keeps giving; whereas, the '98 to 2002 ZEV benefits peak in
20 2004, and then start decaying as some of those vehicles
21 start going off the road.
22 So, in fact, it's actually better than anything
23 you've seen as far as if you want to talk about a cumulative
24 time scale.
25 And as Tom mentioned earlier, some will --
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1 (Thereupon, the third microphone failed.)
2 CHAIRMAN DUNLAP: We're going to have to take a
3 lunch break if this keeps happening. Try it again, Eric.
4 See what you got.
5 MR. RIDENOUR: Okay.
6 CHAIRMAN DUNLAP: Speak loud, and what I will tell
7 the audience is, we'll take a lunch break after Mr.
8 Ridenour's comments, and we'll get the staff to check into
9 this short.
10 MR. RIDENOUR: We've looked at it, and we believe
11 the benefits are on the conservative side of the LEV,
12 because it only includes -- for those 49-State vehicles that
13 permanently come into the State does not include tourism,
14 business travel. Those are harder to nail down exactly how
15 many. And it also claims only three years of credit for the
16 49-State, as we talked about, 2001, '2, and '3. Because in
17 2004, the expectation is that EPA would bring on Tier 2
18 standards, which are nearly -- we would expect to be
19 somewhere to this NLEV vehicle.
20 But the reality is EPA will probably phase in Tier
21 2, much like they phased in Tier 1, and they can wait till
22 2006 before they actually do it.
23 For every year and every phase, it starts adding
24 even additional benefits beyond those already shown. So,
25 from that side, we're being conservative.
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1 On the flip side, we think the case for the EVs
2 are probably overstated. And the main issue we have is that
3 it's assumed that it replaces gasoline vehicles on a one-
4 for-one basis for all of their mileage. And with these
5 lower range vehicles being third vehicles or whatever, in
6 general, will not do that, especially in the early years.
7 So, that might be true later, but we think for the
8 early years, that's an overstatement. And also it has, we
9 think, additional vehicles. And it assumes all
10 manufacturers will be in this program, not just those
11 required.
12 The last item is simply our belief that to develop
13 a sustainable, significant market share, which is what you
14 need and what your SIP is looking for -- for new technology,
15 it requires both the market acceptance as a minimum, but a
16 significant market pull to build that share. No sustainable
17 market has ever been mandated or created by forcing
18 manufacturers to sell something the consumer doesn't want to
19 buy.
20 That's why we're opposed to mandates. We've never
21 been against electric vehicles. We'll show you our stuff
22 out at the parking lot.
23 The automotive marketplace is extremely
24 competitive. Manufacturers battle over tenths of a point
25 market share and spend what it takes to compete in new
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1 market segments.
2 One only has to look at our incentives sometimes;
3 when the thing gets a little soft, they'll look at that.
4 When the EV market develops, Chrysler will be
5 there in a big way. To restate, we believe the proposal
6 before you today provides the best chance for electric
7 vehicles to compete in the marketplace. It ensures the
8 continuation of development efforts and gets vehicles on the
9 road and into customer's hands. And, as an added bonus, the
10 proposal delivers superlative clean air benefits.
11 Thank you for your time and attention. I'll be
12 happy to answer any questions.
13 CHAIRMAN DUNLAP: Okay. Thank you. Mr. Calhoun?
14 I'm certain that you have a question.
15 MR. CALHOUN: No, I don't have any question right
16 now. I guess I would just like to emphasize something that
17 he has said and others have said, that competition is going
18 to force this thing to be successful. We can sit here and
19 we can talk about it all day and all night, but the real
20 determinant as to whether or not a program is successful is
21 competition.
22 And I know enough about the auto industry to know
23 that Chrysler isn't going to allow Ford or General Motors to
24 get ahead of them, at least not for very long. And he
25 mentioned this one-tenth of a market share and the amount of
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1 money that they will spend in order to try and accomplish
2 that.
3 That's real. And that is going to be the driving
4 force behind having a successful program.
5 CHAIRMAN DUNLAP: Thanks, Mr. Calhoun. Ms.
6 Edgerton.
7 MS. EDGERTON: Mr. Ridenour, did you -- did I
8 understand you to say that Chrysler is going to offer for
9 commercial sale vehicles starting in 1998?
10 MR. RIDENOUR: Yes, that's correct.
11 We expect to sell into the fleet market
12 predominantly because of the shorter range and high cost.
13 That makes the most sense.
14 We have a lot of experience. We have a lot of
15 CNG vehicles out there today that, while aren't as limited
16 on range, are still limited range vehicles. And so, we feel
17 we have a lot of expertise in selling those successfully
18 into fleets.
19 MS. EDGERTON: So, I wanted to just clarify that,
20 unlike Nissan, who really has said that all they're planning
21 to do so far is participate in the demonstration project
22 with 120 vehicles, Chrysler is planning on entering the
23 commercial market.
24 That means that you will be submitting a product
25 plan?
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1 MR. RIDENOUR: Uh-huh. We would envision a
2 product plan that would show the '98 actions, which are
3 pretty much as I've laid out. We've made those public.
4 Everything beyond that, I can't speak of in the broader
5 audience, but we'd expect business plans that would show
6 additional products and/or changes to those products, as
7 they make sense, to meet the 2003.
8 Ten percent is a significant share of the market.
9 No one vehicle does that, with the exception of maybe our
10 minivan as a single entry. So, we think that's a
11 significant point. So there'll be actions that will lead to
12 that.
13 MS. EDGERTON: I really like your minivan, by the
14 way. I was out there today.
15 So, this November, you'll have plans that will be
16 telling us what you're doing in 1998?
17 MR. RIDENOUR: It's a technicality. I think the
18 plans that we submit are just ahead of the biennial review.
19 I don't think the first one is this November. Yeah, it's
20 '98, so. . .
21 MS. EDGERTON: Wait a minute. When do the plans
22 start?
23 MR. RIDENOUR: The plans get submitted three to
24 six months ahead of the biennial review so you'll have time
25 to review them and ask questions before the biennial review
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1 process starts.
2 The annual plans are how many are sold, of what
3 type, at what price.
4 MS. EDGERTON: Bear with me just a minute.
5 CHAIRMAN DUNLAP: Tom? Mr. Cackette or Mr. Boyd,
6 can you speak to the time when we'll first get --
7 MS. EDGERTON: (Interjecting) When's the November
8 1st?
9 MR. CACKETTE: The MOA provides for continuing
10 biennial reviews. This is the '96. There'll be a '98 and a
11 2000. And these business plans will be submitted prior to
12 those biennial reviews by the Board so that we have a chance
13 to put the information together and package it in a way that
14 we can make it available to you and the public without
15 violating confidentiality.
16 In addition, we'll have the annual plans, which
17 are reports, which tell what happened up to that point --
18 actual sales, actual costs, things like that.
19 CHAIRMAN DUNLAP: Okay. So, around the summer of
20 '97 is when we'll get the information.
21 MR. CACKETTE: I think there's a specific date in
22 here.
23 MR. RIDENOUR: Yeah, and I know we --
24 MS. EDGERTON: Yeah, and I see it's here in 1C. I
25 guess that changed from a version that I saw. I thought
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1 there was an annual product plan that was --
2 MR. RIDENOUR: Through negotiations, it's always
3 been that way.
4 MR. CACKETTE: Yes.
5 MS. EDGERTON: So, according to this agreement,
6 the first time we get any product plan is November 1st
7 before 1998, then, not '97.
8 MR. RIDENOUR: I think to help make it a little
9 clearer, is we have divulged the near term plans already in
10 our confidential submissions to you for the interim period.
11 There's not going to be a substantial amount. As
12 John Schutz pointed out, those substantive product decisions
13 aren't going to be made. We don't make decisions before
14 they're ready, because we tend to miss the market if you
15 make them too soon.
16 So, a '96 plan submitted in November wouldn't look
17 much different than what you already know today, because the
18 future is fuzzy with specifics.
19 MS. EDGERTON: So, how much time do you need --
20 how much leadtime to make your plans for the --
21 MR. RIDENOUR: (Interjecting) Well, the plans are
22 really done five years in advance. So, for '98, will be the
23 first time that we, as a corporation, will really get into
24 the, you know, substantive detail on any product, regardless
25 of whether it's electric vehicles, or the replacement for a
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1 minivan, or a new Neon, or anything like that. That's just
2 the cycle.
3 Because if you make decisions earlier than that,
4 they tend to be the wrong decisions and you'll have to trim
5 them.
6 MS. EDGERTON: Okay. I did want to let you know
7 that I am one of the skeptics about whether there may be all
8 those emission reductions achieved -- equivalency. And it's
9 not because I think anybody fabricated anything.
10 It's because I have some concerns about the use of
11 the 18 percent migration figure, since the last time we saw
12 18 percent was 1987. And what we've seen for the last few
13 years has been more nearly 14 percent.
14 But I thought your point was well taken that you
15 might have a one percent tourism addition. So, even if 1995
16 is 14 percent, and you add --
17 MR. RIDENOUR: (Interjecting) I think we saw 1.8
18 percent in the stuff we've seen on tourism. So, roughly two
19 percent.
20 MS. EDGERTON: So, even if you add two percent,
21 you might get up to 16 percent. And, as has been described
22 by Chief Deputy Cackette, the total numbers of tons are not
23 overwhelming.
24 On the other hand, I must say that I would feel
25 much more comfortable if you and our staff would go back and
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1 take another look at whether there may be some shortfall
2 that could be made up some other way if we have to.
3 MR. RIDENOUR: One of the things that I think's
4 important to note is the actual number of 2010 is about 4
5 tons versus about a little under 2 tons, like 1.6 versus
6 4.1. So, it's more than double the benefit in the year 2010
7 of the SIP, which was the agreement to get the clean air
8 benefit.
9 So, I think it's very important to realize that
10 even if you were more -- you know, theoretically, and I
11 don't know if it's linear or not, because it's a model and
12 models are sometimes funny. But if you cut it in half to 9
13 percent, you'd still be even.
14 MS. EDGERTON: That's not my understanding from
15 talking with the staff. But I just want to take -- I don't
16 know -- well, the other staff that I spoke with said that we
17 didn't cross the -- we had no chance at equivalency until
18 2010 using an 18 percent.
19 MR. RIDENOUR: That's a cumulative number. And
20 I'd just caution that, in general, when the staff discounts
21 cumulative numbers; when we're submitting NMOG, they start
22 after two years cutting it in half, and then cutting it in
23 quarters, because of the lingering effects.
24 We could argue that, as a matter of precedence,
25 when we submit NMOGs we get "binned" at a decay factor.
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1 We'd argue that that same decay factor would happen.
2 But in 2010, the year of the SIP and from 2006 and
3 beyond, this overwhelms. This continues to go through 2015.
4 So, on a cumulative basis, if you add the next five years,
5 it's overwhelming.
6 CHAIRMAN DUNLAP: If I might interject.
7 MR. RIDENOUR: I've got a chart that shows that.
8 MS. EDGERTON: Please.
9 CHAIRMAN DUNLAP: If I might interject here, I
10 would just -- Ms. Edgerton offered up a suggestion. I think
11 it's a good one.
12 Eric, maybe the industry team would sit down with
13 staff again one more time and take a hard look at it, see if
14 there's any new information that's available. And if it is,
15 apply it to the model and make the necessary revisions.
16 It would cause several of the members of this
17 Board to have a lot more comfort that it's being checked and
18 tracked.
19 MR. RIDENOUR: I mean, I think it's very sold. I
20 know we've --
21 MS. EDGERTON: Thank you very much.
22 MR. RIDENOUR: -- spent a lot of time and energy.
23 I feel very comfortable. We'd be more than happy to do it
24 again.
25 CHAIRMAN DUNLAP: Yeah. There's a willingness to
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1 be believers, but who was it that said, "Trust, but verify"?
2 I'm kind of adding a past President I think.
3 MR. LAGARIAS: Ronny.
4 MS. EDGERTON: Thank you very much.
5 CHAIRMAN DUNLAP: President Reagan said that, and
6 that might apply here, Eric.
7 MR. RIDENOUR: Is there an overhead that I could
8 use here?
9 CHAIRMAN DUNLAP: Certainly. All it does is take
10 the staff numbers out of the report, Attachment B, and then
11 our team evaluated the next five years of what they would
12 look like hopefully. Okay. Good.
13 CHAIRMAN DUNLAP: And certainly, Eric, you can
14 understand how important it is --
15 MR. RIDENOUR: Oh, I definitely understand.
16 CHAIRMAN DUNLAP: -- for us to have that pinned
17 down.
18 MR. RIDENOUR: And that's why I'm saying,
19 sometimes a visual is worth more than me trying to belabor,
20 trying to explain it in bad word choices.
21 But the big point is the dark line that you see
22 growing early, as the staff pointed out, the early years,
23 there is no NLEV. So, therefore, the only thing that's
24 happening is the ZEV mandate. But as time moves on, you
25 see the smaller gray bars that become overwhelming through
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1 time. And that's what we're talking about here, is that
2 2010 is the last, you know -- just before the box is 2010
3 for those who can't read all the years.
4 So, you see, the last five years, you can see the
5 decay factor on those early ZEVs as they start being taken
6 out of service due to accidents, normal life time frames,
7 other things.
8 This thing just keeps on giving. So, that's what
9 we've walked through. We'd be more than happy to do that
10 again. But I just think that visual of the overpowering
11 number should make people feel a lot better and a lot more
12 confident that, even if there's a 14 versus a 16 as a
13 percentage, that's not going to drive that.
14 And then, if you add the two percent of migration,
15 it --
16 MS. EDGERTON: (Interjecting) But your chart does
17 have -- it does assume an 18 percent; is that correct?
18 MR. RIDENOUR: We took the CARB numbers --
19 MS. EDGERTON: Right.
20 MR. RIDENOUR: -- and just plotted them.
21 MS. EDGERTON: Yes. I've got a chart. I want you
22 to understand why I'm concerned.
23 MR. RIDENOUR: Sure.
24 MS. EDGERTON: It's hard to see, but as you can
25 see, the historical data that's been provided to me from '80
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1 to '94, it seems to indicate that -- for example, if we had
2 picked from 1990 to 1994, we would not be able to have used
3 18 percent.
4 And the other -- but even, you know, I can see how
5 you might take all that. You've got to make decisions to
6 make assumptions and make averages.
7 So, that certainly is rational. What is of a
8 concern to me and what I hope maybe we can discuss some
9 more, or you can discuss with the staff, is the future;
10 where do you go from there?
11 It seems to me, to assume that we're going to have
12 18 percent in '95, '96, '97, '98, when we're looking at not
13 having crossed over to 18 percent for 10 years, it just bugs
14 me.
15 So, thank you very much.
16 MR. RIDENOUR: Understand.
17 CHAIRMAN DUNLAP: Staff will be sure to follow up
18 on that and get back to Ms. Edgerton.
19 Okay. Mr. Lagarias, before you leave, Eric.
20 MR. LAGARIAS: Just a comment on this. Does this
21 account for the fact that over the past five years, there
22 are more people leaving the State than are coming into the
23 State, and that we're losing a lot of cars that are
24 registered in California and are no longer here because
25 people have gone back to their home States??
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1 MR. RIDENOUR: I think that actually helps the
2 analysis, because those are the cleaner cars yet that are
3 leaving. As far as the underlying base, I don't that --
4 because what you're really worried about is the dirtier cars
5 are coming in rather than the cleaner cars that leave.
6 But I'm not a modeling expert. I'm relying on my
7 staff.
8 CHAIRMAN DUNLAP: On that point, just to clarify
9 it. I think that certainly the population trend in
10 California has been growing, but that doesn't get to the
11 point, I think, Jack's getting at about people coming and
12 going and what not.
13 And I think, later on, I saw on the list here, we
14 have a witness from SCAG who's going to speak, and maybe
15 they can incorporate in their remarks some of the trends
16 we're seeing in population growth, and vehicle travel, and
17 the like.
18 MR. LAGARIAS: I really only have one question.
19 Did I understand you to say that Chrysler is
20 committed to meet a 49-State national LEV program in the
21 year 2001?
22 MR. RIDENOUR: That's our absolute current intent.
23 I mean, there's --
24 MR. LAGARIAS: Ms. Hathaway, did you hear that?
25 Because that was a concern she had.
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1 Thank you.
2 CHAIRMAN DUNLAP: One thing, Ms. Edgerton, a point
3 that I should bring up at least relative to the numbers.
4 There is a small percentage of vehicles that are not
5 registered in our State and that escape registration with
6 DMV and any kind of enforcement activity.
7 And so, those I believe have not been entered into
8 the mix as I understand it. And I don't even want to
9 speculate what that number may be. But it is some number,
10 and it certainly would have an impact on air quality, a
11 detrimental impact.
12 So, with that, Eric, thank you.
13 MR. RIDENOUR: Thank you.
14 CHAIRMAN DUNLAP: I would like to break at this
15 point for about 35 minutes or so. We'll reconvene around
16 1:00. And the audience may have a few extra minutes. We're
17 going to recognize the retirement of one of our employees to
18 start the meeting; reconvene, I should say.
19 (Thereupon, the luncheon recess was taken.)
20 --o0o--
21
22
23
24
25
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1 AFTERNOON SESSION
2 --o0o--
3 CHAIRMAN DUNLAP: Okay. I'll call the witness
4 list now, and we'll get it going. There's a few of the
5 staff members and a few of the Board members lingering, but
6 most of them are in the back, so the witnesses will be
7 heard.
8 I'm going to run through three or four names and
9 if you're here, please come forward, and we'll begin the
10 testimony.
11 Andrew Frank from U.C. Davis, followed by Cecile
12 Martin from CalETC. Is Bob Ham here? Okay. Followed by
13 Bob Ham, and then Judy Mikels from SCAG, and Lloyd Dixon
14 from Rand.
15 So, Mr. Frank? Good afternoon. Good to see you
16 again.
17 DR. FRANK: Yes.
18 CHAIRMAN DUNLAP: Did you bring your car today?
19 DR. FRANK: Well, no, I didn't bring my car, but
20 we're working on a new car.
21 CHAIRMAN DUNLAP: All right. When you get it
22 running, bring it over here and show me, will you?
23 DR. FRANK: Right. The new car's going to be a
24 Ford Taurus and hold four passengers. And it's being built
25 for P and GD.
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1 One of our goals is to inform the staff -- I don't
2 know if the staff really knows -- that P and GD, you know,
3 the president's partnership with the 80-mile per gallon car,
4 could be combined with the ZEV, California ZEV program if we
5 allow hybrids.
6 So, that brings up the subject of what I really
7 want to talk about today. I personally think this electric
8 vehicle mandate that we have started is definitely in the
9 right direction. I'm here to say the mandate has spurred
10 the research and development of EVs and, in fact, the last
11 five years we've actually gotten more accomplished in
12 research and development of true electric technology than we
13 have in the last 50 to 100 years.
14 So, the most important thing about the mandate is
15 that we maintain this pressure on the research and
16 development community, both the Federal Government as well
17 as the car companies, to continue this rate of research and
18 development.
19 And it behooves the entire country, because when
20 we're all said and done, we will have a much better, and
21 more friendly, and environmentally clean transportation
22 system as a result of this work.
23 So, I'm going to ask that the Board consider
24 keeping the mandate as it is; however, to allow for the --
25 allow the car companies flexibility, and to be able to meet
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1 the mandate, to push forward on your proposed EZEV mandate,
2 the equivalent zero-emission mandate for hybrid vehicles.
3 Because I believe that gives the car companies an out.
4 And if they do it correctly, it does not mean a
5 more expensive car. In fact, what we have shown in research
6 at the University indicates that it is possible to build a
7 hybrid electric car at approximately the same cost as a
8 conventional car, because you don't have to have as many
9 batteries, and the engine and the powertrain is greatly
10 reduced in size.
11 So, I'd like to express my opinion that the
12 mandate be softened by allowing the car companies to build
13 hybrids. Now, I understand and, of course, I do research in
14 the area, so I understand that there's a lot of questions at
15 this moment about how to test the hybrid.
16 Well, okay. That's one of the things that has to
17 be settled. How will we assess the concept of a hybrid from
18 an emissions point of view?
19 Well, it's kind of the chicken and an egg problem.
20 If you don't have the chicken, you can't figure out what the
21 eggs look like. So, we need to build these hybrids. We
22 need the car companies to build these kinds of vehicles,
23 and then we can begin to evaluate and develop the testing
24 procedures.
25 Now, the testing procedure is one of the questions
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1 of hybrids that has to be answered. But I think the hybrid
2 satisfies a lot of the goals and problems of EVs in the
3 short term especially.
4 Our research indicates that the present electric
5 battery technology, what is available out there today, is
6 good enough for hybrid, and the hybrid will perform equally
7 to a conventional car in every way. Give you the same
8 range; give you the same performance. In fact, our Taurus
9 that we're building as a hybrid will get 80 miles per
10 gallon; at the same time, it will go 0 to 60 in eight
11 seconds. So, when we're all done, we'll have a car that is
12 better than a conventional Ford Taurus with a conventional
13 engine and transmission.
14 Now, of course, one can sit here and claim all
15 this. And it's one thing to say it, and it's another thing
16 to do it. We actually had built a car in the past. It was
17 a special purpose built car, like the GM Impact, in which we
18 had already achieved 77 miles per gallon by driving it from
19 the Air Resources Board down in El Monte up to Davis, up
20 here to Sacramento, up over the mountains on one battery
21 charge and five and a half gallons of gasoline.
22 So, that comes out 77 miles per gallon on
23 gasoline. So, it is doable, and you no longer have the
24 problem of range. And I hate to have Ms. Hathaway get
25 caught in an electric vehicle in the middle of Watts without
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1 a charge.
2 She might have to wonder about that charge.
3 Anyway, so a hybrid will satisfy a lot of the
4 problems we're trying to address, and I think it gives the
5 car companies a way out. Technologically, it's not a
6 difficult thing if they will do it according to what staff
7 the staff has suggested in terms of their equivalent ZEV
8 program.
9 I think it's a good suggestion, and I think that's
10 where we ought to be headed, sticking with the mandate,
11 while pushing the EZEV hybrid concept as the alternative to
12 changing the mandate entirely.
13 Incidentally, one last comment, and that is, we've
14 got a good thing going. We've got momentum. When you
15 change horses in midstream, what I'm afraid of is we will
16 begin to lose momentum. And this rate of growth, as I
17 mentioned at the beginning, we had in the last 50 years --
18 in the last two or three years, we've had the equivalent of
19 research in the last 50 years in electric cars. We can
20 continue that rate of growth if we maintain this mandate
21 where it is.
22 That's my comment. Thank you.
23 SUPERVISOR RIORDAN: Thank you, Mr. Frank. Let me
24 ask the Board if there are any questions.
25 Mr. Lagarias.
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1 MR. LAGARIAS: Dr. Frank, thank you for your
2 comments. And I agree with you that we need flexibility to
3 allow all types of technology to enter this arena.
4 The regulation really called for zero-emission
5 vehicles. It didn't call for battery operated cars. And
6 we're now redefining equivalency of zero. So, I would
7 certainly encourage that they push on this technology.
8 And if, indeed, it shows merit, I think we'll find
9 ways of letting it enter the picture.
10 DR. FRANK: Good. That's just my hope. Thank
11 you.
12 SUPERVISOR RIORDAN: Are there any other questions
13 by any of the other Board members?
14 Mr. Calhoun.
15 MR. CALHOUN: We've heard a lot of discussion
16 about the hybrid, and the merits of which is kicked around
17 back and forth.
18 What's the status of that?
19 MR. CACKETTE: Let me see if I can answer the
20 right question here.
21 One of them I can answer is the status of how our
22 regulations might treat hybrids, and the other one is the
23 status of hybrids as an evolving technology in
24 transportation. Should I do both or the first?
25 MR. CALHOUN: Both.
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1 MR. CACKETTE: Okay. The first one is, in terms
2 of an equivalent zero-emission vehicle program, we're
3 developing a regulatory proposal we'll bring to the Board in
4 December, and that will define zeros as power plant level
5 emissions, or something equivalent to that. And then
6 vehicles that do not use power plants to charge themselves
7 could have just the same amount of emissions as the power
8 plant and still be called a zero-emission vehicle.
9 That would expand it to very clean hybrids, fuel
10 cells with reformers, things like that, as another potential
11 zero-emitting technology to complement battery powered
12 vehicles.
13 As far as where hybrids are in general, Dr. Frank
14 probably knows better than I do. But there's a tremendous
15 amount of research going on around the world on hybrid and
16 other hybrid-like vehicles, including fuel cells.
17 So, there's a lot evolving work on fuel cells that
18 suggests they're coming much closer to commercialization
19 than we may have thought. And hybrid electrics, there's
20 multi-hundred million dollar programs at all the domestic
21 auto companies underway funded by DOE to produce hybrid
22 electric vehicles as well as the P and GD program, which is
23 a billion dollar program. And most people believe that the
24 vehicle that will come out of there, the 80 mile per gallon
25 car, will be a hybrid of some type.
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1 MR. CALHOUN: Thank you.
2 MR. CACKETTE: So, it's evolving pretty quickly.
3 SUPERVISOR RIORDAN: All right. Thank you.
4 DR. FRANK: One last quick comment. If we build a
5 hybrid, bear in mind that you could -- if the hybrid has a
6 60 to 80 mile range, that you could build 11 hybrids, and
7 according to the proposed rules, would be equivalent to 10
8 electric vehicles.
9 In other words, 11 hybrids would be equivalent to
10 10 ZEVs. And to me, that makes -- that opens the door for
11 the car companies without changing too much technology, and
12 adapting the existing battery technology to put these things
13 out on the market very quickly in a very short length of
14 time.
15 Thank you.
16 CHAIRMAN DUNLAP: Thank you, Mr. Frank.
17 What I'd like to do is shift from the agenda just
18 for a moment and take care of more of the Board's personal
19 business, if I may, in public.
20 I'd like to ask Don Drachand to please stand up
21 and join Board Member Calhoun over there at the podium.
22 It is with mixed feelings that I make the next
23 announcement. By the time this Board holds its next
24 hearing, the ARB will have lost one of its cornerstones.
25 Don Drachand, Chief of the Mobile Source Division, who is
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1 retiring.
2 As I've said many times, the ARB's real strength
3 through the years is its staff, world class employees
4 dedicated to the mission of this Board, certainly talented
5 and committed. And Don has been a leader for many years.
6 He's been with the Board some 26 years.
7 As a matter of fact, Joe Calhoun left the Board as
8 an employee in 1974, and had worked -- I won't say side by
9 side with Don, but certainly done was a colleague of Joe's
10 and Joe knows him well. And that's why he's at the podium
11 there.
12 But Don has epitomized those high standards and
13 ideals, which are the true foundations for this Board's
14 remarkable success over the years. And it's appropriate
15 that at his last hearing as a manager and a leader of this
16 Board, that we should be considering a move that will assure
17 the success of perhaps Don's most outstanding contribution
18 to the Board's work, which is the zero-emission vehicle
19 standards.
20 So, Don, it's with great pleasure and a touch of
21 sadness that offer you on behalf of my Board member
22 colleagues -- actually Joe will do it -- this token of our
23 appreciation for your 26 years of service.
24 I'd like to ask Joe, if you wouldn't mind, to read
25 the Board resolution -- it's signed by all of the Board
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1 members, Don -- and tell you what we think of you, I guess,
2 in the closing hours of your career here.
3 (Thereupon, the Resolution was read to
4 Mr. Drachand, after which a standing
5 ovation was accorded him.)
6 MR. DRACHAND: Thank you very much, Joe. I know
7 you're busy, Mr. Chairman. I'd like to take about two
8 minutes to say my thanks.
9 I've had the privilege to work for the Air
10 Resources Board for about 30 years. I worked for the first
11 Chairman, Dr. Haagen-Smit, his Board, all the way down to
12 your Board.
13 And I've been extremely pleased that the support
14 and confidence that you Board members have shown the staff.
15 I can't emphasize enough what a difference this makes for
16 the staff.
17 I want to thank all of you and previous Boards for
18 that.
19 I also want to take a few minutes to thank my
20 management staff, Mr. Boyd, Mr. Cackette, Mr. Scheible.
21 These people are exemplary civil servants in my mind, in the
22 true sense of the word. They've given us good direction.
23 They make us work hard sometimes, but they've also supported
24 us in terms of resources and funding to do the research that
25 we need to do to come up with the rules that we bring up to
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1 you.
2 I also want to take a few minutes to thank the
3 staff, not just the smart young people that you see in front
4 of you at Board meetings, but also the hundreds of engineers
5 and scientists that work in El Monte gathering data that
6 goes to make the reports and regulations that we bring up to
7 you.
8 Also, I want to thank the legal staff, the
9 Administrative Services, staff, and the other divisions that
10 help us do what we do. What we did was really a full team
11 effort. It wasn't just one person or one division that did
12 it.
13 And, finally, I'd like to take a few minutes to
14 express my deep gratitude and respect for the people that we
15 regulate. These people are tough. It's tough to deal with
16 these people.
17 (Laughter.)
18 MR. DRACHAND: We have yelled at each other.
19 We've bumped heads on occasion. But eventually things come
20 together, and they make the cars that contribute to clean
21 air in California.
22 I want to thank you all very, very much.
23 (Applause.)
24 CHAIRMAN DUNLAP: Thank you, Joe, very much. Don,
25 well said.
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1 Now, take your place and get back to work
2 defending your program.
3 (Laughter.)
4 Cecile Martin, from CalETC, followed by Judy
5 Mikels from SCAG, and Lloyd Dixon from Rand. And then Tim
6 Carmichael from the Coalition for Clean Air.
7 MS. MARTIN: Good afternoon, Chairman Dunlap,
8 members of the Board, staff.
9 (Thereupon, the microphone was adjusted.)
10 MS. MARTIN: I think you all heard my greetings.
11 And I want to say congratulations to Don as well. It's a
12 hard act to follow up here.
13 Now, back to the subject at hand. I'm
14 representing the California Electric Transportation
15 Coalition. We're a nonprofit business association, whose
16 mission is to promote clear air through the development and
17 use of zero-emission vehicles, hybrid electric vehicles,
18 electric buses, and rail.
19 CalETC's board members are the fuel providers for
20 the growing electric vehicle market. And in that role, we
21 have had and continue to have a stakeholder's interest in
22 the direction of California's zero-emission vehicle program.
23 As CalETC has said many times in these hearings
24 and workshops over the last year, the market for electric
25 vehicles can only begin when there are viable and affordable
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1 cars and trucks available to fleets and consumers.
2 It will take this market to spur competition and
3 grow in volume so that costs and prices will drop, and
4 vehicles with electric propulsion systems can begin to
5 contribute their full potential to California's drive for
6 cleaner air.
7 During the past workshops, hearings, and actually
8 since early in 1991, CalETC has stood at the podiums and
9 asked the automakers for electric vehicles, and that's what
10 we've been given, not with the certainty or in the numbers
11 that we expected. But regardless of what happens here
12 today, the market for electric vehicles has begun to take
13 shape, and all of our roles are changing.
14 This is truly the moment when the rubber meets the
15 road. Now, I wanted to speak just a little bit about the
16 uncertainty in numbers. Because for us, as fuel providers,
17 we do need access to information. We're hoping to have
18 access to the noncompetitive aspects of automakers' plans,
19 because we need to be able to prepare and make our business
20 cases for investment in infrastructure.
21 We know that in the last few months, automakers
22 have announced at least three separate products that will be
23 available this year. So, we have accelerated our schedule
24 of preparation. CalETC and its members are committed to
25 infrastructure readiness.
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1 Infrastructure projects that we have been working
2 on since last year are nearing implementation. In
3 California, electric and building codes now contain a new
4 section that describes safe EV charging facilities. The
5 statewide training for building officials begins next month.
6 In addition, all utilities are establishing their
7 procedures for quick response to requests for recharging
8 infrastructure on the utility side of the meter, and some
9 utilities are establishing customer-side infrastructure.
10 New businesses are being formed to provide
11 infrastructure equipment and services to EV consumers.
12 And there are Northern and Southern California
13 efforts to establish master permitting procedures to
14 simplify and accelerate the installation of EV
15 infrastructures.
16 Inductive charging systems are fully standardized
17 and will be UL Listed to the new codes in time for vehicle
18 introduction. The Society of Automotive Engineers is
19 working to finalize the conductive plus standard, completing
20 standardization for conductive systems.
21 At least three manufacturers are poised to
22 manufacture these systems and list them to the new code in
23 time for the introduction of vehicles recharging with the
24 conductive system.
25 Further, high voltage quick charge demonstrations
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1 are being planned in at least three areas of the State.
2 In another important area, the emergency response
3 training project with the State Fire Marshal that we began
4 last year is proceeding on schedule with additional support
5 from the automotive industry.
6 And thanks to the Air Resources Board initiative,
7 there are now regular meetings with representatives of the
8 California Highway Patrol, firefighters, and other emergency
9 response personnel.
10 In the expectation of the introduction of
11 vehicles, at least five regions of the State are already
12 proposing purchase incentives for electric vehicles. These
13 incentives are a critical component of early vehicle
14 introduction and a wise avoided cost investment strategy for
15 communities trying to reduce mobile emissions by putting
16 zero-emission vehicles on their streets.
17 Some of those programs are in areas where Board
18 members reside or in areas that Board members represent, and
19 we're hoping for your support there.
20 These programs and many others are good examples
21 of public/private partnerships, and it is necessary for the
22 public and private sectors to work together to lay the
23 foundation for the successful introduction of EVs.
24 Public agencies, when they understand zero-
25 emission vehicle benefits, continue to step forward to do
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1 what they can to encourage this technology. To support
2 their efforts, as well as those of the private sector, it is
3 important that they have access to a balanced and
4 independent analysis of ZEV benefits.
5 And we appreciate staff's efforts today in
6 pointing out that the analysis in the documents presented
7 today was incomplete, and that included upstream emissions
8 for electric vehicles, but not all upstream emissions for
9 gasoline vehicles.
10 We urge the Air Resources Board to complete this
11 fuel cycle analysis and to produce a document for the
12 purpose of educating the public about the fuel range of ZEV
13 benefits, and to address any concerns that the public may
14 have about the relative impacts of battery recycling and
15 power plant emissions.
16 This is a first and necessary step in the public
17 education campaign that is needed to provide the public with
18 an independent source for continuing information on ZEVs.
19 And, of course, I'd like to second what a couple of earlier
20 speakers mentioned and say that we would very much like to
21 see a public education campaign like we've just experienced
22 for cleaner burning gasoline.
23 And we really would hope to work with the Air
24 Resources Board on a campaign like that.
25 We also need public agencies like yourselves, who
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1 do know the benefits of EVs, to take the lead in fleet
2 purchases to set a positive example for other agencies and
3 the public by modeling the kind of ideal fleet you envision
4 for California's future.
5 As CARB moves forward to fulfill its
6 responsibility in the area it deems appropriate to remove
7 any existing barriers and to support the early market for
8 ZEVs, both the vehicles and the fuel, CalETC members will be
9 working with you and with the industry to do all we can to
10 provide Californians with the opportunity to make a p
11 purchase choice for clean air.
12 And on behalf of our members, I want to reiterate
13 our continuing commitment to EV readiness.
14 CHAIRMAN DUNLAP: Thank you, Ms. Martin. Any
15 questions of our witness?
16 Ms. Edgerton.
17 MS. EDGERTON: Ms. Martin, what figures are you
18 currently using? I mean, it struck me as making great sense
19 that obviously you need to know how many electric vehicles
20 to plan for.
21 And where does the MMOA leave you in terms of
22 planning? And do you -- that's one thing. Do you have
23 alternative ways and communications with the automakers to
24 work that out?
25 We have the infrastructure working group.
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1 MS. MARTIN: If an automaker lets fuel providers
2 know that they're going to introduce vehicles, where and
3 about how many, it's easy to make a business case to go
4 forward with that investment.
5 We see in the MOA that there will be demonstration
6 vehicles, but we don't know where they'll be located. At
7 least we have some leadtime, because that doesn't begin
8 until 1998.
9 But we have heard that some manufacturers are
10 introducing vehicles this year. We're working with those
11 manufacturers to make sure we're ready. And they have been
12 forthcoming with information.
13 But it will be difficult, I think, when all seven
14 manufacturers are making plans to keep up with manufacturers
15 on an individual basis.
16 It would be great if there was a place where we
17 could get a sense of what was coming ahead of time.
18 CHAIRMAN DUNLAP: Thank you.
19 Judy Mikels? If I might give some counsel to some
20 of the witnesses, we received and read an awful lot of
21 material. And if we've had your written testimony for some
22 time, you can be assured that most of us, if not all of us,
23 have read it.
24 So, please, don't feel that you need to read or
25 cover everything that you may have written to the Board.
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1 Because, while your points are important and we need to hear
2 them, we may have already had a chance to follow them.
3 So, if that applies to you, use it. If not, feel free to
4 cover what you feel you need.
5 MS. MIKELS: Well, good afternoon, and thank you
6 all for allowing me to speak.
7 You do have the written testimony in front of you.
8 My name is Judy Mikels, and I'm from the Southern California
9 Association of Governments. I serve as a regional council
10 member. I'm also chair of the energy and environment
11 committee. I'm a county supervisor for the County of
12 Ventura. You probably are well aware of the County of
13 Ventura.
14 Since you have the written testimony, I see no
15 reason to read to you and to read it into the record. We
16 would just like to reiterate, you know, that there are
17 millions of dollars of transportation funds at risk.
18 Thank you very much for what you've done so far in
19 maintaining some sort of incentive for continuing. We have
20 our conformity plans at risk. We're very pleased with
21 what's before us.
22 And as it goes forward, if it goes forward as it
23 is, we feel that it will not impact our conformity plans.
24 We just hope that there is no more relaxation due to our
25 Federal transportation funding.
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1 I would be happy to leave it at that. You've
2 heard more than you probably need to over the last few
3 years. If I can answer a question, I certainly would be
4 happy to.
5 CHAIRMAN DUNLAP: I had a question. I don't
6 remember exactly the detail. It had to do -- Jim, help me
7 out.
8 MR. BOYD: Population.
9 CHAIRMAN DUNLAP: Oh, population trends. Could
10 you say a word or two about that? We had an earlier witness
11 that mentioned -- brought this up. And I think Mr. Lagarias
12 raised it as well.
13 MS. MIKELS: Okay. I wasn't here when the
14 earlier. Were you here for the earlier testimony?
15 CHAIRMAN DUNLAP: Erica, can you --
16 MS. MIKELS: Could she come up? I apologize. I
17 was at the California Association of Counties meeting. So,
18 I don't want to give you what you've already heard.
19 You heard the question earlier. Can you give us
20 some statistics about what's happening with population
21 increases in Southern Cal?
22 MS. VANDENBRAND: Indeed, the population is going
23 up and vehicle ownership is going up along with it. We have
24 increased vehicle miles traveled, all those things
25 essentially about to increase vehicle emissions. And
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1 because of that, we need to reduce those emissions. And
2 what we found and what the SIP has found is that one of the
3 most effective ways is to do that through zero-emission
4 vehicles and through alternative fuels.
5 My name is Erica Vandenbrand (phonetic), and I'm
6 principal planner with the Southern California Association
7 of Governments.
8 MR. LAGARIAS: Mr. Chairman, the question I raised
9 was not new registration or out-of-town registration, but
10 the existing population. What about reregistration? How is
11 that going?
12 MS. VANDENBRAND: Well, I don't have the
13 statistics off the top of my head about reregistration. But
14 what I do know is that the population increase in Southern
15 California is primarily people who are here already. And
16 reregistration, there has been some cars that have left.
17 But there's still quite a lot of cars remaining. And what
18 we're seeing is that there are just simple more and more
19 cars being owned.
20 MR. LAGARIAS: Well, of course, that would be with
21 the new registrations as well. We want to know who's
22 driving out of the State and not coming back.
23 MS. VANDENBRAND: Honestly, I can't tell you right
24 off the top of my head. We know that some people are, but
25 who they are hasn't been kept track of.
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1 MR. LAGARIAS: Thank you.
2 MS. MIKELS: If we have those figures -- and
3 certainly Erica is headed back, as well as I, and we will
4 try to get that information to the Board as clearly as we
5 possibly can.
6 CHAIRMAN DUNLAP: That would be appreciated. And,
7 Jim, if you'd ask Mr. Scheible to call up. He has direct
8 contact with SCAG.
9 We just wanted to get a flavor for what's happened
10 population-wise.
11 MS. MIKELS: Well, it appears that, since our
12 population is growing, those registrations that are leaving
13 are being outnumbered by the internal growth. That's about
14 the only statement I can make. But we can certainly get you
15 that information as best as we have it and get it back to
16 you quickly.
17 CHAIRMAN DUNLAP: Okay. Thank you.
18 MS. MIKELS: Thank you very much.
19 CHAIRMAN DUNLAP: Lloyd Dixon from Rand, followed
20 by Tim Carmichael, Dave Hermance from Toyota, and Joe Caves
21 from Union of Concerned Scientists.
22 Good afternoon, Mr. Dixon.
23 MR. DIXON: Hi. My name is Lloyd Dixon. I'm a
24 chemist at Rand.
25 We have just completed an extensive study of
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1 California's ozone reduction strategy for light duty
2 vehicles. We presented some of our findings on the zero-
3 emission vehicle mandate to you last December. And you
4 should have recently received the summary of our technical
5 report.
6 Today, we will explain why we believe it wise for
7 the Board to revise the ZEV mandate. We will assess the
8 proposed revision and provide suggestions for increasing its
9 payoff.
10 In particular, we believe that the intense debate
11 over the ZEV mandate should not district attention from the
12 critical importance of programs that control emissions from
13 internal combustion engine vehicles.
14 So, I have some slides here to help with the
15 presentation. First, our research suggests that there's
16 great economic and environmental risk of proceeding with the
17 mandate as it currently is. This is because electric
18 vehicles could cost much more to produce and operate than
19 internal combustion engine vehicles in the early years.
20 They could also be displacing fairly clean ICEVs
21 if the ICEV control program works well.
22 The mandate may cause the prices of internal
23 combustion engine vehicles to rise by $550, because the
24 mandate, in effect, creates increases -- creates a cost to
25 selling an additional gasoline powered vehicle in the State.
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1 This increase in prices can slow the sales of new
2 vehicles, cause the fleet to age, and increase the overall
3 emissions from LEVs. And finally, the current mandate poses
4 risk, because it could result in consumer disappointment
5 with EV performance and harm the long-run prospects for
6 ZEVs.
7 Now, on the other hand, there's great economic and
8 environmental risk from repealing the mandate all together.
9 Without the mandate, ZEV technology may stagnate. It could
10 turn out that our emissions control efforts from internal
11 combustion engines are disappointing. It may be very
12 difficult to come up with other ways to reduce emissions,
13 and California could be left with some very unappealing
14 alternatives to meeting its Federal standards in the year
15 2010.
16 Well, given these uncertainties and these risks,
17 we developed some principles for desirable ZEV policies, and
18 what we concluded is that we don't need to commit to a long-
19 term ZEV policy right now; that what we should instead is
20 look for short-term policies that allow us, first, to avoid
21 really bad outcomes, extremely bad outcomes.
22 We should also adopt policies that allow us to
23 learn about, first, the promise of electric vehicle
24 technology and the effectiveness of the other elements of
25 the strategy. And those other elements are so important,
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1 because they, in part, determine the overall desirability of
2 electric vehicles.
3 And, finally, we should take -- we should adopt
4 policies that allow us to take advantage of this
5 information. Next slide.
6 Now, we think that the proposed revision to the
7 mandate is consistent with these principles. It appears to
8 avoid the worst-case outcomes by delaying production -- by
9 delaying the production quotas that avoid the possibility of
10 very high cost with little emission payback in the early
11 years.
12 It also avoids the -- by promoting the
13 demonstration program and funding for R & D, promotes the
14 continued development of electric vehicles.
15 It provides, through the demonstration vehicles
16 and the R & D, it allows us to continue to learn about the
17 promised electric vehicles, and what role they should play
18 in our overall strategy.
19 The battery research provisions allow us to see if
20 we want to realize the promise of any advanced technology
21 battery research efforts, and also we'll learn more about
22 our other strategies to control emissions. We'll learn more
23 about the strategies to control emissions from gasoline
24 vehicles.
25 And finally, the biennial reviews allow this CARB
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1 Board to use the information that becomes available to
2 revise the mandate as appropriate.
3 Next slide, please.
4 So, we think that the proposed revision is clearly
5 superior to either the mandate as it currently is or its
6 outright appeal, but we think its success depends on how
7 it's implemented.
8 And we urge the CARB Board to first make
9 information on EV performance and cost publicly available to
10 the extent confidentiality allows. This will allow policy
11 makers, the public, as well as investors to better
12 understand the real costs and payoffs of electric vehicles.
13 We also encourage the Board to announce soon how
14 different factors will be weighed in their biennial reviews
15 of the mandate. And this will help strike a balance between
16 the flexibility that you need in setting -- in modifying
17 policy appropriately as well as the predictability that's so
18 important to investors and the development of advanced
19 technology batteries.
20 And finally, and perhaps most importantly, we
21 think that it is very important for the Board to pay close
22 attention to the non-ZEV elements of our strategy. And this
23 is important for two reasons. First, these other elements
24 are potentially large sources of emissions. And, second,
25 how effective they are will indeed determine what the proper
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1 role of ZEVs should be in California strategy.
2 Next slide.
3 Now, our research suggests that a tremendous
4 amount of uncertainty does remain about the non-ZEV elements
5 of our strategy. And let me just give three examples or
6 examples from three key programs
7 First, the benefits of the scrappage program will
8 depend importantly on details that have yet to be
9 determined. This program could result in the in-migration
10 of many vehicles. It also could provide incentives for
11 drivers to tamper with or delay repairs on his car. And, if
12 this is the case, then we may fall far short of the
13 projected benefits of the scrappage program.
14 OBD II could pay enormous dividends, but it's
15 important that its effectiveness may well depend on this
16 very little understood -- very poorly understood behavior of
17 drivers and smog check technicians to check engine lights.
18 And finally, the success of the smog check II
19 program is hardly assured. The higher repair limits may
20 increase evasion of the program. And we know from
21 experience how hard to is to deter fraud.
22 The last slide. Oh, that is the last slide.
23 Sorry.
24 Anyway, in the end, we encourage CARB and the
25 public to pay careful attention to the design and
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1 implementation of these programs and to monitor closely
2 their emissions reductions. This will be important to
3 determine how hard we should continue to push those in the
4 future.
5 CHAIRMAN DUNLAP: Thank you. Mr. Lagarias has a
6 question.
7 MR. LAGARIAS: I take from your discussion that
8 you're supportive to our proposed modifications to the ZEV
9 program.
10 MR. DIXON: That's right.
11 MR. LAGARIAS: Well, that's interesting.
12 Who's funding your study?
13 MR. DIXON: It's partly funded by the California
14 Manufacturers Association, and then it's partly funded by
15 Rand's internal funds through the Institute of Civil
16 Justice.
17 MR. LAGARIAS: So, we had no part in putting you
18 up to this report?
19 MR. DIXON: No, you had no part.
20 (Laughter.)
21 MR. LAGARIAS: Are you aware that when you
22 discussed the non-ZEV elements program, that 90 to 98
23 percent of the program is dedicated to TLEVs, LEVs, and
24 ULEVs programs, substantially reducing emissions from new
25 cars? That the clean fuel program also gets immediate
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1 benefits, and that the ZEV program is an addition. And
2 while it's getting the major part of the attention, it is
3 not the major contributor to pollution reduction. It's just
4 looking into the future.
5 And overlook the benefits of the LEV, the ULEV,
6 and the clean gas/clean fuels program is really not putting
7 things in perspective.
8 MR. DIXON: Yeah. And the point we're trying to
9 make is continue -- is to encourage -- or to continue to put
10 its focus on that part of the program. And, in particular,
11 look at the design, implementation, and evaluation of the
12 key elements of the program. Because there's a lot of
13 uncertainty about how certain parts of the program would
14 work, and how they work has a lot of impact of what we will
15 have to do in the future.
16 Any other questions for Mr. Dixon? All right.
17 Very well. Thank you.
18 Tim Carmichael, Coalition for Clean Air, followed
19 by Dave Hermance, Joe Caves, Mike Miller.
20 Mr. Carmichael, I understand you've given us
21 written testimony here.
22 MR. CARMICHAEL: Yes, I have. I'll just try and
23 touch on a couple of points that I don't believe have been
24 addressed this morning. We concur with much of the
25 testimony of NRDC. And some of the comments you may have
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1 heard from us before, but I'll be as brief as possible.
2 Good morning -- or good afternoon, members of the
3 Board. Chairman Dunlap, good to see you.
4 My name is Tim Carmichael. I'm the Policy
5 Director for the Coalition for Clean Air.
6 As we have stated many times in the past, the
7 Coalition strongly supports California's zero-emission
8 vehicle requirements as an essential component of
9 California's clean air plan.
10 The Coalition participated in all of CARB's
11 workshops -- 1995 workshops on zero-emission vehicles, and
12 based on that information, supporting existing ZEV
13 technology which was presented at those workshops, the
14 Coalition does not agree with this agency's proposal to
15 repeal the ZEV requirements until 2003. In fact, we believe
16 that CARb should move ahead with the 1998 requirements.
17 Unfortunately, this agency is going to move ahead
18 with another program.
19 Relative to the program that's before you, the
20 memorandum of agreement and the regulatory adjustments that
21 would go along with that, the Coalition continues to have
22 several of the same concerns we highlighted in our testimony
23 last December.
24 Specifically, the MOA does not provide a viable
25 ramp-up to the 10 percent level in 2003. It seems clear
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1 that this Board understands the importance of that 10
2 percent level in 2003 based on your commitment to date to
3 that percentage in that year.
4 Our concerns relate to how do we get from here to
5 there? And if we accept that the manufacturers will not
6 only have a capacity to produce 14 or 15,000 vehicles in the
7 year 2000, but actually produce that number of vehicles,
8 zero-emission vehicles, we're still very concerned about the
9 years 2000 to 2003.
10 And if we went from 15,000 ZEVs in the year 2000
11 to the projected approximately 100,000 vehicles in the year
12 2003, that would require an annual growth of 100 percent per
13 manufacturer per year. That is enormous for any
14 manufacturer to grow by 100 percent per year, even a small
15 component of their business.
16 CHAIRMAN DUNLAP: Mr. Carmichael, if I could just
17 make a point on clarification. I think they said a capacity
18 of 15,000 in '98.
19 MR. CARMICHAEL: Okay.
20 CHAIRMAN DUNLAP: I understand your point.
21 MR. CARMICHAEL: Even if it's 1998, you still have
22 tremendous growth -- that probably means in excess of 50
23 percent a year till 2003.
24 Requiring the automakers to submit production
25 plans is simply not enough. We believe that there should be
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1 an interim production requirement in the 2000 to 2003 time
2 frame so that, you know, we do, in fact -- California does,
3 in fact, see 10 percent of the vehicles in 2003 as zero-
4 emission vehicles.
5 That is critical to our air quality and is
6 certainly critical to meeting the ZIP as we see that target
7 in the future.
8 Our second major concern relates to equivalent
9 emission reductions. This morning, the testimony has
10 focused on the viability of the 49-State car, and the
11 questions surrounding the percentage that will migrate into
12 this State.
13 Even if you accept the staff's projections and you
14 accept the automakers will produce a 49-State car in 2001, t
15 his program before you that you're considering does not
16 achieve equivalent emission reductions. It doesn't achieve
17 it in 1998 to 2002 time frame. In fact, it doesn't achieve
18 equivalent emission reductions until 2006.
19 The Coalition that equivalent emission reductions
20 in 2006 means little to someone who's breathing in 1998.
21 In a December 21st letter to Chairman Dunlap,
22 Governor Wilson wrote, and I quote, ". . .I would endorse
23 modifying the ZEV mandate so long as a modification meets or
24 exceeds the emission reduction benefits of the existing
25 regulation."
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1 As the proposal before you does not deliver
2 emission reductions equivalent to the ZEV mandate, we are
3 left to conclude that this proposal would not have the
4 endorsement of the Governor.
5 Finally, a modification of the ZEV requirements,
6 which will not result in equivalent emission reductions, is
7 not acceptable to the Coalition for Clean Air. And we do
8 not believe it should be acceptable to this Board.
9 As I stated earlier, none of these concerns are
10 new. The Coalition for Clean Air, along with the National
11 Resources Defense Council, Union of Concerned Scientists,
12 and the Planning and Conservation League have addressed
13 these issues at the Board meeting in December and in letters
14 submitted in January and February of this year.
15 Unfortunately, to date, no revisions addressing
16 these concerns have been incorporated into the proposal that
17 you are considering.
18 The Coalition urges you to reject the MOA until
19 these equivalent emission reductions -- until the issues of
20 equivalent emission reductions and a viable production
21 ramp-up are addressed.
22 Thank you very much.
23 CHAIRMAN DUNLAP: Mr. Calhoun and then Ms.
24 Edgerton.
25 MR. CALHOUN: Mr. Carmichael, how would a
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1 specified ramp-up -- a specified number of vehicles, how
2 would that differ from the original regulation?
3 MR. CARMICHAEL: It would differ in that you would
4 not have the 1998 requirement; you would have a requirement
5 in 2001.
6 As has been laid out clearly over the last year,
7 the majority of emission reductions will come post-2003.
8 But they rely on 10 percent beginning in 2003. And if we
9 don't reach the 10 percent level in 2003, we're not going,
10 you know, make the emission reductions that are projected
11 and required to meet our SIP goals in the year 2010.
12 So, my concern is that we're postponing this
13 program for five years, and we're not asking enough in the
14 interim. And we're going to get 2002, 2003, and the
15 automakers will throw their arms up and say, "We can't do
16 it."
17 MR. CALHOUN: Well, the Board has a provision to
18 know what's taking place during the intervening years. They
19 will know what kind of progress is being made. So, I don't
20 know how you can accurately predict at this point what's
21 going to happen between now and then.
22 MR. CARMICHAEL: You're right. We can't predict.
23 And we want to hedge on the side of clean air. And we want
24 to ensure that there are protections there. And we feel one
25 protection would be a milestone or a target requirement in
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1 the year, you know, 2000, 2001.
2 MR. CALHOUN: The Board will periodically receive
3 reports from the staff about what is actually taking place.
4 The Board will know that.
5 And if the Board feels as though some change will
6 be needed down the road in order to make the program more
7 effective, it will have an opportunity to do that.
8 MR. CARMICHAEL: Okay. If I could respond to
9 that.
10 As was highlighted earlier by the gentleman from
11 Chrysler, the first production plan that you will receive
12 will be in 1998. That, we hope, will cover the next five
13 years.
14 CHAIRMAN DUNLAP: '97. In '97.
15 MR. CARMICHAEL: Okay. In 1997. We hope that
16 will cover the next five years. But your next opportunity
17 to review production is two years after that in 1999 or late
18 1999.
19 It was pointed out that the automakers need four
20 years advance to develop a production plan. So, it's not
21 until 1999 that you will know one way or the other whether
22 these automakers are -- on paper only -- are going to meet
23 2003 targets.
24 And even if they lay it out on paper, you -- I'm
25 not sure what the value is or how much better off this Board
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1 will be in evaluating or stating that the automakers will
2 achieve the 2003 goal.
3 Simply because they said, in 1999, our four-year
4 production plan shows that we'll product X-number of
5 vehicles in 2003, we don't believe that the paper submittal
6 to this Board is enough.
7 MR. CALHOUN: What would you have the Board do?
8 MR. CARMICHAEL: Well, in a perfect world, we --
9 MR. CALHOUN: We want to do this in the imperfect
10 world.
11 MR. CARMICHAEL: Okay. We would like a percentage
12 requirement in the 2000 and 2003 time frame.
13 MR. CALHOUN: Well, to me, that's no different
14 from what we started out with. That concludes my comment.
15 CHAIRMAN DUNLAP: Thanks, Mr. Calhoun.
16 Ms. Edgerton.
17 MS. EDGERTON: Well, in the interest of getting a
18 colloquy going, it does strike me that there is -- that
19 there are quite a number of differences. But one difference
20 which is enormous and which the automakers negotiated very
21 hard for is that having a contractual obligation as opposed
22 to a regulatory obligation greatly reduces the likelihood
23 that the California program can be adopted by the Northeast
24 States.
25 I beg your pardon?
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1 MR. CALHOUN: I haven't said a word.
2 MS. EDGERTON: Oh, I thought I saw you shake your
3 head back and forth.
4 So, it seems to me that it's pretty clear the
5 reason why we're -- the reason why this rather unusual or
6 odd approach has been taken is because of a concern there on
7 behalf of the automakers.
8 Secondly, I think a contract, though, -- I mean to
9 be fair -- is very, very different from a regulation, in
10 that a contract is an agreement between the parties and must
11 be interpreted based on the actual four corners of the
12 agreement.
13 You have to look at what is actually in the
14 agreement in order to determine the intention of the
15 parties. That's a well-settled principle of law.
16 So, it seems to me that if this went to a court,
17 if the contract went to a court, and there were terms that
18 were missing, you know, it's going to be very difficult.
19 And, secondly, if it went to a court and there
20 were terms that were agreed to, they wouldn't be mandates.
21 They would be agreed to by both parties.
22 I have found it very confusing to hear people talk
23 about anything that's in the MMOA, in the proposed MMOA,
24 which would be a ramp-up as a mandate.
25 It is not correctly -- it would not correctly be
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1 categorized as a mandate at all. It would be correctly
2 categorized, I believe, as a voluntary agreement, as an
3 agreement, good-faith agreement by the auto manufacturers to
4 California to tell us at a minimum what they plan to provide
5 to us to help us with our air.
6 So, it strikes me that it's very different asking
7 for a ramp-up, a voluntary ramp-up number that's publicly
8 released to Californians who breathe this air. You know,
9 air pollution is probably the fourth-highest ranking public
10 concern.
11 This is quite different, it seems to me. I think
12 it's a clear, a fair request. That's one of the things that
13 I wished that was more carefully and specifically set out,
14 Mr. Carmichael.
15 CHAIRMAN DUNLAP: Well, one of the things, too --
16 I think we've heard this. I think we even had this
17 discussion last time you were here. This Board is concerned
18 about letting the market have a role to play here. And no
19 matter how we were to implement this program, the market
20 will play a role.
21 And it's the intent and it was the direction from
22 this Board to staff to find the best way to harness that
23 market while getting at the clean air goals.
24 And that's what the intent is here. I want you to
25 at least hear that from me. It's not a sinister move to
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1 deprive the breathers of this State of their rights. We
2 want that program, the ZEV program that is, to work and we
3 need it to work to attain the clean air goals.
4 So, I appreciate your consistency and your
5 personal believe that there's some areas that we need to
6 focus on. I appreciate that. That's wise counsel.
7 And I'm glad that you continue to let us hear that
8 throughout this process.
9 Any other questions of Mr. Carmichael?
10 MS. EDGERTON: I have one, because we've talked
11 about -- the man from Chrysler mentioned 15,000 by 1998.
12 But --
13 CHAIRMAN DUNLAP: Cumulatively.
14 MS. EDGERTON: Cumulatively. Uh-huh. That's
15 right, in the aggregate for all manufacturers.
16 However, in the MMOA, 1-B, market-based ZEV
17 launch, where it is provided that -- where it's called for
18 manufacturers to maintain a, quote/unquote, "capacity to
19 produce specified ZEVs that could be sold in California if
20 warranted by consumer demand," I can see how it could be --
21 I can share the concern that a manufacturer can simply offer
22 unattractively priced ZEVs without maximized performance,
23 and declare that these ZEVs weren't warranted by customer
24 demand.
25 I mean, it seems to me that's -- that's a concern,
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1 that's a legitimate concern. And also, I would say, with
2 respect to that 1-B, it is mentioned that Exhibit A will
3 have the capacity numbers.
4 And I can only deduce from the testimony that I
5 suppose what's already been submitted by the manufacturers
6 confidentially has been made public by Chrysler saying it's
7 15,000 today.
8 MR. CARMICHAEL: Chairman Dunlap actually
9 estimated to be in that ball park in December, and that's
10 why I was using that number.
11 CHAIRMAN DUNLAP: Which was confirmed today.
12 MS. EDGERTON: So, that part's not public (sic)
13 anymore, so why don't we just go ahead and put it in the
14 agreement?
15 CHAIRMAN DUNLAP: I think we can --
16 MR. CACKETTE: The reason for that was that there
17 are seven different agreements, and the 15,000 number is the
18 aggregate, which we made available publicly prior to it.
19 But the individual numbers per manufacturer are deemed
20 confidential by those manufacturers.
21 MS. EDGERTON: Well, that always --
22 MR. CACKETTE: That's the only reason for that.
23 CHAIRMAN DUNLAP: One thing ---
24 MS. EDGERTON: Well, we could say --
25 CHAIRMAN DUNLAP: What I'd like to do is stick to
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1 the witness' testimony. And I think, Ms. Edgerton, we can
2 cover these items when we hear from the witnesses.
3 MS. EDGERTON: Okay.
4 CHAIRMAN DUNLAP: And our own discussions.
5 MS. EDGERTON: Thank you.
6 CHAIRMAN DUNLAP: Thank you, Mr. Carmichael.
7 MR. CARMICHAEL: Thank you.
8 CHAIRMAN DUNLAP: Dave Hermance from Toyota, Joe
9 Caves from the Union of Concerned Scientists, Mike Miller
10 from the California Motor Car Dealers Association, and then
11 Marc Chytilo from the Environmental Defense Center, CalPIRG.
12 Good afternoon.
13 MR. HERMANCE: Good afternoon, Mr. Chairman,
14 members of the Board, staff, and interested others. Why
15 else would you be here if you weren't interested.
16 I am Dave Hermance, General Manager of Powertrain
17 in Toyota's Los Angeles Technical Center.
18 As a member of the negotiating team, a tired
19 member of the negotiating team, I'm here to express Toyota's
20 strong support for the pending staff recommended regulatory
21 changes and the MOA.
22 While not perfect in our eyes, they represent a
23 viable compromise which we believe will result in the
24 highest probability of a successful market launch of EVs.
25 The regulatory changes are necessary to avoid a
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1 catastrophe or, as member Calhoun called it, "a pending
2 train wreck," in 1998. We appreciate staff's recognition of
3 this problem and commend the new process undertaken to
4 resolve it.
5 The MOA represents a new approach to development
6 of advanced technology. Further, in recognition of
7 California's unique air quality situation, the industry has
8 agreed in the MOA to implement cleaner cars nationwide which
9 will result in a greater air quality benefit toward
10 California's SIP compliance.
11 This contract is fully enforceable, and we
12 certainly regard it as that, and intend to comply fully.
13 And in combination with the regulatory changes, it will give
14 EVs their best shot at success.
15 Since other members of industry have spoken
16 previously and more will speak later, I will end my comments
17 there and attempt to answer your questions.
18 CHAIRMAN DUNLAP: Okay. Very well. Ms. Edgerton.
19 MS. EDGERTON: I want to get back -- are you
20 authorized to talk about the commitment of your company to
21 the 49-State car?
22 MR. HERMANCE: Absolutely. We are totally
23 committed to implementing the program.
24 MS. EDGERTON: Okay. And that's the NLEV, same
25 thing as an NLEV.
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1 MR. HERMANCE: That's correct.
2 MS. EDGERTON: Would you be prepared to write a
3 letter to Administrator Browner from the U.S. EPA,
4 indicating that, as soon as we take our action tomorrow,
5 that you are committed?
6 MR. HERMANCE: I believe you've got a 15-day
7 notice pending that precludes an agreement as of tomorrow.
8 But, we are committed to implementation of the 49-State.
9 Whether it's specifically the one outlined in the
10 NPRM is not quite -- there is some risk associated with
11 that. It will be a 49-State program. It may not be the one
12 as defined in the NPRM. It will still accomplish .075 fleet
13 average NMOG.
14 MS. EDGERTON: NPRM, could you, for the public --
15 MR. HERMANCE: That's EPA's language for notice of
16 proposed rulemaking.
17 That's the document that's out now for comment.
18 It's an in-process document. It's not a final one.
19 MS. EDGERTON: Can you clarify for me why
20 representatives of the auto companies in the last couple of
21 weeks have objected to representatives of the U.S. EPA about
22 having the NPRM regulation approved?
23 I mean, if -- I just want to get clear.
24 CHAIRMAN DUNLAP: Lynne, if I may --
25 MS. EDGERTON: Yeah, sure.
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1 CHAIRMAN DUNLAP: -- ask maybe a clarifying
2 question. There is some difference between the Federal
3 definition of an NLEV and our definition for purposes of our
4 proposal here today, Mr. Cackette?
5 MR. CACKETTE: The NLEV regulation that EPA's
6 proposing is designed to allow a vehicle manufacturer to
7 voluntarily sell cars. But once they do that, they have
8 enforceable requirements to meet emission standards to which
9 they voluntarily sold the car.
10 So, in other words, they can say, "Yeah, II want
11 to," or, "No, I do not want to sell LEVs in the other
12 States."
13 And once they do that, those vehicles are subject
14 to recall and other provisions, which are basically governed
15 by that rulemaking. That's what's at stake.
16 What governs their decision to do that -- I think
17 the definitive statement Mr. Hermance said -- is the MOA,
18 which says that they will do it. They are committed to
19 selling nationally cars which meet the equivalent of
20 California LEV standard.
21 CHAIRMAN DUNLAP: Okay.
22 MS. EDGERTON: But my question is this: I just
23 want to be sure -- and I'm going to ask the other car makers
24 who come up, too -- I want to be sure that I am not mixed up
25 about what California has really achieved here.
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1 My understanding is that once these MMOAs are
2 approved, Massachusetts and New York have a right, and
3 you've promised, and it's enforceable there, for them to get
4 in 2001 the NLEV, the 49-State car.
5 I mean, we've claimed that we've won this for
6 everybody. And I just want to be sure at the end of the day
7 that that's true.
8 MR. HERMANCE: In Massachusetts and New York --
9 let me clarify one thing first.
10 I've not been party to the direct negotiations in
11 the Northeast. That's handled out of a different office in
12 our company.
13 However, my understanding is Massachusetts and New
14 York currently have regulation on the book which
15 specifically adopts California's low-emission vehicle
16 program.
17 It's my understanding that unless they change what
18 they've done on the books, they'll actually wind up getting
19 the fleet-average NMOG as opposed to .075. They'll get the
20 California program exactly instead of NLEV.
21 MR. LAGARIAS: Very good.
22 CHAIRMAN DUNLAP: Ms. Edgerton, just --
23 MS. EDGERTON: So, we haven't won what we thought
24 we'd won for them. You're still negotiating.
25 MR. HERMANCE: Well, no. Massachusetts and New
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1 York have adopted your rule. They will get your vehicles,
2 which is actually cleaner than NLEV, marginally cleaner than
3 NLEV.
4 SUPERVISOR RIORDAN: It's a little bit cleaner.
5 MR. HERMANCE: Yeah, it's marginally cleaner than
6 NLEV.
7 MS. EDGERTON: What I would like to have at the
8 end of the day -- my understanding, when I came to this
9 hearing, was that what California got, they'd get. And
10 that, as a result, we would be counting what they sold there
11 and came into our State according to that particular
12 standard.
13 MR. HERMANCE: That's correct.
14 (Thereupon, both speakers spoke
15 simultaneously.)
16 MR. HERMANCE: -- well, Massachusetts and New
17 York, instead of being a .075 car, it could be a ULEV; it
18 could be a LEV, or it could be a TLEV, as long as the fleet
19 average NMOG meets your curve, unless they change their
20 rule, which is a possibility.
21 CHAIRMAN DUNLAP: But from the all other States,
22 the migration --
23 MR. HERMANCE: From all the other States --
24 (Thereupon, the reporter requested one
25 person speak at a time.)
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1 MS. EDGERTON: What's wrong with this picture,
2 Tom?
3 CHAIRMAN DUNLAP: I think we're maybe splitting
4 hairs here.
5 MS. EDGERTON: I don't. Well, it may be --
6 MR. CACKETTE: I think the differences you're
7 hearing here is that -- I mean, you referred to a 49-State
8 or a NLEV program, and two of the States might have slightly
9 different cars than that, that will be more identical to
10 California vehicles than the NLEV car, depending on their
11 actions, because they've already adopted under 177 our
12 program.
13 The other 47 States would get -- have not taken
14 that action, and would -- I think it's 47. I'm not sure if
15 Maine is in there or Vermont. There are a couple of other
16 ones that are considering it in the Northeast, but the other
17 States will get the California LEV car -- Nevada and
18 Arizona, places where we get more of our migrating cars
19 from, will get the California LEV equivalent vehicle in
20 2001.
21 MS. EDGERTON: Thank you. Well, I'd like to get
22 back, and I'll move on in the interest of --
23 CHAIRMAN DUNLAP: That's fine. We can have a
24 discussion. One thing, I'd like to caution my colleagues,
25 as witnesses come forward, we don't want to imply that they
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1 must send communications to other regulatory agencies or
2 anything like that.
3 They're here to try to educate us and answer
4 questions about our program. So, I just want us to be a
5 little careful about suggesting we send letters -- require
6 them to send letters to Administrators of EPA or any other
7 such organizations.
8 MS. EDGERTON: Okay.
9 CHAIRMAN DUNLAP: While Mr. Hermance may be
10 totally capable and confident to cover these areas which
11 we're considering today, I don't know that you can make as
12 broad a policy for your company.
13 MR. HERMANCE: That's correct. I can not.
14 CHAIRMAN DUNLAP: Okay. Any other questions of
15 Mr. Hermance?
16 All right. Thank you. Joe Caves, Union of
17 Concerned Scientists; Mike Miller, California Motor Car
18 Dealers Association; Marc Chytilo, Environmental Defense
19 Center, CalPIRG; and then Kelly Brown, Ford Motor Company.
20 MR. CAVES: Mr. Chairman, members, Joe Caves,
21 representing the Union of Concerned Scientists.
22 Let me just, first of all, say we share, I think,
23 the goal of this Board in having a successful market launch
24 of zero-emission vehicles, and we participated at every
25 stage, and you've heard our technical comments. And I hope
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1 that where we've had disagreements, that they are respected
2 as our legitimate concern to try to make this a workable
3 program. We'll continue to voice those.
4 And we previously testified that we do not agree
5 with CARB about the wisdom of substituting a contractual
6 agreement for regulatory standards to ensure development of
7 zero-emission vehicles.
8 After reviewing the staff report and the MOA, that
9 view has not changed. But rather than restate those
10 arguments, you've heard them before, I want to confine my
11 remarks to some specific concerns about the MOA that I think
12 that you can address now; and I think, in the interest of a
13 successful market launch that you should at least consider.
14 One of the concerns that I want to raise with you
15 is what I would term potential loopholes -- I'm certain not
16 intentional; but, nonetheless, loopholes -- that could allow
17 one or more car makers to avoid key requirements of the
18 agreement.
19 To cite what I think is probably the most obvious,
20 the MOA includes language that excuses a failure to comply
21 with the technology partnership if the price of pilot
22 batteries are, quote, "unreasonable."
23 Reasonable costs are not defined in the MOA. The
24 whole point of the partnership is, of course, to test
25 advanced battery technologies, and allowing an out on cost
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1 in that way I think defeats the whole purpose of that
2 provision, and what I think is critical to the MOA, which is
3 the technology partnership.
4 A second concern that I want to raise is on the
5 issue of ramping up to the 10 percent production. I think
6 we've all recognized that it's getting to that, it's having
7 an acceptable and sustainable zero-emission vehicle program
8 in California that's really the key to the air quality
9 benefits we're after.
10 The debate we've had over the early years is
11 really how to get there, how best to test that market, how
12 to find the way that works.
13 Nonetheless, those years working up to 2003, are
14 really critical. The existing regulation has an explicit
15 ramp against which we can at least judge automaker
16 performance. We understand your reasons for wanting to
17 eliminate that. And while we have some concerns about it, I
18 think the MOA goes -- is way too flexible, and it lacks some
19 key provisions.
20 The MOA requires only that car makers submit such
21 ramp-up information to the extent it's available. There is
22 no requirement that it be available; that car makers
23 actually develop ramp-up plans. There is no requirement
24 that automakers demonstrate real progress consistent with
25 the state of the technology, as your staff is telling you,
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1 from the technology partnership.
2 There is no explicit penalty or even a real threat
3 of regulatory action the car maker that fails to make
4 reasonable efforts to build and market zero-emission
5 vehicles.
6 What you have before you is an agreement that
7 depends on trusting the automakers to make investments and
8 commitments that are in the interest of cleaning up our air,
9 but may not be in their immediate financial interests.
10 And we all understand how their financial
11 circumstances may change and, quite frankly, their corporate
12 priorities may change. And while we may be sympathetic,
13 that does not put us in a position where California
14 necessarily wants to have its clean air future in the hands
15 of those short-term shareholder-based decisions.
16 For this program to have any hope of success, I
17 think the Board has to send strong and explicit signals
18 about exactly what's expected of the car makers during the
19 supposed ramp-up period. And what are the consequences for
20 a willful failure to comply?
21 We believe that the MOA, as written, does not meet
22 that test. I want to, first of all, say that we appreciate
23 thae Chairman's remarks this morning as to that issue. But
24 I will say further, the reason that we have a contract or
25 the reason you have a regulation is because you have to deal
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1 with changed circumstances and changed attitudes of the
2 parties that come to that agreement, and you have to protect
3 against that.
4 We would urge you to include some kind of formal
5 commitment or statement from the Board as to how they view
6 the MOA in this regard. As part of the formal action this
7 Board takes, we would suggest an amendment to the MOA. But
8 at least this Board ought to be explicit about what they
9 expect of the car companies and what will happen if they
10 fail to comply.
11 An additional issue on the MOA that I want to
12 raise deals with emissions equivalents. And I heard Tom
13 Cackette's eloquent defense of the staff with respect to the
14 modeling. And indeed, UCS has been one of the groups that
15 has raised points of concern and disagreements on that.
16 And I, first of all, want to say -- I want to
17 reiterate our support for and belief in the integrity of
18 CARB's staff on this issue, and don't mean in any way to
19 disparage it. But at the risk of setting off another
20 statement like that, I do want to respectfully disagree with
21 some of the elements of the emissions analysis.
22 We've submitted extensive written testimony on
23 this issue that documents in detail our concerns. Let me
24 just note a few of those.
25 Even as your staff report -- or at least what I
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1 heard this morning -- indicates substitution of the 49-State
2 car for ZEVs will increase emissions, at least until the
3 year 2006, I believe is the staff analysis today. Our
4 analysis suggests 2007.
5 Second, we believe staff's analysis overestimates
6 the NLEV benefits. I appreciate again the Chair indicating
7 a desire to revisit some of those numbers with CARB staff
8 and the automakers, we would respectfully ask to be included
9 in that discussion and that analysis.
10 I think that one of the difficulties all of us
11 have with the MOA process is, it is occurring behind closed
12 doors. Concerns and criticisms we might have might be
13 unfounded, because we have no way of knowing because, quite
14 frankly, we're excluded from that discussion process.
15 I think all of us would benefit in trying to
16 understand these numbers better if we had a more open
17 discussion and process in that regard.
18 Finally, I just want to -- just want to indicate
19 some concern about the sort of larger issue with the NLEV as
20 to what's going in the two Coasts, and the extent to which
21 automakers may be saying one thing and one thing on the
22 other Coast.
23 I'm not in a position to judge that issue, but I
24 think it is one that deserves further exploration here.
25 Having said all this, I want to add one more
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1 point. UCS and I think the entire environmental community
2 wants this program to work. We believe that zero-emission
3 vehicles and the related transportation technology, such as
4 hybrids and fuel cells, offer our best and maybe only long-
5 range hope for clean air in California, given how dependent
6 this State is on automobiles.
7 And we stand willing to work with CARB and with
8 the automakers to put the kinds of disputes we've had aside
9 and begin to find ways to make a market launch of zero-
10 emission vehicles successful in California.
11 Thank you.
12 CHAIRMAN DUNLAP: Thank you, Mr. Caves.
13 Mr. Lagarias?
14 MR. LAGARIAS: I think I heard those same
15 discussions when you had an ex parte discussion with me
16 earlier.
17 MR. CAVES: And I appreciate the members of the
18 Board being willing to have those discussions.
19 MR. LAGARIAS: You raised the concern about the
20 fact that the MOA would say that the price of batteries
21 would have to be reasonable, and you were concerned about
22 the word "reasonable," who determines it.
23 What do you think is reasonable?
24 MR. CAVES: Well, I think the battery panel laid
25 out a range of what we would call reasonable cost. It's not
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1 defined in the MOA itself, and I think that's one of our
2 concerns.
3 The way the MOA is structured, and I would just
4 mention as a caveat, the way a court is gong to review a
5 contractual agreement like this is different than the way
6 they would view a challenge to an administrative regulation
7 or an action of an administrative regulation. And this
8 contract specifically provides for a de novo review. So,
9 you have the potential of having a judge taking a brand new
10 look at this issue.
11 And while CARB may believe that a reasonable price
12 is within the range the battery panel suggested, that
13 doesn't mean on an independent review by a judge, if there's
14 not some explicit definition of a reasonable price, that he
15 would agree.
16 MR. LAGARIAS: Well, it seems to me that until you
17 get cars on the road with batteries, you find out whether
18 people would consider batteries reasonable or not by buying
19 them or not buying them.
20 MR. CAVES: Well, if I could, Mr. Lagarias, the
21 issue is, from the technology partnership on the early
22 vehicles, where they're really only making very limited
23 number, and that that number of vehicles is in part, as I
24 understand it, limited because of the car makers' desire not
25 to make too many; at the same time, that limits the
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1 economies of scale that are involved in batteries.
2 So, you have a situation where CARB staff and the
3 car makers have explicitly negotiated down to a commitment
4 by car makers for a limited number of pilot vehicles.
5 The question is whether or not car makers have an
6 out and can avoid meeting that commitment by making a
7 statement that what battery manufacturers want to charge
8 them for those few hundred or few dozen batteries is an
9 unreasonable price.
10 And I would just indicate that I think that a
11 range of reasonable price needs to be defined to avoid what
12 could be, I think, extremely unfortunate later disputes over
13 that issue that might prevent the entire technology
14 partnership from being successful.
15 MR. LAGARIAS: It might. But it seems to me that,
16 if you start bringing the courts into trying to decide what
17 the people want or don't want by determining things like
18 reasonable, you're obfuscating the issue, which is how do
19 people use these vehicles and where do they go with them?
20 MR. CAVES: With respect, sir, it's not us who are
21 trying to bring the courts into the question of what is a
22 reasonable price, but the MOA itself. That's been the
23 action of CARB staff in saying that, if the prices are not
24 reasonable, that is a defense against not participating in
25 the technology partnership.
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1 We've not raised the issue; CARB has.
2 MR. LAGARIAS: Well, the competitiveness of the
3 suppliers of batteries will pretty much determine what the
4 price of batteries will be, because they're competing with
5 each other just as the auto manufacturers are.
6 MR. CAVES: Well, indeed, I think our view is that
7 the seven large -- seven of the largest corporations on this
8 planet have very little need of protection from us in
9 dealing with what amount to dozens of battery manufacturers
10 and trying to drive those prices to a -- particularly
11 because battery manufacturers are going to want to get their
12 batteries into those cars.
13 MR. LAGARIAS: Right.
14 MR. CAVES: I mean, this is their future market.
15 MR. LAGARIAS: That's a point that's debatable.
16 CHAIRMAN DUNLAP: I was just going to ask,
17 suggest, Mr. Cackette, maybe you can talk about the spirit
18 in which that provision was included.
19 Because I think Joe, as you hear it, I think it
20 may be a source of some reassurance.
21 MR. CACKETTE: Yes. The statement for allowing
22 an out if there's not a reasonable pilot level price for
23 batteries was driven by a single concern. And that was this
24 contract obligates the vehicle manufacturers to put out
25 these 3750 vehicles, each one with an advanced battery pack
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1 in it.
2 And if they found themselves in a situation where
3 they absolutely have to buy a certain pack from a certain
4 manufacturer and that's the only one they've got, they could
5 arguably be held up for an outrageous price.
6 And the only spirit there was to give them an out
7 so that they would not be held hostage to million dollar
8 battery packs.
9 And we believe we know what a reasonable pilot
10 level price is based on the guidance that was provided by
11 the battery panel and the person that makes the decision on
12 this -- notwithstanding the legal review -- but within the
13 confines of whether it's a violation of the memorandum of
14 agreement or not, is the Executive Officer.
15 So, we are in control of deciding what is
16 reasonable or not reasonable.
17 MR. LAGARIAS: So, that word was put in there in
18 the pilot stage.
19 MR. CACKETTE: Yeah, it's only to the pilot stage
20 batteries. And, you know, there has been some -- there have
21 been some examples where some of these early batteries in
22 very small units of a few were priced, you know, scaling up
23 from laptops, and ended up with, you know, hugely inflated
24 costs.
25 And that's not something that we want to see
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1 either. It becomes I think bad publicity that have
2 demonstration vehicles have outrageously priced batteries.
3 And it's not representative of the future.
4 And so, we just wanted to provide some kind of a
5 provision that gave us a leverage to let the marketplace
6 establish a fair and reasonable price.
7 MR. CAVES: Well, I think we don't object to that,
8 Mr. Lagarias. Our concern is that the standards which Mr.
9 Cackette may hold in his head as to what a reasonable price
10 is are not, in fact, in the record of this proceeding, and
11 is not, in fact, in the record before you in adopting this
12 MOA. And that's what we're trying to address.
13 MR. LAGARIAS: It's going in the record right now.
14 MR. CAVES: Well, I heard that he has news on the
15 subject, not that what those range -- or even that it
16 included the --
17 CHAIRMAN DUNLAP: I don't mind. Tom?
18 MR. CACKETTE: There is something on the record.
19 It's the battery panel report. They talked about what they
20 thought typical prices would be.
21 But, obviously, when it comes down to situation, t
22 he Executive Officer would have to look at the actual
23 situation, what is the exact battery. Maybe it deserves a
24 higher price. Maybe the reasonable price we see today seems
25 unreasonable because everything else is cheaper. I don't
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1 know.
2 We're hoping the competition will not make this an
3 issue at all; that it was merely an escape valve for a
4 potentially egregious situation.
5 SUPERVISOR ROBERTS: Would there be a way of
6 defining that to give a little bit more comfort? I was
7 starting to feel good, but then when I heard what you just
8 said, it's got me nervous again.
9 CHAIRMAN DUNLAP: There's one battery pack in
10 particular -- I shouldn't say one battery manufacturer that
11 had a very small number of pilot battery pack units that
12 cost in the range of -- they were selling them for about
13 $300,000 a battery pack for the car.
14 It was felt that that range was much more
15 expensive than you would want to expect or require an
16 automaker to -- even giving Joe credit for perhaps his
17 assessment that they are very large corporations, it's still
18 an incredible amount of money. And for units that cost that
19 cost that much, to be forced into a pilot when they're
20 economically so out of line, Supervisor, it might just be
21 difficult to conclude that they could ever become
22 commercially viable during the lifetime of our what we're
23 discussing here, or that time period which we're discussing
24 here.
25 SUPERVISOR ROBERTS: But there's no requirement
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1 that anybody use a particular company, is there?
2 CHAIRMAN DUNLAP: Particularly now, in some cases,
3 there are only a few manufacturers. And so, as it was
4 explained to me, we ran the risk of holding people hostage
5 economically.
6 SUPERVISOR ROBERTS: There's only a few battery
7 manufacturers?
8 CHAIRMAN DUNLAP: Of a certain type of battery.
9 MR. CACKETTE: There are developers of a number of
10 batteries -- we think there's about 10 or so right now, but
11 we don't know how that's going to sort out in the future.
12 So, those people could drop out and new ones could
13 come into the marketplace. We're not sure. But that's
14 possible that you could end up with a vehicle manufacturer
15 that had gone the track using a specific technology battery,
16 find a couple of the potential manufacturers deciding not to
17 move forward in the pilot area, and they could be stuck --
18 basically held hostage for whatever price and rapid
19 development and recovery costs that battery manufacturers
20 should choose to apply.
21 And there's no out for the vehicle manufacturer,
22 because they're locked into this contract, having to do it,
23 and so on.
24 It's a little hard to sit here and defend a
25 corporation like General Motors about whether they have to
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1 spend this kind of money, but we would -- in the spirit that
2 it was put in there, it was for that purpose alone. We
3 don't think that's going to happen.
4 MR. CAVES: And I don't want to question the
5 spirit with which it was put in. And I want to make clear
6 that we don't want to defend battery manufacturers that are
7 trying to hold General Motors, or Ford, or Chrysler hostage
8 to buying their batteries.
9 Because I was rather on the flip side of that
10 situation, where you had a recalcitrant automaker who
11 decides, for whatever reason, they don't want to participate
12 in the technology partnership, you have the potential here
13 for them to say that a $50,000 or a $40,000 battery pack at
14 pilot level production -- they could declare that
15 unreasonable.
16 The would take that to the Executive Officer, who
17 would say, "No, that's reasonable."
18 They would then get a de novo review under this
19 contract. And the difference between contract law and
20 standard administrative law is, if they were appealing a
21 decision under administrative regulation, the deference
22 would go to the administrative agency. In that case, almost
23 certainly the Executive Officer's decision as to what was
24 reasonable would stand.
25 That's not necessarily true with respect to a
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1 contract agreement where you've not spelled out the terms.
2 That is, I think, a more serious issue than I think CARB
3 staff is taking it. And it's one, again, that I think you
4 don't want the technology partnerships to flounder on this
5 kind of technicality.
6 CHAIRMAN DUNLAP: Mr. Kenny, do you agree that
7 that's open to interpretation?
8 MR. KENNY: I think Mr. Caves actually raises a
9 valid point. But I think Mr. Cackette is trying to answer
10 that point in a way that the actual language came about.
11 The desire here was, as Mr. Cackette enunciated, that we
12 were simply trying to address an extreme situation that
13 could arise under the way the agreements were written, in
14 which the manufacturers had to procure a certain number of
15 batteries for these demonstration vehicles.
16 The original thought was that this would prevent
17 the extreme situation. And what we would do in the event
18 that reasonable pilot level prices had to be addressed, we
19 would look at the battery panel's determinations. We would
20 also look at the historical evidence that's been available
21 to us with regard to what the car manufacturers have done in
22 the past with regard to pilot level programs.
23 Additionally, because of the fact that we're
24 looking at this particular issue at this point, if it turned
25 out at some point down the road that this really became a
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1 sticking point, it seems to me that, at that point in time,
2 there's probably going to be an issue with regard to good
3 faith that underlies this topic.
4 And at that point, if we're looking at good-faith
5 compliance with the regulations, then I think this Board
6 would need to consider whether or not it wants to stay with
7 this particular approach or return to some kind of
8 regulatory approach.
9 MS. EDGERTON: I'd like to --
10 MR. LAGARIAS: I have two more points. Mr. Caves,
11 you made a point of stating that ARB should be explicit
12 about what we expect of the car companies. Well, I thought
13 that MOA said what we expected from the car companies and
14 what we were going to do.
15 Now, there are other things you might want to see
16 in it, but it is explicit.
17 MR. CAVES: I think what I'm addressing there
18 particularly is the failure of the -- and the particular
19 provision is referenced on C3 of your report, ZEV Product
20 Plans.
21 (Reading) The issue of a ZEV product plan shall
22 include, to the extent available, projections for model
23 types, vehicle features, specifications, production
24 capacity, et cetera, and the lack of a specific requirement
25 to ramp up to the 10 percent, or to provide plans which CARB
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1 could reasonably say do, in fact, show a reasonable
2 potential of ramping up to the 10 percent.
3 I mean, I respect that this Board has decided not
4 to set those same kinds of numerical standards you had
5 before, but at least to give you a clear signal that you
6 need to be able to make a judgment based on the information
7 that's provided that they can get to that 10 percent; that
8 they're making reasonable efforts.
9 And there is both a lack of the explicit
10 requirement that they provide plans that show that they can
11 ramp up to 10 percent and a lack of requirement that they
12 actually even provide specified information here if it's not
13 available.
14 If a car company were to choose not to make those
15 kinds of plans or argue that it's not available because they
16 have not made a decision as to which option they're going to
17 make, you have -- they have no requirement to submit that
18 information to you.
19 MR. LAGARIAS: Well, the discussions Board members
20 have made with the staff have been very explicit about
21 requiring, when they review these plans for ramp-up, that
22 they clearly demonstrate the ability to -- and not only the
23 capability, but the direction of meeting the 2003 production
24 requirements.
25 MR. CAVES: And I appreciate those statements and
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1 the extent that we can get that on the record, I think it's
2 useful in establishing what the Board's intent is here.
3 MR. LAGARIAS: Well, that's clearly what the Chair
4 and the other Board members have directed the staff to do.
5 One final question. You brought up the point that
6 fuel cells may be the solution in the long range approach to
7 the clean car of the future.
8 Now, that's an example of considering time as a
9 resource. You didn't put a date on that. You didn't say by
10 2003 and 2010. You said that's down the road.
11 And yet, the emphasis we hear is trying to
12 shoehorn in this interim period between 1998 and 2003; all
13 of a sudden that's a constraint. There's no consideration
14 of using it as a resource.
15 MR. CAVES: I am mindful of your suggestion to me
16 that I begin to rethink my views on this and try to use time
17 as a resource. And that's one of the reasons that I
18 mentioned the fuel cells.
19 I would say further that I understand what the
20 Board is trying to do, and you're -- and we've had extensive
21 discussions on this issue. But I think that it's important
22 that the Board, in reviewing what occurs between now and
23 2003, that you have a clear view of what the car companies
24 are doing, and that you lay out clear expectations both to
25 them and I think to the public, so that everybody has a
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1 clear understanding of what you intend from them and where
2 we're going to get.
3 MR. LAGARIAS: Great. Thank you.
4 CHAIRMAN DUNLAP: Supervisor Roberts, then Ms.
5 Edgerton.
6 SUPERVISOR ROBERTS: Yeah. Let me -- I want to go
7 back for a minute to this -- the ramp-up issue, because
8 there's still part of it that concerns me. And, as I
9 listened to the testimony, at least one of the manufacturers
10 that spoke to producing 120 vehicles, and little more than
11 that, that I hear at least in the testimony, it seems like
12 we're creating a situation where we're kind of passive
13 observers of what is going on with these efforts.
14 And it's not clear to me what happens, for
15 instance, if that particular company were to stick to the
16 120 vehicles. It's very unlikely that they're going to get
17 to the 10 percent in 2003.
18 And yet, there doesn't seem to be anything more
19 than that called for in any way that's enforceable on our
20 part.
21 MR. CACKETTE: Your point is correct prior to
22 2003. What's driving the ramp-up is the 2003 ten percent
23 requirement.
24 You probably can't get there from 120 vehicles to
25 whatever 10 percent of Nissan's sales are. I don't know
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1 what that is, but it's the many thousands.
2 And to try to avoid that or provide an early
3 warning, a red flag, if that was the case, we asked for
4 these business plans. Because one of the specific things
5 that is enumerated there is to have information on the
6 products that will be -- being designed to meet the ZEV
7 regulatory requirement in 2003.
8 So, there's two things that we get out of these.
9 One is, we would identify if Company A just seemingly was
10 not making any good-faith effort -- they didn't have the
11 products; they didn't seem to have the plans in place that
12 anyone could reasonably argue could support a 2003 ten
13 percent requirement. So, we know that. And we can let you
14 know that that's happening to one, two, all seven
15 manufacturers, so that you can take the other actions that
16 may be appropriate.
17 And we're depending on the fact that all seven
18 know that we're looking at all seven plans independently.
19 So, one manufacturer's going to be somewhat at ease of a
20 lack of good faith, if you would put it that way, if they
21 know that the other manufacturers -- one of the other
22 manufacturers is moving forward.
23 So, we used the competitive pressures months ago,
24 and the knowledge of the marketplace and what they're
25 developing to try to assure them that it's not a smart thing
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1 to be a --
2 SUPERVISOR ROBERTS: (Interjecting) We heard
3 their plans were about four years in advance a while ago.
4 1999, a plan's going to be out. You'll review that in the
5 year 2000.
6 MR. CACKETTE: Right. And in '98 as well. The
7 plans they have generally fall into -- in talking with the
8 various manufacturers, fall into two categories. Within a
9 plan, there's a three to five-year horizon. Within the
10 three-year horizon, which is the typical number you hear
11 about there being model revisions every three years, like
12 happens with the Honda Accord, for example, it will have
13 detailed information.
14 SUPERVISOR ROBERTS: (Interjecting) Let me -- you
15 know, I don't know want to draw this out too much. But what
16 if you get to the year 2000, and you're looking at a plan,
17 and maybe they're really going to do better than 120. Maybe
18 they're going to get to 130.
19 Okay? I'll give them the benefit of the doubt.
20 MR. CACKETTE: Okay.
21 SUPERVISOR ROBERTS: They did what this MOA says
22 they have to do. They even went beyond that by 10 percent
23 or so. But it doesn't look like they're in the position to
24 get to your 10 percent. Then, what do you do?
25 MR. CACKETTE: What we'd do is we'd come back and
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1 we'd be making a presentation, and we'd say, Mr. Chairman
2 and members of the Board, we reviewed the business plans of
3 the seven manufacturers subject to the contracts and MOAs
4 that we have with them. And we can tell you today that six
5 of them are developing the kind of products that we think
6 support the 10 percent requirement, and one of them isn't.
7 And then we'd have to decide what to do about
8 that. And we'd try to explain --
9 SUPERVISOR ROBERTS: Well, what might be the
10 options under this agreement?
11 MR. CACKETTE: Well, the premise of this agreement
12 is that, for those first five years, this is a market-driven
13 introduction of vehicles. So, there is not a mandate or a
14 remedy within that time frame to say that there's some
15 implicit ramp-up that is go/no go position.
16 It's going to be your staff's judgment and the
17 information we get as to whether they're on a path for
18 success or failure. And then --
19 SUPERVISOR ROBERTS: What are the options? It's
20 still not clear to me. What are the options for us if you
21 have identified that --
22 MR. CACKETTE: For lack of good faith, we could
23 propose to reinstate the mandatory requirements. That's one
24 if it seems to be a lack of good faith.
25 On the other extreme, it could be that the
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1 experience of the ZEVs that are on the road and the
2 development projects simply are not supporting the viability
3 of having 10 percent vehicles in 2003. And that would be
4 the other extreme, where we say, "Gee, we're going to have
5 to reconsider whether this program can be successful or be
6 successful on this time frame."
7 It could be either extreme. In the latter, we
8 have to figure out what's the best course of action. And in
9 the former, the Board could action to basically force the
10 manufacturer to do a better job.
11 SUPERVISOR ROBERTS: If you found that they
12 weren't proceeding in good faith, then you say you could
13 make that determination? You could make them subject to the
14 existing rules, which would then --
15 MR. CACKETTE: You would have to reimpose the
16 rules by regulatory action. But there's nothing in this MOA
17 or change in the regulations that take any of that authority
18 away from the Board.
19 We still have the authority to reimpose any
20 standards that we can justify as technically feasible.
21 SUPERVISOR ROBERTS: The Board would be able to
22 put back into place those regulations?
23 MR. CACKETTE: That's right.
24 SUPERVISOR ROBERTS: Mr. Kenny, do you want --
25 MR. KENNY: Yes. The qualifier I want to throw in
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1 there is that it sounds a little bit like we're talking
2 about preconditions to Board action. There are no
3 preconditions to this Board acting in any fashion that's
4 subject to its authority.
5 And adopting a regulatory requirement is within
6 this Board's authority at any time.
7 MR. CACKETTE: You just have to follow the due
8 process of reimposing it.
9 SUPERVISOR ROBERTS: So, if somebody were not
10 dealing in good faith and didn't appear that they putting
11 together the program that looked like they can get to that
12 goal, you're saying you could take steps, huh?
13 MR. BOYD: Yes, Supervisor Roberts. We indicated
14 earlier that that was one of the provisions of the program
15 that we had outlined. We have several tools. We have
16 annual reports and data. We have the biennial business
17 plans. We have site access guaranteed under the agreements,
18 and we have the ability at any point in time to give the
19 Board an evaluation and, as indicated, give you an
20 indication of whether we think there's a good-faith effort
21 or not.
22 In the context of that public discussion, the
23 culprits, whoever they may be -- or et cetera -- would have
24 an opportunity to respond to that.
25 And the Board has the option of following a staff
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1 recommendation or finding to the contrary, the staff
2 recommendation of lack of good faith and a projection on our
3 part that they are not adequately ramping up such that they
4 can meet the 2003 requirement, and the Board should take
5 action X, Y, or Z.
6 And the most dramatic of which is reinstatement of
7 the original program; but, as we indicated, "or some variant
8 thereof."
9 SUPERVISOR ROBERTS: Are you going to be able to
10 go after singular manufacturers then? If six comply and a
11 seventh doesn't, you're going to actually be able to take on
12 that one, and you're going to make them subject to these
13 rules and the others are not going to be? Is that what I'm
14 hearing you say?
15 MR. BOYD: That's theoretically possible, in that
16 we have seven individual agreements. The enforcement
17 action, the punitive power that we have to exercise that
18 judgment against each and every one of the contracts. And
19 if only one, for whatever reasons, is way out of line,
20 we have and you have the capability of dealing with and
21 disciplining, if you want to call it that, that particular
22 individual.
23 SUPERVISOR ROBERTS: So, any number from one to
24 seven, we can -- we're free to act on.
25 CHAIRMAN DUNLAP: Mr. Boyd, if I may ask counsel
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1 maybe to affirm that?
2 MR. KENNY: Yes. It would be a very interesting
3 regulatory approach, but we do believe that we could do it.
4 The way we would -- the we have at least thought about it so
5 far, is that we would have a regulatory structure that would
6 be applicable probably to all, but in which those who are in
7 compliance would essentially be able to more or less opt
8 out.
9 And so, the one who was in noncompliance would be
10 obligated to therefore comply with any regulatory approach.
11 SUPERVISOR ROBERTS: The ones that are in
12 compliance can opt out?
13 MR. KENNY: Yes. We were trying to figure earlier
14 about how we would -- this is what we've been thinking about
15 over the last several months -- but how we would essentially
16 construct a regulatory framework that was applicable only to
17 a noncomplying company out of the seven.
18 It would be very difficult we think to essentially
19 construct a regulatory framework that was applicable only to
20 one company. But the way we could construct it would be a
21 regulatory framework that was generally applicable, but
22 which would have specific provisions in it that would allow
23 for companies to not have to comply with the regulatory
24 provisions because of their compliance with alternative
25 provisions.
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1 The alternative provisions that we were thinking
2 about would be compliance with the existing MOAs.
3 CHAIRMAN DUNLAP: Conceptually, it would be
4 similar to like an alternative compliance plan?
5 MR. KENNY: Yes.
6 MR. CAVES: And if I could comment on that, that
7 is one of the issues that we raised previously that, in
8 order to avoid this kind of awkward construct, would be --
9 instead of repealing the mandate to 2003, suspend it for
10 those companies who are in compliance with the MOA, and then
11 it could be reinstated if someone is found out of
12 compliance.
13 CHAIRMAN DUNLAP: Supervisor, the alternative
14 compliance plan -- I guess a "blueprint" has been used here
15 at the Board with consumer products since -- how many years
16 have we had that in place, Mr. Kenny?
17 MR. KENNY: Approximately three.
18 CHAIRMAN DUNLAP: Three years?
19 MR. KENNY: About three years.
20 SUPERVISOR ROBERTS: I've actually seen that in
21 the short time I've been here.
22 But could you comment on the last approach where
23 you'd be suspending?
24 MR. KENNY: The negotiations that we had with the
25 automakers did not really get to the point where we were
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1 talking about a suspension.
2 They really went to this point where we are
3 actually talking about a repeal. I think the primary
4 motivation behind that was the consequences to Northeast
5 States. If you go with a suspension, there is what's called
6 a Section 177 consequence. And that has applicability to
7 the Northeast States.
8 If you go with a repeal, there is the exact
9 opposite consequence to the Northeast States.
10 MR. CAVES: Although you'd have the potential, if
11 you then try to reimpose the mandate at some earlier date,
12 and then suspend it for some, you're going to run right into
13 the same situation.
14 MR. KENNY: In terms of practical consequence in
15 the State of California, that is true.
16 SUPERVISOR ROBERTS: I don't have any further
17 questions right now.
18 CHAIRMAN DUNLAP: Okay. Ms. Edgerton.
19 MS. EDGERTON: Mr. Caves's positions, his comments
20 about the likely court interpretation of the MMOA are, in my
21 view, a hundred percent correct.
22 I think it'd be very difficult, if not impossible,
23 for us to succeed in proving the existence of an intention
24 that's not in the four corners of the document.
25 With respect to the reasonable pilot price issue,
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1 which was raised, when I asked staff about it, the response
2 that I got was that reasonable pilot price is one word, and
3 that reasonable pilot price means prevailing pilot price,
4 which, for example, for nickel metal hydride batteries would
5 be around $250,000.
6 And I would feel most comfortable if there was a
7 provision included in the body of the agreement, because
8 really, if it's not in there, it will not have the same
9 weight as what is in there; that clarified that the parties
10 understood that reasonable pilot price could mean batteries
11 up to $250,000 each, if that's correct. You know.
12 It seems to me we've got 15 more days. I think
13 that our colloquy right here has proven beyond a shadow of a
14 doubt that a court would have difficulty figuring what we
15 meant, because we don't even know what we meant as best I
16 can tell.
17 We've had our Chairman say he thought what was
18 behind it was $300,000 was too much. I was sitting here
19 thinking, what it means is $250,000 for the battery and the
20 technology demonstration project.
21 Mr. Caves is wondering whether it's 40,000. Mr.
22 Lagarias thought it was a competitively priced battery at
23 first. And I think we're all pretty up to speed, so I think
24 it stands for itself.
25 This conversation is that we would all benefit by
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1 having it clarified in the body of the language. I mean the
2 language of the agreement.
3 And I would support that. Would you have any
4 objection? Do you think that's something that could be
5 taken care of in a 15-day agreement, just clarifying what is
6 meant by -- what is meant by a 15 -- what is meant by a
7 reasonable pilot price?
8 MR. KENNY: There is actually not a need to do a
9 modification to the MOAs in the context of a 15-day
10 regulatory change.
11 The MOAs are actually outside the regulatory
12 structure. If, in fact, it was the desire of the Board to
13 go in that direction, what we would simply need to do is go
14 back and reopen the negotiations on that matter with the car
15 companies.
16 MS. EDGERTON: Well, maybe we can find out right
17 here when the next people come up, if they'll agree to it,
18 and what they think it means, and we can get it taken care
19 of.
20 The next thing is, "to the extent available" is
21 worrisome. I agree on that.
22 And I think that -- I think that any reasonable
23 interpretation of the sentence would mean to the extent
24 available anyway.
25 And I think it only confuses things. And I would
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1 appreciate it if the auto companies' principal spokespeople
2 who are still going to come would reflect on whether that's
3 the kind of thing that would be okay with them, too, because
4 I'll ask them about it.
5 Thank you.
6 CHAIRMAN DUNLAP: Thank you, Mr. Caves.
7 MR. LAGARIAS: One comment. I think if you start
8 putting in prices on what you think is reasonable, if you
9 said 300,000, for example, I guarantee you every developer
10 would find that his value is 300,000, and that's what you're
11 going to have to pay.
12 I think that agreements have to be flexible. I
13 think that you can't tie the hands of everything because of
14 how you want to interpret things now, because things are
15 going to change.
16 And we have to look at the staff and the people
17 affected in the auto industry to work these issues out.
18 Because, clearly, they understand the intent of the program.
19 MR. CAVES: And I think there are some ways to
20 work it out and, in fact, to achieve what was stated as the
21 intent.
22 And that would be, eliminate that provision that
23 allows them an out, and instead allow at the Executive
24 Officer's sole discretion his ability to excuse performance
25 in that regard in the case of an unreasonable battery price,
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1 or a battery manufacturer who's trying to use this in an
2 unreasonable fashion.
3 And that solves your problem. You don't risk
4 separate court interpretation. At the same time, it allows
5 what clearly CARB staff wants to do, which is prevent
6 automakers from being held hostage by a single battery
7 manufacturer.
8 CHAIRMAN DUNLAP: Thank you, Mr. Caves.
9 MR. CAVES: Thank you.
10 CHAIRMAN DUNLAP: Mr. Miller.
11 (Thereupon, there was a pause in the
12 proceedings to allow the reporter to
13 replenish her Stenograph paper.)
14 CHAIRMAN DUNLAP: Okay. Mr. Miller, the time is
15 now yours. Go right ahead.
16 MR. MILLER: Go right ahead, huh? Okay.
17 My name is Mike Miller, and I am the President of
18 the California Motor Car Dealers Association, an association
19 of 1400 dealers across the State of California, with 100,000
20 employees.
21 And I was -- I had made a couple of notes, and
22 I've said many things over the past year, but I'm really
23 here to say that I represent the one situation that you
24 haven't covered. And that's when all of you go home, it's
25 when that customer comes into my dealership and buys the car
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1 at night, whether it be the 3200 cars that you're talking
2 about doing a year, whatever that number is, up to whatever
3 higher number; if that car is not right when we put that car
4 out, we have an unhappy customer.
5 Now, I'm here to tell you that when I took office
6 almost 11 months ago, it was my goal to take the mandate
7 and destroy it. We believed that the electric vehicle would
8 never work, and we thought it would be a failure.
9 Shortly thereafter, we had a chance to drive one.
10 The people in the association and myself flew back to
11 Detroit. We drove three back there. And I drove another
12 one in California a few months later.
13 And I would like to tell you that that car is a
14 winner; that car will be a major part of my inventory that
15 I sell to the public. I love the car. But I love the car
16 with the next generation battery or the one after that.
17 The problem is that I can not sell a car that is
18 going -- in the quantities in particular that you're talking
19 about, and a car that will get from 50 to 75 miles between
20 charges.
21 It doesn't work. There's no way that I can
22 rationalize that. There's no way that I can ever convince a
23 customer to do it.
24 It is important that this car start out with a
25 chance to succeed. We're talking about numbers that we have
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1 to hit in the year 2010. We're talking about moving the
2 mandate back to the year 2003, having the 10 percent number
3 on it. I concur with those a hundred percent.
4 And I would absolutely believe that you could do
5 10 percent in the year 2003 if the battery will get you 150
6 to 200 miles.
7 And then when you go to the lithium after that,
8 maybe you can get more than that. And if the prices come
9 down, I think everything that everybody said is accurate.
10 And that's where I come from. At some point, the
11 manufacturer, the State of California, and the United States
12 Government is going to stop putting money after this, and
13 the customer's going to have to put their own money on it.
14 And it's not going to be at 3700 cars or whatever
15 that number is. Because that's easy to take care of. You
16 know, you can buy your way through that. But you can't buy
17 your way at 10 percent. You've got to have a real car
18 there. You've got to have a real car that I can live with,
19 and that I can comfortably sell to my customer.
20 I can not sell a car that I can not have the
21 confidence that my customer can go from Point A to Point B
22 reasonable, without worry, "Am I gonna get stuck? Do I have
23 to think about that additional miles, and the quality of
24 it?"
25 I just heard a conversation about battery and, Mr.
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1 Lagarias, I agree with you a hundred percent. If you put a
2 number in there, whatever number it's going to be, that's
3 going to be the number.
4 We have to make this a market-driven product,
5 whether it is in the initial part of it or it is in the year
6 2003. Please understand that I believe this car will be a
7 major success. I would drive the car. I have -- in fact,
8 we were on a radio show down in Los Angeles, the Michael
9 Jackson Show. And I said that I believed that 10 percent is
10 a lock in the year 2003 to 2005. I really believe that if
11 the battery is there.
12 But the battery has to be there. And you've got
13 to give it a chance. When you're talking about ramp-up and
14 you're talking about going from zero to whatever numbers in
15 the initial stages and when you're having the conversations
16 that I just heard, ladies and gentlemen, I don't know what
17 you do with those cars if they don't work.
18 Why not take smaller steps? Why not allow the
19 cars to work? And why not pass the liability or reduce --
20 excuse me -- reduce the liability all the way down the line
21 to have these cars succeed before we start asking for major
22 numbers.
23 The only numbers that I heard were all followed or
24 proceeded by the word "produce." Nobody -- and I've been
25 sitting here for two hours -- nobody has said one word about
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1 a customer buying a car.
2 That's where the rubber meets the road. And all
3 of this is for naught if we don't address that.
4 My concern is that wherever you go in your first
5 year that you're going to have this in, not 2000, but in the
6 next few years, as we've had the request to ramp up, the
7 first year the numbers are going to look terrific. But then
8 you will have hit the saturation point with the current
9 battery.
10 Then it's going to fail. And what I'm really
11 saying to you is I don't want this car to fail. This car
12 can not fail. This is the evolution. Very frankly, I said
13 to my wife this morning when we left Los Angeles, and we
14 stopped at a place to get a cup of coffee. The car I'm
15 driving had a cup holder. And I said to her, "It's kind of
16 sad when I read recently in an article that the great
17 evolutions and the great excitement about cars today is that
18 they now come with cup holders, and that the cup holders pop
19 out."
20 (Laughter.)
21 MR. MILLER: This is the evolution. This is the
22 future of the automobile business; it's the electric
23 vehicle. It's one of the great evolutions in my lifetime.
24 I don't want to see it hurt. And I want to see it done so
25 it's done well.
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1 The investment is just a few years between now and
2 the year 2003. And I'm convinced that, if we are delivered
3 a product that I can be comfortable selling, that I will
4 sell at least 10 percent. And I'm using the word "at
5 least." I really believe there are certain areas of
6 California that we will do greater numbers than that. And
7 there are certain areas that we won't.
8 I have gone across the State with 18 field
9 meetings as president of this association, and I have talked
10 about the electric vehicle in every meeting. Frankly,
11 that's where I was this morning. We went from Los Angeles
12 to a field meeting in Orange County and flew up here just
13 for this.
14 And in every one of those meetings, we look at the
15 areas -- and there are certain areas the electric vehicle
16 will have absolutely no involvement. I think of areas like
17 Bakersfield, or I think of areas where there's just too much
18 driving; that the people have to be -- they have to buy into
19 it, and they would have to change a little bit.
20 Los Angeles, Orange County, Ventura County, San
21 Francisco, all those areas I think would be very good for
22 it. I really believe it's a winner.
23 I ask you to -- we looked at the three plans. We
24 heartily endorse the plan that your staff has recommended.
25 We truly do believe it's the way to go. Allow it to
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1 succeed, allow it to succeed the right way.
2 And I ask that you don't enter into any areas
3 where you're going to inhibit or you force cars to come out
4 that we eventually have to either junk or somebody's going
5 to have to buy.
6 Allow it to be something that the market drives.
7 The market will drive this car.
8 Thank you.
9 CHAIRMAN DUNLAP: Thank you, Mr. Miller. I
10 thought it was impossible to improve upon Peter Welch's
11 representation of this association, but you have outdone
12 him.
13 MR. MILLER: Thank you.
14 CHAIRMAN DUNLAP: So, you're welcome to come back
15 here anytime. Peter, we're sorry. He's taken your job.
16 Mr. Lagarias.
17 MR. LAGARIAS: Thank you. I thought that was a
18 very constructive and positive message.
19 MR. MILLER: Thank you.
20 MR. LAGARIAS: You did strike a responsive cord.
21 And I wish you'd take this message back to the auto
22 manufacturers. When they do build cars, please build a
23 larger cup holder.
24 (Laughter.)
25 CHAIRMAN DUNLAP: Jim, did you -- Supervisor
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1 Silva.
2 SUPERVISOR SILVA: Mr. Miller?
3 MR. MILLER: Yes.
4 SUPERVISOR SILVA: I'm not an expert on cars, but
5 if a product gets out there before it's really been refined
6 and you have people that really like the innovation or
7 whatever it may be, but the technology is not there,
8 wouldn't that be the same as like, for example, poisoning
9 the well, and then we lose the people that would probably
10 sell that product?
11 MR. MILLER: Supervisor, I've said that for the
12 whole time, in that the only way that I know that this car
13 will fail is if we bring out and we force the issue too
14 soon, and with a product that is not a quality product.
15 That is the sure poison to this car. I believe
16 this car is so good, and the potential of the car is so good
17 that I don't want it poisoned. You're a hundred percent
18 right in what you're saying.
19 If they come out with something marginal, what
20 happens -- and the truth is, and everybody in this audience
21 knows a lot of people that do this.
22 The problem is, you have one bad experience,
23 you're going to tell 10 people. If you have a good
24 experience, you tell one. You have a bad car, and that'll
25 spread like wildfire.
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1 You get stuck someplace that you can't go because
2 you have an electric vehicle and your mileage -- you didn't
3 calculate your miles right, you have ruined the car. You've
4 got to take those obstacles away.
5 We're asking for people, at some point they want
6 to buy it, they have to make some concession to it, in that
7 they have to think about how many miles might they go today.
8 You don't have to do that with the car that's in
9 your driveway today. But I believe that the car has so many
10 positives that you can get away from that.
11 But if we start sticking too many negatives to it,
12 then we start balancing. And then people are going to say,
13 "You know what? I don't need the aggravation, or I don't
14 need to think twice about it."
15 I'll wait until the next generation, which might
16 be the year 2010, whenever it comes, where you might get 300
17 miles between charges.
18 Does that answer your question?
19 SUPERVISOR SILVA: Thank you.
20 CHAIRMAN DUNLAP: In this case, I need to look out
21 for a witness. He has a plane to catch. So, I'm going to
22 let you go before we inundate you with questions.
23 Thank you for your time.
24 MR. MILLER: Thank you.
25 CHAIRMAN DUNLAP: Marc Chytilo, Environmental
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1 Defense Center, CalPIRG, and then Kelly Brown, followed by
2 Steve Heckeroth, and Doug Henderson.
3 MR. CHYTILO: Mr. Chair, members of the Board, I
4 am Marc Chytilo. I'm the Chief Counsel of the Environmental
5 Defense Center, and we are a public interest environmental
6 law firm in Santa Barbara, one of the towns that has over a
7 dozen electric buses currently in operation.
8 And let me stand up and raise my hand for Mr.
9 Miller, because I'm ready to buy an electric car. I'd like
10 to be able to retire the old Honda Civic that we keep
11 trundling along in year after year as our second car for one
12 that we can use in Santa Barbara, where rarely would we ever
13 go beyond a 30 or 40 mile radius.
14 I'm here today not just in that capacity as a
15 consumer, potential consumer, but as a representative of
16 both the California Public Interest Research Group, and the
17 Massachusetts Public Interest Research Group.
18 The significance of having a Massachusetts group
19 here before CARB will become clear to you in just a moment.
20 But indeed, the significance of what you are contemplating
21 today, the significance of this action, is not only national
22 in scope; it's international.
23 And as part of the comments that I submitted to
24 your Board, was some correspondence from a Canadian group
25 that's watching very carefully on how California's going to
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1 treat the electric vehicle industry, because they, too, are
2 looking to the electric vehicle as a solution to a problem
3 that they're finding particularly difficult.
4 The perspective that we have on this issue, coming
5 from a community where electric vehicles are already in
6 place and are something that there is a considerable amount
7 of consumer demand for, is that CARB has pioneered the air
8 quality improvement technologies. In fact, the history of
9 the Clean Air Act is for technology forcing measures.
10 However, at this juncture, it appears that CARB is
11 prepared to snatch defeat from the jaws of victory. And
12 we're really concerned about that.
13 As I came in, I saw down in the parking lot, as
14 I'm sure you did, a series of vehicles that are out there
15 that are ready to go. And while they may not satisfy the
16 consumer who wants to be able to drive 300 miles, they do
17 provide a very important opportunity for a significant part
18 of the market; that is, the second vehicle, the commuters
19 who can limit their driving to within the reasonable range
20 of that vehicle.
21 Now, as I understand it, the folks at U.C. Davis
22 have done some evaluation of the available market for these
23 vehicles, and it's anywhere from 7 to 14 or 15 percent of t
24 he perspective car buying market.
25 Unfortunately, the auto manufacturers have come up
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1 with their own data, which shows that it's going to be
2 impossible to launch this vehicle as the market is currently
3 configured until you have the long-range vehicle
4 commercially available.
5 And I think that the product of your decision here
6 is going to be to impair the ability of California and the
7 nation and, in fact, the world to be able to accomplish the
8 air quality goals that we all consider to be very, very
9 significant.
10 Now, I'm here today as an attorney and I'm taking
11 Janet Hathaway's more pessimistic role. I have to look for
12 the problems, and I've been asked to review how the
13 California Environmental Quality Act may apply to the action
14 that the Board is considering taking.
15 Now, I see that many of you do serve in other
16 roles before -- as members of a city council or boards of
17 supervisors, and you may be familiar with CEQA in a
18 different context.
19 And you may also note that there has not been a
20 considerable amount of attention paid to CEQA in the context
21 of the staff report and the analysis that's been brought to
22 you.
23 And it's my contention that, in fact, CEQA's goals
24 of full disclosure of all potential impacts associated with
25 a potential action has not been honored through this process
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1 and, as a result, the decision that you're being asked to
2 make is not the best decision.
3 The processes that are created by CEQA provide an
4 opportunity for agencies to make decisions that will have
5 the best possible environmental ramifications, while
6 accomplishing the goals of the project.
7 And the certified regulatory program under which
8 the Air Resources Board is authorized to operate under
9 requires that you adopt and embrace the spirit and the
10 purpose of CEQA in your decision making.
11 And I'm concerned that, in fact, that's not been
12 fulfilled.
13 The guidelines which interpret CEQA specify that
14 the role of the CEQA document -- in this case, the staff
15 report -- is to demonstrate to an apprehensive citizenry
16 that the full ecological ramifications of your action have
17 been considered.
18 And it is there where I think that the staff
19 report falls short. This is a process that involves
20 literally millions of people, millions of people will be
21 affected by the decision that you make here.
22 And it is going to be one that is going to have
23 very significance adverse ramifications potentially to
24 environmental quality. And the failure to use the staff
25 report and to use the CEQA process as a tool to guide your
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1 decision-making process has tainted that process. And I
2 would implore the Board to step back from the course that
3 you're on and look -- take a hard look at the environmental
4 issues that are associated with the proposed action, and
5 evaluate whether there may be additional mitigation
6 measures, whether there may be other alternatives that would
7 be able to accomplish the purposes that you seek to
8 accomplish here.
9 CEQA requires that, as you make this demonstration
10 to the apprehensive citizenry, that you provide a logical
11 link from the facts to the conclusions that are drawn. And,
12 as we've tried to do an analysis of the staff report and its
13 review of environmental issues, as we peel back the onion,
14 we found troubling issues rise virtually at every corner.
15 There was a discussion earlier about the model and
16 the assumptions that underlie it. And the model, of course,
17 is a critical bit of information here. Because the staff
18 report recognizes that there are going to be some short-term
19 increases in air pollution, and there's going to be exposure
20 of -- as a result of that, additional people to air
21 pollution that otherwise, with the ZEV program, would have
22 been able to have been reduced or eliminated.
23 However, when you look at the model, you realize
24 that virtually every assumption that was made was made in a
25 manner as favorable as possible to minimize the significance
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1 of the environmental impact associated with your decision.
2 You heard about the 18 percent migration rate; the
3 trends actually indicate that a 14 percent migration rate
4 would be -- is more reflective of what's really going on.
5 1987 was the last year we had an 18 percent rate.
6 Now, just adjusting that one number in the context
7 of the model employed by staff changes the net cumulative
8 benefit associated -- the air quality benefit associated
9 with the NLEV mitigation measure, if you will, from 104
10 percent at the year 2010 to 85 percent. So, we don't get
11 that net air quality benefit that is -- that was pledged
12 when this process was initiated, and which is the
13 underpinnings of staff's conclusion that the significance of
14 the environmental impacts is not going to be great.
15 But there are a lot of other issues. One of the
16 most significant issue that has been overlooked through this
17 process is that there are two States -- Massachusetts on
18 behalf of the residents I'm speaking with -- for today, and
19 New York -- have already opted into the California tailpipe
20 emission standards.
21 So, the model assumed that the NLEV, the in-
22 migration of cars for the purposes of calculating this
23 benefit were all going to be Tier I cars, dirtier cars.
24 But, in fact, to States, two very populated and large
25 States, have already adopted California standards.
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1 So, the cars that are going to come in from New
2 York and from Massachusetts aren't going to benefit -- we're
3 not going to see an air quality benefit from the NLEV
4 program, because we're already there in those two States.
5 So, the model in that way has overstated the
6 benefits associated with the NLEV as a mitigation measure.
7 Another assumption was that there would be
8 turnover -- that the average fleet age would be 7.31 years.
9 Well, in fact, the in-migration fleet, the migrant fleet
10 tends to be substantially older; in fact, twice that age.
11 Excluded from the model's assumption of the
12 benefits are refinery emissions associated with the
13 additional fuel that's going to be burned by the NLEVs which
14 would otherwise not be required to be produced if the ZEV
15 program were in place.
16 Similarly, the proposal that's been put forward
17 allows the compounding of the ZEV credits, which is going to
18 have an adverse effect on the ultimate long-term emissions
19 reduction from the ZEV program. So, we're compromising the
20 ZEV program as we're trying to build up the NLEV program.
21 And that's going to have some significant cumulative air
22 quality impacts.
23 And the worst problem associated with the whole
24 modeling proposal and the NLEV program as a mitigating
25 factor is that there's no real mitigation monitoring plan.
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1 There's no ability to evaluate how effective either the NLEV
2 program or, as is allowed by the MOAs, the substitute
3 program is in actually accomplishing those emissions
4 reductions.
5 And what CEQA requires, and what I've not seen out
6 of the documents that have been made available to me at this
7 point is a mitigation monitoring plan, which is an element
8 that the Legislature saw fit to pass and include as part of
9 CEQA in any agency action where there was a determination
10 that there was the potential for significant impacts and
11 mitigation measures were available to reduce the
12 significance of those impacts.
13 The mitigation monitoring plan is supposed to be a
14 device where you can go back and evaluate how effective the
15 mitigation measures have been. And, as the proposal is
16 currently been brought to you, there is no mitigation
17 measure plan -- mitigation measure plan. And, in fact,
18 there is a number of opportunities for mischief in
19 determining whether the mitigation is actually going to be
20 effective.
21 So, that's a concern that we have that we think is
22 particularly significant.
23 Other environmental impacts are associated with
24 the fact that the NLEV program is going to generate
25 additional PM10 pollution, which is not included as part of
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1 the calculation -- what sort of benefits the ZEV program
2 would offer to us as opposed to the NLEV program with
3 respect to PM10. The same analysis applies to toxics, which
4 has been brought up by a number of commenters in their
5 letters.
6 The second major problem that we have with respect
7 to this CEQA analysis is the memorandum of agreement and,
8 specifically, its enforceability. Without the opportunity
9 to ensure that we're going to accomplish the emissions
10 reductions that the NLEV program is designed to accomplish,
11 there's no guarantee that we're actually going to get the
12 air quality reductions that even the NLEV program offers.
13 And indeed, without having some sort of
14 third-party enforceability, some avenue for the public to
15 participate in the process of evaluating whether these
16 mitigation measures have actually been effective, you're
17 denying the enforceability of these mitigation measures in
18 the MOA generically.
19 You've gone from a situation where have regulatory
20 compliance which is enforceable by public interest groups,
21 by the citizenry that can observe and monitor this process,
22 and see that, indeed, we're going to accomplish these
23 emissions reductions, to one that's based on contract. And
24 it's just a contract between the Air Resources Board and the
25 auto manufacturers.
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1 The public has no role in that process. They have
2 no ability to participate and to learn that, in fact, these
3 emissions reductions are being accomplished and, if they're
4 not, to be able to take action to ensure that they are.
5 SUPERVISOR RIORDAN: While you've paused for just
6 a moment --
7 MR. CHYTILO: sure.
8 SUPERVISOR RIORDAN: -- and I'm respectful of the
9 time and we have a number of other speakers. Is there some
10 way you could perhaps draw this to some sort of a summary?
11 We do have -- and you're certainly, I think, on record in
12 writing, am I correct?
13 MR. CHYTILO: Yes.
14 SUPERVISOR RIORDAN: Okay.
15 MR. CHYTILO: Supervisor, I am. And I'll try and
16 bring this together.
17 SUPERVISOR RIORDAN: Thank you. I'd appreciate
18 that.
19 MR. CHYTILO: I hope that you understand just --
20 that these are technical concerns.
21 SUPERVISOR RIORDAN: And I recognize that.
22 MR. CHYTILO: They concern the CEQA process. They
23 don't necessarily jeopardize the final decision, but the way
24 the decision is accomplished.
25 And it would be my hope that the Board would be
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1 able to go back and address some of these issues in the days
2 that follow before taking final action, and that that will
3 provide a mechanism where this process can be honored.
4 I'll be brief.
5 A second issue, which is not clearly stated in the
6 staff report and jeopardizes the whole CEQA process is that
7 the basic need for these changes has not been established,
8 in our opinion, from unbiased sources.
9 As we've noticed, it is the auto manufacturers and
10 Sierra Research, two entities that have expressed a very
11 strong predisposition on this overall issue, that have led
12 the Board to conclude that this change is necessary. And if
13 you look at what I consider to be some unbiased sources, the
14 Department -- or the University of California at Davis
15 study, it shows indeed there is a market for these vehicles.
16 And so, the overall need for the project just
17 needs to be better articulated. It shouldn't be based on
18 biased data. And I'm afraid that that's the case right now.
19 Thirdly, the public process is very important for
20 CEQA. And there has been a major change in this program
21 going from ZEV to the NLEV. The public just has not had the
22 opportunity to be involved in the environmental impact
23 analysis components of that. And the fact that you received
24 a thousand comments, 70 percent of which were concerned
25 about environmental impact issues, indicates as black letter
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1 CEQA law, that there is a significant issue there that needs
2 to be fully developed.
3 The staff report spends one page on environmental
4 analysis. And that just does not provide a substantive CEQA
5 response. It does not satisfy the requirements of this
6 statute, and it leaves the public very much in the dark
7 through this process.
8 Finally, we have grave concerns with respect to
9 the State's attainment status, and whether this particular
10 project, this proposal, is going to jeopardize the State's
11 attainment status.
12 If I could ask to put on the overhead here, this
13 is from the staff report, the cumulative net emissions. And
14 it's a little difficult to show. But I've worked closely in
15 Ventura County and Santa Barbara County -- Ventura in
16 particular, and Sacramento is in a similar situation, where
17 the attainment date is 2005. And if you'll see that the
18 benefits associated with the ZEV program for the 2005
19 attainment areas are significant.
20 Now, if you're looking just at the South Coast in
21 the year 2010, the NLEV program appears to catch up,
22 assuming that the model is all correct.
23 But for those other areas that are relying on the
24 ZEV emissions reductions, they're being left in the lurch.
25 They're going to be asked -- and Supervisor Mikels was here
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1 earlier -- she and I have looked at air quality issues
2 together, and it's a problem.
3 Local districts have put everything possible into
4 their air quality attainment plans, and here with the ZEV
5 program, you're asking them to do more. That's a
6 significant environmental issue, because you're
7 contradicting one of the plans that was adopted at the local
8 level.
9 So, there's -- you can turn the lights back on
10 now.
11 There's a need for additional process to be able
12 to address these issues. I surprisingly echo the statements
13 by the gentleman from the Rand Corporation. It's necessary
14 to pay careful attention to this process. And indeed, I
15 believe that the CEQA process provides a vehicle for paying
16 that careful attention to the decision-making process, the
17 factors, the facts, the evidence that your Board considers
18 that the staff presents to you.
19 Based on what I've seen, I don't see substantial
20 evidence in the record to support the action that you're
21 being asked to approve at this point.
22 And consequently, I have concerns that the action
23 that you're taking is subject to a judicial challenge. So,
24 I hope that you can go back, try and remedy these concerns,
25 provide the public more opportunity for input in the
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1 process, and a full airing of the environmental impacts
2 associated with this action.
3 Thank you.
4 SUPERVISOR RIORDAN: Thank you very much.
5 I'm going to ask if staff wants to comment at all
6 on the CEQA issues. I don't want to get into a debate, and
7 I would tell the speaker that I just am asking now for their
8 opinion. You've offered yours.
9 And if they want to have any opportunity to
10 comment, this is the appropriate time, if so.
11 MR. KENNY: We actually have no comment to make at
12 this time.
13 SUPERVISOR RIORDAN: All right. And I appreciate
14 that. Are there any questions by the Board members?
15 MR. CALHOUN: May I have one?
16 SUPERVISOR RIORDAN: Yes, Mr. Calhoun.
17 MR. CALHOUN: I don't agree with your assessment,
18 in that there's no basis for changing the program.
19 Apparently, you did not attend any of the hearings in the
20 past when the battery panel that this Board appointed came
21 in and said that the technology wasn't there, and that it
22 would not be there until around the year 2000, 2001. And on
23 that basis alone, I think it would have been irresponsible
24 on the part of this Board not to suggest any changes.
25 So, I just want you to realize that I certainly
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1 disagree with your assessment that there's no basis for
2 making any change.
3 MR. CHYTILO: I appreciate that.
4 MR. CALHOUN: And you also said something to the
5 effect -- "by a biased group" -- and I don't consider the
6 battery panel as being biased.
7 MR. CHYTILO: No, and I didn't make that -- I
8 wasn't leveling those charges at the battery panel. My
9 contention here would be that the short-range vehicles are
10 something for which there is an acceptable market out there.
11 And existing technology could be used, the lead-acid
12 batteries, in order to provide the first round of ZEVs.
13 And as advanced technologies came into place, then
14 we could see a transition of the fleet into the long-term --
15 the longer-range vehicles.
16 But, at this point, I think that there is -- that
17 the ZEV mandate could be accomplished, and it could reduce
18 air pollution, and it could be successful as a commercial
19 venture -- if not for the big automakers, perhaps for many
20 of the small businesses in our State that are more actively
21 working on developing the technologies to be able to respond
22 to this mandate.
23 SUPERVISOR RIORDAN: We thank the speaker very
24 much and, if I might on behalf of our reporter, I'd like to
25 take a five-minute break and resume in truly five minutes.
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1 Thank you very much.
2 MR. CHYTILO: Thank you.
3 (Thereupon, there was a brief recess taken.)
4 CHAIRMAN DUNLAP: Who have we got next?
5 SUPERVISOR RIORDAN: Mr. Brown. Mr. Kelly Brown.
6 Maybe, Mr. Brown, you could wait just a minute,
7 because people are still finding their seats.
8 MR. BROWN: C'mon, you don't want to miss this.
9 This is the best part.
10 SUPERVISOR RIORDAN: That's right.
11 (Laughter.)
12 MR. BROWN: See, look it. They're all coming in.
13 CHAIRMAN DUNLAP: No advertising.
14 MR. BROWN: Is it okay to start now?
15 CHAIRMAN DUNLAP: Yes, go right ahead.
16 MR. BROWN: My name's Kelly Brown. I'm Director
17 of Vehicle Environmental Engineering for Ford Motor Company.
18 And I'm going to start off by taking the
19 Chairman's wise counsel, and limiting my statement, and not
20 repeating things that have been said by others.
21 I would point out that I support the comments of
22 my colleagues, especially the detailed comments supplied by
23 Eric Ridenour of Chrysler.
24 I also support Ms. Edgerton's opening remarks.
25 It's a shame she's not here to hear me say that. I agree
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1 that, on balance, the agreement is good. And I also agree
2 that some of the details cause me trouble. And they aren't
3 the way that I would write it. I suspect that Ms. Edgerton
4 and I dislike different parts of the agreement.
5 But I guess that means it's probably a good
6 agreement if people who have different views of what the
7 outcome should be and both have things they like and dislike
8 in the agreement; but, overall, they can live with it. I
9 think that's a definition of compromise.
10 Now, I'd like to comment on a couple of things,
11 and then I'll open it up to a spirited question session.
12 A couple of things that have been mentioned before
13 that I think have been misinterpreted -- we've heard a lot
14 of people comment about questions as to whether or not the
15 49-State program offsets the calculated benefits of the ZEV
16 mandate.
17 And I think the confusion might stem from the
18 chart that the last witness put up -- the cumulative
19 benefits.
20 I'm not sure what -- I wish the staff hadn't put
21 that in. I'm not sure what the meaning of a cumulative
22 benefit is. If all the emissions that went into the
23 atmosphere just stayed there, we would have been gone
24 generations ago. And, really, the year over year analysis,
25 I think, is much more technically correct and more
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1 thoughtful.
2 And if you look on page 59 of the report, and you
3 look at what the actual emissions benefits of either the
4 calculated benefits of the ZEV program -- and for the sake
5 of simplicity, put aside the fact that, if you look at the
6 battery panel report and the testimony of the other experts,
7 the fact that electric vehicles won't sell in any quantity
8 would really take those benefits almost down to zero.
9 But put that aside and assume those cars actually
10 got sold and actually displaced a gasoline vehicle. If you
11 look at the analysis, our offer is triple the benefits in
12 2010, which is the SIP year. It's tripled.
13 So, even if it goes to 14 percent, the worst case
14 assumption presented, it still shows better than equivalent.
15 With that, I think I'll take questions.
16 MS. EDGERTON: I just want to say I heard your
17 kind comments. I was in the back.
18 MR. BROWN: Thank you. I knew I'd get you back.
19 MS. EDGERTON: Well, it was kind of fun to hear
20 what you said behind my back. I really liked it.
21 Thank you.
22 CHAIRMAN DUNLAP: Okay. Mr. Brown, short and
23 sweet, have a seat.
24 MR. BROWN: Thank you.
25 (Laughter.)
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1 CHAIRMAN DUNLAP: Mr. Heckeroth, Doug Henderson,
2 Larry Berg.
3 Again, I'd just remind the audience, if we've
4 heard from you and you've provided us comments in writing,
5 we've had a chance to read them; don't feel you need to
6 cover them all verbatim. But make a few salient points, and
7 we'll move the agenda.
8 MR. HECKEROTH: Thank you, Mr. Chairman and
9 members of the Board. My name is Steve Heckeroth. I'm the
10 only representative of a very small business that's come
11 before you today.
12 I'm educated as an architect. And for the last 25
13 years, I have been refining the design and construction of
14 buildings that rely totally on the sun to satisfy the energy
15 needs of the people who live and work in them.
16 In 1992, inspired by the courage and vision of
17 this Board's zero-emission mandate, I mortgaged my land and
18 sunk my life savings into starting a small cottage industry
19 style electric vehicle company.
20 My goal was to change the public's perception of
21 EVs from ugly, slow utility vehicles to good looking, high
22 performance cars.
23 When I started producing electric vehicles four
24 years ago, the only components available came from the golf
25 cart and forklift industry. Since then, a multitude of
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1 small businesses have sprung up all over the world in
2 anticipation of the mandate's implementation.
3 I am now able to get high performance controllers
4 with regenerative braking, power factor corrected chargers,
5 and light weight wheel -- permanent magnet wheel motors.
6 I am here to support the 1990 mandate and tell you
7 that my company is one of many that will have to close its
8 doors if you eliminate the percentage requirements for 1998
9 and 2001.
10 The staff's recommendation of Option B is based on
11 information gathered from what they call the primary
12 stakeholders. These stakeholders, it turns out, are not
13 people who've risked all they own, or our children,
14 grandchildren, or future generations as one would assume.
15 They include the oil and auto industry. These
16 industries are firmly entrenched in the technologies of the
17 industrial age, which has brought us to the point where we
18 need an air quality control board.
19 I'm a stakeholder along with all the people in
20 small business who believed that the mandate would be
21 implemented in 1998. But my efforts and interests are not
22 reflected in Option B.
23 When smoking was determined to be a public health
24 hazard, law makers did not sit down with the tobacco
25 industry and draft a memorandum of agreement for cleaner
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1 burning cigarettes.
2 California took on smokers and the tobacco
3 industry, and made laws to protect the health of people in
4 public places.
5 The Option B MOA includes some serious loopholes
6 that will likely result in further delay of the full
7 compliance with the mandate. For instance, the auto
8 industry can influence the acceptance of ZEVs by continuing
9 its negative media campaign or by making products that are
10 not satisfactory to the public as evidenced by the price tag
11 of many of the cars they are suggesting.
12 The fines suggested in the MOA can easily be
13 circumvented by token efforts or included in the cost of
14 doing business. These fines are not commensurate with the
15 public health hazard caused by vehicle emissions and do
16 little to guide the industry toward -- they only punish
17 after the damage has been done.
18 According t o the California Energy Commission,
19 Californians burn 500 gallons of gasoline per capita for
20 personal transportation annually. If everyone in the world
21 consumed as much as California, the oil resources would be
22 exhausted in under three years.
23 Overconsumption of a finite resource and the
24 pollution caused by internal combustion engines are problems
25 that have to be addressed immediately.
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1 On the last page of my presentation, I list some
2 suggested options that would include the original 1990
3 mandate, with additions that would go beyond the Federal
4 standards.
5 Could I have the slides now?
6 Much is said in the staff report about waiting for
7 a successful launch of ZEVs. This Italian ZEV went 120
8 miles in one hour. That's averaging 120 miles an hour for
9 one hour. This is the ultimate car for half-width, fast
10 lane, single-passenger commuting.
11 Next slide.
12 The rest of the vehicles you see were built in my
13 shop with off-the-shelf components, recyclable lead-acid
14 batteries, and on-board chargers that can be plugged into
15 any 20 amp 110 Volt outlet without any increase in
16 infrastructure.
17 I used kit car bodies and aftermarket running gear
18 to make these electric cars by hand, which have outperformed
19 auto industry entries at EV rallies across the country.
20 this silver Porsche took first place in the Palm
21 Springs rally by going 117 miles on one charge. It took
22 second place in the DOE Clean Air Rally in Los Angeles,
23 easily outdistancing the Ford and Chrysler entries.
24 Next slide, please.
25 The yellow Porsche came in first in the Sunday
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1 Challenge at Daytona Beach last year, with a 0 to 60 mile
2 per hour time of10 seconds.
3 Next slide, please.
4 It took second at Phoenix a couple of weeks ago
5 against -- in its class against 55 other entries, with a
6 time of 17 seconds in the quarter mile.
7 Next, please.
8 The black Porsche took second in the Silicon
9 Valley EV Rally, with a range of 92 miles in city traffic.
10 And it looks pretty good, too.
11 Next, please.
12 The red electric Porsche and tractor in this photo
13 can be charged with 3 kilowatt photovoltaic array on my barn
14 roof.
15 Next, please.
16 Making them truly zero-emission vehicles.
17 Could I have the lights again?
18 Members of the Board, the fact that you went
19 beyond the Federal requirement in 1990 to improve air
20 quality for the citizens of this State and required ZEVs in
21 your SIP was the inspiration that created an industry.
22 Based on my experience as part of that industry, I
23 still believe that your initial path is the correct one.
24 Option B leaves a questionable future for this
25 budding industry and opens many loopholes for the auto
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1 industry.
2 Please have the same courage you showed in 1990,
3 and stick to the original mandate, or at least Option C.
4 Thank you.
5 CHAIRMAN DUNLAP: Thank you. Mr. Lagarias.
6 MR. LAGARIAS: How does the -- how is your
7 business affected by the ZEV regulation?
8 MR. HECKEROTH: It puts off till 2003 -- what it
9 does really is it gives the impression to the public that
10 the Air Resources Board has abandoned their stated mission
11 until 2003, and makes them think that the cars that produce
12 aren't viable.
13 And so, I had a very good public acceptance going
14 into 1995, but with the millions of dollars spent in
15 negative advertising by the auto industry, that acceptance
16 has dwindled considerably.
17 And to find out that they're successful negative
18 ad campaign has pushed back the industry to 2003, makes the
19 public think that -- well, I don't have the resources to
20 compete against that kind of --
21 MR. LAGARIAS: You have special purpose cars, as
22 far as I can see; how much do they sell for?
23 MR. HECKEROTH: They sell for around $30,000.
24 MR. LAGARIAS: And is there a market for them?
25 MR. HECKEROTH: Yes.
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1 MR. LAGARIAS: Well, then, the ZEV regulation
2 shouldn't have any impact on your business.
3 MR. HECKEROTH: The negative advertising has had a
4 big impact on my business. I sold four cars in 1994; I sold
5 none in 1995, because I was spending most of my time and
6 resources trying to fend off the negative advertising.
7 MR. LAGARIAS: Well, the 2003 regulation's been on
8 the books since 1990, and there's no intent to change it.
9 That has not changed in any way.
10 MR. HECKEROTH: I agree, but by making the 10
11 percent in 2003, you've eliminated the small business
12 opportunity to fill in the time between now and then.
13 MR. LAGARIAS: It only affects seven
14 manufacturers, the regulation.
15 MR. HECKEROTH: In the public's perception, it
16 affects everybody.
17 MR. LAGARIAS: Well, it seems to me, if you have a
18 car that can perform as you say within a price range, and
19 there are a thousand people that indicated they want the car
20 in our mailings alone, there should be a ready market for
21 the volume of cars that you're interested in.
22 MR. HECKEROTH: My goal was to prove the
23 technology worked, not to become a manufacturer. And I
24 would be more than happy to turn that -- all my customers
25 over to the industry, and if they would produce a car that
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1 performed as well with current technology.
2 So, what I'd like to say is that the people in
3 small business -- and small business I think is under 500
4 employees, which --
5 MR. LAGARIAS: Under a hundred.
6 MR. HECKEROTH: Under a hundred? Well, I
7 definitely qualify for that.
8 But the people in that size business can not
9 afford to wait till 2003, when the public views, as you do,
10 that that's when electric vehicles will be feasible.
11 And I don't have the resources to go out and tell
12 them that they're already feasible.
13 MR. LAGARIAS: Thank you.
14 CHAIRMAN DUNLAP: Thank you for your comments.
15 Mr. Henderson.
16 MR. HENDERSON: Mr. Chairman, members of the
17 Board, I am Doug Henderson, Executive Director of the
18 Western States Petroleum Association. And I want the Board
19 to understand that the Western States Petroleum Association
20 certainly recognizes the difficult task you face in
21 continuing to make improvements in California's air quality.
22 Our industry has a huge stake in your LEV program.
23 As you mentioned earlier today in your discussion
24 about the roll-out of our cleaner burning gasoline, we have
25 certainly supported your goals by producing and marketing
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1 that gasoline, which is, as you also know, the largest
2 single emissions reductions program in this State in more
3 than a decade, and we're particularly proud of the
4 cooperation that you mentioned earlier today. And, thank
5 you, Ms. Edgerton, for your comments. Same with Mr. Boyd's
6 comments as well.
7 Regarding the issue before you today, WSPA does
8 not believe that the ZEV mandate can be reconciled with your
9 mission. In our view, it is not effective and efficient,
10 and it does not give adequate recognition to the effects on
11 the economy that it would bring along with it.
12 Rather than a limited appeal, we feel that the ZEV
13 mandate should be eliminated, since it requires the forced
14 sale of electric vehicles, and also includes costly
15 anticompetitive subsidies required to accomplish that
16 objective.
17 We strongly believe and, as we have said
18 consistently, that the best way for CARB to meet its
19 objectives iis to set performance standards for emissions
20 reductions, and to allow the marketplace to find the most
21 efficient and least disruptive means of achieving these
22 standards.
23 Absent an outright repeal of your ZEV mandate, we
24 would support the proposed amendments before you, because
25 they eliminate the requirement on automobile manufacturers
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1 to sell a set percentage of ZEVs from 1998 to year 2002.
2 WSPA strongly opposes the terms of the MOAs that
3 obligate you to promote and seek subsidies for ZEVs. We
4 also urge the elimination of the mandate for the year 2003
5 and beyond.
6 Based on your staff estimates of emissions
7 reductions that can be expected under these amendments, only
8 10.4 tons per day of ozone precursor emissions would be
9 removed under the original 1990 mandate, and only 8.8 tons
10 per day under the 2003 mandate.
11 Mr. Chairman, that's less than one percent of the
12 reductions that you need to meet your goal. And the costs
13 are staggering, about $227,000 per ton. These are costs
14 that will impact every sector of California's economy.
15 And there are alternatives. Each of the four
16 alternatives described in our written testimony and written
17 comments submitted a couple of days ago, it costs less than
18 $1 billion in total from now through the year 2010 to
19 achieve the same 8.8 tons per day of emissions reductions.
20 That works out to between 5,000 and $25,000 per ton.
21 When electric vehicle technologies are adequately
22 developed, Mr. Chairman, they will be competitive in the
23 market without the need for mandates and subsidies. In the
24 meantime, progress can continue on air quality improvements
25 in a more effective, more credible, and less costly way.
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1 That's the end of our testimony. I'd be happy to
2 take any questions.
3 CHAIRMAN DUNLAP: Any questions of Mr. Henderson?
4 Okay.
5 Dr. Larry Berg with Ballard Power Systems,
6 followed by Ben Knight, followed by Rock Zierman from
7 Assemblyman Bordonaro's office.
8 Good afternoon, Larry.
9 DR. BERG: Good afternoon, Mr. Chairman. And
10 thank you, ladies and gentlemen of the Board for giving me
11 an opportunity to at least make a few comments.
12 But before I do that, I'd like to, on behalf of
13 Ballard, express our appreciation to Jim Boyd and Tom
14 Cackette and to you, Mr. Chairman, and to Lynne Edgerton for
15 working with us and discussing some of the things that were
16 of concern to us, and also providing the opportunity to work
17 in a cooperative way to hopefully facilitate the
18 implementation of this mandate, which I certainly would
19 support.
20 Also, having sat here all day, there are a few
21 questions I heard asked that I think perhaps I can give an
22 answer to.
23 One, regarding the state of fuel cell technology,
24 I am somewhat astonished, having followed it for
25 approximately 10 years -- when Ballard started out as a
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1 small R & D firm that had come out of the United States
2 space industry, with perhaps 10 to 15 employees, and one
3 support staff, to the state where, today, still being a
4 small player in a very large field.
5 However, it is a firm today of about 275 employees
6 and $350 million evaluation. So, in a period of about, I
7 would say, seven years, six years, I think the -- I always
8 like to, in a market economy, refer to the increase in
9 value. It has some reflection, I believe, in the relative
10 rapidity with which the technology has been developed.
11 Secondly, with regard to automobiles, Ballard
12 announced last September in London that we no longer need to
13 focus on the power density aspects of developing a fuel cell
14 for light-duty vehicles. The partnership for a new
15 generation of vehicles and the auto manufacturers set as the
16 goal for a proton exchange membrane fuel cell of 1,000 watts
17 per liter, or 700 wats per kilogram. And to carry it one
18 step further, or 28 kilowatts per cubic foot.
19 Having spent many hours at a Board like this,
20 basically, what we're talking about is something about like
21 that and about like that (indicating size) that produces
22 somewhere between 25 and 30 kilowatts of electricity.
23 Ballard, in the development of its automobile and
24 light-duty fuel cells, has entered into programs, the
25 largest being with Daimler-Benz and Mercedes-Benz in
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1 Germany. We are completing Phase II of that.
2 Daimler-Benz unveiled a vehicle about -- almost a
3 year and a half ago. It is our understanding the second
4 vehicle will be unveiled this year in Germany, and it is our
5 understanding that next year, sometime in 1997, we can
6 expect to see a Mercedes-Benz vehicle on the road in a test
7 mode in Germany.
8 Our second largest partner is General Motors. We
9 are partners with General Motors in the PNGV DOE program.
10 We have delivered one and I think the second fuel cell is
11 going to them that will be at the 50 kilowatt level.
12 So, the rapidity of this is almost beyond, from my
13 perspective as a nonengineer, expectations.
14 But I could point out that when we produced the
15 first fuel cell vehicle in the world in 1992, it was a proof
16 of concept bus. And, at that point in time, we were working
17 in the neighborhood of 140 to 160 watts per liter.
18 Slightly more than three years later, we are at
19 beyond the 1,000. And it is substantially beyond that.
20 In 1993, we were at the level of about 300 watts
21 per liter; less than a year later, we were at 570; less than
22 a year later, we were at 1,000.
23 Now, this doesn't mean that the fuel cell vehicle
24 will be in Mr. Miller's garage -- not garage -- his facility
25 in the next year, but what it does mean is that we are in
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1 the range of being able to produce a fuel cell by the end of
2 this decade. And with a production decision having been
3 suggested by Daimler-Benz, that decision will be made before
4 the end of the year 2000.
5 Our plans in 1991, were to have a fuel cell for
6 automobiles available for extensive testing in the late
7 1990s, and they would be available for commercial production
8 by the time the 2003 mandate went in. That was working
9 under the other original mandate, which still remains. And
10 we see no reason not to be able to meet that goal.
11 The cost of the fuel cell has come down. It's
12 come down dramatically in the last two years. Part of that
13 is related to the density, which I just described. Part of
14 it's also related to the use of materials in that fuel cell
15 with one of our joint partners, which is Johnson-Mathe. For
16 those of you in the automobile business, you recognize them
17 as the world's largest catalyst maker.
18 They are a partner, an equity partner of Ballard,
19 and we have made substantial progress there. More needs to
20 be done.
21 However, in that regard, I would refer you to
22 General Motors, which slightly less than two years ago, had
23 completed a study funded by DOE, which suggested -- the
24 headline of the Press release that went out shows,
25 "Nonpolluting Fuel Cell Engine Can be Made at No Extra Cost
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1 to an Internal Combustion Engine."
2 I would -- since we are placing a great deal of
3 faith in General Motors in a variety of other ways, I'm
4 placing a great deal of faith in their cost projections in
5 this particular case.
6 I would refer one to one other item, and then I
7 will bring it to a close, Mr. Chairman.
8 The chairman of the board -- the former chairman
9 of the board of Daimler-Benz at the announcement, at the
10 showing of their first vehicle, was reported in Automobile
11 International in September, 1995, in a headline and a small
12 vehicle, which is presently being developed -- the headline
13 is, "Mercedes Could Have a Fuel Cell Car by the Year 2000."
14 What I would suggest, within the next year, and by
15 the end of 1997, with what we know with the partners that we
16 have in the automobile industry, which are 10 out of the 17
17 largest that we have these arrangements with, that you could
18 see -- you will see at least two fuel cell vehicles on the
19 road by the end of '97. You could see as many as five.
20 We're not in the automobile business. We're in t
21 he business of producing zero-emission engines for those who
22 do produce automobiles.
23 Mr. Chairman, thank you very much.
24 CHAIRMAN DUNLAP: Thank you, Dr. Berg.
25 DR. BERG: Any questions? I'll be happy to
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1 answer.
2 CHAIRMAN DUNLAP: A comment, if I could. I
3 appreciate very much you making the time to educate Ms.
4 Edgerton and I as to the recent progress made in the fuel
5 cell area. I appreciated that very much, and have had an
6 opportunity, as I know you have, to talk to the executive
7 staff of the Board.
8 DR. BERG: Yes.
9 CHAIRMAN DUNLAP: They've indicated, assured me
10 they'd redouble their efforts to track and to stay involved
11 with what's going on in the fuel cell area. So, you can
12 count on us being up to date, and certainly a partner in
13 many respects relative to sharing information and making
14 sure people know about the role that fuel cells can play in
15 the future.
16 So, we're encouraged by your work.
17 DR. BERG: Thank you, Mr. Chairman. The other
18 point I would make is -- and the only comment with regard to
19 the staff report and recommendation is that one thing we
20 would like to see is on the credits for ZEV, we have
21 demonstrated a 200-mile vehicle already. We would just kind
22 of like to see those credits keep on going up at the same
23 ratio. With all due respect, we kind of like that, Tom.
24 So, if we could discuss that in the future, that
25 would be deeply appreciated.
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1 CHAIRMAN DUNLAP: Okay.
2 DR. BERG: Also, the 40-foot bus will be South
3 Coast at the July Board meeting, which I think is around the
4 10th or 12th. And we'll certainly send invitations and hope
5 to see all of you, and hope that we can bring a fuel cell
6 vehicle to one of the CARB meetings in the not too distant
7 future.
8 One last item related to Supervisor Roberts,
9 Ballard Power Corporation, which is our U.S. subsidiary, has
10 selected San Diego County as the site and opening of our
11 first facility. We have located that site.
12 The San Diego connection goes one step further.
13 The first vice-president, executive vice-president of
14 Ballard Power Systems Vancouver, but is also the head of
15 Ballard Power Corporation in the United States just happens
16 to live in San Diego. There's probably a correlation there.
17 But we will be opening that facility, and we will
18 be employing Californians. And we intend to grow.
19 CHAIRMAN DUNLAP: Very good.
20 For my colleagues on the Board that don't know it,
21 Dr. Berg served for nearly a decade as one of the --
22 DR. BERG: Over a decade.
23 CHAIRMAN DUNLAP: -- prime movers and shakers on
24 the South Coast District Board. I had a chance to work with
25 him there.
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1 Mr. Lagarias.
2 MR. LAGARIAS: Dr. Berg, we certainly want to
3 encourage the technology. Even Joe Caves has indicated that
4 you are the hope for the future.
5 What is the future? When can you anticipate
6 demonstrating, and then how long do you think the followup
7 would be to let's say commercializing fuel cell type
8 technology?
9 DR. BERG: We would hope to have light-duty
10 automobiles demonstrated in this State prior to the end of
11 this decade.
12 We have -- there's a relationship between the fuel
13 cells for heavy-duty and the relationships for light-duty,
14 and they sort of piggyback each other in terms of cost
15 reductions and testing.
16 We have three demonstration projects for our 40-
17 foot, 275 horsepower fuel cell powered transit bus. The
18 first contract was signed in the City of Chicago. The
19 second contract was in Vancouver, which was just announced
20 this week. It's about $8 million Canadian. And the third
21 demonstration will be Chula Vista, which Supervisor Roberts
22 has been of great assistance in helping reach the funding.
23 We think that that will be completed -- the
24 funding will be completed within a month.
25 That will give us the demonstration on the heavy-
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1 duty side that we feel is sufficient to work out the
2 problems to commercialize the transit bus in the year 1998.
3 That has been our business plan since 1991. Out of the
4 experience with the transit buses we feel that -- both with
5 the demonstrations and with the 100 vehicles, which we hope
6 to put on the road around -- not just North America, but
7 also in Europe prior to the year 2000 -- that it's out of
8 that experience, we'd meet your 2003 deadline with the
9 manufacturer being able to make a decision in the late
10 1990s.
11 Obviously, things need to -- someone used an
12 analogy before about hitting home runs and singles.
13 I think we'll be okay with singles, but we can't
14 have any strike outs. Because if something comes up that we
15 haven't anticipated, there could be a lag. But that is the
16 time frame that we set in '91. We have met every one of
17 those milestones, in most cases as much as a year early,
18 such as on power density.
19 And we feel that the confidence in the technology
20 has been demonstrated by the investors on the stock market
21 offerings that we've had, both on NASDAQ and at the Toronto
22 Stock Exchange, where it has gone up about 400 percent since
23 listing.
24 We have had good success in raising capital. We
25 have also used, obviously, government contracts. But it's'
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1 been roughly a third, a third, and a third without relying
2 upon just public money. This is not a publicly developed
3 project.
4 And we are in business to make money.
5 MR. LAGARIAS: One other question. What is your
6 operating temperature, and what are you using as the fuel?
7 DR. BERG: The fuels, we are what we call a
8 multiple-fuel fuel cell company, which is customer friendly.
9 We think the best fuel, for example, for the heavy-duty is
10 obviously hydrogen. It's the simplest and it's the easiest
11 to deal with.
12 However, on the -- our automobile manufacturer
13 partners, I believe without exception, perhaps one
14 exception, have preferred to use methanol as the liquid fuel
15 with a small reformer on board to convert that into
16 hydrogen.
17 That certainly is the case with regard to General
18 Motors and Daimler-Benz.
19 With regard to temperature, it hasn't really made
20 any difference. We've operated the fuel cells in -- I guess
21 we first showed the bus number two in Toronto and trucked it
22 across Montana in the middle of winter. And operating
23 temperatures really don't have a lot of bearing. There are
24 concerns, obviously, because of the cooling system. But
25 these are the kinds of things that we hope will come out --
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1 and, frankly, we're confident will come out -- of the three
2 demonstration sites.
3 And the three sites are not chosen just because
4 they're the first ones to come up with money. They're three
5 different types of areas. San Diego, obviously, is in the
6 Southern California climate. Vancouver is a temperate
7 climate. It's rarely freezing, rarely snow. But it's
8 colder, it's damper. And Chicago, I don't need to tell you
9 what Chicago's like, having grown up in Iowa.
10 I don't know whether I answered your question, Mr.
11 Lagarias.
12 MR. LAGARIAS: I was looking for a number. Are
13 you talking about ambient, or 300, or 600?
14 DR. BERG: The PEM fuel cell is the low
15 temperature fuel cell, which is one of the reasons why it
16 has applicability for transportation. And we are not the
17 only producers of PEM fuel cells. IFC on the East Coast,
18 Energy Partners, and --
19 MR. LAGARIAS: Thank you.
20 DR. BERG: -- H Power, et cetera, are in it, also.
21 And there is very little disagreement that, with
22 regard to transportation, it's the PEM. And the reason
23 being low operating temperature, and it's light.
24 CHAIRMAN DUNLAP: Ms. Edgerton.
25 MS. EDGERTON: Dr. Berg, I'd like to make a
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1 comment that it is my opinion that Ballard is very lucky to
2 have you as one of their board members.
3 As Chairman Dunlap mentioned, we very much
4 appreciate your coming to help keep us informed of your
5 progress. I'd also like to say I think California's lucky
6 that you are a Ballard board member, because -- Supervisor
7 Roberts, I know that -- I can assure you that I have
8 personal knowledge of Dr. Berg's working very hard to ensure
9 that this company came to California.
10 And I've been a very good sport about not having
11 it being in L.A. and having it be in San Diego. I've been
12 fully satisfied by that.
13 I'd also like to say that one of the things that
14 was a lot of fun about being appointed to this Board was,
15 when I found out that Mr. Dunlap was appointed the new
16 Chair, I recalled immediately that I first met Chairman
17 Dunlap in connection with my working to persuade -- well, in
18 a fuel cell project, shall we say it that way?
19 CHAIRMAN DUNLAP: That's right.
20 MS. EDGERTON: I think he refers to it as I picked
21 his pockets. In any case, so that was something that I
22 recalled immediately.
23 I'd like to say that this issue is, I believe, a
24 very good indication of the staff's openness and willingness
25 to consider the concerns of the Board members and of
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1 technologists. And subsequent to the release of the draft
2 report on this regulatory change, we had -- had the
3 opportunity to get together and talk, and I have been
4 tremendously impressed with the inclusion of fuel cells.
5 And it was sort of the focus that you made sure that this
6 program will not mandate a particular technology. And by
7 that, I mean not mandate advanced batteries if fuel cells
8 can be competitive.
9 I think Chairman Dunlap has made it very clear
10 that we want to be technology neutral. And whatever is the
11 cleanest and the most competitive, and can be delivered to
12 our cars, that's what we want.
13 So, I just wanted to thank you very much for that,
14 and say that it matters a great deal.
15 And finally, I'd say that, with respect to the
16 fuel cell issue, I couldn't help but think about it as I
17 read of the strikes in GM over the last few weeks, and the
18 importance of the outsourcing issue. And I do realize that
19 currently -- and, for example, Ballard is -- would be
20 considered a supplier, and that the outsourcing issue is a
21 potential reality, and I duly note that.
22 Thank you.
23 DR. BERG: Mr. Chairman, could I just make -- 10
24 seconds, one comment that I really appreciate the fact
25 sheet. There's one word I'd really like to see added, and
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1 that is the most work on fuel cells going on in Europe is in
2 Germany. And you could put Germany there, we would be
3 deeply appreciative, as our largest partner.
4 Thank you very much, Mr. Chairman.
5 SUPERVISOR ROBERTS: Mr. Chairman?
6 CHAIRMAN DUNLAP: Thank you. Supervisor Roberts.
7 SUPERVISOR ROBERTS: The good judgment that
8 they've shown on site selection --
9 CHAIRMAN DUNLAP: I know.
10 SUPERVISOR ROBERTS: -- along with the progress
11 that they're making on development of this technology, I
12 think it bodes well for the company. And it's nice to have
13 them involved in San Diego County.
14 CHAIRMAN DUNLAP: I've noticed General Motors and
15 EV1, and now Ballard, economic development is happening down
16 in San Diego.
17 SUPERVISOR ROBERTS: It's a wonderful environment
18 for launching these technologies --
19 CHAIRMAN DUNLAP: That's right.
20 SUPERVISOR ROBERTS: -- Mr. Chairman.
21 CHAIRMAN DUNLAP: That's right. Thank you. Duly
22 noted.
23 Mr. Knight from Honda, Rock Zierman from
24 Assemblyman Bordonaro's office, Jamie Phillips.
25 And, again. And again, I'd remind the witnesses,
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1 if you provided written comments, please don't feel it's
2 necessary to cover the testimony word for word. You can
3 summarize it. It would be appreciated.
4 MR. KNIGHT: Good afternoon, Chairman and Board
5 members.
6 I'm Ben Knight with Honda Research and
7 Development. I'd like to present comments in support of the
8 staff proposal and the MOA.
9 Honda has supported CARB's '95 workshop process
10 with testimony, and also in private minutes with staff, we
11 shared our most confidential information, and by providing
12 technical information and also facility visit to the battery
13 panel.
14 We have been seriously preparing to meet the ZEV
15 requirement since it was adopted in 1990. And among our
16 activities, we've been operating a fleet of test vehicles
17 since the summer of '94.
18 The vehicles -- we call them research prototypes,
19 and there's a sample of one outside. They do employ a
20 dedicated ground up platform, even if you get confused by
21 some of the passenger car related body panels.
22 Also, we've expended significant resources to meet
23 the '98 regulation, including the development of an all-new
24 purpose built vehicle.
25 Also, we have been and will continue to work with
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1 the majority of the battery, major battery developers
2 worldwide.
3 We agree with the battery panel's assessment: The
4 advanced battery, offering greater range, and therefore
5 having a better chance at being accepted by the public, will
6 not be fully evaluated nor ready for full scale
7 commercialization prior to the years 2000 and 2001, and that
8 a constructive approach to work toward a ZEV market is to
9 conduct real world trials utilizing advanced technology
10 batteries in the vehicles.
11 The technology development partnership framework
12 in the MOA is the key element which would allow these
13 technologies to be promoted and evaluated in the market in
14 such a manner that all stakeholders -- the auto companies,
15 utilities, the government, and so forth -- could work
16 together in close cooperation to find ways to nurture the
17 EV.
18 We would like to accomplish the following in our
19 program: Offer and evaluate advanced technology batteries
20 installed in vehicles in real world conditions; work on
21 infrastructure development; evaluate incentives,
22 particularly nonmonetary incentives; and evaluate the
23 factors for customer acceptability.
24 In parallel with the advanced technology battery
25 trials, Honda will continue its aggressive R & D towards the
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1 further advancement of electric vehicle components systems
2 and, in particular, batteries.
3 Again, we look forward to bringing a quality
4 electric vehicle to this partnership and to work sincerely
5 and cooperatively toward common objectives with our utility,
6 and government, and supplier partners.
7 I'll be glad to answer any questions.
8 CHAIRMAN DUNLAP: Any questions?
9 MS. EDGERTON: Could you tell me, please, sir,
10 whether you intend to offer for commercial sale Hondas,
11 electric Hondas?
12 MR. KNIGHT: We're not convinced that the current
13 technology is -- makes a viable product, so we would like to
14 focus on the advanced technology and demonstration portion,
15 and put our energies there.
16 MS. EDGERTON: So, if I understand you right,
17 you're substantially in the same position as the -- were you
18 here when the representative from Nissan --
19 MR. KNIGHT: Yes, I was. Under the MOA, the seven
20 automakers will be putting out up to 3,750 vehicles. And
21 our portion of that would be about 506 vehicles; depending
22 on the battery applied and the performance of the specific
23 battery, somewhat less than that.
24 That's where we would concentrate. I've said in
25 the past that I think managing a high quality program is
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1 extremely important and I think the quality over quantity is
2 a very important contribution to this program and next step.
3 And over the next several years, we'll be introducing those
4 vehicles.
5 MS. EDGERTON: So, that beautiful car out there is
6 not going to be for sale? I can't buy that?
7 MR. KNIGHT: The vehicle we're planning in this
8 next step will not be the vehicle outside. That's been our
9 current research prototype.
10 So, we're working on a completely new ground-up
11 vehicle. And at some point in the future, we'd like to
12 announce that.
13 MS. EDGERTON: And do you anticipate that vehicle
14 being the test bed for the advanced batteries?
15 MR. KNIGHT: The vehicle we're developing and
16 would apply to the demonstration program would be equipped
17 with advanced batteries. One of the key battery
18 technologies we've been working with towards '98 is a nickel
19 metal hydride battery.
20 MS. EDGERTON: Let me go back again.
21 Thank you. I think I was asking whether the
22 ground-up vehicle that you have been working on will be the
23 vehicle in which you will place the advanced batteries for
24 the technology demonstration project.
25 MR. KNIGHT: That's correct.
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1 MS. EDGERTON: Okay. So, if I understand you
2 right, so far, you don't see an entry point for lead-acid
3 battery electric vehicles for your company?
4 MR. KNIGHT: At this time, we think the best
5 approach to this is to put the vehicle out there in the
6 hands of consumers as well as fleets with the advanced
7 batteries and gauge where the technology's at, and work on
8 customer acceptance issues, and take it a step from there.
9 MS. EDGERTON: So, if I understand you correctly,
10 then, the first product plan you would be submitting would
11 be 1999, November?
12 CHAIRMAN DUNLAP: Be '97.
13 MS. EDGERTON: For commercialization. Potential
14 date.
15 MR. KNIGHT: Well, we certainly will comply with
16 the MOA as well as, frankly, I think we'll tend to meet more
17 frequently with staff and share our progress, technology,
18 and our plans.
19 At various stages, the plan is, you know, is
20 finally approved; at other points, the plan is under
21 development, or there may be several ideas and alternatives.
22 Finally, when a plan's approved, it's a start-up
23 of development.
24 MS. EDGERTON: And 506 cars? Is that right?
25 ///
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1 MR. KNIGHT: That's our share of --
2 MS. EDGERTON: Thank you.
3 MR. KNIGHT: -- the 3750.
4 CHAIRMAN DUNLAP: Okay. Thank you very much, Mr.
5 Knight. Jamie Phillips, Planning and Conservation League;
6 Rock Zierman, Paul Haluza from MEMA.
7 Hello, Ms. Phillips, I understand we have some
8 written testimony.
9 MS. PHILLIPS: Gary Patton has written testimony,
10 or presented a letter, and he was unable to be here this
11 afternoon, Mr. Chairman, members of the Board.
12 So, I'm here speaking very briefly on his behalf
13 again. I believe I was here on his behalf last time as
14 well. I apologize for his not being able to stay. He had
15 another engagement and had to leave, so. . .
16 We're here to urge you not to adopt the staff plan
17 as proposed. And we urge you to save the mandate, to make
18 he right decision for California for our health and for our
19 economy.
20 Backing away now we believe would be a mistake.
21 The mandate is working, and we've all read the battery panel
22 report, so I won't go through that.
23 And has it has indicated through the marketing
24 studies and through the battery panel report, it said that
25 it pushed technology and we all that. We believe that
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1 eliminating the early years of the mandate, as proposed in
2 this staff MOA recommendation, strips away your enforcement
3 capabilities.
4 And that, together with trusting the automobile
5 industry, abandons the intent of the original ZEV program
6 that was adopted in 1990.
7 Since last fall, as you know, PCL has accepted and
8 supported your stated need to build in flexibility in the
9 early years of the program. And we think that you can do
10 that without repealing the mandate. We think that you can
11 build in flexibility by adding language which creates
12 alternative compliance factors based on specific conditions.
13 And that, if those conditions are met, then the mandate does
14 not have to be applied. If the conditions are not met, of
15 course, the mandate is applied.
16 I would ask you to refer to the second page of Mr.
17 Patton's letter, because he outlines some suggested language
18 that you would be able to apply in this case.
19 He's essentially suggesting that the enforcement
20 mechanisms be part of the regulation, not part of the MOA
21 contract.
22 Members of the Board, PCL recognizes that you're
23 trying to develop an electric car program that works for
24 California. We applaud you for that. We support your
25 intent. We cannot support the proposed changes, however, in
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1 the implementation strategy.
2 We think you're making a mistake by giving up the
3 regulation and replacing it with the contractual agreement,
4 and we think it's a mistake to transfer that initiative and
5 control of California's clean air program in the future to
6 the automakers.
7 If you must take on the weaker path, we implore
8 that you address our concerns and the concerns as were
9 outlined very eloquently earlier today by both Janet
10 Hathaway and Joe Caves. So, I will not repeat those.
11 But we will be watching closely -- I'm sure you
12 know that -- to assure that you do carry out the public
13 trust.
14 Thank you.
15 CHAIRMAN DUNLAP: Thank you, Ms. Phillips. Okay.
16 Very good. Mr. Zierman.
17 MR. ZIERMAN: Mr. Chair, members, thank you very
18 much for this opportunity to speak.
19 My name is Rock Zierman with State Assemblyman Tom
20 Bordonaro's office. Tom fully accepted to come today, but
21 was unable to, and wanted me to come to express his views on
22 this issue, as well as invite each of you members to contact
23 him directly if you have any questions or comments for him.
24 Let me read his brief prepared comments for you.
25 (Reading) I want to express my strong opposition to the
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1 zero-emission vehicle regulations, the ones that you and
2 your fellow Board members are discussing today.
3 As a matter of public policy, mandates such as
4 this are an anathema to the principles of free market
5 enterprise. The fact that a government mandate is required
6 to bring electric cars to the marketplace speaks volumes
7 about their viability. Clearly, if there were indeed a
8 market for these vehicles, no mandate would be necessary.
9 Further, if there were a market for these
10 vehicles, the extensive subsidies agreed to in CARB's
11 proposed memoranda of agreement with automakers would also
12 be unnecessary.
13 Once again, if there were a significant consumer
14 demand, this demand would be met in the marketplace by
15 competing private companies underwritten by shareholder
16 investment.
17 It is inappropriate public policy to commit
18 taxpayer dollars to produce a product which can not attract
19 investors and consumers on its own merits in the private
20 sector.
21 As a member of the Assembly Appropriations
22 Committee, I'm particularly concerned with respect to
23 provisions in the MOAs implying a commitment on the part of
24 the State to purchase EVs for government fleet use, and to
25 develop and support so-called incentive programs to enhance
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1 the marketability of EVs.
2 Where does the Board anticipate obtaining the
3 funding for such subsidies? And since EVs are priced at
4 roughly two to three times the cost of better-performing
5 conventionally fueled vehicles, how do you intend to justify
6 the expenditure of scarce public funds on EV fleet
7 purchases?
8 I would like to make it clear that I'm an advocate
9 of clean air, and do not believe that an improved
10 environment and fiscal responsibility are mutually
11 exclusive. However, the Air Resources Board's own staff
12 have indicated that even under the most optimistic
13 assumptions, the electric cars mandated under this
14 regulation would achieve less than one percent of the smog
15 reduction required under the State's clean air program.
16 This hardly seems a result worthy of the massive market
17 manipulation and public subsidizations anticipated (sic) by
18 the ZEV mandate.
19 Thank you.
20 CHAIRMAN DUNLAP: Thank you. And thank the
21 Assemblyman for his interest in this issue. Appreciate it.
22 Mr. Haluza from MEMA, followed by Charles Hooper,
23 and Pam Leeper from Project California.
24 Good afternoon, sir.
25 MR. HALUZA: Mr. Chairman, good afternoon.
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1 Members of the Board, for the record, my name is
2 Paul Haluza, and I'm Director of Government Relations and
3 Public Affairs for the Motor and Equipment Manufacturers
4 Association.
5 Unlike everybody else that has been before you
6 today, I'm here to address some very isolated issues and
7 raise some technical points within the proposal that you are
8 considering.
9 And basically, my remarks are intended to address
10 pending EPA rulemaking with respect t o the national low-
11 emission vehicle program, also NLEV, the proposal to include
12 California's OBD II as a component part of the NLEV and
13 linkage of the compliance of NLEV with today's proposal
14 before the ARB and your mandate for zero-emission vehicles.
15 For the record, MEMA is a national trade
16 association representing more than 750 manufacturers of
17 motor vehicle original equipment components, replacement
18 parts, accessories, automotive chemicals, and related
19 equipment. Our members supply both the vehicle
20 manufacturers with original components and systems, and the
21 independent aftermarket with replacement parts used in the
22 repair and service of in-use vehicles.
23 MEMA believes that it would be both premature and
24 inappropriate for California to adopt any proposal that
25 would link compliance with NLEV revisions to the low-
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1 emission vehicle regulations adopted in 1990, for two
2 reasons.
3 First, there are very serious unanswered questions
4 in the U.S. EPA's authority to certify or enforce before
5 2004 more stringent emission standards for new motor
6 vehicles beyond those set in the Clean Air Act amendments of
7 1990, and EPA lacks the authority to certify NLEV vehicles
8 utilizing California's OBD II system with antitampering
9 protection compliance installed as a part of that system.
10 Also, in listening to Tom Cackette describe the
11 NLEV program in the MOA, there may be -- I will congratulate
12 staff, whoever was very creative in developing that MOA, but
13 if I heard him correctly, I believe that under the
14 California MOA, it would be a California LEV vehicle, not
15 necessarily the NLEV vehicle as proposed by the Federal
16 Government at that point.
17 Am I correct with what I heard you say earlier,
18 Tom? I'm sorry.
19 MR. CACKETTE: It's a vehicle that meets standards
20 that are equivalent to the California LEV vehicle.
21 MR. HALUZA: Okay. I guess that would raise a
22 third point, and that is the ability of EPA to certify a
23 California LEV vehicle outside of California.
24 While we have heard many indications from senior
25 EPA officials that the agency plans to adopt the NLEV, to
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1 date, there's been no regulation. Absent actual notice of a
2 final NLEV rule, it would be premature and presumptuous of
3 ARB to include NLEV compliance in the proposal being
4 considered today.
5 With respect to the pending NLEV rule itself, MEMA
6 and other associations have made every effort to ensure that
7 the evidence in NLEV docket reflects the serious competitive
8 issues raised by other pending EPA dockets regarding
9 enforcement of California's OBD II in its present form, and
10 also as a national standard.
11 To date, we have found no indication that EPA's
12 given serious consideration to these concerns; instead, EPA
13 has blindly adhered to the notion that the NLEV proceeding
14 is a cooperative partnership effort between EPA and the
15 automobile manufacturers, and that they, along with the
16 States, are the only interested parties.
17 MEMA believes that this is an absurdly narrow view
18 in its attempt to promulgate an enforceable regulation --
19 whether deemed voluntary or not -- when that regulation
20 would change the provisions of the U.S. Clean Air Act,
21 completely revamp national emissions policy and automotive
22 emission design, and create tidal wave effects in the $200
23 billion automotive parts and service industry.
24 Further, should EPA issue an NLEV rule
25 incorporating California OBD II provisions, particularly in
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1 advance of a determination on the State's request for a
2 Federal -- a waiver of Federal preemption, its action would
3 demonstrate the utter indifference to the rule's impact on
4 the independent parts manufacturers, rebuilders, automotive
5 service providers, and most importantly, the public, in
6 terms of decreased competition and higher prices.
7 It would also totally disregard the dictates of
8 the Clean Air Act, the U.S. Administrative Procedures Act,
9 and the Government in the Sunshine Act.
10 Secondly, with respect to the national adoption of
11 California's OBD II regulations, which are prominently
12 identified in the proposal before you today as a component
13 part, MEMA and other aftermarket associations have raised
14 numerous and substantial issues regarding the inconsistency
15 of OBD II and particularly its antitampering provisions,
16 with Sections 202(m)(4), and (5), and 207 of the U.S. Clean
17 Air Act; the U.S. Semiconductor Chip Protection Act, and the
18 clear congressional intent to ensure competitiveness in the
19 independent automotive aftermarket once the OBD systems are
20 mandated equipment.
21 MEMA has repeatedly noted in the public record
22 that the EPA can not certify or allow certification of
23 vehicles which comply with California' unlawful provisions.
24 Still pending before the EPA is a request by the
25 State of California for a waiver of Federal preemption to
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1 allow enforcement of its OBD II within the State of
2 California. And I guess it raises a legal question as to
3 whether you have the authority to enforce it as of the
4 moment.
5 EPA's acknowledged that the rulemaking procedure
6 has raised significant issues being debated within the
7 agency, and a final rule is not expected until late April.
8 The ARB has so far ignored any serious response to the
9 issues raised by the aftermarket and pursues its waiver
10 request on the basis that EPA has a record of deferring to
11 the wishes of the State on waiver issues.
12 However, if EPA determines that the NLEV
13 proceedings to adopt California's OBD II as a voluntary and
14 binding standard with which the automakers must comply
15 before the agency has fully evaluated the significant issues
16 raised by the aftermarket, then the pending waiver
17 proceedings is effectively mooted, and the aftermarket's
18 arguments will be rendered academic.
19 Thus, with respect to the proposal before the
20 Board today, MEMA would argue that adopting any portion of
21 the proposal that conditions compliance with NLEV and OBD II
22 would be premature at best absent the final decisions from
23 EPA on pending actions involving NLEV and OBD II.
24 Further, it runs the risk of abrogation should any
25 of these significant issues raised by the aftermarket be
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1 upheld in the future.
2 We would request that all reference to compliance
3 with NLEV and OBD II, including the language in the MOA, be
4 deferred until the Federal status for both is determined.
5 That concludes my formal remarks. I'd be happy to
6 take any questions.
7 SUPERVISOR RIORDAN: Thank you, Mr. Haluza. Are
8 there any questions for the speaker? If not, then we thank
9 you very much for your testimony.
10 MR. HALUZA: Thank you.
11 SUPERVISOR RIORDAN: The next person is Charles
12 Hooper. Is he here? I don't see Mr. Hooper. Pam Leeper?
13 Is she here? Apparently not.
14 Richard Wilmshurst?
15 MR. WILMSHURST: Thank you, Board members. I'll
16 make this short. You've been here for quite some time.
17 I'm an automobile dealer in Calaveras County --
18 SUPERVISOR RIORDAN: Can you put the microphone a
19 little closer to your mouth?
20 MR. WILMSHURST: Thank you. -- about 80 miles
21 from here. And I'm interested in clean air. Thirty-nine
22 years ago, I drafted a regulation to stop motor boats up in
23 our area from putting pollution into the air at our
24 community, and it was passed, and it's been on the books
25 since that time.
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1 I'm very interested in the Sacramento Basin. I'm
2 interested in what the Air Resources Board is going to do to
3 meet the Federal standards that the EPA has set for clean
4 air in this area.
5 And I believe it's up to the government to lead
6 the way. I'm familiar with this area, and I think that
7 there's a lot that can be done for pollution right here in
8 Sacramento in this basin area by applying standards to the
9 city, the county, the State, and the cooperation of the
10 Federal Government must lead the way in the use of ZEV
11 vehicles and CNG vehicles.
12 I've checked and found that you have about 25
13 vehicles operating. 15 are owned; 11 are leased; 5 are CNG.
14 I don't believe you have any ZEV vehicles operating at this
15 time.
16 I believe that this Board should select government
17 as the area that the low-emission vehicles are going to be
18 applied to. I think they should be applied to this area,
19 probably in other areas, and that the program get away from
20 the general public (sic), because you can't control the
21 general public, but you can control other governmental
22 agencies.
23 There's 1100 vehicles operating in this basin.
24 And I understand that if the modification of all those
25 vehicles was made so that they were low-emission, it would
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1 make quite an impact on this area and reduce the air
2 pollution.
3 I have made a suggestion that might be a
4 compromise to the regulations which you've wanted to change
5 in Title 13. And I think that's what we're probably here
6 talking about.
7 And I think that probably the regulation should be
8 left almost intact, with the exception that each
9 manufacturer shall certify, produce, and deliver for sale in
10 California directly to governmental agencies, if orders are
11 placed by governmental agencies to the selected
12 manufacturers one year in advance of the required delivery,
13 using the same up to two percent selection that you had
14 previously.
15 I think that government should get into this mode
16 in full fashion. It should take on converting its fleets,
17 because I think probably the largest fleet owner in the
18 State of California is government. And I think that's where
19 it starts.
20 Let's get these vehicles, CNG, let's get them to
21 ZEV, and let's make this operation work. I understand that
22 the Governor sent out an Executive Order. I imagine you're
23 all familiar with that.
24 Governor Wilson's Executive Order W100-94. And it
25 set up the -- I believe it's the Department of General
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1 Services -- to set up areas for refueling CNG vehicles and
2 for also charging electric vehicles.
3 So, I would ask that you consider modifying the
4 regulations so that the government will actively take --
5 want to hand this -- actively take an interest in this
6 program.
7 And that concludes my statement.
8 SUPERVISOR RIORDAN: And we thank you for your
9 presentation and staff has your work there. Thank you very
10 much, and thank you for waiting.
11 The next speaker that I'm going to call on is Daki
12 Venetolis. Excuse me. You're going to have to forgive my
13 pronunciation of your name. And if you would provide it
14 correctly for the record.
15 MR. VENETOLIS: Daki Venetolis.
16 SUPERVISOR RIORDAN: Venetolis (pronouncing).
17 Okay.
18 MR. VENETOLIS: I'm used to it.
19 SUPERVISOR RIORDAN: I bet you are by now. Thank
20 you.
21 MR. VENETOLIS: I'm from Berkeley, and I'm just an
22 environmental activist and advocate of zero-emission
23 vehicles. I thank the Board for hearing me today.
24 Even though it's kind of restating the issue that
25 this Board's been assembled to protect the air quality of
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1 California, and I feel strongly that if you all go against
2 the mandate that you have already instated (sic), it will be
3 going a step backwards.
4 The two percent is already a great step in favor
5 of zero-emission vehicles, and we really, really need it.
6 Your 1994 report has many statistics. Transportation
7 accounts for 60 percent of ozone emissions, 90 percent of
8 carbon monoxide, and 30 percent of carbon dioxide -- the
9 greenhouse effect.
10 All those things are detrimental to our air
11 quality as you know. And we can't wait for the future to
12 take this into effect. This two percent needs to be in now.
13 The electric vehicles could reduce carbon dioxide
14 by 70 percent if they were put in effect, and that's kind of
15 the environmental look at it, that we really need to get on
16 this now.
17 And I realize there's other economic issues to
18 take into account, but I feel that how they have been
19 represented today is not very realistic, because I think
20 that from the two percent, by 1998, that would be 25,000
21 cars if it was two percent produced in California. And
22 there's been some testimony to say that there is a market
23 for those short-range vehicles.
24 And the automakers are saying there's no market
25 for it. But I feel that if we were -- if the automakers
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1 were to give the consumers the option to have a zero-
2 emission vehicle, that would make them feel good. But it
3 really comes down to money. And these low -- these electric
4 cars are 50 percent more efficient, and so that's 50 percent
5 on a fuel cost.
6 And if you present that to a consumer that, yes,
7 you'll have to pay more upfront, but you're going to get it
8 back, because these things save energy -- and I was just
9 thinking of this kind of thing where we're teaching our
10 children -- turn off the lights, you know, when you leave
11 the house. Save energy. It saves money. It's better for
12 the environment. It's better for our natural resources.
13 And that's what we have to start doing.
14 If you all keep the two percent mandate, it will
15 push the zero-emission vehicles into effect and the market
16 economy will pick up, because people will realize that they
17 are viable.
18 Now, no one really wants them, because they've
19 only heard negative things about them. They don't believe
20 in them. But for commute vehicles, for people going to and
21 from work, they are perfect.
22 Obviously, the auto manufacturers, they're not
23 concerned with the environment; they're concerned with
24 money. And they want to keep selling their cars. They have
25 a system. They want to keep selling them until the latest
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1 date possible. And I think that that's -- for you all to
2 come together, you from an environmental standpoint, they're
3 coming from an economic standpoint.
4 And so, they're not necessarily -- even though
5 they say, yes, we'd love to see these zero-emission
6 vehicles, they have something going on already. They're
7 making cars.
8 The technology is there, and I think that, if
9 there was a two percent mandate upheld, then the consumer
10 population would come to realize these things. And I just
11 really hope you all consider these things before you go back
12 a step.
13 You've already made this step. You've gone
14 forward for the environment in California, and I hope that
15 you hold that line and not go backwards with this other MOA.
16 Thank you.
17 SUPERVISOR RIORDAN: And I want to thank you very
18 much, as a student, to take the time to be here for today's
19 testimony.
20 Are there any questions, Board members? Seeing
21 none, thank you very much.
22 MR. VENETOLIS: Thank you.
23 SUPERVISOR RIORDAN: Our next speaker, Mr. Stout,
24 Mr. Mark Stout. Are you here?
25 CHAIRMAN DUNLAP: Okay. Barbara George? Barbara
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1 George? Peoples Energy Matters.
2 MS. GEORGE: Hi. I'm Barbara George with Peoples
3 Energy Matters.
4 And I greet you on the anniversary of Three Mile
5 Island 17 years ago today. Around five year ago, the Gulf
6 War ended, although the fires burned all year, and I heard
7 500,000 Iraqi children have died since the end of that war.
8 But the Middle East oil is still flowing through
9 our corporations, through our single-walled tankers, through
10 our cars, and trucks, and buses, and diesel trains, and
11 airplanes, and space ships. And it flows right out into our
12 water and our chemical-coated food, and our smoggy sky, and
13 all the way up through the Earth's atmosphere.
14 It's' comforting, isn't it? This is called
15 winning the war. We can do what we want; nothing has to
16 change.
17 I took the train here this morning, and I'm hoping
18 I can make it back this afternoon. There's just a few
19 trains a day, unfortunately.
20 I represent a group called Peoples Energy Matters.
21 We're a new organization focusing on mobilizing women in
22 particular to bring about a rapid change to sustainable
23 energy in our communities and our own homes.
24 We have a particular interest in getting clean
25 cars, so we can replace our internal combustion engines, and
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1 quit polluting the air, and quit contributing to global
2 warming. I think those are issues that are very important
3 to women today.
4 We are appalled that the CARB staff has caved into
5 the auto and oil industries. We feel that our car companies
6 have always stalled on providing the advances that consumers
7 want. This happened with seat belts, airbags, and fuel
8 efficiency.
9 The Japanese took advantage of our stupidity and
10 captured the compact car market, causing years of hardship
11 in the U.S. auto industry. We believe the same thing will
12 happen with clean vehicles. Other countries will take the
13 lead and we'll be left behind.
14 The car companies claim there is no market for
15 ZEVs. However, we know many women who will not buy a new
16 car until they can get an electric one.
17 We are especially concerned about the lack of
18 advertising requirements for ZEVs in the MOA and in the
19 initial ZEV agreement. The car companies claim that they
20 are worried whether people will like ZEVs. Usually, when
21 big companies launch new product s on the mass market, they
22 push those products ad nauseam on television.
23 Where are the ads for the EV1? If GM was serious
24 about marketing this car, they would be running ads for it
25 all the time. Instead, they set the price so that only rich
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1 people could afford it.
2 I believe they are actually trying to prove that
3 they can not sell electric cars. I can imagine an ad
4 campaign for electric cars. Think of the beautiful lawyer
5 on "Law and Order," or somebody like that. "Electric cars
6 have three moving parts instead of 2,000. You never have to
7 buy a muffler, never have to change the oil, never have to
8 go to a gas station, hardly ever need a mechanic. You save
9 a lot of money and a lot of time. My time is expensive."
10 Or how about somebody like Sally Field. "With an
11 electric car, you'll be doing the best thing you can do for
12 your children's health and the health of the planet, and
13 you'll have more peace and quiet. If you live near a busy
14 street or a highway, electric vehicles will make that road
15 much quieter. And when you take a deep breath, you'll small
16 the flowers instead of the gas."
17 Or how about this one. You've got a busy mom and
18 a voice over, an authoritative voice over: "With internal
19 combustion engines, the greatest pollution comes from short
20 trips, but with electric cars, you can run to the store, go
21 pick up your kids, stop by the cleaners, all with a clean
22 conscience. Electricity production at the utility only
23 produces about one percent of the pollution that each
24 internal combustion car produces."
25 Okay. One last one: "If you have an electric
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1 car, you can't commit suicide by inhaling the exhaust."
2 (Laughter.)
3 MS. GEORGE: When lots of people have electric
4 cars, there will be no need for oil drilling off the
5 California Coast. No need for the birds and otters to drown
6 in the oil spills.
7 And we won't need huge armies and navies in the
8 Middle East.
9 I think if the word ever leaks out about the
10 advantages of electric cars, there will be a stampede to buy
11 them at an affordable price. And that means 15,000 or less.
12 Although there was one out in the parking lot -- it was
13 amazing, a small company; not one of these mass auto
14 companies. Has a car out there for $19,900. This is
15 getting into the realm of the possible.
16 And they seem to have a longer range than the big
17 car companies. And then, there's the one who produces the
18 Porches. Now, isn't it interesting that little companies
19 with no economy of scale are able to do that. Something is
20 strange.
21 This has been said kind of before, but I think
22 it's worth repeating, that this is not a rehearsal for life
23 that we are having here. This is the real thing. And guess
24 what, nicotine is addictive, and car exhaust does cause smog
25 and global warming.
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1 We need to make changes to clean up the air, and
2 we need to make them as fast as we can,not in seven years.
3 This is why I'm here today. As an antinuclear
4 activist, I'm not pleased about plugging cars into the grid.
5 I want to see electric cars powered with fuel cells, running
6 on totally clean fuel produced by solar processes. I'm
7 willing to go with hybrids, too.
8 We are in a delicate position on this planet.
9 Human ingenuity has produced many wonderful things and some
10 truly horrible things. We need to distinguish between them.
11 And it's hard when they're all mixed together.
12 I love cars. I love listening to a good tape and
13 seeing the countryside. But, frankly, I prefer to take a
14 bicycle, or a train, or a bus to work everyday. But an
15 electric car, that would really be fun.
16 Each of us have moments in our lives when we have
17 to choose between what is comfortable but clearly wrong, and
18 what is less certain, but that we know is right and
19 necessary. And I beg each of you on this Board to look into
20 your hearts tonight before you go to sleep and every night
21 until you take this vote. I believe your heart will tell
22 you that this MOA is dangerous and deadly.
23 I hope you will keep the original mandate. But
24 whether or not you do, please do put in some requirements
25 for advertising, because I think in this State, we know how
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1 important that is to developing a market.
2 Thank you very much.
3 CHAIRMAN DUNLAP: Thank you. Any questions?
4 Okay.
5 SUPERVISOR ROBERTS: I was hoping Dr. Kervorkian
6 doesn't have to rebut this.
7 (Laughter and Moans.)
8 CHAIRMAN DUNLAP: I don't think you have to worry
9 about that, Ron.
10 Richard Wilmshurst from 49er Sierra Resources,
11 Inc.
12 SUPERVISOR RIORDAN: He's spoken.
13 CHAIRMAN DUNLAP: He's spoken. Okay.
14 Paul Knepprath, and Jerry Mader. Paul, are you
15 here? Mr. Mader? Come forward, please.
16 Followed by Bill Wason, then John Burton.
17 Mr. Knepprath's going to yield to you. That's
18 okay. Jerry, go right ahead.
19 MR. MADER: Okay. Sorry. Nice to be here this
20 afternoon. I'm going to be as brief as I can be.
21 I'm Jerry Mader. I'm the Chairman of the Advanced
22 Battery Task Force representing today AEG Corporation, Varda
23 RWE, and Electric Fuels Limited.
24 Before I make some of my remarks, I just wanted --
25 I was listening carefully to your debate about trying to set
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1 reasonable cost figures for pilot scale batteries. And I
2 would really encourage you to stay out of that quagmire. I
3 did this when I was in technology development for the
4 Electric Power Research Institute. I used to put out RFPs
5 for pilot scale batteries.
6 And what you have to understand is, in that
7 technology development stream, there's no real basis on
8 which you can set the cost of those batteries. The
9 manufacturers are going to take a loss on the sale of those
10 batters, so they set them -- they kind of pick a reasonable
11 cost so they can get some return on their investment. So, I
12 think that would be a folly to try to define what reasonable
13 cost would be for this type of MOA.
14 So, I would stay away from that.
15 I want to take a little slightly different tact
16 than what I've been hearing from a lot of people today. And
17 I want to say that this is a historic day, and I want to
18 congratulate this government organization, the staff and the
19 Board, for coming up with an agreement with the auto
20 industry to introduce electric vehicles. This has never
21 happened that I know of anywhere, because there hasn't been
22 big industry involved in electric vehicles really anywhere
23 in the world.
24 I've been in this field for over 17 years, and
25 this is a big day. You actually have hammered out an
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1 agreement to move forward to introduce electric vehicles
2 with the auto industry, not only the U.S., but also
3 Japanese companies.
4 And I think that you're to be commended for that.
5 The Task Force members in the Advanced Battery Task Force
6 are behind the proposal, because they know that the auto
7 companies are going to be their customers. And they know
8 that the auto companies have to be involved and be behind
9 what you're going to do here in California.
10 I would like to say that the key issue, as we've
11 talked about -- and many people have brought up -- in the
12 next few years is the development of the market. And that's
13 been this issue, I think, all through a lot of the debate
14 this summer.
15 And I just want to make the point that I think you
16 ought to be considering and thinking about how this market
17 segments itself, niche markets in the early phases, niche
18 markets in fleets. I really like this idea of placing
19 vehicles in rental fleets. It's a great way to get exposure
20 to the technology, and when you even have limited range, to
21 be able to get people to use vehicles, and also in buses.
22 This many, many -- I think anybody who's looked at
23 this technology over the years would agree that, in order to
24 introduce it, you need cooperation between, you know,
25 government, auto industry, you know, including the battery
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1 industry, utilities, and the environmentalists.
2 And I think that, you know, the one encouragement,
3 and other people have brought this up today, but it's
4 something that I've been really trying to think through over
5 the last several months, is how do these entities come
6 together?
7 Over the last eight or nine months, there's been a
8 lot of dialogue. It's been somewhat divisive. People have
9 taken their stances. And I think this has created somewhat
10 of a rift between all these organizations. And I think
11 that, after today, we want to clear the table and start a
12 new process.
13 We want to start a process of kind of coming
14 together. I have had maybe the good fortune of going to
15 school in Michigan for seven years, and working and living
16 there for another ten, and now living out here for nineteen.
17 So, I've been like 17 years back in Michigan and 19 years
18 here.
19 I know a lot of people in the auto industry as
20 colleagues and friends. I think there's some effort that we
21 should put into building better relationships with these
22 people. I think that, you know, for good or for -- for
23 better or for worse, you have an agreement with them. And I
24 think that the way this technology will get introduced and
25 the way this trust issue will get handled is through
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1 developing better relationships.
2 So, I would like to see us move beyond, you know,
3 a lot of this dialogue of -- and I don't mean to be putting
4 any profession down, but rather than looking at regulation
5 and legalities, you know, when we move into the technology
6 development and market development, it's more of a
7 cooperative approach. And I think we ought to give that a
8 try for two or three years and see how it works, and then we
9 can bring in the legalities and look at if it's working or
10 not working.
11 So, I would like to offer, you know, I stand ready
12 to be involved in any way I can to help bring the various
13 parties together and work so that we can have a true
14 partnership and establish a market over the next three or
15 four years.
16 Thanks.
17 CHAIRMAN DUNLAP: Thank you, Jerry, very much.
18 Any questions of the witness? Thank you.
19 Mr. Knepprath from the American Lung Association.
20 MR. KNEPPRATH: Good afternoon, Chairman Dunlap
21 and Board members. It's been a long day. I'm glad I have
22 the opportunity to stand here before you now.
23 My name is Paul Knepprath, and I'm speaking here
24 on behalf of the American Lung Association of California,
25 the 15 local affiliates and associations that we have
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1 throughout California, and our medical section, the
2 California Thoracic Society.
3 And we're here today to express our opposition to
4 the zero-emission vehicle regulation as it is before you.
5 Many people have mentioned these points, and I will just
6 make them for the record.
7 We believe that the proposal before you today
8 relies too heavily on the voluntary action by the automakers
9 to ensure the success of this program and to clean the air
10 between now and year 2003.
11 I'd also say that we have submitted a letter to
12 you for the record, and it may be before you as I'm
13 speaking.
14 And that while we understand the interest and the
15 desire in pursuing a market-based approach to the ZEV
16 regulation, and that it's desirable in this current
17 political environment, we believe that repealing the ZEV
18 until 2003 reduces your leverage and your ability to really
19 force progress and compliance set forth in the proposed MOA.
20 We believe and we have recommended that the Board
21 consider maintaining the regulatory approach and perhaps
22 marrying some flexibility, but while retaining the force of
23 the regulation in the former ZEV mandate.
24 Many of these proposals you have heard already at
25 previous hearings and workshops.
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1 I guess the reason why we believe that the
2 regulatory approach is a better way to go is, in this case,
3 when we're talking about an air quality regulation, which is
4 intended to reduce emissions and to provide for better
5 public health environment, that relying on the market is not
6 the way to do it.
7 If all we were talking about was introducing a new
8 vehicle for people to purchase because it was a new
9 transportation system, that may be a desirable way to do.
10 But we believe that, if you're looking at public health, and
11 you are a public health organization, that you ought to be
12 looking at a strong -- the strongest approach. And that, in
13 our mind, is the regulatory approach.
14 Having said that, and recognizing that there has
15 been a lot of work and a lot of effort gone into the MOA,
16 and that there appears to be a lot of momentum moving in
17 that direction, we would stress three things that you
18 consider in adoption and looking at this MOA and this
19 agreement you have in front of you.
20 Because we think that implementation is going to
21 be critical; that moving the ZEV technology out the door and
22 getting wide acceptance by the public in California is going
23 to be crucial to making this program work, we're
24 recommending three things. One is a comprehensive public
25 education campaign; two, some kind of a watchdog function or
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1 role specifically within the Air Resources Board; and,
2 three, pursuing incentives and supporting incentives to
3 create the market, to push the market. And this would be
4 both legislatively, administratively, however you can
5 support those.
6 It has been mentioned before that the public
7 education effort being undertaken by the RFG campaign is a
8 good model. And we would agree; that looks fine. There are
9 many other models I think that you could utilize. But
10 somehow we've got to get back out to the public to indicate
11 that these ZEVs are a clean-air vehicle; they are good for
12 public health.
13 There are lung health benefits to the ZEV; and,
14 secondly, that these are real cars for real people. We've
15 got to dispel some of the myths that have been put out there
16 by the oil and auto industry in the last several months
17 campaigning against the mandate, in which I think the public
18 has gotten the message that ZEVs are some kind of a wild
19 technology and that they may not be ready for Californians.
20 We think that it's our responsibility as the
21 public, your responsibility as the Board, to help bring the
22 message back to the public that these are real cars for real
23 people, and that they have good public health benefits.
24 The watchdog role I think is something --
25 obviously, with the MOA, there needs to be some way to
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1 ensure that some of the loopholes or some of the -- what we
2 believe are some weaknesses in that are watched along the
3 way, and that we ensure as much -- create as much framework
4 as possible to ensure compliance with the MOAs and to move
5 this thing beyond just an agreement and into reality,
6 particularly with the issue of ramping up to 2003, which
7 remains, I think, an unanswered question.
8 And then on the incentives issue, whatever you can
9 do within your own power within the California Legislature,
10 and within this Administration, to push incentives, tax
11 incentives, whatever it may take to help the public purchase
12 zero-emission vehicles, we think that's the way for you to
13 go. And we would urge you to do so.
14 And those are our comments for today. And we
15 appreciate the opportunity to be here.
16 CHAIRMAN DUNLAP: Thank you. Just a comment. I
17 wanted to commend the ALA for re-energizing their efforts in
18 the clean air agenda here at the Board. It's good to see
19 you guys involved and participating. And you add a lot of
20 value to the debate. I don't necessarily say I agree with
21 every position you take.
22 MR. KNEPPRATH: Certainly. I'm sure there are
23 many that we will agree on, and there are going to be some
24 that we don't. But thank you for those comments.
25 CHAIRMAN DUNLAP: Thank you. Any questions of our
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1 witness?
2 Very good. Bill Wason, followed by John Burton,
3 followed by Ed Maschke.
4 Mr. Wason here? Okay. Mr. Burton from Integral
5 Design. Is Mr. Maschke here?
6 MR. BURTON: Thank you for letting me speak today.
7 This is a momentous day, and I'm somewhat unfortunately
8 convinced that you're going ahead with this decision. And I
9 think there are good elements in this decision and working
10 with the big auto companies.
11 However, I would be much more pleased if we had
12 stuck with our two percent and our ramp-up of percentage
13 requirements, because I believe the issue of air pollution
14 and public health is a big one.
15 And it connects to a lot of other issues, such as
16 population growth, greater, and so on.
17 Let me get specific and get through with my
18 testimony here.
19 This memorandum of agreement, I think it would be
20 in your interest to listen to our environmental lawyers who
21 have been speaking to you about weaknesses in the agreement.
22 Let's be honest. We know that we can't trust the auto
23 manufacturers to really implement electric vehicles if we'd
24 just look at history.
25 We'd like to trust them. Perhaps that's the good
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1 thing about this agreement. But we know from history that
2 we can't. And so, we are going to have to be strong in
3 enforcing this agreement, even the minimal agreement that it
4 is.
5 The manufacturers have focused on battery
6 technology as an excuse to delay any implementation of
7 electric vehicles.
8 It shows a lack of vision and perhaps because of
9 their lack of interest in this area. Perhaps their interest
10 is increasing. And I'm sitting here wondering, can we trust
11 them to come up with the next generation of batteries
12 implemented in their vehicles? Perhaps we can. I hope we
13 can.
14 On the other hand, I'm very thankful that there
15 are people like MendoMotive, companies that have shown that
16 lead-acid batteries work just fine in nice light weight
17 fiberglass sports cars.
18 And beyond that, we know that a 50-mile range is
19 good a lot of our transportation needs. There are other
20 solutions other than advanced batteries. I'm sure someone
21 must have mentioned the idea of having battery stations
22 where you simply every 50 miles, pull into a battery
23 station, drop your old batteries out (sic) and get new
24 batteries in.
25 A lot of advantages to that if we were willing to
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1 set up that kind of infrastructure, you wouldn't have to own
2 the batteries and maintain them. And we could take care of
3 the environmental problems that way.
4 So, there's a lot of other possible solutions.
5 We've become focused into this one avenue, which is going to
6 be these auto industries coming up with these high-tech
7 batteries and delaying implementation of electric vehicles.
8 Clearly, MendoMotive and other creative
9 environmentally oriented individuals are going to continue
10 to come up with better and better electric vehicles in the
11 meantime. But it's unfortunate that you don't seem to have
12 any way to support those efforts.
13 The larger problem that I see that's not being
14 addressed by the Air Resources Board has to do with our
15 growing population. The trend to more automobiles and more
16 miles being traveled per person per automobile, and the fact
17 that we've built a very convenient system that supports the
18 single occupant automobile. And we all know that it's very
19 convenient, but we all know deep down that it's really one
20 of the biggest problems we have in this country.
21 You've already mention of the Gulf War and the oil
22 companies. So, beyond providing zero-emission vehicles, or
23 low-emission vehicles for a single occupant or two occupants
24 perhaps, clearly, the solution must include looking at
25 public transportation systems and a coordination of those
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1 systems.
2 And if you don't like the word public, then let's
3 call it group, or multiple occupant vehicle systems.
4 Shouldn't the Air Resources Board be taking initiative in
5 this area as well? You should be proud of what you've done
6 so far with the electric vehicles to promote them. We also
7 need to be coordinating and promoting public transportation.
8
9 For example, BART could be extended to places like
10 Santa Rosa, which could be connected to the North Coast
11 Railroad, which would be a public transit corridor if we
12 were willing to upgrade the infrastructure there. We have
13 agencies like the Solano Transportation Agency that's
14 starting to look at in a county area.
15 But I believe that your agency should look at
16 statewide coordination of these efforts, because the public
17 transportation system will be even more effective in
18 reducing air pollution if it is coordinated so it is a
19 convenient system that people like to use.
20 And, of course, most of us have traveled to Europe
21 or Japan, and we know that those systems can work.
22 Admittedly, it's going to take a lot of effort. But that's
23 why I'm bringing this up now, is that I think you need to
24 look into public transportation systems as part of the
25 solution that we need to push for.
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1 Thank you very much.
2 CHAIRMAN DUNLAP: Okay. Any questions for the
3 witness? Okay. Mr. Maschke from CalPIRG, followed by V.
4 John White, and Mr. Grumet.
5 MR. MASCHKE: Thank you, Mr. Chairman. We have a
6 small gift for the Board members from CalPIRG. I hope
7 there's enough to go around.
8 These are masks which are basically either for
9 sort of the smell of our testimony, if you will, or for the
10 decision that you're about to make which, in our opinion,
11 stinks.
12 So, I would ask you to pass these out.
13 We also are presenting you today with the
14 signatures of some 4,000 individuals who object to the MOAs
15 you have structured, to the deal that you have cut, and who
16 would ask that you not complete this mission that you're on.
17 And representing CalPIRG in our 60,000 members and
18 MassPIRG's 55,000 members, we ask you to reconsider your
19 actions and don't count the deal as done yet.
20 As you're aware, Mr. Chair, you were out of the
21 room, as was Ms. Edgerton, but we were represented by
22 counsel here today. We have posited some arguments in terms
23 of the CEQA perspective that is lacking, at least in our
24 opinion. And we would hope you take those comments
25 seriously. We would hope you answer the thousand comments
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1 that are in the record.
2 And because we have just added another 4,000
3 individuals who have commented and signed petitions against
4 your change and your MOA, we would ask that you respond to
5 each and every one of them. Their addresses are there as
6 are their phone numbers.
7 We would ask that you work, as this Board has done
8 for many years, in the public interest. Since the inception
9 of this Board back to the time of Tom Quinn -- and,
10 unfortunately, I'm old enough to remember that, and I was
11 here at that time, this Board has been working as keepers of
12 the public health, if you will.
13 And the bottom line has always been the public
14 interest. And I think your actions in that area are
15 recognized, and it was stated earlier that you're in a world
16 leader position.
17 And it's appreciated. It is supported. And
18 rightly so, because you've taken many actions that have been
19 very, very forthright and very far reaching to clean the
20 air. But despite your good work, our air is not clean.
21 The evidence is mounting now that more and more
22 deaths and decreased life expectancy are linked to
23 diminished air quality. The report that we have just given
24 each one of you is something we released earlier this week.
25 It summarizes a tremendous amount of the data, the six city
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1 studies, the various health impacts that you have laid out
2 from your own staff reports that provide the information to
3 show that what we're talking about here is not just a
4 decision about dollars and cents. It's a decision that
5 basically is killing people
6 Your actions will, in fact, have great harm upon t
7 he public or great benefit to the public. So this just
8 isn't about electric vehicles. This is about people dying
9 from air pollution when they don't have to, having their
10 lives shortened.
11 And I know you take your responsibilities as
12 public officials very seriously, and that's appreciated. I
13 think you're deliberate about these things. But, as we bear
14 responsibilities as consumers for the automobiles we buy and
15 for the fuel that we purchase and burn, you bear a different
16 responsibility and a greater responsibility at this time,
17 because you can change the direction. It's a rare
18 opportunity to have a launch window for technology.
19 I was blessed some time in the seventies to work
20 on something called the 55 percent tax credit, which we
21 wrote with Jerry Brown. Joe Caves, who stands before you on
22 this issue, also worked very hard on that.
23 John Burton, the man who just stood here was also
24 working on that issue at this time (sic).
25 ///
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1 So, we have sometimes a launch window to make
2 significant change that's very important and that provides
3 the leadership potential for California. And I understand
4 that you're well aware of this.
5 Unfortunately, you've chosen -- you seem to have
6 chosen a path. And I won't prejudge your actions, although
7 they've certainly been stated at least by the majority of
8 the Board today, when I've heard you speaking, that the
9 public testimony doesn't seem to persuasive today; that's
10 you've already made up your minds; that the MOAs and the
11 deal that you've done and signed, as I understand, is a fait
12 accompli.
13 If those MOAs are not signed, then I have gotten
14 that wrong. Mr. Chairman, you shook your head, so I hope
15 that is correct.
16 CHAIRMAN DUNLAP: They haven't been signed, no.
17 There's an intent, if the Board takes action to approve the
18 staff recommendation, that they would be.
19 But they have not been signed.
20 MR. MASCHKE: Well, at least from our perspective,
21 the MOAs and your actions to develop a market-based
22 strategy, as ordered by the Governor, break the compact that
23 you and the Governor made with the businesses and the people
24 of this State.
25 And this is exactly what those who would decry
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1 regulations rail against the most -- uncertainty and
2 changing the rules after six years of development of this
3 program.
4 It remains in doubt now whether or not CARB can
5 keep its word when the right amount of political pressure is
6 exerted and money is spent.
7 The retreat is disingenuous at best, and at worst,
8 it smacks of the things that the public believes worst in
9 its government, that politicians are bought with
10 contributions, and that their appointees are controlled by
11 the industries that they are to regulate.
12 The distortions that the automakers and the oil
13 companies put forth in the last two years to destroy public
14 confidence in electric vehicles would seem to have been
15 convincing to all that they are not serious about a viable
16 marketing strategy. But now, you've decided they should be
17 in the driver's seat; that they should decide on marketing,
18 and that we're going to have a partnership with them on
19 marketing instead of regulating.
20 Putting Detroit in this position is like leaving
21 Dracula in charge of the blood bank. You seek balance
22 between regulations and what they would cost. And what
23 price would you put on the lungs of your own child?
24 Two of my children have lung impairments. What
25 price would you put on the lungs of your elderly parents or
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1 of groups that are disabled? How does that figure in your
2 cost/benefit calculus?
3 And, as you're required to do an economic impact
4 statement as part of your own regulations, where are those
5 analyses done? And I would ask you to include within some
6 of that economic analysis what's called the externalities.
7 And those externalities have now been quantified to some
8 degree when you look at the studies that have been done on
9 not only the health impacts, but also the agricultural
10 impacts and the impacts to the economy of the State of
11 California.
12 So, this deal, if you will, that's been cut for
13 the Governor, because he wanted it done, smells. It's a bad
14 deal. You don't have to do it. A majority of this Board
15 doesn't have to vote for it. If those MOAs have not been
16 signed, I hope you will remember that you work for the
17 public. You take an oath when you took this office. And
18 you swore to uphold the Constitution, which includes some
19 pretty, pretty strong language about health and safety.
20 And you have the ability to basically do something
21 through a launch window and provide a technological
22 opportunity for this State. You don't have to knuckle
23 under. You don't have to, in essence, carry the water that
24 the oil companies and the car companies are now asking you
25 to carry.
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1 This, I think, is really what you're charged with,
2 protecting the public health, safety, and welfare;
3 protecting the public's air quality, not to be the front man
4 for the Governor, not to be carrying the water for the oil
5 and the auto companies.
6 You are to regulate them, and what you have done
7 in this contractual agreement is give up your regulatory
8 authority. And if you continue on this way, why is it
9 anybody would not believe that they can come to this Board,
10 push hard enough on either the Governor or with funding
11 through two years of advertising, and expect that any rule
12 can be bent.
13 And why should the public end up with any
14 confidence? Mr. Chairman, I thank you for the time. I
15 think the public deserves better than the MOAs that have
16 been structured here. And I would encourage you to take
17 into account the comments that have been made by NRDC, by
18 UCS, by counsel representing us today.
19 And I would believe that it will take you at least
20 five or six months to answer those comments before this rule
21 could take effect.
22 Thank you.
23 CHAIRMAN DUNLAP: Thank you.
24 Any questions of the witness? Dr. Boston.
25 DR. BOSTON: Mr. Maschke, I take great objection
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1 to a lot of the statements you have made. I don't think
2 it's your position to get up there and scold us when you
3 don't know half of what we've been doing over the last 15
4 years.
5 Who do you think is spending millions of dollars
6 to perform a children's health study in the L.A. Basin right
7 now? That has been our Board that's been doing that. You
8 don't know what the results of those studies are yet. And
9 we don't know what the results of those studies are yet.
10 When they come out, we'll be taking appropriate
11 action. If you would get those 4,000 people that you have
12 on signature there to line up and start buying electric
13 cars, then General Motors would be very happy to sell them
14 to you, and the other companies would jump in immediately
15 and have cars on the market to sell, also.
16 So, get your people to start putting up their
17 money where their mouth is and start buying these cars.
18 I think we've done a great job over the last few
19 years, and I think we've done a great deal to clear the air.
20 And I don't like to be scolded by you and have masks passed
21 out. I think that that's a very childish thing that you've
22 done. And I resent it.
23 MR. MASCHKE: Well, Dr. Boston, with all due
24 respect, I wouldn't like to be standing here and scolding
25 you if these MOAs were being questioned in the way that
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1 somebody who would look at them logically and say there is
2 not enforcement in this provision.
3 There is no provisions (sic) to get us to 2003
4 where we're going to be at 10 percent without the entire
5 world collapsing. And this MOA can't work. And I think
6 you, sir, as representative of the public, should be asking
7 the questions that the public was standing here asking
8 today.
9 DR. BOSTON: You don't know how I'm going to vote.
10 You have no right to assume that. You have already
11 prejudged what I'm going to do. And that is not accurate
12 for you to do that.
13 MR. MASCHKE: I did not say how you were going to
14 vote or anything else, sir. I simply said I think it would
15 be important for you to ask those questions.
16 DR. BOSTON: Prior to that, you stated you knew
17 how this Board was already going to vote; that our votes
18 were already bought by the auto industry. And that's
19 another statement that I resent.
20 You don't know that our votes have been bought.
21 That's a terrible thing to say.
22 MR. MASCHKE: Well, again, if you'd look in the
23 record, that is not even my characterization of you.
24 I said there has been $31 million spent in the
25 last two years, and it's been spent on lobbying; it's been
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1 spent on advertising; it's been spent basically a PR
2 campaign that apparently has worked.
3 DR. BOSTON: You don't know that.
4 MR. MASCHKE: Well, I hope you would prove me
5 wrong, sir.
6 CHAIRMAN DUNLAP: Mr. Lagarias.
7 MR. LAGARIAS: I think you ought to know that Dr.
8 Boston and I served on the 1990 Board that passed this
9 original ZEV regulation.
10 MR. MASCHKE: I do know that, sir.
11 MR. LAGARIAS: And I, too, resent the manner in
12 which you've presented the considerations we have. And you
13 bring in the Governor in all this. I've never been
14 approached by the Governor.
15 I look on this on its technical and economic
16 merits. And my judgment is based on what I see, and what I
17 know, and what I understand.
18 And to assume otherwise, I resent.
19 CHAIRMAN DUNLAP: Any other questions or comments?
20 Thank you, Mr. Maschke. Appreciate your time.
21 MR. MASCHKE: Thank you, Mr. Chairman.
22 CHAIRMAN DUNLAP: Mr. Grumet and then Mr. White.
23 MR. GRUMET: Thank you, Chairman Dunlap and
24 members of the staff, of whom I'm familiar and have enjoyed
25 working with for the last several years.
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1 I'm Jason Grumet, and I'm the Executive Director
2 of NESCAUM, which is the Northeast States for Coordinated
3 Air Use Management. And we represent the air control
4 programs of the States between Maine and New Jersey.
5 I personally have been enjoying working on this
6 issue myself since the late 1980s and, in fact, come before
7 you with a little bit of reluctance. I had decided
8 affirmatively to be a passive observer to your process with
9 plenty of difficulties back home to keep my mind occupied.
10 But as I watched the tortured expressions, as we
11 all tried to grapple with the exact status of what's
12 happening in the Northeast -- I guess in the word's of
13 President Clinton, "I felt your pain," and decided I would
14 come forward and try to at least put myself out of the
15 misery I was experiencing.
16 For myself, a lot of the pain results from the
17 great disparity between the presentations about the
18 commitment and the status of the national LEV program that
19 were represented today versus what we continue to grapple
20 with back home.
21 And I thought that what might be helpful would be
22 simply to just give you a little bit of context about the
23 national LEV program, its origin and its status, so that it
24 can form your ultimate decision.
25 As I think many of you know, several of the
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1 Northeast States have been working very closely with the
2 staff here in California for a number of years using the
3 authority under the Act to mimic the substantial benefits of
4 the California program relative to the Federal standards.
5 Since the last 1980s, New York and Massachusetts
6 have adopted standards that are consistent with the
7 standards here in California.
8 As the State's moved forward and started running
9 into roadblocks in the Northeast based on the fear that some
10 States might adopt and other States might not, we turned to
11 a mechanism in the Clean Air Act -- the Ozone Transport
12 Commission.
13 And in February of 1993, voted -- this 13 State
14 region -- voted by 9 to 4 to have all States between Maine
15 and the District of Columbia adopt the California LEV
16 program, including the NMOG fleet average.
17 EPA approved that request in December of 1994, and
18 started a 12-month time clock that States needed to
19 essentially complete adoption of the OTC LEV program in
20 order to satisfy. Failure to do so would result in the
21 imposition of Federal sanctions.
22 During this time, the auto manufacturers became
23 understandably concerned that they were going not only to be
24 dealing with an autonomous program here in California, but a
25 lot of copycat programs back in the Northeast.
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1 And concerns about the tremendous quality they
2 perceived of complying with a whole host of fleet averages,
3 prompted them to offer the national LEV program. This is a
4 very positive step, and it's a step that we in the Northeast
5 have embraced.
6 But it has to be understood for what it is. It
7 is, in part, out of I think the sincere desire for a better
8 world that many in the car manufacturing industry support;
9 and it's, in large part, a quid pro quo.
10 The deal in the Northeast was if the Northeast
11 States all capitulated in their desire to have independent
12 programs, the car manufacturers would supply the entire
13 nation with the benefits of a national LEV program.
14 It's worth noting that we've been through the same
15 migration debate in the Northeast, and EPA reached the same
16 conclusion essentially -- it should be noted -- that you
17 did; that the benefits of having the regional program made
18 up for the decrement of lost benefits from complying with
19 the more stringent California standards.
20 However, what I think is important to understand
21 for your decision today is, what's the role of this Board in
22 securing that agreement? Because I don't think anyone
23 here's talking about taking credit for something in a
24 metaphysical sense but, in fact, obviously to the extent
25 that this action today secures that 49-State or Federal LEV
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1 program, you will have done something that you should very
2 much take credit for.
3 And here's the rub. Back at home in the
4 Northeast, there is no unequivocal commitment on the part of
5 the auto industry to produce a national LEV vehicle. The
6 situation has been quite static for the last year or so.
7 The industry has basically said, unless and until
8 all of the States in the Northeast affirmatively repeal
9 their regulations, the industry will essentially keep their
10 clean cars to themselves.
11 That's the status of the situation right now in
12 the Northeast. So, to the extent that this action today
13 changes that; to the extent that, as a result of this
14 agreement, the auto manufacturers remove those hurdles and,
15 in fact, make an unequivocal commitment to sell vehicles in
16 any State that wants them that are at the LEV standards or
17 better, you will have deserved the full credit for securing
18 the national LEV deal.
19 I was quite pleased as I heard things that sounded
20 like that was what the auto industry, in fact, was coming
21 here to say to you.
22 But in some hallway discussions during the lunch
23 break, I found that, in fact, that is certainly not the
24 case. They are still equivocating. I was told that they
25 are committing to a LEV-type concept, but it's still very
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1 much contingent in their minds upon certain things happening
2 outside of the State of California.
3 So, that, I hope, is where we can focus a little
4 bit of attention. To the extent that the industry's
5 willingness to provide California and the nation with NLEV
6 is contingent upon things happening outside of this process,
7 then it seems to me to be certainly a little bit more
8 difficult to base equivalency on this assumption.
9 And I understand that there are many aspects of
10 the MOU which provide alternatives. I think we would all
11 benefit tremendously if national LEV, in fact, was the
12 outcome.
13 And I think there are some activities you could
14 take by, in fact, when the auto representatives who follow
15 come forward, essentially to try to nail this issue down.
16 Are they or are they not making an unequivocating
17 commitment to national LEV? And if not, I would benefit
18 greatly from this trip to understand what it is that still
19 needs to happen in the Northeast in order for them to supply
20 us and you with the benefits of the national LEV vehicle.
21 And I think, mostly, I really just wanted to stand
22 here and see if there were any questions at all about the
23 hyperkinetics in the Northeast that still remain unclear
24 that I might be able to clarify before turning around and
25 flying home.
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1 CHAIRMAN DUNLAP: Maybe I'll start it off.
2 I want to tell you how much I appreciate you
3 monitoring those hallway conversations.
4 (Laughter.)
5 MR. GRUMET: They actually were with me directly.
6 CHAIRMAN DUNLAP: Oh, okay.
7 MR. GRUMET: But thanks for your concern.
8 CHAIRMAN DUNLAP: Because there's a couple people
9 that are going to come up here in a few minutes, and we'll
10 ask them to share some things.
11 MR. GRUMET: That's exactly what I would
12 appreciate.
13 CHAIRMAN DUNLAP: Any questions of the witness?
14 Lynne.
15 MS. EDGERTON: Mr. Chairman, I'm going to further
16 monitor those hallway conversations.
17 What else did you hear that they said was
18 required?
19 (Laughter.)
20 MR. GRUMET: Anybody want to buy a watch?
21 (Laughter.)
22 MR. GRUMET: Let me be absolutely explicit. What
23 has been thwarting the development of the national LEV
24 program has been a couple of things.
25 The States of Massachusetts and New York, in
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1 particular, have been unwilling to repeal their LEV
2 standards. In addition, they have been unwilling to accede
3 to the demand by the manufacturers that they also obviate
4 their authority to do anything different between now and
5 2006.
6 You may have trouble believing this, but the
7 manufacturers are coming before your peers in our States and
8 not only asking that you repeal your existing program, but
9 also asking that you make a prospective commitment between
10 now and 2006 to do nothing to change your regulation of
11 their product.
12 And while I think, you know, there are certainly
13 tremendous benefits to be gained from the national LEV
14 program, several of the Northeast States have to date have
15 been unwilling to trade in what are affirmatively, legally
16 adopted, and enforceable programs for something that remains
17 what they believe is a good idea, and something that they're
18 not yet convinced is ultimately in their interest.
19 I think they believe that having national LEV in
20 every State that wants it would be a profound achievement.
21 But those States who want to continue to cooperate with
22 California and impose fleet averages should have that
23 volition, and just as you're receiving additional benefits,
24 so would those States in the Northeast.
25 MS. EDGERTON: So, let me see if I understand
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1 this. Massachusetts and New York have to repeal their
2 adoption of the California LEV program, including the NMOG
3 standards, in order for Massachusetts and New York to get
4 the 49-State car that California is agreeing to get?
5 MR. GRUMET: Here's the rub.
6 MS. EDGERTON: Is that right?
7 MR. GRUMET: It's a 49-State program.
8 MS. EDGERTON: Wait a minute. Is that kind of
9 right?
10 MR. GRUMET: It's close, but it's not exactly
11 there. And the problem is that it's a 49-State program.
12 That means that it affects everybody but you. You're the
13 50th State.
14 So, in other words, California saying it's okay
15 with us for you to sell these cars everywhere else is an
16 important step.
17 Massachusetts and New York saying it's okay with
18 us for you to sell these cars everywhere else is an
19 important step.
20 Both of those steps have been achieved.
21 What has not happened is the auto companies
22 agreeing to sell those cars everywhere else, unless and
23 until -- and this was as of three o'clock, so maybe it's
24 changed -- New York and Massachusetts repeal their programs.
25 In other words, the auto manufacturers' offer
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1 remained, as of two and a half hours ago, contingent upon
2 New York and Massachusetts repealing their NMOG curves, and
3 turning about and walking away from zero-emission vehicles.
4 So far, the States have not indicated a
5 willingness to do that. And, as a result, I don't think, in
6 fact, we have a confident 47 or Federal LEV program.
7 CHAIRMAN DUNLAP: Let me ask legal counsel.
8 (Thereupon, there was a pause in the
9 proceedings to allow the reporter to
10 replenish her Stenograph paper.)
11 CHAIRMAN DUNLAP: Okay. Mr. Kenny and Mr.
12 Cackette, as I read the MOA, we are to get the emissions
13 reductions from a 49-State NLEV. If there is a problem with
14 that, and those emissions reductions don't pan out, then
15 there are other measures that can be required; is that
16 correct?
17 MR. KENNY: That is our understanding. However,
18 we do expect NLEV.
19 CHAIRMAN DUNLAP: Understood. That covers the
20 emissions reductions requirements.
21 Are there any provisions in any nook and cranny in
22 this MOA that allows the automakers to somehow not provide a
23 49-State NLEV to the States of New York or Massachusetts, or
24 any other State, for that matter?
25 MR. KENNY: Well, the way the MOA is written is
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1 that, basically, they have an obligation to provide the 49-
2 State vehicles throughout the country.
3 There is an alternative provision there in which
4 they can provide something other than that. But the basic
5 obligation here is to provide those vehicles throughout the
6 country.
7 CHAIRMAN DUNLAP: Okay.
8 MR. GRUMET: Let me be clear. I don't for a
9 moment come before you to question your equivalency
10 determination. And I am absolutely confident that you will
11 do whatever it takes to secure equivalent reductions for
12 California.
13 My only point is that there is far more
14 uncertainty surrounding the national LEV program that has
15 been presented to you. And you would do the nation a great
16 service to the extent that you could reduce that
17 uncertainty.
18 CHAIRMAN DUNLAP: What I'd like to do at this
19 point is say thank you very much. I have four witnesses
20 left. Mr. White, would you yield to your colleagues from
21 the auto industry for a moment?
22 MR. WHITE: Sure.
23 CHAIRMAN DUNLAP: I'd like to call Mr. Leonard
24 forward from General Motors.
25 (Laughter.)
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1 CHAIRMAN DUNLAP: Sam, you know I was saving you.
2 And I'd also like to call your colleague up from Mazda, Mr.
3 Aihara. Mr. Aihara still here?
4 Please come forward. Join Mr. Leonard. Just join
5 Mr. Leonard if you don't mind. I know that you're not
6 linked at the hip here, but at least we can get the
7 perspective maybe covered by both of you.
8 Sam, I know both of you have things you want to
9 say here, and I think you could cover that quickly, then
10 there's a few questions that are left outstanding, and I
11 think between the two of you, you can answer those
12 questions, which would be a great service to us and also
13 moving the agenda along.
14 MR. LEONARD: Be happy to.
15 CHAIRMAN DUNLAP: So, please cover the territory
16 you need to cover on behalf of GM.
17 MR. LEONARD: Okay.
18 CHAIRMAN DUNLAP: And then let's get into some of
19 the details here that are fast becoming troublesome.
20 MR. LEONARD: Okay.
21 CHAIRMAN DUNLAP: Okay.
22 MR. LEONARD: First, I fully support the comments
23 of Chrysler and the other auto manufacturers -- Ford and the
24 other ones that have testified so far. So, I'll try not to
25 repeat those.
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1 But I'd like to provide a little perspective on
2 this, because I think it's lost in the detailed review of
3 what's going on here. But, as most of you are aware, the
4 ZEV requirements -- the CARB ZEV requirements were
5 precipitated by the display of the GM Impact electric
6 vehicle at the January, 1990 auto show in Los Angeles.
7 GM announced at that time that we intended to
8 produce the Impact in the mid-1990s. It's been a difficult
9 road to production. There were hard times for the company,
10 deep losses in the billions and tens of billions of dollars
11 that caused delays in many of our new vehicle programs, not
12 just in the electric vehicle program.
13 The CARB ZEV requirements that would force six
14 major competitors into the EV market made a shambles of our
15 business case for the Impact vehicle. But the company's
16 commitments to the electric vehicle remained intact: an
17 intent to make a business out of it.
18 Our great concerns were the ZEV requirements that
19 would force too many vehicles into the market faster than
20 the consumers would be willing to accept them. But, as
21 evidence of our continuing commitment to make a business out
22 of the electric vehicle, General Motors displayed a
23 consumerized version of the Impact, the EV-1, fittingly at
24 the January, 1996 auto show.
25 Our Chairman, John Smith, in announcing the
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1 availability not only of the EV-1 for the fall of this year,
2 but also an electric version of our S10 pickup truck in the
3 spring quarter of 1997, confirmed these vehicles are, quote,
4 "the first products in a portfolio of high-technology
5 products that GM will bring to the market in the years
6 ahead.
7 It's a total business plan that we are working for
8 in electric vehicle technology. CARB's leadership with
9 today's proposal provides the opportunity for us to make a
10 business out of electric vehicles by allowing manufacturers
11 to focus their resources on the successful commercialization
12 of such vehicles. This will, in turn, encourage and
13 facilitate a parallel development of the necessary
14 infrastructure to enable electric vehicles to fulfill the
15 transportation needs of the State's consumers.
16 Through your leadership in adopting these proposed
17 changes, the electric vehicle now has a real chance for
18 long-term success.
19 Thank you.
20 CHAIRMAN DUNLAP: Okay.
21 MR. AIHARA: Thank you very much.
22 CHAIRMAN DUNLAP: Don't leave, Sam.
23 MR. LEONARD: I won't.
24 (Laughter.)
25 MR. AIHARA: Well, I won't let him go.
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1 (Laughter.)
2 MR. AIHARA: Chairman Dunlap and distinguished
3 members of the Air Resources Board, and our friends on the
4 Air Resources Board staff, we've worked together for many
5 months. And I represent Mazda Motor Corporation in
6 Hiroshima, Japan.
7 And Mazda has been working diligently to advance
8 automotive technology to help achieve vehicle emission
9 reductions, thus providing air quality benefits sought by
10 the State of California.
11 EVs, in order for them to meet the Board's ZEV
12 goal, must meet a variety of expectations that California
13 end users have, such as adequate vehicle performance with
14 sufficient driving range, and acceptable vehicle total
15 ownership cost or cost for purchase, lease, and operation.
16 However, when the Board's BTAP has concluded in
17 its report to the Board the successful launching of the EVs
18 is heavily dependent on the EV battery performance, and EVs
19 with current technology batteries will fall short for the
20 customer satisfaction.
21 Owing to such advanced batteries being still under
22 developing at the present, not to mention the series of
23 obstacles their development has to overcome to have them
24 meet required performance criteria, Mazda feels that, first,
25 the development of these batteries should mature; second,
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1 EVs equipped with these batteries should be tested under
2 real world conditions.
3 Through such validation testing, end user
4 preference would become more clearly identified, and most
5 potential problems would surface and be resolved. Through
6 repeated process, it will be fine-tuned for final production
7 and commercialization.
8 With these considerations, we remain fully
9 committed to terms of the MOA, and work very hard at it.
10 And the EV demonstration program for which the Board has
11 called, while continuing working toward the final goal for
12 introducing vehicles in the spirit of the ZEV program.
13 Thank you very much for your kind attention. And
14 this concludes Mazda's presentation. Thank you very much.
15 CHAIRMAN DUNLAP: Thank you. Okay. You'll
16 provide the court reporter with your testimony. All right.
17 Terrific.
18 Sam, there's been some monitoring of hallway
19 conversations, and people have the impression that somehow
20 you're telling us one thing in California and you're telling
21 the Northeast States something else. And we think the
22 staff's representing that they have an MOA saying that
23 you're willing to sign it, making some commitments, and that
24 somehow people are reporting that that's somehow
25 inconsistent with some negotiations or conversations being
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1 held in the Northeast.
2 Shed some light on that, please.
3 MR. LEONARD: Number one, I don't think they're
4 inconsistent at all, but I'll try to shed some light. Part
5 of the problem is caused by some of the shorthand that's
6 being used here.
7 CHAIRMAN DUNLAP: Okay.
8 MR. LEONARD: The NLEV, as defined in the MOA, is
9 a little bit different than the NLEV NPRM. What we have
10 agreed to --
11 CHAIRMAN DUNLAP: The NPR --
12 MR. LEONARD: M, the notice of proposed
13 rulemaking.
14 CHAIRMAN DUNLAP: Which is the Federal proposal?
15 MR. LEONARD: Right.
16 CHAIRMAN DUNLAP: Okay.
17 MR. LEONARD: What we have agreed to do or is our
18 intent to do under the MOA is to provide a LEV average
19 vehicle nationwide beginning in the 2001 model year. That
20 is our intent.
21 CHAIRMAN DUNLAP: Three years earlier than the --
22 MR. LEONARD: (Interjecting) Three years earlier.
23 CHAIRMAN DUNLAP: -- Federal Government could
24 require.
25 MR. LEONARD: If we are able to do that under the
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1 NLEV rulemaking of EPA, that is great and that's one option
2 we have to do that.
3 The second option of doing it is to find some way
4 to supply a straight California vehicle nationwide in 2001.
5 And hopefully, if we can't do the Federal NLEV program, we
6 would do that.
7 The third backstop in case neither one of those
8 works, because we're working with a notice of proposed
9 rulemaking on the Federal level that's not finalized yet, in
10 trying to sell California cars nationwide, believe it or
11 not, EPA doesn't believe they're as clean as their cars and
12 they would impose additional requirements on us.
13 CHAIRMAN DUNLAP: Okay. On that point, may I --
14 MR. LEONARD: (Interjecting) We reserve the third
15 method as the final fallback method. It is a fallback
16 method. It is not the intent to utilize the equivalent
17 emissions.
18 All right. The Federal NLEV program under the
19 notice of proposed rulemaking by EPA, goes above and beyond
20 what we've agreed to in California. It includes not only
21 national vehicles at the LEV level in 2001, it also includes
22 early roll-out in the Northeast States of TLEVs and LEVs in
23 1997, 1998, 1999, and 2000.
24 We feel those are still currently negotiable items
25 with the Northeast.
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1 And to answer one additional question, as long as
2 New York and Massachusetts keep California requirements on
3 their books and do not provide an alternative that allows us
4 to put NLEV in those States, we cannot supply NLEV vehicles
5 to their States. The California requirements rule under
6 Section 177; so, it's not our choice at that point.
7 CHAIRMAN DUNLAP: Ms. Edgerton.
8 MS. EDGERTON: Is that an accurate interpretation
9 of what --
10 CHAIRMAN DUNLAP: Tom just did. He said it's
11 accurate.
12 MR. CACKETTE: That's our understanding of the
13 situation. That's the way it went in our negotiations.
14 That was exactly the way it was portrayed and the way both
15 sides understood it in signing the agreement. What it was
16 is that if they can't deliver NLEVs to New York and Mass.,
17 they'd deliver California certified cars to those States,
18 because that's what those States' rules require.
19 MR. LEONARD: It's like me trying to deliver NLEVs
20 to California. You wouldn't let me. I've got to deliver
21 California vehicles to California.
22 CHAIRMAN DUNLAP: Dr. Boston.
23 DR. BOSTON: Mr. Leonard, did I understand that
24 when you said that the Impact was in a 1990 auto show, that
25 was prior to this Board taking the action that we did?
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1 MR. LEONARD: It certainly was.
2 DR. BOSTON: Is that right?
3 MR. LEONARD: I am convinced in my mind that, but
4 for that, the ZEV mandate would not have happened from this
5 Board.
6 DR. BOSTON: And then the further implication was
7 that, if we hadn't have come up with that regulation, you
8 may have had that car on the market even --
9 MR. LEONARD: (Interjecting) Sooner. Yes.
10 DR. BOSTON: -- sooner, because it didn't
11 introduce all the other competition to General Motors.
12 MR. LEONARD: We delayed the ZEV, the Impact
13 program, to reexamine the business plan because of the ZEV
14 mandate. Because, when you put -- it's one thing to market
15 a product when you are "the niche" vehicle for that market.
16 It's another one to market -- to tool up and market a
17 product when you're looking at six competitors being forced
18 into the market with you with a set number of vehicles to
19 sell.
20 DR. BOSTON: You should have told us that in 1990.
21 MR. LEONARD: We did. We did.
22 MS. EDGERTON: So, if I understand correctly,
23 Massachusetts and -- what you're saying is Massachusetts and
24 New York, by virtue of having adopted our standards anyway,
25 are going to get cars as clean as the 49-State car anyway?
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1 MR. LEONARD: Yes.
2 MS. EDGERTON: So, the emissions reductions
3 calculations that we use for 49 States times 18 percent,
4 times et cetera, et cetera, et cetera, are still what they
5 were? I mean they're still valid? Huh? Yes?
6 MR. CACKETTE: Yes.
7 MS. EDGERTON: Thank you. I had another question.
8 MR. LEONARD: Yes.
9 MS. EDGERTON: You know, Mr. Leonard, I've asked a
10 lot of people and, you know, I felt kind of badly because,
11 you know, I asked someone else if I could buy their car.
12 And I was wondering, if you were sitting out there, because
13 I'd already asked you to buy your car, I wasn't really
14 serious about buying their car.
15 (Laughter.)
16 MR. LEONARD: Give me my pen back.
17 (Laughter.)
18 MS. EDGERTON: I want your car. No. How many
19 cars do you expect -- I think this is public record, but
20 could you just repeat it for folks that --
21 MR. LEONARD: (Interjecting) It is not public
22 record. It 's in the confidential submission, and I would
23 refer you to the confidential submission. The Chairman has
24 adequately summarized the industry numbers, and we have not
25 announced publicly how many we are going to sell. And I do
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1 not want to give the competitors that information as to
2 what I'm tooled up for.
3 MS. EDGERTON: Okay. Well, could you give me
4 whatever information is available in the public record? I
5 read recently that you were going to lease them; you weren't
6 going to sell them?
7 Can you just give us the --
8 MR. LEONARD: (Interjecting) That decision has
9 not been made.
10 MS. EDGERTON: So, that's not really made.
11 MR. LEONARD: It's still to be made by the
12 marketing division. We have not announced capacity numbers
13 at all in the public record. It is in the confidential --
14 CHAIRMAN DUNLAP: You've announced a season in
15 which they'd be available.
16 MR. LEONARD: We've announced that they will --
17 that the Impacts will be available in the fall of '96, and
18 the S10s in the spring of '97.
19 MS. EDGERTON: And the Impacts -- well, the EV-1s
20 will be sold in California and Arizona?
21 MR. LEONARD: The EV-1s will be sold in the Los
22 Angeles, San Diego, Tucson, and Phoenix area, because those
23 are the climates and geography that are conducive to good
24 operation of that vehicle.
25 That vehicle is not designed, nor would we expect
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1 it to operate well in -- right now -- either in the northern
2 climes of California, let alone Boston or Maine. It does
3 not have a fuel-fired heater in it. It has a heat pump. We
4 do not want to spread that vehicle, again, to consumers
5 before it is ready for them and get it a bad reputation,
6 when we can limit its marketing, build a good reputation,
7 make advancements in the technology, add the features that
8 it needs to go to the other areas -- to hilly terrain, the
9 cold terrain -- and make a success out of that.
10 We do not want to do that too fast, because that
11 will endanger the success of that product. We are making
12 the S10 available on a nationwide basis to fleets, because
13 we believe that fleets understand the limitations of
14 electric vehicles, and they will not have the potential to
15 damage the reputation of the vehicles that are going to the
16 general public with the EV-1 before it's ready.
17 MS. EDGERTON: Thank you.
18 CHAIRMAN DUNLAP: Any other questions of -- Jack?
19 MR. LAGARIAS: I just had a couple of side
20 questions, Mr. Leonard. One of the things I'm concerned
21 about, and I mentioned earlier today, did your emission
22 technology group go on strike, too, with the rest of the
23 company?
24 MR. LEONARD: No. That was just the production
25 people.
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1 MR. LAGARIAS: But you kept on working?
2 MR. LEONARD: Yes. We have.
3 MR. LAGARIAS: A concern I voiced, which was a
4 consumer complaint, earlier today, has any thought been
5 given to putting in larger cup holders?
6 MR. LEONARD: I believe some of our vehicles today
7 are designed for the 7-Eleven super mug, which is about a
8 two-liter cup. Are you drinking anything more than two
9 liters?
10 (Laughter.)
11 MR. LAGARIAS: Over and above.
12 (Laughter.)
13 CHAIRMAN DUNLAP: Sam, you're out of order.
14 (Laughter.)
15 SUPERVISOR RIORDAN: No, in fairness, I drive a
16 Chevy Tahoe. I will take Mr. Lagarias out and show him that
17 mine are adequately sized.
18 (Laughter.)
19 MR. LAGARIAS: That's a date.
20 (Laughter.)
21 CHAIRMAN DUNLAP: Okay. Any other questions for
22 the witnesses?
23 Supervisor Roberts.
24 SUPERVISOR ROBERTS: Thank you, Mr. Chairman. Mr.
25 Leonard, I have covered some -- a topic, that I thought if
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1 anybody were following this closely, may be wondering about.
2 And I was hopeful maybe he might be able to explain it on
3 the record. And I know you'll recall that a couple meetings
4 ago, when he was at the microphone, I think I asked maybe
5 about once, but I think --
6 MR. LEONARD: This is the embarrassing question?
7 CHAIRMAN DUNLAP: Yes.
8 SUPERVISOR ROBERTS: Twice I asked Mr. Leonard how
9 much that the manufacturers were going to put into the
10 battery technology.
11 CHAIRMAN DUNLAP: U.S. ABC, Sam.
12 SUPERVISOR ROBERTS: Yes, on ABC. And I remember
13 quite clearly, Mr. Leonard's answer was $35 million?
14 MR. LEONARD: Yeah, Phase 2.
15 SUPERVISOR ROBERTS: As I add up the totals in the
16 MOA, that they only add up to $19 million.
17 CHAIRMAN DUNLAP: It was Michigan dollars he was
18 talking about.
19 (Laughter.)
20 MR. LEONARD: No. If I can reconstruct the
21 scenario at the last meeting, you asked Mr. Brown for those
22 numbers. Mr. Brown could not give them to you; he did not
23 have them handy. For your information, I did not have them
24 handy either. We made a phone call back to Detroit, got a
25 set of numbers, which I thought were correct, and those were
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1 the numbers that I testified to at this hearing.
2 As it turns out, those numbers were not correct.
3 They were not correct at that time. The numbers that are in
4 the MOA, the $19 million, are the numbers that come out of
5 the November, 1995 budget of U.S. CAR. They are the numbers
6 that should have been given to you by me at the last
7 meeting, and they are the correct numbers. And they have
8 not been changed as a result of this MOA.
9 SUPERVISOR ROBERTS: Can staff verify that for me?
10 Mr. Leonard I think is making reference to a
11 document that I've never seen, and I --
12 CHAIRMAN DUNLAP: Tom, let me ask the question
13 perhaps a little bit differently.
14 Since you've been talking to staff, Tom, Bob, has
15 it been the same number the whole time, or has that number
16 fluctuated?
17 MR. CACKETTE: We did not know the answer to the
18 question when Supervisor Roberts asked it either, and all I
19 remembered was from -- I think when you and I were in
20 Detroit --
21 CHAIRMAN DUNLAP: Right.
22 MR. CACKETTE: -- there was a number that was in
23 the tens of millions thrown out, but I couldn't remember the
24 exact one either. I don't know if we actually went back and
25 looked at the U.S. CAR budget or not. But we did follow up
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1 and, you know, confirm with the manufacturers that that's
2 what it is. So, unless they're not telling the truth,
3 that's -- I don't have any reason to question the number.
4 MR. BOYD: Well, Mr. Albu of our staff is, you
5 know, a regular observer of U.S. ABC. And although I've not
6 personally verified it with him, I think we've -- Steve
7 would have let us know if he had difficulty with that
8 number, and we've had no staff difficulty with it.
9 CHAIRMAN DUNLAP: Okay.
10 SUPERVISOR ROBERTS: Is there a way to check with
11 your -- not that I doubt what Mr. Leonard's saying --
12 MR. CACKETTE: Sure, we can --
13 SUPERVISOR ROBERTS: And I note that General
14 Motors is paying a lot more than anybody else, and I thought
15 maybe his colleagues were unloading on him for that reason,
16 but. . .
17 MR. LEONARD: No, that's my agreed share of U.S.
18 ABC, which is almost half.
19 SUPERVISOR ROBERTS: That's right.
20 MR. CACKETTE: We can certainly look for a hard
21 piece of paper that has the numbers on it.
22 CHAIRMAN DUNLAP: Okay. Anything else, Ron?
23 Ms. Edgerton.
24 MS. EDGERTON: Is the number of vehicles that
25 you're going to have in the technology demonstration project
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1 something you're prepared to discuss?
2 MR. LEONARD: Yes. As far as I know, that was
3 disclosed in the staff report. It's 913 before you get into
4 the multiple credits for the batteries. And it's --
5 MS. EDGERTON: I thought it was. The others have
6 discussed it. I just wanted to make sure we --
7 MR. LEONARD: It's 182 in the first year, 365 in
8 the second year. And staff was kind enough to throw us one
9 extra one, because we were the oddball rounding. They
10 rounded it one low, and somehow I got the extra one, so I
11 got 366 in the third year.
12 MS. EDGERTON: Thank you.
13 MR. CACKETTE: The real reason is they wanted to
14 have a bigger market share than the next closest competitor.
15 That's how the numbers were generated.
16 (Laughter.)
17 MR. LAGARIAS: You're committed to 366 cars?
18 MR. LEONARD: That's the third year, 365 the
19 second year, and 182 the first year; so, it's 913.
20 MR. LAGARIAS: If there's a demand for more than
21 the 182 that's specified, are you in a position to supply
22 more than the 182?
23 MR. LEONARD: Of the advanced technology vehicles?
24 MR. LAGARIAS: Yes.
25 MR. LEONARD: I'm not in the position to commit to
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1 more advanced technology vehicles than that. You will find
2 that my numbers for my capacity to produce lead-acid
3 batteries clearly exceeds that.
4 MR. LAGARIAS: Well, don't forget, you get more
5 ZEV credits the earlier you produce them.
6 MR. LEONARD: That's why I'm the only one that's
7 producing in the fall of '96.
8 MR. LAGARIAS: Now, those credits will only be
9 useful in the year 2003. Is that correct?
10 MR. LEONARD: I don't think they -- no, they're
11 treated as if earned in the year 2003, which means they have
12 some life after that, but it's a declining life. If you
13 don't use them soon, you lose them.
14 MR. LAGARIAS: Oh, good.
15 CHAIRMAN DUNLAP: Okay. If there aren't any other
16 questions for the witnesses, I'll thank both Mazda and GM.
17 I want you to know, Sam, Mazda carried you today.
18 MR. LEONARD: Thank you.
19 (Laughter.)
20 MR. AIHARA: Thank you very much.
21 CHAIRMAN DUNLAP: Mr. White, V. John White,
22 followed by Paul Pulliam, Anita Mangels, and Bill Wason.
23 Those are our four remaining witnesses. Good
24 afternoon, John.
25 MR. WHITE: Mr. Chairman, members, thank you for
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1 having me. I didn't realize I was yielding for the entire
2 presentation, but that's quite all right. I always like to
3 follow my friends from the auto industry.
4 I'm here today on behalf of the Sierra Club.
5 There's also been a filing, a written filing, by the Sierra
6 Club Legal Defense Fund that I would commend to your
7 attention for the record.
8 But I wanted to, as is my wont, to provide a
9 little different flavor and maybe a little perspective based
10 on some of the historical events that have transpired, and
11 maybe put this in a little context.
12 First of all, I want to congratulate the Board and
13 the staff for enduring what has been a contentious and
14 difficult process, and one that has yielded some significant
15 disappointments for us. But I think the Board remains
16 intact in its mission.
17 I want to reflect a little bit on what might have
18 been and where we might still go on some of these issues,
19 because I think it might be instructive -- for no other
20 reason, just to talk about them.
21 First of all, I have taken notes of the concerns
22 of the staff as reflected in the caution with which some of
23 the data presented at the workshops have appeared. And I
24 think you're faced with some difficult choices in not only
25 meeting a regulation, but launching a new product and a new
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1 technology.
2 And I think that counts for some of why this
3 decision is both so momentous and so difficult, is that this
4 is -- this is not just about numbers. This is about
5 changing fundamentally the transportation system. And I
6 think that the concern with the product that you were going
7 to get and the potential for there to be a failure of launch
8 is a legitimate concern and one that led to perhaps a
9 predisposition on the part of the staff to modify or adjust
10 the schedule.
11 I guess my own personal view is that you could
12 achieve I think the entire result, with respect to
13 flexibility, for individual manufacturers to introduce
14 vehicles within the context of the ZEV regulation. And this
15 would be my principal objection to the proposal that's
16 before you, is that I believe ultimately that where we are -
17 - there is a need for more flexibility than the original
18 regulation.
19 There is a need for individually tailored
20 compliance plans. Because you essentially have people in
21 different places vis-a-vis their technologies and their
22 product, and their belief and faith in this market.
23 I was a little troubled by the remarks from
24 General Motors just a moment ago that is basically saying,
25 the whole strategy is we've got to be in -- the only one.
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1 We don't want to compete with a bunch of other vendors in
2 this new market.
3 We only want to do it if we can be the only ones.
4 And I think actually that's -- that's an understandable
5 concern, but it's not one that I think necessarily meets the
6 public's interest. Because if the only car you can buy is a
7 $35,000 GM product, and there's nothing else on the market,
8 because there doesn't have be, I think that's a concern.
9 On the other hand, I think that the fact that you
10 didn't want to push everybody out there with products
11 regardless of where they were is an understandable concern.
12 And the numbers have been less important to me than the
13 direction that we're going.
14 I fear, however, that in going all the way from
15 what could be individually tailored alternative compliance
16 plans to the voluntary MOAs, you all have left too much on
17 the table.
18 And part of the reason for that is, on the one
19 hand, I think it's great to have the car companies
20 constructively engaged as opposed to totally hostile on the
21 product launch. And I know that that's something that's
22 been important to you and your staff, is that going into
23 this with their product that they really are unenthused
24 about and, you know, not really engaged constructively in
25 making the program work but sort of -- "Okay, here's your
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1 cars. You wanted 'em. You sell 'em." It's a difficult
2 spot to be in.
3 And I'm sympathetic to that goal, but I think that
4 we haven't left ourselves much room here to maneuver if, in
5 fact, things don't turn out as expected. So, that's number
6 one. I think you need to have the backstop of the
7 enforceability provided by the rule.
8 Secondly, the principal reason to not have that
9 certainty is to solve the problem for the Northeast that the
10 car companies have. And I think that's also a mistake;
11 understandable, but I think a mistake.
12 I have been greatly impressed by my colleagues'
13 leadership in the Northeast. This is not a market that I
14 would have thought you had as much enthusiasm for these
15 technologies as we in California.
16 But what the Northeast folks have shown, from
17 Governor Weld on down through all the environmental groups,
18 is great grassroots political public support of a bipartisan
19 nature that I think is a good deal.
20 Now, on the other hand, I know negotiations have
21 broke down and that there's sort of an impasse. And
22 essentially what you have is basically they're coming to you
23 and saying, "Get us out of that, and then we'll give you the
24 cars."
25 And I think I'm uncomfortable with that, and I've
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1 expressed this to you all of you at different times. I
2 understand, but I'm uncomfortable with it.
3 The other problem about the MOA is we have just
4 emerged -- I think the Chairman called a meeting downstairs,
5 basically gave the instructions to the car companies to sort
6 of put away the campaign documents and the propaganda
7 machine, and get down to business and come up with an offer.
8 And I think that had an effect, and that's part of why we're
9 here today.
10 But I think part of the reason that you find some
11 harshness and disappointment on our part, as reflected by my
12 friend Mr. Maschke's earlier comments, is because it's a
13 little hard for us -- having watched what they all were
14 doing right before they turned in their offers to you -- to
15 now turn around and trust them.
16 The history of trust between the auto companies
17 and the environmental community has not been a good one.
18 It's a little bit like the history that the auto industry
19 has with the Japanese on the trade issue.
20 There's a lot of willingness to talk, but a
21 difficulty in actually achieving lasting agreements. And we
22 have experience on fuel economy. They didn't want CAFE to
23 be raised. They said, "Give us incentives."
24 We put a bill on the Governor's desk to provide
25 incentives for efficiency improvements, and they got the
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1 bill vetoed.
2 I'm reminded of Ronald Reagan's admonition to
3 Mikhail Gorbachev about arms, and it's a little bit where I
4 think we are with MOAs. It's, "Trust, but verify."
5 And I think what's lacking with respect to the
6 MOAs for us is any opportunity to participate or oversee --
7 I realize this is confidential, trade-secret-type
8 information. On the other hand, the ramp-up issue and how
9 we're going to get from here to there is a significant
10 problem, and I think that the fact that we are essentially
11 relying on the good-faith efforts of the car companies --
12 after we have had two years and many, many millions of
13 dollars spent on a campaign to trash the product that
14 they're now getting ready to introduce -- is part of why
15 we're in a little disconnected state.
16 And I think you all have some ability to help that
17 process along. I'd recommend that you do something about
18 the Northeast other than the 49-State car, because I think
19 the folks up there deserve more than that.
20 They've worked very hard, and I think you can
21 help, and I think the car companies perhaps have a reason to
22 want that to turn out a little differently.
23 The other issue that I want to reflect on a little
24 bit is that, as I look back, this decision and this process
25 we've been through is analogous to the earlier decision to
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1 start with catalytic converters, unleaded gasoline, and also
2 the three-way catalyst decision that this Board made in
3 1976.
4 In both instances, we had terrific resistance.
5 And then we had a breakthrough. We had Fred Harley from
6 Unocal saying the most incredible things, if you go back and
7 look at the quotes, about unleaded gasoline -- it was
8 impossible to make, and it would be wrong and, you know, so
9 forth.
10 Similarly, we had Mr. Estes in 1976 saying
11 virtually the same thing. Impossible to do three-way
12 catalysts; until Volvo came along and did that.
13 And I think, in this case, we had a similar kind
14 of bit of poker going on with you and the car companies
15 trying to see who was going to blink and what was going to
16 be the result; would there be somebody that broke?
17 I think the battery audit panel process that you
18 all went through was a salutary one. I sort of wonder why
19 you haven't had them back to see how this is playing in the
20 broader public community.
21 I urge you to keep those -- that counsel and that
22 process. I think that was a good channel. There was some
23 good conversations going on between the car companies, the
24 battery panel, and the rest of us that allowed for, I think,
25 a better understanding to emerge.
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1 But I think what's different about this decision
2 and the part that I think we all are feeling regretful about
3 is this atmosphere of intimidation that you've been
4 operating in. And I don't think until we're through it and
5 we actually look at the materials that were generated -- and
6 perhaps we'll someday get to see the RFPs that were issued,
7 and the workplans that were proposed by the PR consultants.
8 You all have really had a number done on you
9 throughout this process, some of it by us. We've been
10 trying to do a little campaign, too, in response to the
11 campaign. Okay?
12 But I don't think until the history of this is
13 really written that the atmosphere in which this decision
14 got made will truly be understood. And I really think that
15 our friends in the oil industry owe the citizens of the
16 State of California both an apology and an explanation for
17 the conduct that has gone on around this issue.
18 We don't even see Doug Henderson show up at these
19 meetings anymore. It's all consultants, and paid staff, and
20 front groups. But essentially, it's not been constructive.
21 And it's not been accurate. And it's affected the quality
22 of the process.
23 I think you all have endured and survived, and
24 you've come through it with your best effort. And I commend
25 you for that. But I think that it's a sad day when we have
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1 had the level of propaganda and political interference --
2 attempted political interference -- in the processes of this
3 Board by an industry that isn't even affected by the
4 regulation, except with respect to lost market share.
5 And I just think, at some point, we need to know
6 more about why that was the strategy. There's a lot of
7 opportunity to come in and debate the merits of these
8 issues. But this business of sort of a campaign of just
9 fill the rooms, and flood the radio -- and, you know, all
10 with paid staff. They had stuff with the general public,
11 people have concerns and stuff, but this orchestration has
12 just not contributed to a successful outcome except perhaps
13 from their standpoint.
14 And I think it's a suppression -- an attempt to
15 suppress competition. I think it is unfortunate that it
16 spilled over in the Legislature.
17 One of the other thing that's changed is that we
18 don't now have as much of a bipartisan support for the big
19 picture that we're pursuing. There has been some erosion of
20 that, particularly in the Assembly.
21 I don't think, overall, in the Legislature you
22 will be interfered with or you will be intimidated in the
23 end, but I think certainly an effort has been made. And the
24 fact that some of the members just were repeating things
25 that they were told when, in fact -- let's take the subsidy
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1 issue.
2 The oil industry is in receipt of more than $400
3 million income tax credits to retrofit the refineries in
4 California to meet your reformulated gasoline spec.
5 Okay. Now, we can debate whether that's
6 appropriate. We can debate whether we have the money in the
7 general fund to support that tax expenditure.
8 But I just am astonished that they have the nerve
9 to get up here and talk about subsidies of taxpayers' funds
10 or AQMD supported funds for incentives for electric cars or
11 incentives for the utilities, given the record of subsidies
12 in that industry.
13 And I would close with a couple suggestions for
14 the future. I very much want to see whatever you do be
15 successful. I think you could do this sin the context of a
16 regulation, and I would urge you to do so; maintaining the
17 flexibility, but keeping the regulation intact as the
18 vehicle for enforceability.
19 But I think we all have to now come together and
20 try to make this work. I think that the citizens are out
21 there. To get them connected to the car is something that's
22 very important. I have to tell you, despite the
23 reservations and disappointment we have, around the world,
24 people I talk to that are out there in the marketplace
25 ///
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1 trying to sell technology, the GM announcement of going into
2 production has had far more positive impact than any
3 negative impact from perceptions of your decision.
4 I also think you need to work to reassure folks
5 that this is a midcourse correction and not abandonment, and
6 that 2003 is, in fact, a meaningful date.
7 I worry that the ramp-up is going to be steep.
8 But I think, on the other hand, there is an opportunity for
9 these vehicles to get sold in the terms that the car
10 companies want. We're putting a great burden on the
11 customer. I mean that's the one thing that I worry about,
12 is that we're sort of making customer choice the sole
13 mechanism -- the customer's willingness to buy the product
14 the sole mechanism by which the product gets to the market.
15 And I understand why the car companies want to do
16 it that way, but that means all of us are going to have to
17 work real hard to, you know, to get the word out and so
18 forth.
19 I also think you, as a Board, need to take some
20 greater interest in minimizing and understanding the impact
21 of the petroleum fuel cycle on the entire California
22 environment, not just the tailpipe emissions or the
23 evaporative emissions, but the cradle to grave, life cycle
24 costs of the petroleum.
25 And you need to also be sure that in the
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1 electricity market, that the deregulation of electricity
2 doesn't interfere with the development of zero-emission
3 generating technologies that can make the electric car a
4 true zero-emission vehicle.
5 I want you to know that today I took the example
6 of Dr. Haagen-Smit's grandson from last time and rode my own
7 renewable zero-emission vehicle over here, because I think
8 we need to begin setting examples. And including bicycles
9 within your vision of ZEVs I think would also be
10 appropriate. I know they aren't quite as exciting, but I
11 think we need to recognize that the burden that the
12 California's driving system places on our environment is
13 something we all have to work on.
14 This process that you're engaged in, hopefully,
15 will be a step forward. I just hope that, as we go forward
16 in the future, we can perhaps raise the level of the
17 discussion and move the technologies forward in a way that
18 will give California the kind of leadership and the kind of
19 results that it needs.
20 Thank you.
21 CHAIRMAN DUNLAP: Thank you. Any questions for
22 Mr. White?
23 Very good.
24 Anita Mangels, Mr. Pulliam, and Mr. Wason.
25 MS. MANGELS: Good afternoon, Chairman Dunlap,
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1 members of the Board.
2 Thank you very much for waiting for me. I
3 appreciate it.
4 I also have for you a letter from Lew Uher, the
5 President of the National Tax Limitation Committee. I've
6 submitted that for the record. Mr. Uher was unable to be
7 here. So, he asked that I do that for him.
8 As you know, my name is Anita Mangels. I'm
9 Executive Director of Californians Against Hidden Taxes. We
10 are a coalition representing the Howard Jarvis Taxpayers
11 Association, the National Federation of Independent
12 Business, the National Tax Limitation Committee, the Western
13 States Petroleum Association, the California Business
14 Alliance, California Farm Bureau Federation, and many
15 others.
16 Our long-standing opposition to the ZEV
17 regulations is a matter of public policy is well known, and
18 the proposed revisions do nothing to alter that opposition.
19 Under the Health and Safety Code, regulations
20 enacted by CARB must achieve the desired environmental
21 benefit in the most cost-effective manner. The ZEV mandate
22 is not cost-effective; indeed, it is vastly more expensive
23 than other measures which provide equal or greater emissions
24 reductions.
25 As to environmental benefit, we would remind the
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1 Board, that according to your own staff, the ZEV mandate,
2 even in its original form, would have achieved less than one
3 percent of the emissions reduction required under the SIP.
4 This alone should trigger a complete repeal of the
5 mandate in favor of cost-effective solutions that would have
6 a real impact on our air quality, which the ZEV mandate
7 clearly will not.
8 However, since the Board has already acknowledged
9 the complete lack of air quality benefits to be derived from
10 the ZEV mandate, we will instead focus on the mandate's
11 costs and economic impact.
12 Is this on? (Speaking of microphone.)
13 CHAIRMAN DUNLAP: I can assure it's on.
14 (Laughter.)
15 MS. MANGELS: Thank you. Earlier this year, a
16 team of researchers from the Massachusetts Institute of
17 Technology has found that the costs -- and I quote -- "The
18 costs of implementing the California electric vehicle policy
19 are enormous, requiring subsidies as high ass $10,000 to
20 $20,000 per vehicle."
21 According to Sierra Research, the revised ZEV
22 mandate will cost California taxpayers about $17 billion, or
23 about $226,000 per ton of emissions reduced. This figure, I
24 believe, is compatible with the findings of M-Cubed in a
25 1994 economic analysis commissioned by CARB.
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1 Yet, amazingly, the staff report claims that not
2 only will the ZEV mandate not have an adverse economic
3 impact, it might even save consumers money. The fact of the
4 matter is that the revised ZEV mandate includes memoranda of
5 agreement -- which have been widely discussed this afternoon
6 -- between CARB and the world's seven largest automakers,
7 which specifically call for subsidies, tax breaks, and other
8 preferential treatment for ZEVs, all of which will cost the
9 public billions of dollars.
10 First and foremost, the MOAs call for the
11 development and implementation of incentive programs to
12 promote ZEV sales. An example of one such program already
13 exists. General Motors is widely advertising the $10,000 in
14 tax breaks available to purchasers of its $35,000 EV1. CARB
15 staff in its report today specifically mentions the South
16 Coast Air Quality Management District's "Quick Charge"
17 program. That provides $5,000 worth of rebates to buyers of
18 EVs, also funded by taxpayers.
19 CARB also promises to promote the sale of ZEVs to
20 other State agencies for government use. Who pays for
21 government fleets? Once again, the taxpayers. And in this
22 case, they'd be paying two or three times as much for
23 vehicles that perform at a fraction of the level offered by
24 conventionally fueled vehicles.
25 I'd like to interject here that I believe Senator
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1 Haynes' staff member mentioned this earlier -- and, Chairman
2 Dunlap, I think it was you that brought up the Executive
3 Order of Governor Wilson.
4 The Executive Order that Governor Wilson signed in
5 1994, as I remember reading it -- I don't have it with me --
6 but I think it was specifically intended to be a fuel
7 neutral -- a fuel neutral order, not giving any preference
8 to any particular fuel -- ZEVs, propane, natural gas,
9 whatever.
10 It was directed at widespread introduction of
11 alternative fuels. But by no means should that justify a
12 massive public expenditure committed strictly to ZEVs. And
13 I think that's probably one of the things that has been
14 concerning many of us; that ZEVs are not the most cost-
15 effective alternative fuel.
16 An example of this that comes immediately to mind
17 is the Ford Ranger pickup, the electric version of which has
18 a sticker price of about $30,000, and a range of about a
19 hundred miles; whereas, the electric Ranger's gasoline-
20 fueled counterpart goes about 350 miles on a tank of gas and
21 costs about $11,000.
22 Further, we have documents from State officials
23 indicating that they believe that this agency may have
24 exceeded its statutory by obligating the State to financial
25 commitments it may not be able to honor, and committing
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1 other State agencies to securing preferential treatment for
2 ZEVs.
3 One issue of concern is CARB's promise to work
4 with the California Department of Insurance and the State
5 Department of Banking to establish what appear to be
6 preferential rates for ZEVs.
7 We checked with the Department of Insurance and
8 were informed, and I quote:
9 "The Department was not consulted by the Air
10 Resources Board prior to the formation of the MOA.
11 Moreover, we did not become aware of t he Department's
12 inclusion in the MOA until we received your inquiry and a
13 copy of the MOA from you," close quote.
14 The Chief Deputy Insurance Commissioner went on to
15 say -- and I quote again -- "That the statement that the ARB
16 shall work with the California Department of Insurance to
17 establish reasonable rates for insuring ZEVs is based on the
18 factually incorrect premise that the Department sets
19 insurance rates for private passenger automobiles. The
20 Department does not function as a rate setter," close quote.
21 Similarly, Assembly Banking and Finance Committee
22 Chairman Jan Goldsmith advised us that he was not consulted
23 prior to the formation of the MOAs, although some provisions
24 of those agreements properly come under the purview of the
25 Banking and Finance Committee.
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1 These and similar comments from other public
2 officials raise serious concerns as to the propriety of the
3 MOAs, which appear -- and I'd like to stress "appear" -- to
4 have been created in a back room without disclosure to the
5 public, the Legislature, or other agencies which would be
6 responsible for implementing portions of the agreements.
7 I know that this Board took great exception to
8 that implication when Mr. Maschke was up here earlier. But,
9 again, I believe that the public agency -- even the
10 appearance of less-than-public disclosure of these types of
11 agreements which have such wide-ranging impacts to so many
12 constituencies is not helpful to finding consensus and
13 getting the job done.
14 CHAIRMAN DUNLAP: Are you referring to the
15 proposal?
16 MS. MANGELS: I'm preferring (sic) to the MOAs
17 personally.
18 CHAIRMAN DUNLAP: Proposed MOA.
19 MS. MANGELS: Exactly. The ones which have been
20 initialed, but not yet signed.
21 CHAIRMAN DUNLAP: Okay.
22 MS. MANGELS: And, again, I think the very -- the
23 very fact that you have succeeded in bringing Californians
24 Against Hidden Taxes, CalPIRG, the Sierra Club, and some of
25 these other organizations into consensus, that we're all
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1 suspicious of the MOAs, because we're not sure what it means
2 might bear out the fact that perhaps they were not exactly
3 fully disclosed and perhaps may be very ambiguous.
4 For example, one of the gentlemen who spoke
5 earlier brought up a question about, well, golly, what is a
6 reasonable cost? I think it was Joe Caves. A reasonable
7 cost for batteries, well, gosh, you know, the automakers
8 might think, if it's more than $10,000, it's too much. You
9 guys might think, if it's $350,000, well, that's fine, too.
10 We're looking at it, also asking what's a
11 reasonable incentive or subsidy? You know, there's already
12 $10,000 on the table for each EV1 that gets sold.
13 Down in the South Coast Air Quality Management
14 District, there's $5,000 for everybody that wants to buy an
15 EV.
16 Here in Sacramento, $800 -- up to $800, if you buy
17 something, SMUD will give you a rebate on an EV.
18 So, there's a wide latitude here that hasn't been
19 defined, and I think that's one of the areas of confusion
20 that really needs to be resolved.
21 Moving back to the economic analysis, in
22 addressing the economic impact of ZEV -- the ZEV mandate on
23 small businesses, the staff confines itself to discushing
24 (sic) -- I'm sorry. It's been a very long day -- to
25 discussing the effects of only those companies which are in
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1 electric vehicle related industries, which have relied on
2 the mandate as a source of business.
3 Since millions of tax dollars have already been
4 spent subsidizing so-called investments in the EV-related
5 businesses, the State should properly concern itself more
6 with the wisdom of wasting more tax dollars on a technology
7 which provides no air quality improvement than with propping
8 up businesses which seek to perpetuate and promote that
9 technology.
10 Large numbers of small and large businesses not
11 involve din the EV industry are opposed to the ZEV mandate.
12 Business organizations, such as the natural -- National
13 Federation of Independent Business, for example, which
14 represents over 40,000 small businesses throughout the
15 State; the California Business Alliance, and the Santa Clara
16 Valley Manufacturing Group, representing hundreds of high-
17 tech companies in the Silicon Valley are among t hose
18 represented by our coalition alone.
19 the reality of the ZEV mandate is this: At a cost
20 of at least $17 billion, the Air Resources Board is
21 inappropriately engaging in a market manipulation and
22 dubious contracts which will achieve less than one percent
23 of the emissions reduction required under its own clean air
24 plan.
25 For years, the world's seven largest automakers
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1 have been quietly competing to be the first to offer an
2 economically viable, performance competitive electric
3 vehicle. None has succeeded in making the battery
4 breakthrough necessary to make this goal a reality.
5 The automakers themselves have testified before
6 this Board, as Sam just did, that this competition would
7 have progressed without a mandate, and would have been more
8 sensitive to market conditions and the needs of consumers.
9 More importantly, it would have been financed with
10 investor capital, not taxpayer subsidies.
11 Now, thanks to the decision of this Board, the
12 California taxpayers will be footing the bill for the
13 research, development, and production of electric vehicles,
14 and creating a market for them through State fleet purchases
15 and multibillion dollar subsidies.
16 If the technology eventually takes off, the
17 shareholders of those investor-owned companies will get the
18 dividends. If it doesn't, they will not have lost a dime.
19 Either way, the California taxpayers will get
20 higher taxes or diminished levels of essential services to
21 absorb the cost of the mandate. They certainly will not get
22 cleaner air.
23 The unfunded ZEV mandate will cost at $17 billion.
24 That is almost $2200 for the average family of four in
25 California. It's legal standing is questionable, and it
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1 will not clean our air.
2 Once again, we urge you to repeal this unfunded
3 mandate and turn your attention to meaningful, market-based
4 measures to achieve our State's air quality goals.
5 Thank you.
6 CHAIRMAN DUNLAP: Thank you. Any questions of our
7 witness?
8 Ms. Edgerton.
9 MS. EDGERTON: How do you calculate the 17
10 billion?
11 MS. MANGELS: It's based on the incremental cost
12 of EVs as opposed to conventional cars. And I believe
13 you're very familiar with the Sierra Research report that
14 has come up with those numbers.
15 MS. EDGERTON: So, it's the same one as before.
16 MS. MANGELS: It's the same report as before, with
17 it recalculated due to the lower number of ZEVs that you're
18 planning on introducing.
19 MS. EDGERTON: I see. Why do you think the South
20 Coast money is available for everyone who wants an EV?
21 MS. MANGELS: Because they've allocated funds to
22 provide $5,000 rebates to people who buy electric cars.
23 MS. EDGERTON: Is that for everyone?
24 MS. MANGELS: It's for everyone up to $6 million.
25 And based on what we're seeing as the availability and the
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1 numbers that people are interested in buying, I think that's
2 going to cover a lot of people.
3 MS. EDGERTON: How many cars is that?
4 MS. MANGELS: I'll get my calculator, and I'll
5 tell you, Lynne.
6 MS. EDGERTON: 1200?
7 MS. MANGELS: It's $6 million.
8 MS. EDGERTON: It's not every car.
9 MS. MANGELS: I stand corrected. It's six million
10 dollars worth, and there will be more.
11 MS. EDGERTON: It's not every car.
12 I just want to make a final comment. From my own
13 point of view, I believe -- you've made a lot of assumptions
14 and a lot of statements throughout this. And I just want to
15 clarify that we believe that our ZEV program is cost-
16 effective.
17 We have not found your arguments persuasive.
18 MS. MANGELS: And I may ask you, do you drive an
19 electric car yourself? Or what is it that you do drive?
20 MS. EDGERTON: I have no further comment.
21 MS. MANGELS: All right.
22 CHAIRMAN DUNLAP: Any other questions of the
23 witness?
24 Thank you. Mr. Pulliam, and Mr. Wason. I'm told
25 Mr. Wason's back.
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1 Please come forward and take your place in the
2 queue.
3 MR. PULLIAM: Thank you. Are you hearing me?
4 MR. LAGARIAS: Yes.
5 MR. PULLIAM: I'm one of the first four presidents
6 of the Electric Auto Association, which was formed south of
7 the Bay several decades ago.
8 The other three were going DC. I was attempting
9 to go AC motors.
10 They didn't like me too much. So, I'm still on
11 AC. But now, I've got something to talk about. Some 45
12 horsepower, air-cooled engines are being used in four-wheel
13 vehicles in Bosnia. They were built to my specifications by
14 Air Force people at the local air base that's about to go
15 out of business.
16 The engine runs at a constant speed of 1800 RPM,
17 but variable power, depending upon how much is needed by the
18 load. The load always determines the power on an electric
19 motor.
20 The 30 -- the 1800 rpm, you're talking about wheel
21 speeds, is equal to 30 revolutions per second. And the
22 motors can drive from zero at standstill to 28.5 revolutions
23 per second.
24 The 28.5 revolutions per second is 60 miles an
25 hour at the tire size on the wheels that they've got.
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1 The alternator is revved at 1800 rpm and puts out
2 a hundred and twenty-two-oh-eight (sic) Volts, three-phase,
3 60 hertz.
4 That power at constant voltage is fed to a rotary
5 transformer. You can move that transformer 15 degrees and
6 get no voltage out or back into congruent alignment at the
7 center of the coils and get full rated voltage of the
8 motors.
9 This is the only speed control you really need on
10 five horizontal deal. There's something else up my sleeve
11 for going up a steep slope, which has already been talked
12 before, but I don't want to put that out now, because I'm
13 dealing with the Ford Motor Company on that.
14 CHAIRMAN DUNLAP: Okay.
15 MR. PULLIAM: I can't go to everybody on that
16 extra deal.
17 But the rotary transformer goes from zero percent
18 of the voltage to a hundred percent of the voltage needed by
19 the motor -- I should say plural "motors" because the one
20 voltage is fed to all four motors, and the two in the rear
21 turn, the two in the front turn. They can turn at different
22 speeds as the car's turned. There is a rack and pinion gear
23 for steering in the front wheels.
24 Electric motors are said to have slip. When the
25 car is standing still, the slip is one. When the car is
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1 moving at 60 miles an hour, the slip is .05. There's always
2 some slip in an induction electric motor.
3 And I'm saying this one is .05.
4 CHAIRMAN DUNLAP: Mr. Pulliam, would you be
5 willing to meet with our technical staff on this?
6 MR. PULLIAM: Can you speak a little louder?
7 CHAIRMAN DUNLAP: Would you be willing to meet
8 with our technical staff on this?
9 MR. PULLIAM: I will get these copies made. The
10 lad in the white shirt told me told me to get ten copies
11 later.
12 CHAIRMAN DUNLAP: Well, Mr. Cross, who's wearing
13 kind of a pinkish shirt will wave to you now. I would like
14 it very much if you'd meet with him and share with him your
15 ideas, because you might be talking about some proprietary
16 information here, and I would hate for you --
17 MR. PULLIAM: It could be proprietary, but --
18 CHAIRMAN DUNLAP: I wouldn't want you to lose your
19 ability to make money on your ideas.
20 MR. PULLIAM: Well, I'll go one step further.
21 I'll wait for that deal, then.
22 CHAIRMAN DUNLAP: All right.
23 MR. PULLIAM: The initial designation of these
24 vehicles was by me, the Pulliam 4 x 4 toboggans. And they
25 were built on the air base, three of them with six sheepfoot
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1 rollers, airlifted to Bosnia.
2 One sheepfoot roller is out in front of the
3 vehicle, and another one's trailing behind. And how that's
4 done is happy circumstance for the troops over there in
5 Bosnia.
6 From my viewpoint, they should be entitled to the
7 best we have available. And it took about ten minutes of my
8 time in the 4th Air Force Headquarters Building to get this
9 all done.
10 And it was done by people employed on McClellan
11 Air Force Base. When I was here several months ago,
12 everybody was talking about the 1910 and 2010.
13 CHAIRMAN DUNLAP: Right.
14 MR. PULLIAM: Well, in 2012, I'll be age 100, if I
15 should live so long.
16 CHAIRMAN DUNLAP: Okay. Thank you, Mr. Pulliam.
17 Mr. Cross will follow up with you.
18 Mr. Wason.
19 Sir, it's good to see you. I want you to know
20 you're all that stands between us and ending the public
21 testimony.
22 MR. WASON: Well, I have a couple of tough acts to
23 follow there.
24 So, I'll try and be brief. But I do have some
25 very specific input that I'd like to share with the Board,
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1 and just talk about a couple of general background things as
2 a start.
3 I think we've been very involved in this -- by the
4 way, I'm Bill Wason with BAT International. We're an
5 electric vehicle manufacturer in Burbank.
6 And we've been very involved in this process of
7 hearings, so I'm sure everybody -- a lot of people know who
8 I am.
9 But I think, given this is the end of the end,
10 there are a couple of comments that are worth noting. I
11 think you've done a commendable job of trying to bring all
12 the parties together and come up with an agreement.
13 And I want to commend you for that, and I think
14 it's well worth noting that you have advanced the industry a
15 lot.
16 But I think it's also worth noting that there is
17 still a lot of risk that this industry won't happen. There
18 are car companies that have done vehicle introductions that
19 could just as easily decide they don't like this industry
20 and back out. And with some minor changes in your
21 agreement, which have been discussed -- and I won't go into
22 detail; they've been submitted as testimony -- the
23 agreements could get a lot better.
24 I think that to give it some perspective working
25 this day to day, this has a huge impact on decisions that
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1 are made that could have a lot of impact on the technologies
2 that you have available. And we're working very closely
3 right now with one battery manufacturer, Acme Electric
4 Company, and it may not seem like a lot to invest $25
5 million in a battery plant, but it's tough to pull that
6 money out, given the environment of uncertainty.
7 And when you think about $25 million, it's a day
8 of health care costs in L.A. And it's that -- it's looking
9 at that perspective and that investment, and the effect on
10 the technology, and the timing of the entry that some of
11 these ideas are put in perspective.
12 I think, given that, there are two specific
13 comments that I would like to make. First, we have always
14 been in favor of a market-based approach, and we think it's
15 good that you're working on a market-based approach in these
16 early years.
17 But, if that's the case, you really need to show
18 the world that you are very strongly behind market-based
19 approaches, and be the standard bearer for those specific
20 market incentive mechanisms within the California
21 Government.
22 And there specific policy steps that you could --
23 I understand how bills work and policies are made, and when
24 ou can take positions. But at the same time, a lot of what
25 goes on in the Legislature occurs behind the scenes. And
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1 the ability of you to work at a staff level to deal with
2 technical issues and incentive mechanisms, and bring parties
3 together has clearly been demonstrated in what you've done
4 here in getting MOAs together, and could be continued in
5 efforts to get incentive mechanisms together.
6 Specifically, what we would like to suggest is
7 that, one, we would like to request that you specifically
8 support incentives like access to carpool lanes as an
9 example, and request that you make public statements to that
10 effect, when appropriate.
11 But more significant than that, is that you work
12 very closely with -- and suggest that staff work with the
13 auto companies on resolving technical issues associated with
14 carpool lane access for ZEVs, and invite the auto companies
15 to have a dialogue on those technical issues with the intent
16 of resolving any technical issues outstanding.
17 In addition to that, there are similar technical
18 issues with EPA, with Caltrans, with some of the other
19 agencies that interstaff communications could do a lot to
20 come up with a clear position for the Governor's Office to
21 look at.
22 So, I will leave it at that on that issue.
23 One other thing I wanted to bring up. I think
24 that this -- the MOAs present some tricky future legal
25 problems for CARB that may have some alternatives to -- as a
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1 fallback measure for enforceability, going back to requiring
2 mandates again. Because I think it's going to be extremely
3 difficult for you to ever go back to early mandates before
4 2003.
5 And it's clear that you may not get 49-State LEV,
6 because you end up -- because New York and Massachusetts end
7 up in court and, you know, a national LEV program never
8 happens, and you have a shortfall.
9 And you also have other totally separate from ZEV
10 problems with your '97 SIP submittal that may lead to
11 problems with EPA and a lawsuit from an environmental group
12 on enforceability of ZEVs may create some problems.
13 And what we would like to suggest is that you look
14 at a specific option relative to enforceability of your SIP
15 within the ZEV portion of it, and look at the idea of having
16 an agreement added to the MOAs that, if the car companies --
17 if, for any reason, you fall back from a 2003 mandate, that
18 any credits that are part of the current MOA are bought up
19 by the Big Seven car companies.
20 That would create a tremendous amount of certainty
21 in the market that would et investments occurring at a very
22 rapid rate to get technologies on line. And I think if you
23 combine that with incentives like carpool lane access, there
24 would be enough market driver and investment certainty that
25 I think the technologies will be there and the market
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1 competition will be there to make sure prices drop to
2 realistic levels, and that ZEVs are truly cost-competitive.
3 CHAIRMAN DUNLAP: Thank you. That wise counsel.
4 I appreciate your time and effort in providing that to us.
5 Any questions of the witness?
6 Okay. Very good. That is all I have on my
7 witness list. I trust, Madam Secretary, that that's all
8 that you have?
9 MS. HUTCHENS: Yes.
10 CHAIRMAN DUNLAP: I'd like to ask -- I guess that
11 concludes the public testimony. I'd like to ask staff if
12 there's any more summary work they need to do on letters or
13 communications that have been received?
14 I think you did that at the outset.
15 Mr. Boyd, does staff have any other further
16 comments before I close the record?
17 MR. BOYD: If I might, just a couple of comments.
18 CHAIRMAN DUNLAP: Have I mentioned that brevity is
19 a virtue?
20 (Laughter.)
21 CHAIRMAN DUNLAP: Lately?
22 MR. BOYD: If you afford me the opportunity
23 tomorrow, why, I'll --
24 CHAIRMAN DUNLAP: I will afford you the
25 opportunity tomorrow, Mr. Boyd. You'll be the lead-off
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1 hitter.
2 MR. BOYD: There are no further staff comments.
3 CHAIRMAN DUNLAP: All right. I will now close the
4 record on this agenda item. However, the record will be
5 reopened when the 15-day notice of public availability is
6 issued.
7 Written or oral comments received after this
8 hearing date but before the 15-day notice is issued will not
9 be accepted as part of the official record on this agenda
10 item.
11 When the record is reopened for a 15-day comment
12 period, the public may submit written comments on the
13 proposed changes, which will be considered and responded in
14 the final statement of reasons for the regulation.
15 At this point, I'd like to remind the Board of our
16 policy concerning ex parte communications. While we may
17 communicate off the record with outside persons regarding
18 Board rulemaking, we must disclose the names of our contacts
19 and the nature of the contents on the record.
20 This requirement applies specifically to
21 communications which take place after notice of the Board
22 hearing has been published.
23 Are there any communications which need to be
24 disclosed?
25 SUPERVISOR RIORDAN: Mr. Chairman, maybe I can
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1 begin. I would disclose the following:
2 I had a conversation with the representative from
3 Toyota, and one from Ford, Mr. Kelly Brown from Ford; David
4 Hermance from Toyota. The subject of the conversation went
5 no further than the testimony here, and really was to the
6 point of the testimony given by those two car manufacturing
7 companies.
8 CHAIRMAN DUNLAP: Okay. Very good. Why don't we
9 continue this way, if we may. That side today has had a
10 little bit of attention; we'll give this side a little bit
11 of attention now.
12 Mr. Lagarias?
13 MR. LAGARIAS: Mr. Chairman, I had three ex parte
14 meetings, all in Sacramento at the ARB office. On February
15 28th, I met with Joe Caves of the Union of Concerned
16 Scientists and Janet Hathaway of NRDC.
17 The subject of the discussion was their concern
18 with the MOA, which they presented today.
19 On March 12th, I met with Kelly Brown of Ford,
20 Dave Hermance of Toyota, and Eric Ridenour of Chrysler, and
21 their interest was in clarifying any concerns I might have
22 of the MOA and as they presented them here today.
23 And on March 25th, I met with John Torrens
24 (phonetic) of PG & E, and Dave Modisette of the California
25 Electric Transportation Coalition. And they were interested
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1 in how firm the Board was in addressing the ZEV regulation.
2 And that's all.
3 CHAIRMAN DUNLAP: Thank you. Mr. Parnell.
4 MR. PARNELL: I, too, had ex parte communications
5 with Kelly Brown of Ford, Dave Hermance of Toyota, Eric
6 Ridenour of Chrysler, and the scope of the conversation was
7 merely to see whether or not I had any questions as to the
8 MOA.
9 CHAIRMAN DUNLAP: Okay. Very good. Mayor
10 Hilligoss.
11 MAYOR HILLIGOSS: Yes. On February 27th, I met
12 with the Concerned Scientists, and it's pretty much what
13 they said today. And on March 15th, I met with Mr. Leonard
14 from GM and Mr. Padilla from Nissan, and pretty much what
15 they had to say today.
16 CHAIRMAN DUNLAP: Okay.
17 Thank you, Mayor Hilligoss. Supervisor Silva.
18 SUPERVISOR SILVA: Yes, Mr. Chairman. Under the
19 rules of ex parte, I had meetings with representatives from
20 Nissan, Chrysler, and Toyota in my office in Orange County.
21 I also met with Ford in Sacramento. The
22 conversation went no further than the testimony that was
23 presented today.
24 CHAIRMAN DUNLAP: Okay. Are individual names
25 required to be mentioned, Counsel?
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1 MS. WALSH: I think it would preferable, yes, to
2 mention individual names. Although, in this case, he did
3 indicate the companies those individuals were from, he might
4 just confirm that those were the same individuals that the
5 other Board members had talked to.
6 SUPERVISOR SILVA: We did call the names in, I
7 believe, to the office here. I don't have their cards, and
8 I don't recall the names exactly.
9 CHAIRMAN DUNLAP: All right. Well, we'll work on
10 getting that squared away.
11 Ms. Edgerton.
12 MS. EDGERTON: I had some ex parte communications.
13 On February 13th, '96, I spoke with Janet Hathaway of the
14 Natural Resources Defense Council on the telephone. The
15 subject was letters that are -- a letter that was submitted
16 in the record about reservations that she had about the
17 legality of the MMOA.
18 On February 26th, '96, I spoke with Larry Berg and
19 Raoul Feros (phonetic) from Ballard. We were here in
20 Sacramento. It was a meeting. Mr. Dunlap, Mr. Boyd, and
21 Mr. Cackette, and Mr. Schoening, as I recall, were present.
22 And we had a confidential update on how fuel cells for
23 vehicles were working, not just light-duty vehicles, but
24 also the prospects for use in heavy-duty vehicles.
25 On February 28th, 1996, I had lunch in Los Angeles
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1 with Pete Pastillo and Ms. Weidner from Ford. And
2 primarily, we discussed Ford's plans for the introduction of
3 the Ranger. And we also discussed fuel cells, and my
4 concern that the Air Resources Board maintain its long-
5 standing tradition of being technology neutral, and not
6 favoring a particular technology, and that I was very
7 interested in ensuring that fuel cells would be appropriate
8 technologies for the technology demonstration project.
9 I did get a letter form Pete Pastillo that I
10 turned in on the record. I called Roger Carrick (phonetic)
11 last week. He's an attorney in Los Angeles, to ask him
12 whether the Justice Department had -- United States Justice
13 Department had opened an antitrust investigation with
14 respect to the suppression of ZEV technology by industrial
15 or institutional -- industry.
16 And he replied that they had.
17 I also spoke on several other occasions on the
18 telephone with Larry Berg regarding fuel cells, and I had
19 breakfast with him this morning and talked about it some
20 more.
21 I think that about sums it up. I had a drink with
22 some GM representatives, but I think I only bought a car.
23 (Laughter.)
24 CHAIRMAN DUNLAP: Thank you, Ms. Edgerton. Dr.
25 Boston.
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1 DR. BOSTON: What did you do for lunch?
2 (Laughter.)
3 MS. EDGERTON: What did I do for lunch?
4 DR. BOSTON: On March 14th, I met with Sam Leonard
5 of GM, Kelly Brown of Ford, and John Schutz of Nissan. They
6 wanted to discuss the commitment their companies were making
7 to go forward with the ZEV program, and the significance of
8 the 49-State LEV to our program.
9 We also discussed the MOAs and the agreement to
10 have the capacity to build a specific number of electric
11 vehicles. They weren't able to divulge to me the exact
12 numbers that each company would make, stating that that was
13 trade secrets.
14 But they did give their commitment to work on the
15 advanced batteries. That was the essence of our discussion.
16 CHAIRMAN DUNLAP: Thank you, Dr. Boston.
17 Mr. Calhoun.
18 MR. CALHOUN: I, too, had some ex parte
19 communication. On the 14th of February, I had a very brief
20 discussion with Janet Hathaway. And during that discussion,
21 we primarily focused on her concern about the ramp-up during
22 the early years.
23 And on the 13th of February, I had a meeting with
24 Mr. Aihara from Mazda, Kelly Brown of Ford, and Sam Leonard.
25 And the thrust of that particular discussion was whether or
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1 not I had any concern about the MOA.
2 CHAIRMAN DUNLAP: Thank you, Mr. Calhoun.
3 Supervisor Roberts?
4 SUPERVISOR ROBERTS: Thank you. There are a
5 couple of meetings that I should divulge that would be
6 appropriate.
7 The first was on March 14th, and that was a
8 meeting, a single meeting, that included Sam Leonard, Eric
9 Ridenour, and John Schutz. And that was to discuss ZEV
10 regulations generally and the MOA and some its pieces in
11 particular.
12 On March 27th, I met with Senator Ray Haynes and
13 had a short discussion on -- primarily on mandates, and
14 indirectly on the MOA.
15 CHAIRMAN DUNLAP: Thank you for inviting him to
16 send a representative today, Supervisor.
17 SUPERVISOR SILVA: I think he was planning on
18 being here --
19 CHAIRMAN DUNLAP: I see.
20 SUPERVISOR SILVA: -- even without me.
21 And finally, on today, the 28th, earlier today, I
22 had a meeting with Janet Hathaway, Roland Wong, Joe Caves,
23 and Jane Kelly, all again to discuss the MOA.
24 CHAIRMAN DUNLAP: Okay.
25 MS. EDGERTON: I need to add one.
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1 CHAIRMAN DUNLAP: Ms. Edgerton.
2 MS. EDGERTON: Thank you, Dr. Boston. I actually
3 did have lunch. I did talk with Jason Grumet as I walking
4 during lunch, and Ronald Wong. I also remember that I did
5 speak with Paul Hallaker (phonetic) of CalSTART. And that
6 was in connection with whether they were going to be coming
7 today, and their disappointment that the program had not
8 adequately or did not appear to consider California
9 businesses' interest in advanced transportation technology.
10 Thank you.
11 CHAIRMAN DUNLAP: Okay. I, too, have a few to
12 report, ex parte communication.
13 First with Firoz Rasoul (phonetic) and Larry Berg
14 of Ballard Power Systems on February 26th, speaking about
15 fuel cells.
16 I also met with Joe Caves and Janet Hathaway on
17 March 20th -- Union of Concerned Scientists and NRDC -- to
18 talk about the MOAs, and met with Wayne Nastri, as a
19 representative of ALABC, the lead-acid battery consortium,
20 on March 27th.
21 And that's all I have to report.
22 With that, I would like to recess this meeting
23 till tomorrow morning at 8:30 a.m.
24 And we will reconvene at that point, and we'll
25 take up -- since the public testimony is concluded, we will
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1 take up the Board discussion.
2 It's my understanding staff will have a resolution
3 to present to the Board at that time.
4 Thank you very much.
5 (Thereupon, the hearing was recessed
6 at 7:00 p.m., to be reconvened at
7 8:30 a.m. on Friday, March 29, 1996.)
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1 CERTIFICATE OF SHORTHAND REPORTER
2
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4 I, Nadine J. Parks, a shorthand reporter of the
5 State of California, do hereby certify that I am a
6 disinterested person herein; that the foregoing meeting was
7 reported by me in shorthand writing, and thereafter
8 transcribed into typewriting.
9 I further certify that I am not of counsel or
10 attorney for any of the parties to said meeting, nor am I
11 interested in the outcome of said meeting.
12 In witness whereof, I have hereunto set my hand
13 this 7th day of April , 1996.
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16 Nadine J. Parks
17 Shorthand Reporter
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