BOARD MEETING
STATE OF CALIFORNIA
AIR RESOURCES BOARD
JOE SERNA, JR. BUILDING
CALIFORNIA ENVIRONMENTAL PROTECTION AGENCY
CENTRAL VALLEY AUDITORIUM, SECOND FLOOR
1001 I STREET
SACRAMENTO, CALIFORNIA
FRIDAY, MARCH 28, 2003
8:30 A.M.
JAMES F. PETERS, CSR, RPR
CERTIFIED SHORTHAND REPORTER
LICENSE NUMBER 10063
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APPEARANCES
BOARD MEMBERS
Dr. Alan Lloyd, Chairperson
Dr. William Burke
Mr. Joseph Calhoun
Ms. Dorene D'Adamo
Supervisor Mark DeSaulnier
Professor Hugh Friedman
Mr. Matthew McKinnon
Mrs. Barbara Riordan
Supervisor Ron Roberts
STAFF
Ms. Catherine Witherspoon, Executive Officer
Mr. Tom Cackette, Chief Deputy Executive Officer
Mr. Mike Scheible, Deputy Executive Officer
Ms. Lynn Terry, Deputy Executive Officer
Ms. Kathleen Walsh, General Counsel
Ms. Analisa Bevan, Manager, ZEV Implementation Section,
MSCD
Mr. Tom Cackette, Chief Deputy Executive Officer
Mr. Craig Childers
Mr. Bob Cross, Chief, MSCD
Mr. Tom Jennings, Senior Staff Counsel
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APPEARANCES CONTINUED
STAFF
Mr. Jack Kitowski, Chief, On-Road Controls Branch, MSCD
Mr. Chuck Shulock, Program Specialist, MSCD
ALSO PRESENT
Mr. Tim Carmichael, Coalition for Clean Air
Mr. Tod Dipaola, Kirsch Foundation
Mr. Tom Dowling, Self
Mr. Greg Hanssen, PEVDC
Mr. Doug Korthof, Self
Mr. William Korthof, Self
Mr. Bill Mason, Self & PEVDC
Mr. Charlie Peters, Clean Air Performance
Mr. Jerry Pohorsky, The Pohorsky Group
Ms. Lisa Rosen, Energy Efficiency
Mr. Dan Santini
Ms. Sandra Spellliscy, PCL
Mr. V. John White, Sierra Club
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INDEX
PAGE
03-2-4 1
Staff Presentation 2
Mr. Charlie Peters 10
Mr. Doug Korthof 13
Mr. V. John White 16
Mr. William Korthof 25
Ms. Lisa Rosen 28
Mr. Jerry Pohorsky 31
Mr. Greg Hanssen 35
Mr. Bill Mason 38
Mr. Tom Dowling 41
Mr. Dan Santini 44
Mr. Todd Dipaola 48
Ms. Sandra Spelliscy 52
Mr. Tim Carmichael 57
Discussion and Q&A 60
Adjournment 143
Reporter's Certificate 144
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1 PROCEEDINGS
2 CHAIRPERSON LLOYD: Good morning. The meeting of
3 the California Air Resources Board is now in session. And
4 would you please come to order. This is a continuation of
5 yesterday's item on the low-emission vehicle program.
6 And we will continue on that program.
7 Ms. Witherspoon, do you want to say anything at
8 this time?
9 EXECUTIVE OFFICER WITHERSPOON: Yes, Dr. Lloyd.
10 We thought It might be useful for the Board, before we get
11 into this morning's testimony to summarize some of the
12 comments that you heard yesterday.
13 In particular, the specific numerical proposals
14 relating to the post 2009 model year targets for ZEVs.
15 And so if you'll indulge the staff for a moment, we're
16 going to present a chart comparing those different
17 proposals and explain some of the significance of them.
18 We will of course come back to this at the close of
19 testimony as ask you get into a broader discussion.
20 And we also will have copies available of this
21 chart for members of the audience at the back table. I
22 believe those copies are either being made now or will
23 shortly be available.
24 CHAIRPERSON LLOYD: I see it. We just got one
25 board member who is not here. I know Mr. Calhoun is here.
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1 Dr. Burke, I think, is on his way. Dr. Friedman will not
2 be here. And Supervisor Patrick. So we've just got one
3 board member missing. So it's probably fine to go ahead.
4 EXECUTIVE OFFICER WITHERSPOON: Shall we proceed?
5 CHAIRPERSON LLOYD: I think to proceed as long so
6 you've something for Dr. Burke.
7 EXECUTIVE OFFICER WITHERSPOON: We will be
8 revisiting it again when we get to the Board discussion
9 later.
10 CHAIRPERSON LLOYD: I think it would be helpful.
11 Do my colleagues agree? Because I think it's -- certain
12 of the proposal has ramifications which need to fully
13 understand before we take a vote, give us some chance to
14 talk about it.
15 Thank you.
16 EXECUTIVE OFFICER WITHERSPOON: Mr. Shulock is
17 going to present the comparison.
18 VEHICLE PROGRAM SPECIALIST SHULOCK: Good
19 morning, Mr. Chairman and members.
20 Could we bring the slide up, please.
21 (Thereupon an overhead presentation was
22 Presented as follows.)
23 VEHICLE PROGRAM SPECIALIST SHULOCK: What we'd
24 like to do is walk you through some of what you heard
25 yesterday to try and frame the issues a little bit so you
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1 can have them in your mind as you're going through the
2 rest of the testimony this morning. As Ms. Witherspoon
3 indicated, this will be revisited before you begin your
4 final discussion, but we thought it would be helpful to go
5 through this now.
6 What this shows are the various proposals that
7 have been discussed with respect to the 2009 and beyond
8 time period. So the proposals -- our original staff
9 proposals an approach that increases that 10 fold for the
10 various phases. The Cal ETC proposal, this is what Dave
11 Modisette spoke to. The Union of Concerned Scientists
12 that was presented by Jason Mark and then the South Coast
13 Air Quality Management District Proposal.
14 And what we show for each of these is for three
15 different time periods 2005 through 2008, 2009 through 11
16 and 2012 through 14. What would be the number of fuel
17 cells equivalent vehicles that would be required for each
18 of those in those time frames. We also then have a
19 cumulative total and then some other issues that I'll get
20 into in a second.
21 Looking just at the numbers, on our staff
22 proposal, as you know doubt recall, we recommended 250
23 vehicles in that initial timeframe with the latter time
24 frames, the later time frames to be determined by your
25 board based upon -- or following input from the technical
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1 advisory panel.
2 The 10X proposal, as we describe it here, simply
3 starts with that 250 number and multiplies it by 10 fold
4 each time. The rationale for this approach, as we
5 discussed yesterday, and I recognize it wasn't
6 particularly persuasive to Board Member Calhoun it seemed.
7 But anyway the rationale that we had was that these appear
8 to be the developmental phases that are followed in
9 technical developments of this type.
10 The same logic underlies the DOE proposal, which
11 is not up here, but, you know, similar in some ways. But
12 the same logic of progression through stages underlies the
13 DOE proposal which was put together in careful
14 consultation with the automakers.
15 So the logic behind this is really based on this
16 notion of a progression through the various stages. On
17 the Cal ETC proposal the recommended 500 vehicles in that
18 initial period, a total of 2,800. And the next one
19 22,400.
20 The rationale behind that is also a progression
21 based on a different approach. Looking at theirs, it
22 looks -- it appears that what they do is just double the
23 number each year. So if you take individual years, it
24 goes for 400 to 800 to 1,600. So it's a similar kind of
25 ramping up, just expressed on a year by year basis rather
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1 than ours in groupings. But it's not, at least as far as
2 we can determine, it's not based on the same kind of stage
3 logic that would be behind the 10X.
4 The Union of Concerned Scientists proposal again
5 starts with 500, then goes to 5,000 and 30,000. The
6 rationale behind that, as expressed by the presenter, was
7 statements from the automakers that indicate that there
8 were numbers in this ball park or ever greater perhaps
9 that have been expressed in public statements from the
10 automakers.
11 And so this, as we would describe it, I think, is
12 saying well this is what we've been told in some of these
13 public statements. So here's a progression that would hue
14 to that.
15 The South Coast proposal has much larger numbers,
16 as you can see, 4,500 or so in that initial period, 32,000
17 and 54,000 as the time moves out. The way that one works
18 or the logic behind it is in everything else that you've
19 seen there's the ZEV portion and the AT PZEV portion. And
20 they sort of -- you move the line in between. So if you
21 reduce the ZEV, then you increase the AT PZEV.
22 And there's a back-filling going on. So there's
23 sort of a fixed percentage requirement that's divvied up
24 between ZEVs and AT PZEVs. What the South Coast proposal
25 does is it looks back at our 2001 proposal and says there
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1 was a ZEV piece and there was an At PZEV piece. Rather
2 than having the them either or trade off, let's do both.
3 So although it's not shown here, one thing to
4 bear in mind that that's a two percent gold requirement
5 plus an AT PZEV requirement that's based on filling up
6 another two percent.
7 So there's, in the South Coast proposal, there
8 are also much larger numbers of AT PZEVs than would be
9 implied by any of these other proposals.
10 So that's how they work through their stages.
11 One thing that struck us as we looked at the cumulative
12 total is that those first three are somewhere in the same
13 ballpark. Again, they have different rationales and
14 follow different purposes, but they arrive at similar
15 places. The South Coast proposal, obviously, comes up
16 with much larger numbers.
17 A couple of other issues that also differ across
18 the proposals to keep in mind, one of which is the
19 treatment of battery electric vehicles. In our original
20 staff proposal, it was fuel cells only. But as we
21 discussed in our presentation yesterday, we now would
22 recommend that up to 50 percent of the target there could
23 be met by other types of vehicles. And in the 10 -- I
24 guess on the 10 fold proposal that's not explicit, but at
25 least from our standpoint we would probably recommend that
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1 there be some sort of sharing allowed.
2 In the Cal ETC proposal that would allow up to
3 100 percent substitution by BEVs. So there's no minimum
4 floor requirement explicitly expressed. I do believe that
5 in Dave Modisette's testimony he said you may want to do
6 something like that. But in the proposal as it's written
7 it's a 100 percent substitution. The Union of Concerned
8 Scientists proposal also likewise would allow substitution
9 up to 50 percent maintaining the rest as fuel cell
10 vehicles.
11 And then the South Coast proposal has a hard
12 number of 2,000 full function EV's by 2008. So that one
13 actually has a direct requirement for battery vehicles
14 rather than just allowing them to substitute in as an
15 option.
16 Another dimension to be aware of is the treatment
17 of plug-in hybrids in gold. Under our staff proposal,
18 that would not be included. Under the 10X, at least as we
19 have described that, it would not be included. On Cal ETC
20 very clearly that's been one of their recurring issues.
21 So in their proposal they did include that.
22 The Union of Concerned Scientists, we weren't
23 sure looking at the printed material whether that was
24 included or not. South Coast district, no, they did not
25 include it.
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1 One other piece of information on this table just
2 to again frame the discussion is when and if do the
3 various proposals return to the red line and the red line
4 volume in that 2015 through 2017 timeframe, it would be
5 73,000 vehicles, a little under 25,000 vehicles per year
6 for 2005, 15, 16 and 17. So the red line volume is about
7 73,000.
8 As you go through the discussion later on today,
9 there will be some policy issues. And again just to frame
10 them to have them in your mind, first of all, is clearly
11 just what are the numbers. And then underneath that,
12 what's the rationale -- what's the approach that would
13 support the choice of any of the options here for the
14 numbers. So that's going to be one of them.
15 Second is this issue of BEV substitution. Is
16 there BEV substitution allowed? And if so, what
17 constraints or factors would you want to take into account
18 on that.
19 As I mentioned, another issue is if and when
20 these proposals return to the redline, the timing of the
21 ramp up in the outer years.
22 If we receive more proposals this morning, we'll
23 squeeze them onto this table and have an updated version
24 for you.
25 When you begin the policy discussion, we're not
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1 sure if there will be separate numbers put forward or if
2 people will just be speaking off of these. But if there
3 is, in deed, another proposal, we'll incorporate it and
4 have that before you.
5 So that concludes, from my standpoint, the
6 summary. I don't know if Catherine has any other
7 information to provide.
8 EXECUTIVE OFFICER WITHERSPOON: There were, of
9 course, other issues yesterday. But we think that we'll
10 hold those all until the Board discussion. They go off in
11 different directions. And this was more just to frame the
12 major issue before you. So we'd recommend you go to the
13 public comment now. And we'll come back to the rest
14 later.
15 CHAIRPERSON LLOYD: Thank you.
16 Let's do that.
17 There were a number of people who I called last
18 night who did not step forward. I just want to check with
19 those again just in case they were here.
20 Raymond Cernota?
21 Glynda Lee Hoffman?
22 David Muerle?
23 Hew Hesterman?
24 Paulette Jaeger?
25 MichaelMora?
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1 Shauna Wilson?
2 Bill Smith was testifying, I don't see him back
3 this morning.
4 Kurt Rasmussen?
5 Bernadette Del Chiaro?
6 I think she was going to come back today, but
7 maybe she's not here just yet.
8 So we will pickup with, I see, Charlie Peters.
9 And then Tim Carmichael, Doug Korthof.
10 MR. PETERS: Good morning, Chairman Lloyd and
11 Committee. I'm Charlie Peters, Clean Air Performance
12 Professionals. We're a coalition of motorists that is
13 actually worldwide. And we're quite concerned with how
14 all this impacts the public. How much we're going to have
15 to pay and how this is going to work.
16 I'm here to see if I can get a little advice on
17 remediation and see if I can share a couple of issues that
18 I think might have a possibility of getting some
19 consideration.
20 I have a very complex proposal here. It's a
21 pretty large print. It's one piece of paper.
22 CHAIRPERSON LLOYD: Charlie, we have -- again,
23 just to remind people we're going to be on three minutes
24 here.
25 MR. PETERS: Yes, sir. It says CAPP supports a
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1 smog check inspection and repair audit, a gasoline oxygen
2 cap and elimination of the dual fuel cafe credit to cut
3 car impact over 50 percent in one year, a smog check audit
4 to cut toxic car impact in half in one year, an oxygenate
5 waiver would stop a $10 billion refinery welfare program
6 coming from the federal tax reduction of 52 cents per
7 gallon of ethanol used. That, by the way, is coming
8 straight out of our transportation funds.
9 The third issue is about a third of the gasoline
10 used on new cars is allowed by the renewable fuel credit.
11 From the $900 per car cost of the ethanol gasoline system.
12 And there's not one E85 pump in the State of California
13 that I'm aware of.
14 So we talk about things like global warming and
15 toxic impact, and all of these things. And I would say to
16 you that, in my humble opinion, of course that would take
17 miracle because it doesn't appear as though those folks in
18 Washington would support. Is there someway of pulling off
19 a miracle in those three small items we think that that
20 could very significantly improve how the public is treated
21 and so on.
22 There has been a very interesting legal issue
23 going on with consumer unfair competition lawsuits that
24 the Attorney General is now involved in, that anybody who
25 gets any action whatsoever from any regulatory agency in
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1 the state of California can be sued by any consumer with a
2 group of lawyers.
3 So far the Attorney General has stepped in, the
4 California Bar Association has stepped in. And I have a
5 huge concern there because I have a gentlemen by the name
6 of Mr. Cruz in southern California who came here when he
7 was seven years old because both of his parents passed
8 away. His mother was a U.S. citizen. His father was a
9 Mexican citizen. He has U.S. citizenship today.
10 CHAIRPERSON LLOYD: Charlie, can you help link
11 what you're saying to our deliberations? That would be
12 helpful for us.
13 MR. PETERS: Absolutely. Here is a copy of the
14 court actions to remove this guy from business in the
15 straight of California. He was Triple A certified. He
16 was CAPP certified. He was smog certified. He had an
17 eight bay, seven hoist -- the reason was he didn't
18 appropriately mitigate the outcome.
19 At best, there's possibly $300 worth of money
20 involved in this whole process. And California eliminates
21 small business people just straight up and basically says
22 you have no opportunity to do business in California.
23 This is a person who maintained cars, keeps them from
24 becoming broken, sets standards. He's impacting the air.
25 And we just put him out of business, and I am trying to
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1 find out how to appropriately mitigate an issue like this.
2 CHAIRPERSON LLOYD: Charlie, your time is up.
3 MR. PETERS: Thank you very much.
4 CHAIRPERSON LLOYD: Thank you. We appreciate it.
5 I guess I was looking from a different list here
6 than I should have. John White. I saw John make a
7 fleeting appearance. And then Doug Korthof, and William
8 Korthof.
9 John, do you want to?
10 MR. DOUG KORTHOF: Dough Korthof from Seal Beach.
11 I first want to say that I think everybody is in favor of
12 clean air. Everybody agrees on this. The only question
13 is how to get there. So I think we have everybody here
14 honestly on that footing. I wan to also point out in
15 response to Dr. Burke's observation that there are only
16 two or three supporters of the staff report.
17 In fact, a lot of people due to the wording
18 listed themselves of the staff report when they meant to
19 say supporters of the ZEV mandate. So yesterday, during
20 the whole thing, not one person supported the staff
21 recommendation. That is, if it meant cutting down on
22 battery powered electric vehicles, no one outside the
23 automakers.
24 Now, some want -- so I just wanted to point that
25 out. Some want you to buy the fuel cells. Perhaps fuel
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1 cell vehicles will become practical sometime in the
2 future. Perhaps not. It's an economic and an
3 infrastructure problem. But solar electric roof top
4 systems and battery electric vehicles allow us to live oil
5 free right now. So I wanted to support and extend Tom
6 Gauge's point That we need to cut down on gasoline
7 consumption. Not everyone has to do so.
8 Please let those of us that choose to do so
9 enable us to do it, please.
10 The only good faith effort so far in this
11 marketing was Toyota. They actually sold a car to
12 somebody who wanted to buy. Everybody else played games.
13 During a magical six month window they abandoned
14 the tricks and devices and honestly offered an EV to those
15 willing to spend the money. That's free market. And no
16 one else did that.
17 Voluntary, does not work with these automakers.
18 They bully the drivers. They confiscate our cars.
19 They've taken out two of our cars and they won't give them
20 back. They're going to do something else with them.
21 They're going to break them up. This is not what we want.
22 And they're gaming the system with PZEV credits.
23 They're laughing at you when you say require PZEV credits,
24 multiple PZEV credits. They laugh at you. These thinks
25 are multiplying like quarks and masons, blue quarks, queen
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1 quarks.
2 They did the letter of the memorandum of
3 understanding nothing more. They did not create. They
4 laughed at us. They said we did not create a viable
5 program. All we did was put a certain amount of the cars
6 on the road and then we took them back.
7 Remember when Volkswagen's multiplied in the 60s,
8 because they put them out and everybody bought one, and
9 they didn't breakdown. That's the way these should be.
10 Instead, they put them out, everybody loves them and they
11 take them back. That's not productive.
12 So I propose three things. First of all, get rid
13 of the PZEV system, this system of multiple, hard to
14 understand permission. Get rid of all that.
15 Very simple program, enable one dealer, not
16 everybody, just one EV to come out during this blackout
17 period. Just one EV. Give us one, like the Toyota EV
18 Plus. They can open that line. They've told me. The
19 line is there. We can open it. We just don't have to
20 because CARB's not making us. That's the second point.
21 Sell the car to anybody who wants to buy it.
22 Give us the free market, for once, please. Enable other
23 manufacturers to fulfill their ZEV requirements by buying
24 ZEV credits to supply the RAV4 EV to those of low income
25 in areas that are impacted by bad air.
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1 There are so many people when I drive down the
2 streets of Los Angeles. I was pulled over on the 10
3 freeway by somebody who said how do I get one of those.
4 When I pulled into a gang area, the gang members came
5 over. Were they going to shoot me? No, they said how is
6 that electric? How can I get one?
7 When I was driving the street, they guys with
8 bandannas came over next to me, pull up next to me. I
9 figured oh, here I am. I'm dead. There's the uzi, right?
10 No. Hey, what's that man? It's electric.
11 These they all know. And when I tell them that
12 you can't have it because they oil companies are stopping
13 it, they know what I mean. They know that the oil
14 companies are conspiring with the auto companies to stop
15 us from getting electric cars. They believe it, whether
16 it's true or not.
17 CHAIRPERSON LLOYD: Can you wrap up because
18 you've gone three minutes, three and a half minutes.
19 MR. DOUG KORTHOF: Thank you, sir.
20 CHAIRPERSON LLOYD: Thank you very much. And we
21 appreciate that.
22 John White, William Korthof, Lisa Rosen.
23 MR. WHITE: Mr. Chairman and Members, good
24 morning. My name is John White. And I'm proud to be here
25 representing the Sierra Club.
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1 And I have had the honor and the privilege of
2 appearing before this Board on this issue going back to
3 the original adoption. And I want to reflect a little bit
4 on sort of where we've come and where we still need to go.
5 First of all though, I'd like to really thank the
6 Board and the staff for a terrific process under very
7 difficult and trying circumstances. I think we have had,
8 speaking as a member of the environmental community, very
9 very good opportunities to present our views, good
10 opportunities to hear from the Board what it was thinking
11 as it was developing its plans, particularly the staff.
12 You have, as you know, the best staff in the
13 world on these subjects. And they have performed
14 admirably. Even when we disagreed, it's been a good open
15 honest straightforward thing. I also note that the Board
16 members have themselves put an enormous amount of time
17 into this.
18 I've tried not to burden all of you with as many
19 meetings as I might have liked to have. But I know you
20 all have met and thought and deliberated, spent time in
21 Detroit, spent time with the manufacturers, really
22 struggled to make this thing work.
23 And Mr. Chairman, your leadership is very much
24 appreciated in the overall calm and deliberate manner that
25 you bring to bear on quite contentious and difficult
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1 issues.
2 I wish our friends in the auto industry had been
3 really as engaged in this process in a constructive way as
4 I wish they had been. I think there has been too much
5 litigation and too much of an attempt to really avoid the
6 debate here in California.
7 People have gone to Court and sought to impede
8 the flexibility that you have sought to give them under
9 the most unusual interpretations.
10 This is the law that I put up here.
11 (Thereupon an overhead presentation was
12 Presented as follows.)
13 MR. WHITE: Section 43018 of the California Clean
14 Air Act. It was pass in 1988, and it gave this Board and
15 this staff the authority, under which it has proceeded.
16 And some of the issues that we're talking about I wanted
17 to touch on that are still -- that have been raised in the
18 last couple of days. I know you've had a lot of
19 presentations. I don't want to take a lot of time.
20 On the issue of the hybrids, and the AT PZEVs.
21 The rationale that my friend and colleague Roland Hwang
22 put together about the link to the zero fuel cell platform
23 is very important. But let's remember that the hybrids
24 also give us upstream emission reductions NMOG and toxics.
25 And those are very important reductions that we don't have
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1 another way to get. And they're very consistent with the
2 statute.
3 The second thing is I'm surprised that, you know,
4 we have so much PR floating around on these issues with
5 our friends from General Motors, with all of the -- I
6 remember they were very much involved with PR at the time
7 we did the ZEV mandate with the electric vehicle and
8 making a lot of statements in the press and so forth, and
9 raising people's expectations.
10 They have done that with fuel cells. And we're
11 glad to see their enthusiasm. But they also have a hybrid
12 presentation they've given their shareholders. I'd like
13 to leave with the Board an excerpt from the annual report
14 of General Motors regarding the hybrid vehicles that
15 they're offering.
16 And that one of the reasons, in addition to fuel
17 savings, is low pollution. So the rationale for hybrids
18 isn't fuel economy, at least in California. It's
19 pollution. And you're on firm ground here along with the
20 link to zero.
21 On the remaining issues before you, I know that
22 it is a difficult decision. And I know there's a lot of
23 disappointing among the supporters of battery electrics at
24 the changes you're making with regard to the hybrid
25 compliance in the near term. And there's good reason for
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1 people to want fresh credits. There's good reason to want
2 things to have turned out differently with respect to the
3 credits.
4 But, in fact, to think they've turned out as they
5 have, these adjustments you're making, we think on
6 balance, with respect to the hybrid near term make sense.
7 However, two things trouble us about the proposal
8 as it's before you. And I say that knowing that many of
9 the criticism level against the auto industry about
10 marketing of battery electrics and so forth have a lot of
11 truth in them. And yet we've also seen the recent
12 experience with Toyota, and, you know, there are some
13 lessens here. And I think the success of the ZEV mandate
14 is why we're here to talk about hybrids being so doable.
15 We wouldn't be there without the battery electric
16 vehicles having given us the hybrids. We wouldn't be
17 talking about electric drive with fuel cells without that
18 platform. So those are a very important platform and
19 there's future opportunities to fill into the fleet with
20 them, which your rule apparently is going to provide for.
21 But two things remain missing. One is the role
22 of the independent expert panel needs to be carefully
23 narrowed and constrained and not be given a policy making
24 role and not taking the job of this board. This is your
25 decision to set numbers as their helpfulness to give you
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1 independent advice on key technical matters.
2 Conflicts are going to be important to watch with
3 those people. And the role of the fuel cell partnership
4 is going to need to be opened up and made a little more
5 accountable. There's got to be more governance and
6 participation by the NGOs. So you've got to narrow that
7 responsibility some.
8 And the second thing is that we just have to
9 have, as my colleagues have pointed out, commitments for
10 zero after 2008. Now, with those numbers my friend Jason
11 Mark has a very modest proposal, more modest than the one
12 that we put forward. And I leave that to your good wisdom
13 what the actual numbers should be.
14 But if you look at what we're seeing around the
15 world, Japan and the EC, and some of the other
16 presentations the automakers are making, you're well
17 within safe grounds to get into the health five figures in
18 the next decade.
19 So you pick the numbers, but be sure there's
20 numbers there or this mandate dies today. And I don't
21 think that's what you want. So we would commend all of
22 the fine work that your staff has done and the comments of
23 other folks on the record. But I think those are the two
24 points that I really wanted to emphasize.
25 And also really to thank you all for the work
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1 that you've done and for the staff's work as well. And we
2 have disagreements still that I'm sure we'll end up with,
3 but we're committed to working with you going forward to
4 make this a continuing success as we go forward into the
5 next round.
6 Thank you.
7 CHAIRPERSON LLOYD: Thank you, John. Thank you
8 for your real constructive hope over again these months,
9 and helping us -- reminding us of our mission and what we
10 need to do.
11 Thank you very much.
12 BOARD MEMBER BURKE: Mr. Chairman.
13 CHAIRPERSON LLOYD: Yes, Dr. Burke.
14 BOARD MEMBER BURKE: Before Mr. White leaves, I'd
15 like for him to know that two years ago -- I'm not big
16 into demonizing industry, because we all make a living one
17 way or another. And I absolutely am not into demonizing
18 the legal process, because we all -- that's what America's
19 about is we all have justice under the system.
20 Two years ago, a major car manufacturer came to
21 South Coast and said to us, the largest concentration of
22 automotive pollution in the state of California is in the
23 South Coast district. We think that this should be a test
24 area to control emissions from cars.
25 And we should have -- we have, our engineers
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1 have, some creative ideas on how to do that. We are
2 willing to give you $200 million to operate this test
3 project. Dr. Wallerstein approached CARB and approached
4 Mike. Mike says no, you can't take the money. You can't
5 do the project, because the ZEV mandate is going to work
6 and we're going to make sure it works.
7 Now, here we are this morning losing in court,
8 losing the momentum of our ZEV mandate, and I don't have
9 $200 million. You know, that's a tragedy, because we
10 don't know what we might have found to be able to do in
11 these last two years to enhance the efforts of CARB if, in
12 fact, that experimental project had been established.
13 And all my friends who are driving electric cars
14 and all those companies in South Coast who have electric
15 fleets might today be adding augmentation to that instead
16 of having to travel all this way to fight for what
17 currently is less than gross.
18 So, you know, everybody has a position here. You
19 know, I don't think the car companies are without fault or
20 without merit. You know, and I know the consumers and the
21 agencies are not without fault or without merit.
22 So I just wanted to let you know that some things
23 have happened that, you know, the public may not be aware
24 of.
25 MR. WHITE: Mr. Chairman, may I respond. Dr.
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1 Burke, I think it's important for me to be understood at
2 least, that I don't think this --
3 BOARD MEMBER HUGH FRIEDMAN: Excuse me, John.
4 I'm having a little trouble hearing you.
5 MR. WHITE: I'm sorry. I was just going to say,
6 I actually don't think this is a dire situation in the way
7 you describe. I think we're gaining more than we're
8 losing. We are making a mid-course adjustment and we are
9 moving forward in ways that we could have never
10 envisioned.
11 When we did this in 1990, there wasn't any PZEV.
12 There wasn't any SULEV. We were arguing about ULEV and
13 TLEV, okay. And we've made that happen. So I think the
14 program in emission's terms has been successful. I also
15 think that the adjustment you're making today, if you make
16 the right ones, and if you keep the commitment to zero and
17 allow some of these accelerated improvements and hybrids
18 to occur, is going to lead us to success, but you have to
19 keep the path clear. And at the same time, we have to be
20 open to dialogue. I think the fact is we've got more
21 consensus now than we had four years ago, in the last
22 discussion here.
23 Now, some of the parties aren't here. Some of
24 them are in court or offering side deals. But in the end,
25 overall progress is being made provided we don't lose
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1 sight of the need to still set the ambitious goals.
2 So I'm not as unhappy as it may sound except that
3 we're trying to make things work better, and I think this
4 Board has shown a lot of creativity and imagination in
5 making us move forward.
6 CHAIRPERSON LLOYD: Thank you.
7 We have William Korthof, LIsa Rosen, Jerry
8 Pohorsky.
9 MR. WILLIAM KORTHOF: William Korthof. I live in
10 Pomona in the South Coast Air Quality District. And let's
11 see I'm a RAV4 electric vehicle driver right now as well.
12 I work at AC Propulsion for two years. I
13 presently run a solar installation business. And I wanted
14 to speak today to strongly oppose the staff
15 recommendations, because I think they're a significant
16 step backward for the ZEV mandate, and the progress that's
17 been underway for 13 years now.
18 The proposed revisions would result in the ZEV
19 blackout, but not just a ZEV blackout but pretty much an
20 end to the ZEV program as we know it. And the only ZEVs
21 that will happen in the future, will have to come from
22 third party sources.
23 We're not going to have a meeting in eight year's
24 time where the car companies decide that they want to
25 start building fuel cell vehicles in quantities. Once we
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1 look at the costs and say gee for $500,000 or $400,000 or
2 $200,000 we could build these expensive laboratory
3 experiments on wheels. It just isn't going to happen.
4 So if we put off the idea of actually building
5 vehicles that are actually going to be marketable, that
6 consumers actually want to be driving. If we put that off
7 until some nebulous date in the future, it's just not
8 going to happen. And the press is already in that CARB is
9 playing to pull the plug. This sets a bad precedent for
10 regulatory continuity.
11 CHAIRPERSON LLOYD: Nothing has happened until
12 this Board acts.
13 MR. WILLIAM KORTHOF: That's correct, but the
14 press is already in on this. The press has already voiced
15 the story that the staff proposal is to eliminate the ZEV
16 component of the ZEV mandate to basically make zero zero
17 emission vehicles.
18 So unless this Board makes a decision in this
19 hearing or in the next hearing or very soon that the
20 requirements for zero emission vehicles is solid and
21 intact and that's still the intent of the program with
22 serious numbers of vehicles, that's not what the public is
23 going to see. The story is already out that ZEVs are
24 done.
25 So we have to -- if they're not done, we need to
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1 make some change in course.
2 CHAIRPERSON LLOYD: That's the purpose of this
3 hearing.
4 MR. WILLIAM KORTHOF: From my perspective and
5 from people that I contact, customers, ZEVs are market
6 ready. Now is the time. I don't have a second vehicle.
7 I have a RAV4 EV and that's my only car. I drive
8 approximately up to 3,000 miles a month. So I'm actually
9 a very high mileage driver. I drive all over the LA
10 basin.
11 As I say, I don't have a second vehicle. And my
12 routine is not a regular commute pattern, with a known
13 start and endpoint. So I know if I can make it work for
14 myself, there's quite a range of commuters with regular
15 patterns that are going to be able to make it work.
16 I wanted to comment on the ZEV market demand.
17 The RAV4, as Toyota pointed out, if you just took their
18 data in their own quote from their presentation, they
19 marketed 300 units in the first in the retail market.
20 They essentially closed down the fleet market
21 during that time window, so we know that there's a
22 capability for them to market 300 vehicles at the price of
23 a brand new Lexus SUV. So, you know, down the road if we
24 said well, that was one manufacturer selling at a limited
25 number of dealerships, with a limited number of sales
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1 people that were motivated at a high, essentially a luxury
2 car price, using 1996 technology vehicles, 1996 battery
3 technology.
4 You add that to the fleet market for postal
5 vehicles that Ford has demonstrated that they can place
6 vehicles into the postal service, those are EPac compliant
7 vehicles, an aggressive marketing program could meet both
8 Ford's desire to place vehicles for it's cafe purposes,
9 it's desire to get some alternative fuel vehicles onto the
10 road, and also the postal --
11 CHAIRPERSON LLOYD: Can you summarize, please.
12 MR. WILLIAM KORTHOF: As I see it, there's a
13 demand for at least 1,000 vehicles per year. Without a
14 mandate that forces production quantities that are in that
15 rough order of magnitude, the market for ZEVs will not be
16 satisfied. And the ability For the market to mature and
17 grow will not be met. So I propose at least 1,000
18 vehicles per year of production, approximately, of
19 placement credits through 2006 to 2010 timeframe. So the
20 way to get there would be, I propose --
21 CHAIRPERSON LLOYD: Thank you.
22 Lisa Rosen. Jerry Porhorsky, and Ed Heustis.
23 MS. ROSEN: Thank you. I'm pleased to be here
24 and appreciate your patience.
25 As the complexity of this measure grows to nearly
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1 200 pages, the probability of more lawsuits and loopholes
2 increases. Don't for any measure that you can't fully
3 understand. Clarity and simplicity are not just virtues,
4 they're essential for any kind of fair legal enforcement.
5 I believe that the success of the battery
6 electric program is not just the numbers on the road which
7 are small, but that it's been a catalyst to driving all
8 kinds of automotive development and progress. And how
9 many of these programs will continue if the force driving
10 it is gutted.
11 As the electric vehicles are removed from
12 service, the benefits of the program are lost. Demand
13 grows when people who see one want one.
14 I spoke to sales people who'd sold 50 or more of
15 these vehicles, and the sales grew slowly. They were
16 fueled by word of mouth. The sales people that I talked
17 to commented that there was in deed a marketing program,
18 but it seemed to have nothing whatsoever to do with the
19 actual sales and placements they made. That particular
20 market as grown by word of mouth and presentations at
21 public functions, environmental things. Those were the
22 only sources of customers that they noted.
23 But it was as if the cars were going out and
24 selling themselves. If there were no cars of this kind,
25 they can't go out and sell themselves.
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1 One of the sales people in fact went so far as
2 part of her MBA program to go and design, redesign her own
3 marketing program that she felt might more effectively
4 address the actual markets out there.
5 I did note and think passing that none of the
6 manufacturers seemed willing to embark on a Corvette like
7 program in which a company supports a high quality product
8 that loses money for them in order to enhance the
9 company's image and provide a vehicle to people who are
10 really hardcore enthusiasts, which is what we seem to have
11 here.
12 The sales people that I talked to indicated that
13 particularly given the mad rush at the end to buy
14 vehicles, which wasn't reflected, I believe, in Mary
15 Nickerson's figures. Her figures did not reflect the last
16 four weeks of sales. I believe and these sales people
17 certainly believe that they could double their sales to
18 members of the general public, not to mention any kind of
19 fleet sales, which weren't included, if they had another
20 year of program to go.
21 And there was also the comment not only from
22 those sales but from a Gem salesperson that we ended up
23 talking to that if there is no mandate requiring it, no
24 one is going to engage in production.
25 CHAIRPERSON LLOYD: Can you summarizes, please.
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1 MS. ROSEN: I'm thinking of the Alchemists during
2 the middle ages and their pursuit of transmuting base
3 metal into gold. I think that you can do it. In the end
4 human being technology did concur that and they produced
5 gold in linear accelerators. But I think that the pursuit
6 of the fuel cell is rather like that.
7 My proposals would be to stick with a flexible
8 result driven mandate. Anytime, you specify a number of
9 particular technologies that you have to produce, I think
10 you're going to blunder into more lawsuits.
11 I think, though, that if you have a policy that
12 favors existing technology that already works, you're more
13 likely to get results. And I think battery electrics do
14 that.
15 CHAIRPERSON LLOYD: Thank you.
16 MS. ROSEN: And I believe you could also
17 encourage one manufacturer or set it up so that one
18 manufacturer could meet the mandate for all of them if
19 they cooperated as they have in the fuel cell process.
20 Thank you.
21 CHAIRPERSON LLOYD: Thank you.
22 Jerry Pohorsky, Ed Heustis, Greg Hanssen, Bill
23 Mason.
24 MR. POHORSKY: Good morning, Dr. Lloyd and staff
25 members and board members. I'm Jerry Pohorsky, a
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1 professional problem solver, and I have a solution to your
2 problem.
3 In the interests of time, I've cut my testimony
4 in half. However, you've been provided with the rest of
5 the story.
6 While I'm a delighted EV1 driver today, my
7 delight will change to disappointment in July when my
8 lease expires. This is happened to many EV drivers
9 already, and that's why I'm calling EVs an endangered
10 species. Actually, we're all endangered by the toxic
11 fumes that come from petroleum powered vehicles.
12 (Thereupon an overhead presentation was
13 Presented as follows.)
14 MR. POHORSKY: I'm going to skip over this slide.
15 How can we make sure ZEVs survive. Let's strengthen the
16 mandate. CARB said that 10 percent of new cars sales must
17 be ZEVs. Looking at this the other way, this means that
18 90 percent of new cars sold will still be polluting the
19 air. Weakening the mandate, drives that number closer to
20 100 percent.
21 My proposal eliminates the need for an
22 alternative compliance path and gives you real numbers of
23 ZEVs that are easy to understand and easy to enforce. ZEV
24 credits should be reserved for vehicles that have either
25 zero emissions or a category known as ILEV, Inherently Low
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1 Emission Vehicles.
2 This is the same standard used to determine which
3 single occupant vehicle's are allowed to use the carpool
4 lanes during commute hours. There is a list of qualified
5 ILEVs on your web site. This list includes natural gas
6 and propane powered vehicles from most of the major auto
7 makers. And this is the alternative compliance path.
8 None of the current production hybrids or PZEVs
9 are in the ILEV category.
10 --o0o--
11 MR. POHORSKY: It seems that most of the recent
12 changes to the mandate have been designed to ease the
13 burden on the automakers. While this helps maximize their
14 profitability, it has also resulted in the endangered
15 species problem that we're facing today.
16 Please, reevaluate your priorities. You're part
17 of the Environmental Protection Agency, not the Corporate
18 Profit Protection Agency. The automakers should be held
19 in contempt of CARB.
20 The public deserves the right to be able to go
21 into any dealer's showroom and order a zero emissions
22 vehicle. The process should not be anymore difficult or
23 intimidating than ordering any other new car or truck.
24 --o0o--
25 MR. POHORSKY: We all know that affordable fuel
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1 cell vehicles are at least a decade away, and that the EV
2 is already developed to a satisfactory degree. I'm
3 perfectly happy with my 1997 EV1. GM doesn't need to
4 spend another dime developing it. All they need to do is
5 keep collecting the monthly payments.
6 Which would you prefer? Would you rather see me
7 driving a ZEV for two more years or should I just lineup
8 at the gasoline pump like everybody else with a PZEV.
9 --o0o--
10 CHAIRPERSON LLOYD: Can you bring this to a
11 conclusion.
12 MR. POHORSKY: I'm working on it. Even if ZEV
13 credits were issued for release the MOA vehicles, it
14 appears a significant shortfall of ZEVs could occur if the
15 mandate required the full 10 percent in the near term.
16 And I'm not talking 2005, I'm talking now.
17 Some of this shortfall could be met with natural
18 gas, propane and ILEV hybrid cars that I recommended. So
19 what I'm saying is any hybrid should be either propane
20 hybrid or natural gas hybrid. We don't need any gasoline
21 hybrids, because none of the manufactures have even
22 started making a plug-in hybrid yet. You might as well
23 start them out with a clean full. Why make them use
24 gasoline?
25 --o0o--
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1 MR. POHORSKY: Okay. Here's my 10 percent. If
2 you want to look behind I've got it there. The top two
3 percent could be either fuel cells or BEVs, alternate
4 compliance path. Any mix works for me. Two percent, keep
5 it Gold. The next four percent could be either gold. You
6 could fill the whole six percent up with gold if you want.
7 If you can't do that, okay, give me some CNG cars. Honda
8 has one. They're working with fuel maker of Canada for a
9 home fueling device.
10 Bronze category, this is the propane. So on your
11 ILEV list, there's a bunch of propane cars in there.
12 They're not getting any ZEV credits. Rather than See
13 hybrids or PZEVs get credits, forget that noise, let's get
14 some of these other clean technologies that are already
15 acknowledged by you as being clean enough to go into the
16 carpool lane.
17 CHAIRPERSON LLOYD: Thank you. I've got to cut
18 you off please. We've got you on time.
19 Thank you very much. We've got the proposal.
20 Maybe staff can take a look at that.
21 Ed Heustis?
22 Greg Hanssen, Bill Mason, Tom Dowling, Dan
23 Santini.
24 MR. HANSSEN: Good morning, Dr. Lloyd and
25 distinguished members of the Board. My name is Greg
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1 Hanssen. I'm with the Production Electric Vehicles
2 Drivers Coalition. We represent over 200 people who are
3 driving or at least recently drove production electric
4 vehicles in California, and some beyond.
5 I had some cute stories about my EV1 which I just
6 lost on Wednesday, and my efforts to save the EV1. We had
7 80 people trying to write letters to save the EV1 to
8 extend the leases and keep the cars on the road without
9 warrantee, but GM turned us down. I also had some stories
10 about my RAV4, which was -- or at least the trials And
11 tribulations of trying to obtain my RAV4, but I'm going to
12 skip over that and go right to our proposal from the
13 Production EV Drivers Coalition.
14 We've got basically three things that we'd like
15 to see in this resolution this afternoon. Many of these
16 are in line with things that members of the Board have
17 suggested, and proposals that have been made by our
18 colleagues in the environmental community on the
19 utilities.
20 First and foremost, we agree with staff's
21 proposal to split the alternate compliance path between
22 battery technologies and fuel cell technologies. We
23 believe the goal should be to have 3,000 to 5,000 battery
24 technology vehicles on the road during this 2001 to 2008
25 timeframe.
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1 We believe that this split between battery
2 technology and fuel cell technology must be a requirement.
3 There must a floor requirement for battery technology and
4 for a fuel cell technology. I don't think there's any
5 doubt that fuel cell technology will continue rolling on.
6 But for those of us who drive EVs, we have grave concerns
7 about whether battery technology will continue.
8 We see a huge market for full function battery
9 electric vehicles, which can share the same platform with
10 fuel cell vehicles, city electric vehicles and plug-in
11 hybrid vehicles. And we believe all should be considered
12 in this battery requirement within the compliance path.
13 Second, we'd like to see additional credits for
14 pre-2001 vehicles to be brought back on to the record.
15 This is MOA vehicles, out-of-state vehicles and other used
16 vehicles, because we have a definite shortfall of
17 blackout, if you will, between 2003 and 2005 or 6, even
18 with a battery requirement. And anything that can be done
19 to encourage these vehicles to stay on the road would be
20 very helpful. I think credits within this ultimate
21 compliance path might be able to achieve that.
22 Finally, I think there should be some sort of
23 additional credits, maybe a multiplier credit of say 20
24 percent or so for vehicles that are offered for sale or
25 for open lease. So we can avoid the problem that many of
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1 our drivers have had of having their vehicles taken from
2 them.
3 We're not going to require people to sell
4 vehicles. Of course, it's their discretion. But we'd
5 like to have an incentive for companies like Toyota who
6 have made the RAV4 available for sale and open lease. I
7 should also point out that in our goal to try and
8 encourage all the automakers in to the alternate
9 compliance path, perhaps having this battery section could
10 encourage automakers like Toyota and Nissan because they
11 will have already placed a portion of their battery
12 technology requirement with vehicles that came out in 2001
13 and 2002.
14 So I'm sorry we didn't get to speak last night
15 and get our proposal up along side everyone else's. I
16 think whether it's 500 fuel cell vehicles or 250 fuel cell
17 vehicles, and how you split it between there, we're not
18 really concerned. Our main goal is 3,000 to 5,000 battery
19 technology vehicles in this timeframe, 2001 to 2008.
20 CHAIRPERSON LLOYD: Thank you, Greg for the
21 specific comments. We appreciate it.
22 Bill Mason, Tom Dowling, Dan Santini.
23 MR. MASON: Good morning. I'm Bill Mason. I'm
24 speaking this morning as a retired automotive engineer and
25 also as co-chairman of the PEVDC.
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1 There's been a lot of discussion about grid
2 connected hybrids. As Greg said, we support these
3 vehicles as a viable pure ZEV technology. I'd like to
4 remind staff and also point out to the Board that in
5 addition to the excellent work that's been going on at UC
6 Davis for a number of years by Andy Frank and his people,
7 there's a rich history of very good plug-in hybrid
8 development work in the past.
9 In 1995, Mitsubishi placed two plug-in hybrids
10 with ARB for a 30 month evaluation. These were plug-in
11 hybrids with a gasoline fueled APU and lead acid
12 batteries.
13 These were followed by three or four more
14 advanced prototypes with a CNG fueled APU and lithium ion
15 batteries of Mitsubishi's own design and manufacture.
16 Now, Automotive News in December of 1994, almost nine
17 years ago, one of the lead articles was entitled, "Volvo
18 Plans to Sell a Hybrid Electric Car in the United States
19 in 1997 or 1998."
20 Volvo's hybrid was also grid connected, had a
21 gasoline fueled APU and nickel metal hydride batteries.
22 Plug-in hybrids have a substantial and credible
23 development history. And with regard to Volvo, that
24 experience is now owned by Ford Motor Company.
25 The alternative compliance path must be
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1 technology neutral. Battery electric vehicles must be
2 required in the alternative path, not just an option. I'm
3 afraid that regardless of how you try to set the ratio to
4 encourage battery electric vehicles, the automakers will
5 spend more money than doing the BEVs, to do -- to, you
6 know, avoid doing something that they don't want to do.
7 It took several months for the 2001 amendments to
8 become law. And when they did ARB was promptly sued by GM
9 and Daimler Chrysler. In my opinion, the lack of BEV
10 development in the last two years was due to lawsuits and
11 the refusal of most manufacturers to do anything. I don't
12 think you should blame technology and the market.
13 In closing, I believe that the pure ZEV portion
14 of the ZEV mandate needs to recognize that it is highly
15 unlikely that any one technology will ever replace the ICE
16 fueled by gasoline. It won't be all fuel cells. It won't
17 be all BEVs. Each technology will have a role to play.
18 I also believe that the pure ZEV program is not
19 about manufacturers being able to make a business case or
20 being able to easily market a new technology. The pure
21 ZEV program is an investment in the manufacturers and
22 California's futures. And for that reason, I don't think
23 you should hesitate to require BEVs in the alternative
24 compliance path, not just make them an option.
25 Thank you.
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1 CHAIRPERSON LLOYD: Thank you very much Bill. We
2 appreciate it.
3 Tom Dowling Dan Santini, Todd Dipaola.
4 (Thereupon an overhead presentation was
5 Presented as follows.)
6 MR. DOWLING: Good morning, Dr. Lloyd and members
7 of the Board and staff. I'm intending to address
8 specifically the Toyota RAV4 program. My position is that
9 it was an evidence of strong retail demand that there were
10 many reasons why there were dropouts and their could have
11 been a lot more sales, if Toyota were prepared to do that.
12 --o0o--
13 MR. DOWLING: Toyota says we tried, but retail
14 demand was very low. The Buyers and potential buyers
15 disagree with that. We do want to give sincere thanks to
16 Toyota. They did quite a few right. They did things that
17 no one else had done before. But there were a lot of
18 other things that could have been done.
19 Strong retail demand is still there. And we very
20 need ZEVs in the marketplace now. I won't read that, but
21 that's a quote from Toyota's web site, about sales being
22 very low as the reason for discontinuing the program.
23 They couldn't make a business case for continuing sales at
24 those volumes.
25 We don't believe that's the real reason --
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1 --o0o--
2 MR. DOWLING: -- that they discontinued the
3 program. They never expected or said they were going to
4 sell more RAV4 EVs than they did. They sold everyone that
5 they could make. We're not even addressing here the fleet
6 demand which is significant additional to the retail
7 demand.
8 What they did is they filled their quota. They
9 got more multipliers for 2002 deliveries than for 2003
10 deliveries. So when they had gotten enough they quit,
11 because CARB wasn't requiring them to make anymore.
12 --o0o--
13 MR. DOWLING: So their stated reason doesn't seem
14 to be the real reason.
15 I'm going to skip this in the interests of time.
16 But we want to thank Toyota for a lot really good things
17 they did do.
18 --o0o--
19 MR. DOWLING: What they could have done -- one of
20 the big things, is they could have integrated the rebates.
21 They didn't do that. What it looked to the retail buyer
22 was this was a $42,000 car. Yes, there were Lowenthal
23 funds and so forth, but Toyota did not pass those on
24 directly. They made the buyer jump through hoops. Fill
25 out forms. Wait for their money, pay sales tax as if it
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1 were a $42,000 car. And that turned off a lot of buyers.
2 That's the reason for dropouts.
3 Not every Toyota dealer was a RAV4 EV dealer, and
4 their marketing campaign, such as it was, didn't make that
5 clear. People would show up at other dealers and be
6 steered to other cars and be told the RAV4 EV didn't exist
7 and so forth.
8 I live in Folsom and I know that happened at the
9 Folsom Toyota dealer was not a RAV4 dealer. Toyota didn't
10 help very much with DMV issues. One big thing they caused
11 a lot of people to drop out was the charging
12 infrastructure.
13 The RAV4 EV is the small paddle inductive
14 chargers. The worst of all possible words really. The
15 least available public infrastructure.
16 CHAIRPERSON LLOYD: Can you just summarize,
17 please?
18 MR. DOWLING: Yes, sir. Toyota didn't help with
19 that at all. So there were many things that caused the
20 buyers to drop out, potential buyers to drop out that
21 could have been taken care of.
22 --o0o--
23 MR. DOWLING: Spotty availability was very
24 important. All along in all these programs, you can get
25 them if you're there at the right time. But if you're not
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1 there at the right time, you can't get them. So the main
2 thing -- another thing is the performance sales too.
3 There could be better performance and other features in
4 ZEVs that would help a lot.
5 CHAIRPERSON LLOYD: Thank you.
6 MR. DOWLING: Thank you.
7 CHAIRPERSON LLOYD: Dan Santini, Todd Dipaola,
8 Sandra Spelliscy.
9 (Thereupon an overhead presentation was
10 Presented as follows.)
11 CHAIRPERSON LLOYD: National Labs, I'd give you
12 more than three minutes normally, Dan. I apologize, but
13 that's all we have.
14 MR. SANTINI: I'm Dan Santini from the Technology
15 Assessment Section of Argon National Laboratory. I have
16 discussed my presentation ideas with Tien Hwang of the
17 Office of Freedom Car and Vehicle Technologies at the
18 Department Of Energy. And Tien felt that it was advisable
19 for me to share my ideas as a scientist with the Board.
20 I have participated in the past with the Electric
21 Power Research Institute study of electric hybrid
22 vehicles. And Dr. Phil Patterson has supported that in
23 kind contribution to that study. So the Department Of
24 Energy, and myself as a scientist working for them, are
25 greatly interested in what the technologies are of
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1 interest to CARB and whether those technologies have the
2 potential to spill over and benefit the nation as a whole.
3 And that is the position I'd like to speak to from today.
4 I don't know if anybody else has used the term
5 grid connectable in describing a grid connected hybrids
6 that you may have been discussing. But one of my
7 perspectives is that these hybrids may or may not run on
8 gasoline that would be up to the consumer at least
9 depending on the regulatory environment of a particular
10 state.
11 --o0o--
12 MR. SANTINI: In the EPRI working group study, we
13 looked at grid independent hybrids such as are sold today.
14 And then the possibility of having a variant of -- two
15 variants of the hybrids. One with all electric range
16 capability up to 20 miles or actually 20 miles or better,
17 and then 60 miles, dictated to a certain extent by CARB
18 intentions.
19 I was quite fascinated with our results for the
20 hybrid with a 20-mile grid connected capability. And as a
21 scientist, I think there's some interesting potentials for
22 that technology for the country.
23 First I note that it could be charged without
24 infrastructure modification. Infrastructure modification
25 is a big issue with hydrogen fuel cell vehicles for
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1 example. It provides greater gasoline fuel economy than
2 the straight grid connectable -- or the straight grid
3 independent hybrid.
4 It could be an option if the power train systems
5 are developed properly, then you could have multiple
6 options in your hybrid power train. One of which might
7 allow you have grid collectability. And you would get
8 your added fuel economy as a result, and be able to use
9 electricity instead of oil.
10 These technologies could provide the possibility
11 for judiciary timing and relocating of emissions in urban
12 areas. I'll discuss that a little more.
13 The grid collectability provides you the option
14 and capability of adding green-house gas reductions if you
15 charge your --
16 CHAIRPERSON LLOYD: Dan, can you summarize there
17 please.
18 MR. SANTINI: Okay. I think the key point that I
19 need to make here is that such a technology with the
20 energy storage capabilities of the HEV 20's has a
21 potential for providing an enabling bridge for the
22 hydrogen fuel cell vehicle technology as scientists
23 looking at the attributes of fuel cell vehicles. We are
24 recognizing the benefits of larger amounts of energy
25 storage that might have been previously considered. And
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1 in looking at the HEV 20 grid, the energy storage
2 capability that we came up with, it would be complimentary
3 to the energy storage capabilities that are being
4 considered now for the hydrogen fuel cell vehicles.
5 CHAIRPERSON LLOYD: Thank you very much.
6 MR. SANTINI: And I have a couple of slides that
7 embellish other points.
8 CHAIRPERSON LLOYD: We have that, Dan which we
9 very much -- let me just ask you one point. Will this
10 technology be part of the freedom car program?
11 MR. SANTINI: The freedom car program has
12 developed a set of goals. And the goals, however, are
13 subject to reevaluation. There is reevaluation going on
14 with respect to the power train energy storage goals. We
15 will be presenting a paper on the fuel cell attributes,
16 including cold start, getting out of the driveway and so
17 forth, if the future transportation technology conference.
18 And our emphasis with DOE is that you think about
19 power train technologies that have a fairly significant
20 amount of energy storage capability. If you have those --
21 if the DOE works with other organizations to develop that
22 capability, that would be a natural to fit into hybrids in
23 the interim such as, you know, an HEV 20.
24 CHAIRPERSON LLOYD: Thanks very much.
25 Tod Dipaola, Sandra Spelliscy, Tim Carmichael.
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1 MR. DIPAOLA: Thank you, Chairman Lloyd and Board
2 Members. My name is Dipaolo. I'm a public policy
3 associate the Steve and Michelle Kirsch Foundation. The
4 foundation was founded in 1999 with the mission of
5 improving our world through strategic union and advocacy.
6 We're a 501(c)(3) charity. And we both fund and
7 advocate for environmental initiatives that clean our air.
8 And the foundation as well as our founder, Steve Kirsch,
9 has a long history of a commitment to clean vehicles and
10 the ZEV Program.
11 First, I'd like to thank this Board. As a result
12 of your vision and the ZEV Program's aggressive approach
13 to promoting zero emission vehicles over the past 13
14 years, we've reaped the benefit of battery electric
15 vehicles, the mass commercialization of hybrid vehicles
16 and fuel cell vehicles. These technologies owe their
17 birth and entirety to CARB's foresight in setting high
18 goals and resolve and seeing them through.
19 The ZEV mandate has altered the course of
20 worldwide automotive technology. It has changed
21 automotive history for the better and turned concept cars
22 into environmental reality. Based on the program's track
23 record of success and prospects for stimulating further
24 automotive innovation, the Kirsch Foundation feels
25 anything less than a fervent push forward would be
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1 regrettable.
2 Therefore, I'm hear today to relay our concerns
3 regarding CARB staff's proposed amendments to the ZEV
4 Program. While a few of the provisions of staff's most
5 recent proposal could really benefit the program and
6 resolve pending legal issues, most of its changes erode
7 the program's potential to drive clean vehicle technology.
8 In a January letter to the Board, the Foundation
9 and many of our environmental colleagues expressed our
10 concern regarding the direction of the program's
11 modifications and outlined three necessary components we
12 required to support the proposal.
13 These included significant numbers of non-NEV
14 vehicles, non-NEV ZEVs between 2008 and 2005 and 2012,
15 increased incentives for plug-in hybrids, and stronger
16 requirements for conventional hybrids. While staff did a
17 commendable job revising hybrid classifications the issue
18 of plug-in hybrid incentives and larger numbers of ZEVs
19 have not been adequately resolved.
20 In addition, several new and disappointing
21 modifications arose when the latest proposal was made
22 public. Specifically, we were disappointed in a few key
23 elements, which included only requiring 250 total ZEVs to
24 be produced in the next five years. CARB has shown itself
25 to be a worldwide leader in clean vehicle technology
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1 development.
2 Right now, however, the Japanese government is
3 poised to require 50,000 fuel cell vehicles on the road by
4 2010, which does not compare favorably with staff's
5 proposed 250 fuel cell vehicles by 2008.
6 We're especially disappointed with no plans for a
7 program post 2008. Under the current proposed rules the
8 program would essentially sunset -- would go into effect
9 in 2005 and sunset three years late in 2008.
10 Also, the credits for non-California fuel cell
11 vehicles is also disappointing. In fact, California could
12 see no fuel cell vehicles to 2008 and all of them could be
13 placed elsewhere in the United States.
14 Also and end to the programs technology neutral
15 approach is something else we found to be very
16 disconcerting. In the past, CARB has pushed the ZEV
17 program forward with an idea of pushing a diversity of ZEV
18 technologies. Choosing only fuel cell vehicles could
19 essentially set the program up for defeat when we look at
20 regulations again in 2008 or at another point, if
21 technology is not advanced significantly.
22 Also, we'd like to see further incentives for
23 plug-in hybrid vehicles. The Commercial success of
24 hybrids has shown us a lot about consumer's acceptance of
25 them and we'd like to see it pushed to the next level by
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1 providing enough incentives to encourage an automaker to
2 actually take that path.
3 CHAIRPERSON LLOYD: Todd, can you wrap up there.
4 I think we've read the rest of it. I think you've got the
5 gist of it there, but we appreciate your specific
6 suggestions there.
7 MR. DIPAOLA: I'll wrap up. Essentially, the
8 Kirsch Foundation as opposed to the current staff
9 proposals as proposed. We would like to see a return to
10 the 2001 amendments that the Board passed just two years
11 ago. And we think that amend the regulation every two
12 years creates an incentive for companies to generate
13 results conducive to further charges.
14 We believe the trading needs to occur between
15 automakers and other companies earning credits and that's
16 what the program has been designed for. So we at the
17 Kirsch Foundation urge you to stay the course and affirm
18 the path you set just two years ago. We urge you not to
19 weaken a program that's brought so much positive change to
20 California.
21 Thank you.
22 CHAIRPERSON LLOYD: Thank you for Todd.
23 Sandra Spelliscy and Tim Carmichael.
24 MS. SPELLISCY: Good morning, Mr. Chairman and
25 members. Sandra Spelliscy with the Planning And
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1 Conservation League. I'm going to speak in bullets this
2 morning. I want to move very quickly.
3 And I appreciate the opportunity to be here
4 today. I think I have a little bit different perspective
5 than maybe you've heard from some of the others in this
6 hearing. The Planning and conservation league is opposed
7 to the staff proposal. We urge you to reject it and to
8 maintain the guiding principle of your 2001 decision,
9 which was to see significant numbers of zero emission
10 vehicles on the road in California in this decade.
11 I see two major problems with the staff proposal.
12 The first is that it gives up too quickly on present day
13 ZEV technologies that are providing ZEV miles every day.
14 The staff analysis has a fundamental flaw, I believe,
15 which it turns the assumption of the 2001 decision on its
16 head. That assumption was that we were going to over time
17 build a market for ZEV vehicles in this state with this
18 program.
19 Now, suddenly we are in a position where we are
20 supposed to have had a market appear overnight and because
21 the program has not captured it, suddenly the decision
22 that you made in 2001 does not work. I believe that there
23 are vehicles that we have here today that we should be
24 seeing in fleets. We should be seeing them in the
25 innovative transportation systems that Supervisor
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1 DeSaulnier has been working on and we need to not give up
2 on that goal.
3 The second major problem is that the alternative
4 path in terms of fuel cells in the staff proposal is a
5 recipe for failure that we've already tried. And let me
6 just say I differ from a lot of people here who think the
7 critical flaw in the staff proposal is that there are no
8 numbers after 2009.
9 Because my feeling is that if we do nothing More
10 than have a demonstration program for fuel cells in the
11 next six or seven years and then pick a number for the out
12 years, it will not work and it will not work because
13 people simply won't believe you.
14 We've done that in '96. We were there in '98.
15 We did in 2000. If we do it again today, we are repeating
16 the same process that we've seen throughout this
17 regulation. We have to have a serious gold portion of the
18 program, now, in order -- for people to believe that the
19 out years when I'm not going to be here and probably most
20 of you will not be here, really mean anything in
21 California.
22 Let me switch to a couple comments about process.
23 This process is nothing like the biennial review that we
24 did in 2000, 2001, five months one, single public
25 workshop. The proposal before you today is far too
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1 complicated to have been done this quickly. I think this
2 is why you see so much disagreement about what the staff
3 is proposing.
4 We spent many, many hours talking to the staff
5 about our specific concerns, about the direction they were
6 taking and things that we thought needed to be changed.
7 None of which were ultimately reflected in the staff
8 proposal.
9 I'd hope that there is someway within the
10 structure of the Administrative Procedure Act that this
11 Board could find a system so that there are alternative
12 policy choices laid out for you before you come to the
13 Board hearing. Certainly the staff can say what its
14 preferred alternative is, but for you to be in a situation
15 where you have to make an up or down judgment about the
16 staff proposal, and if you decide not to accept it, have
17 to create sort of from whole cloth from the dais, what the
18 new program should be, is simply not a good way to make
19 public policy.
20 We are in the position of trying to respond to an
21 extremely intricate staff proposal in a very, very small
22 amount of time. We want to layout specific proposals.
23 It's virtually impossible to do that in the few minutes
24 that people are given here. I seriously hope that this
25 Board will think about how to reform its regulatory
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1 process, and it's hearing process to deal with these very,
2 very complicated technical decisions in a better manner
3 than we've seen in the last few months and over the last
4 couple of days.
5 Let me talk very quickly about a couple of
6 mistakes I hope that we can avoid in the future. This is
7 an extremely complicated and complex regulation. It has
8 not aged gracefully over the years. Every time it's come
9 up for review it's gotten more complicated. This time is
10 no exception.
11 It's very difficult to have a successful
12 regulatory program that nobody in the public can really
13 understand, nobody in the press understands. You can't
14 explain to the judges who are interpreting the law. It's
15 not been the best way to go about creating the kind of
16 program we want to create. I hope that we learn from that
17 lesson and in the future try to have simplicity as a
18 guiding force in the regulatory process here.
19 The other problem that we've had with this
20 program is that no successful regulatory program can
21 withstand the kind of constant scrutiny and review and
22 reevaluation that this program has undergone.
23 One of the pillars of regulatory success is to
24 have certainty for the public and for the regulated
25 industries. And the only thing that's been certain about
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1 this program is the certainty that it will constantly
2 change.
3 Again, I hope that we can learn from these
4 lessons, and in the future do a better job.
5 Let me just close with these final words. If you
6 speak to anybody who works on air quality issues in
7 California these days, a recurring theme comes up. That
8 theme is about the mind boggling challenges that we face
9 in getting to the health based standards in California.
10 Despite all the progress that we have made on air quality,
11 we still have places like the South Coast and the Central
12 Valley, where there is no discernable path for reaching
13 healthy air for millions and millions of people.
14 And the reason that this task is so daunting is
15 because we have made all of the easy choices when it comes
16 to air quality in this state. And all we are left with
17 are the very very hard choices.
18 The ZEV Program is one of those very hard
19 choices. This is a tough, tough program. It's a
20 revolutionary program. It pushes the automakers hard, and
21 they don't like it, and they push back hard. And all of
22 us who are involved with this it's tough for us and it
23 makes people uncomfortable.
24 But as you deliberate today on the fate of this
25 program, I urge you to summon all of your political
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1 courage to make the hard choices that you know you need to
2 make on this program, because when it comes to protecting
3 the health of the people of California, there are simply
4 no more easy choices to make.
5 CHAIRPERSON LLOYD: Thank you, Sandy. Tim
6 Carmichael.
7 MR. CARMICHAEL: Good morning, members of the
8 Board and Chairman Lloyd. Tim Carmichael. I'm the
9 Executive Director of the Coalition for Clean Air.
10 It's hard enough going last, but after Sandy's
11 presentation, I'm shaking a little.
12 I'll jump straight in, because I know we're short
13 for time and we're eager to hear your deliberations.
14 There are two numbers that aren't in the staff report that
15 should be in the staff report. The first of those is 1.8
16 million vehicles per year. And that is a very important
17 number for you guys to remember as you consider what to do
18 with this program. That's the number of new cars, light
19 trucks and SUVs sold in California every year, 1.8
20 million.
21 And that's lost when we're talking about 2,500 or
22 500 or even 25,000. 1.8 million new vehicles in
23 California every year.
24 The second number that's not in the staff report
25 and should be in the staff report is 14 billion or some
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1 bigger number. $14 billion per year, that's the cost of
2 air pollution, estimated cost of air pollution, in the
3 South Coast air basin.
4 We know that the San Joaquin is suffering
5 significant costs in health care, as well as crop loss.
6 So the number for the state is much bigger than $14
7 billion. But that number is not in the staff report.
8 I've got to believe that this Board and the staff
9 working for you recognize that the priority for the agency
10 is the protection of public health. But the staff report
11 highlights the cost savings of this program to the
12 automobile industry without addressing or identifying the
13 costs of air pollution in our society. And that's a
14 mistake in this report and it should not be left out of
15 any future report. Where we're talking about cost to an
16 industry. Let's remember the cost to society of air
17 pollution.
18 I think Sandy and my colleagues from the other
19 organizations have addressed all of our concerns with the
20 proposal.
21 Let me just jump to what we believe the combined
22 effect of all those problems -- combined impact of all
23 those problems will be. If you move ahead with the staff
24 proposal today, California will, in effect, relinquish our
25 leadership role in driving zero emission technology for
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1 the globe. Many of you probably relish that, and you know
2 think let's pass the torch, enough of this pain.
3 But there are a lot of benefits to being in the
4 leadership position. And it's very important to remember
5 how much popular support there is here in California for
6 this leadership role, for this program.
7 Dr. Burke mentioned Yesterday just basically
8 summarized the numbers of where the people lined up as
9 testifiers. And sure it's 70 something people. It's not
10 the state of California. But I need to remind you and you
11 need to remember, as an agency, you have never received as
12 many letters of support for any program as a strong ZEV
13 Program in California. You have never ever -- there's no
14 program that's come close, tens and tens of thousands of
15 support letters for a strong ZEV Program. The popular
16 support is there. The People of California are behind not
17 only a leadership position for zero emission vehicles, and
18 zero emission technology, but for a very strong program.
19 And you need to remember that as deliberate today,
20 remember that the majority of Californians believe in this
21 program and believe we should be leading the globe in
22 these sorts of efforts.
23 With that, thank you very much.
24 CHAIRPERSON LLOYD: Thank you, Tim.
25 Ms. Witherspoon, does staff have any further
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1 comments before I close the record?
2 EXECUTIVE OFFICER WITHERSPOON: Not at this time.
3 CHAIRPERSON LLOYD: We'll now close the record on
4 this agenda item. However, the record will be reopened
5 when the 15-day notice of public availability is issued.
6 Written or oral comments received after this hearing date
7 but before the 15-day notice is issued will not be
8 accepted as part of the official record on this agenda
9 item.
10 When the record is reopened for a 15-day comment
11 period, the public may submit written comments on the
12 proposed changes which would be considered prior to the
13 adoption of the amendments and responded to in the final
14 statement of reasons for the regulation.
15 So, I guess, we're open for discussion at the
16 Board.
17 Mr. McKinnon.
18 BOARD MEMBER McKINNON: Mr. Chairman, I want to
19 start out the way I started yesterday, and that is to be
20 very clear that I don't consider where we've gone in the
21 last 12 years as failure. What has happened in the last
22 12 years in terms of technology development to get closer
23 and closer to zero, it's mind boggling how far we've come.
24 And nothing can take that away. We can't call this a
25 failure.
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1 But I have to tell you that I cannot proceed with
2 the staff proposal with no numbers. And I'm very
3 heartened by basically the testimony of the Union of
4 Concerned Scientists and Dave Modisette yesterday. And I
5 think the Union of Concerned Scientists laid out lots of
6 facts and statements by the auto companies about their
7 intentions and what they could do if they wanted to.
8 His numbers, and this really to me is a
9 discussion about numbers. I frankly tend to favor the
10 Modisette proposal, not because it wasn't a good proposal
11 from the Union of Concerned Scientists, but it's sort of
12 taking just a slightly more conservative view at the
13 numbers. I like the Modisette proposal.
14 The only thing I might change about it is in the
15 first 2 or 3 years using the sliding years that Jason
16 described in the Union of Concerned Scientists' format
17 last night.
18 To be specific, I think that silver needs to make
19 it to the gold category. I think it matters. Just
20 instinctively I think that and now we're starting to hear
21 some of the discussion of how it might impact even fuel
22 cell development and what may happen, particularly, and
23 when I say plug-in HEV, what I'm talking about is plug-in
24 HEV that has the ability to operate on 100 percent
25 electric for some set period of time, to 20 miles or the
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1 60 miles. So that essentially a consumer could operate on
2 electric while they were commuting each week. And if they
3 needed to use the car in the gasoline mode to go on a
4 vacation or a longer trip, they could do that.
5 So, I think, yesterday I said something about a
6 car that you could switch on and off. And somebody said
7 well, it does it automatically. I don't mean
8 automatically. I mean that if you choose to use it as an
9 electric vehicle most of the time, you can control that.
10 And I think that that essentially should get gold credit.
11 In terms of the issue of stating the number of
12 Battery Electric Vehicles versus fuel cell vehicles, I
13 personally do not want to prescribe that. I personally
14 think we set out the big numbers and the auto companies
15 are going to make a variety of choices about how many fuel
16 cells they do, how many battery electrics, how many
17 plug-in hybrids on down the line, that we, you know, we
18 set the sort of -- the major goals and we set a credit
19 scheme that gives them some options, but we don't
20 prescribe 50 percent or 70 percent or whatever.
21 So I think that's sort of kind of my major -- the
22 big piece of where I'm at on this.
23 CHAIRPERSON LLOYD: Supervisor DeSaulnier,
24 Supervisor Roberts.
25 BOARD MEMBER DeSAULNIER: Thank you, Mr.
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1 Chairman.
2 First, I'd like to thank you and my colleagues.
3 As John White said I know everybody has put a lot of work
4 into this. And I'd like to thank staff. You've had some
5 comments directed your way, but I think you did a great
6 job with a difficult chore. And you've basically tee'd up
7 the issues that Matt's just talked about.
8 And, Catherine, in the category of be careful
9 what you ask for or wish, you've done a great job today,
10 too. And for everyone who's come here and traveled, I
11 hope you appreciate how the Chairman has tried to run the
12 meeting given how difficult a task it is to keep so many
13 different constituencies happy.
14 The great American sage Yogi Berra once said that
15 the toughest thing about predictions is you never know
16 what's going to happen in the future.
17 (Laugher.)
18 BOARD MEMBER DeSAULNIER: That's not my favorite
19 Yogi, but that's a pretty good one for today.
20 I think we can predict though that over the
21 course of the next 20 years in the timeframe we're looking
22 at that the world is going to change quite a bit. And
23 certainly air quality and auto manufacturing is going to
24 change quite a bit during that time period as well.
25 The issues that staff put in their slide
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1 presentation first beginning with the alternative
2 compliance option and rolling into the BEV. I agree with
3 Matt, although I tend to side with -- to go a little
4 higher and do what Jason has suggested, the rationale
5 being, I look at the proposal by the Bush Administration
6 with a little bit of -- well, maybe perhaps more than a
7 little bit, but out of courtesy, I'll say a little bit,
8 out of skepticism. I think most of those numbers will in
9 fact end up California numbers.
10 So I would agree with Matt, but I would tend, in
11 terms of the discussion, look at the higher numbers that
12 Jason has suggested. In terms of the question of the
13 plug-in hybrids, I agree with Matt that should be in the
14 gold category as has been suggested by Mr. Modisette.
15 The ZEV infrastructures that I've been working on
16 and Chuck and I have had some discussion about, in the
17 resolution there's a paragraph that I think is good, and
18 is acceptable. And I look forward to three months from
19 now coming back to my colleagues with a presentation I
20 think that will be quite positive.
21 In regards to what John White talked about, in
22 terms of the panel, in looking at the resolution, I think
23 that pretty much accomplishes what he was looking for in
24 terms of the conflict of interest and their appropriate
25 role.
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1 So with those sort of broad interests, I'd just
2 say I think we've come a long way. And I would say that I
3 can't think of a worse time for this Board and for the
4 State of California to think about weakening in any way
5 what we have started out on -- what this Board started on
6 in 1990.
7 From the historical standpoint, this would be the
8 worst time for us to send any kind of message to the State
9 and to the country and to the world that we're going to
10 back off. And to the auto manufacturers, I'd just say
11 that, and to all of us, but particularly to the partners
12 in the auto field, the expression that, "To those who much
13 is given, much is expected." I think that this is
14 something that I would look to you folks without
15 minimizing the difficulty that you have and having a good
16 deal of respect for many of you in terms of the challenges
17 you have, in terms of being worldwide companies that have
18 to be profitable and have to look at technology with a
19 jaundiced eye, but I would call you to continue to partner
20 with us rather than litigate against us.
21 Thank you, Mr. Chairman.
22 CHAIRPERSON LLOYD: Just one clarification before
23 I go to Supervisor Roberts. Both you and Matt suggested
24 that we put plug-in hybrids into the gold. You recognize
25 that's going -- are you going to say that's forever or for
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1 a period of time, because clearly I think this would be a
2 major policy shift to have something which can operate in
3 non-zero mode to put in a zero category.
4 BOARD MEMBER DeSAULNIER: For myself, I'd be open
5 to some suggestion in terms of when that would sunset.
6 BOARD MEMBER McKINNON: Mr. Chairman, I
7 respectfully disagree with you. I think that what you're
8 talking about -- people use two different cars to do the
9 same thing. And I think you get the gasoline mode. Am I
10 you know, going to fall on my sword over that, no. I mean
11 if we can work out, you know, a consensus as a board, I'm
12 going to be with that consensus.
13 CHAIRPERSON LLOYD: But you can't disagree that
14 that vehicle can operate in a non-zero mode.
15 BOARD MEMBER McKINNON: I cannot. But I will
16 suggest to you that in real life application what happens
17 is that individual climbs into a different vehicle to do
18 something different. And the real effect on the air is
19 equivalent.
20 And I think what we gain out of putting this to
21 gold is it's something that's going to be easier to get to
22 the public. So if that makes it complicated legally or
23 something, then I'm, you know -- I could be swung, but I
24 think if we're talking about how it really affects
25 people's lives and how they're really going to use the
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1 vehicles, we get the same effect either way.
2 CHAIRPERSON LLOYD: I'm just concerned that if
3 you throw this open forever, that, in fact, you -- Mr.
4 Freeman talking about, you know, the hydrogen are very
5 close to zero. You've heard Honda talking, and
6 rightfully, that they've got vehicles that operate very
7 close to zero.
8 So when we come to maybe 4 decimal points, you
9 know, what is the difference there. And I think we've
10 resisted that argument in the past. I think you're trying
11 to put some encouragement there, which I understand. What
12 I understand is that the credits that we had to date
13 wasn't enough to entice people into that market. And
14 maybe staff is proposing to increase those credits. And
15 clearly if the Board doesn't feel that that's enough, then
16 maybe an interim period I would go with that for a period
17 of time to see how it works.
18 BOARD MEMBER McKINNON: Mr. Chairman, I have no
19 problem with an interim period. I mean, there's some
20 wisdom to that, if it doesn't work the way I think it
21 should work, hey, then we find that out and we can change
22 it. So I can do that.
23 CHAIRPERSON LLOYD: Supervisor Roberts.
24 BOARD MEMBER ROBERTS: Thank you, Mr. Chairman.
25 Good morning. It's nice to see you again. And
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1 thank you for ending it at such an early hour last night.
2 (Laughter.)
3 CHAIRPERSON LLOYD: I apologize for the way in
4 which it ended.
5 BOARD MEMBER ROBERTS: All of a sudden I looked
6 up and he was gone. I wasn't sure I was sitting here.
7 But it's nice to see you and it's nice to see you in that
8 chair.
9 (Laughter.)
10 BOARD MEMBER ROBERTS: Mark, I think it was Yogi
11 that also said, "This is like deja vous all over again."
12 (Laughter.)
13 BOARD MEMBER ROBERTS: And having been on this
14 Board for 8 years now, there's a little bit of that that
15 I'm feeling today. But in spite of that, I think
16 there's's a couple points.
17 Let me deal, first, with the issue that you just
18 discussed with. I like what both of my colleagues have
19 said about introducing the HEV into the gold. And I like
20 it for a limited time though. I don't know what that
21 limited time is. And, Mr. Chair, if you could just
22 suggest something, but I think there should be a limit on
23 that, just as we've done with other things. But if we can
24 give that a little stimulus, that would be --
25 CHAIRPERSON LLOYD: I think we'd look to staff
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1 for some guidance there, I think.
2 BOARD MEMBER ROBERTS: Okay. I think that would
3 be good.
4 We talked about the correspondence. I have to
5 share with you, I did receive a lot of letters. There was
6 one of them that caught my attention in particular,
7 because it was addressed to Supervisor Ron Roberts. And
8 it was asking me to read this letter. And after I read
9 this letter would I please contact Supervisor Roberts to
10 let him know how I felt.
11 (Laughter.)
12 BOARD MEMBER ROBERTS: I'm not going to tell you
13 who sent it. It was another elected official. I just
14 want the world to know I did have a thorough discussion
15 with Supervisor Roberts on this issue.
16 (Laughter.)
17 BOARD MEMBER ROBERTS: Again, you know, there's
18 something unfair that's also happened here. And I'm not
19 sure if it really was the press or if it's people
20 interpreting the press. But in my reading of everything I
21 received, the staff has not recommended getting rid of the
22 ZEV Program.
23 Can I say that again? The staff has not
24 recommended getting rid of the ZEV Program. The staff
25 didn't recommend going to zero. The staff said we need to
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1 determine a number, but we don't know what that number is
2 yet and clearly it was not a zero number.
3 For those of you who took that and continued to
4 hammer away on that, that isn't part of the
5 recommendations I got. And if it was something reported
6 in the press, I must have missed it. Maybe I'm not
7 properly educated. But that's not what I brought away
8 from what the staff's effort was.
9 This staff is, has been and will be, I think,
10 committed to having a zero emission vehicle. This Board
11 is committed to a zero emission vehicle period.
12 Having said that, we've got to find something
13 that works. We've got to find something from a cost
14 standpoint and a performance standpoint that is
15 competitive.
16 Perhaps because, like some of my colleagues, I've
17 been here for a number of years. I can remember some of
18 the earlier hearings and having some speakers come in with
19 new batteries now that hold the promise that everything
20 will be good, you know, just give us a couple more days.
21 I mean, we thought we were going to be somewhere
22 different with respect to battery technology, with respect
23 to performance, with respect to costs than we are today.
24 That's why we're having this hearing. We don't have the
25 range that I can remember that was a goal and not only
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1 that was a prediction. We don't have that. We don't have
2 the costs where we want it.
3 But we still want a zero emission vehicle. I
4 want that. I don't think there's anybody up here and
5 there's probably few people in this room that don't want
6 that. And we have a lot of -- it's not just -- you know,
7 the economics and to want to make money isn't just the car
8 makers. I mean we've seen a steady stream of people who
9 are vested in this in all sorts of ways.
10 I thought there's one great company out there
11 that I haven't -- that don't come here though that's very
12 heavily invested in electric transportation, and I think
13 is going to play a significant role in getting people from
14 our train depo into their office buildings downtown, and
15 that's Segue Way.
16 I don't know how many of you have seen these, but
17 I tried one of these out recently. This is a little
18 electric scooter. And we've got people actually riding
19 those from the train depo and they go right onto the
20 elevator, and up to their offices. Now, they're pretty
21 expensive. And Segue Way is not here saying you've got to
22 have us mandate it so we can sell these things. Guess
23 what? Click on Amazon.com and you can buy one. It's real
24 simple. And they cost about $5,000 a piece. I can't
25 believe anybody is buying these things. You know what,
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1 it's something that people want.
2 And what we keep talking about is, yes, there are
3 people that want certain things. I've got friends that
4 still like vinyl records. And they insist that we ought
5 to have vinyl records. God bless them. And I've got a
6 lot of vinyl records. But what we have to come up with is
7 something we want to come up with, something that is going
8 to be there, and it's going to be cost competitive, and
9 it's to have the performance.
10 In the last several years, if they've taught us
11 anything, we're not reaching any of the goals that we had
12 hoped for, aspired for, dreamed for. We set all kinds of
13 numbers. By God if setting numbers would have done it, we
14 ought to be there. We've set numbers. We've set more
15 numbers than anybody around.
16 And the fact of the matter is our setting numbers
17 doesn't solve chemical and physical problems that need to
18 be solved to bring these products to market.
19 So what do we do?
20 Let me -- you know, I can only speak for myself.
21 Maybe I am once again naively impressed with the
22 technology. And I was one of the, probably the earliest
23 ones in the state to have one of the EV1's. I had it for
24 some time. I drove it. I experienced it. I know what
25 the shortcomings are from a performance standpoint. And,
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1 Matt, you're right, there are days I had to go home and
2 change cars.
3 Okay, that EV1. I live one and a half miles from
4 where I work. It isn't about -- you know, it's about your
5 whole day. And there still were days when I had to go
6 home drop that off, get a car that, you know, that old gas
7 guzzler and get out there.
8 We've got to have better performance. And I know
9 that there are people in the world that can get by on a
10 car even if it only has 20 miles range. But if we're
11 talking about mass markets, if we're talking about some
12 day getting the air as clean as we possibly can, we've got
13 to get to zero emission vehicles.
14 There's one other thing I want to notice. In San
15 Diego, the one thing we're proud of is that every single
16 year the air has gotten cleaner. And what we need to do,
17 you've got to keep that long view. There's got to be a
18 curve there that every year that this state we're going to
19 make the air cleaner.
20 And the mix may change, and the strategies may
21 change, you know, but the grand finale has to be the air
22 has to be cleaner every single year. And you know what
23 we're getting there. We have cleaner air now than we had
24 50 years ago in San Diego and I'm very proud of that. And
25 we're going to keep going.
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1 And I don't remember who it was that put that
2 chart up, and they kind of showed where the curves are and
3 then they had to blowup the bottom of it so we could
4 see -- I mean, we're down, you know, the world is very
5 different.
6 We still want a zero emission vehicle. And I
7 said earlier, I may be a little naive, but to me I'm
8 asking what is out there, what is the promise, what looks
9 good, what starts to respond to a whole plethora of
10 problems, in addition to air quality, that might make it
11 the technology of the future?
12 I am very impressed with the fuel cell's
13 potential. I don't know if they'll ever get the cost down
14 where it's going to make any sense. You couldn't begin to
15 market it there. But I also know that good research isn't
16 just about putting numbers of things out, although I think
17 you need numbers -- to do need some numbers in here.
18 But good research is based on a commitment that
19 you build and you analyze and you build again and you
20 analyze and you build again and you're committed to
21 improving a product in all its aspects. And it isn't a
22 requirement that we necessarily put out 50 of one kind of
23 vehicle this year and, you know, another 50 next year.
24 What it really requires you to put out some
25 things that you have a very good research project that in
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1 the testing and the follow-up and everything you can do to
2 improve that so that the next model that you bring out is
3 going to be a lot better, and you know where you're going.
4 If we look ahead, I don't -- you know, it's very
5 hard to set a number. And I mentioned something yesterday
6 about being arbitrary. And any time you start to look to
7 the future you're going to be a little bit arbitrary. And
8 if you don't think so, God I'd like to have you as an
9 advisor.
10 But we want to get to a zero emission vehicle. I
11 think we can get there not with the staff's
12 recommendation, but with an adjustment to that and I like
13 that second column. And I like having some of the
14 credits. By the second column I'm talking about the one
15 that says 10X over it, and with the changes that we talked
16 about, Mr. Chairman.
17 I hope that we can have most importantly a
18 partnership with the major stakeholders here that is going
19 to drive the successful research that we need, the
20 successful development that we need, and that we're in a
21 position to continue to monitor this thing, and to see not
22 only how it's going to be able to make adjustments. If we
23 can do that, you know, that number that we're looking at,
24 if we're successful, it will look pretty small and
25 somebody will say that you didn't set the number high
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1 enough.
2 But you know what, if the research isn't
3 successful, it doesn't make any difference what that
4 number is, you're not going to make it. So to some
5 extent, setting the numbers, I think, is of interest. But
6 what should be more fundamental is how do we forge that
7 partnership to get the results so that, you know, I would
8 like to see my family and the people in our neighborhood
9 all driving zero emission vehicles, and I don't care if
10 they propel those with rubber bands, as long as they're
11 not polluting. And whatever technology works is fine with
12 me. And if there's a bunch of choices, that's even
13 better.
14 But I think as I sit here now, I want to see if
15 there's a way to stimulate that investment in the hydrogen
16 research and the hydrogen development.
17 CHAIRPERSON LLOYD: Thank you, Supervisor. I
18 think both your technical and historical perspective is
19 most appreciated.
20 Mrs. Riordan.
21 BOARD MEMBER RIORDAN: Thank you, Mr. Chairman.
22 Tim Carmichael reminded us today of something that I took
23 to heart and that was the number of new vehicles that are
24 sold here in California. And that is a substantial
25 number.
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1 But I'm going to take you one step further, Tim
2 and tell you that we need to also research the number of
3 new vehicles sold throughout the world, because I think of
4 what we're doing here today in California, but there's a
5 much bigger market. There are many, many countries
6 besides other states that are going to follow us. And if
7 you see the bigger picture and understand that the
8 automotive industry and all of those who have associated
9 industries and companies, this is a big future market.
10 And we should not stumble in saying we can't reach some
11 numbers that seem realistic to us.
12 Our staff report was excellent and I do thank
13 you. I do think you're conservative and cautious. And
14 we, the policymakers, are a little bit more optimistic and
15 pushing. And I think to say to a whole number of
16 partnerships out there, and they can be fuel cells, they
17 can be batteries, they can be a whole host of things, we
18 need to do better in terms of defining some numbers into
19 our future and setting some goals.
20 May I say that the Electric Transportation
21 Coalition numbers seem very reasonable to me, and I am
22 certainly very supportive of that. And I also believe
23 that if we do include the HEVs that are the plug-ins, that
24 this is a good thing. There is probably some element of
25 timing there, and a sunset perhaps if they are given
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1 quote, "the gold credit." That I would look to staff to
2 give me some sense of what number of years out we would
3 want to do that.
4 I absolutely believe in the free marketplace and
5 believe that there are going to be a number of you who are
6 sitting in the audience in your associated industries that
7 are going to need to sort out which is the avenue for the
8 best results. And there could be a whole host of them.
9 And so I'd like to leave that a little bit free for you to
10 have that opportunity to work with what you think will be
11 best for whatever product you develop.
12 And so that, Mr. Chairman, is my, I guess,
13 summation. And I'm ready to support the staff, what I
14 would call, and amendment to the staff report, which would
15 include the California Electric Transportation Coalition's
16 numbers.
17 CHAIRPERSON LLOYD: And that would be -- are you
18 saying that would -- is that having a mandatory thing or
19 did I understand you to give some flexibility on whether
20 you have batteries or the technology?
21 BOARD MEMBER RIORDAN: Because I'm a free market
22 person, I sort of like flexibility.
23 CHAIRPERSON LLOYD: Ms. D'Adamo.
24 BOARD MEMBER D'ADAMO: This was what I was
25 waiting for, some actual discussion of, you know, honing
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1 these proposals down. Just to make sure I'm
2 understanding. Mrs. Riordan, you're suggesting that we
3 look more closely at the Cal ETC proposal?
4 BOARD MEMBER RIORDAN: (Mrs. Riordan nods head.)
5 BOARD MEMBER D'ADAMO: I'm unclear about the
6 sunset provision. I've got a couple of questions on the
7 sunset provision on plug-in hybrids. I also would like to
8 have a discussion and am interested in particular in the
9 Chairman's point of view on BEVs. That's something I want
10 to push for as much as possible. The ratio is important.
11 I don't know that we can decide here today what that ratio
12 is. But I think that we ought to have some discussion
13 about how to get there.
14 Also, I am interested in including in the mix
15 some mechanism for credit for re-lease or, in fact,
16 increase credit for an open lease. I guess it's called an
17 open lease or an increased credit for sale. And I would
18 like to be as flexible as possible on the issue of BEVs,
19 but I am concerned about being gamed. Because last time
20 when we were here, we knew that we were being pretty
21 generous with the Neighborhood Electric Vehicles since
22 they were already under way.
23 As I recall, a lot of us were pretty reluctant to
24 cut back too far on the credit. In the end though I think
25 we ended up getting gamed. So I don't know the answer to
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1 that question about how do we somehow include BEVs in the
2 mix, plug-in hybrids, generous credits for re-release
3 without getting gamed.
4 BOARD MEMBER DeSAULNIER: I can tell you some
5 more Yogi Berra lines, if you'd like.
6 (Laughter.)
7 BOARD MEMBER D'ADAMO: Well, maybe, Mr. Cackette,
8 since they're conferencing over there, do you have any
9 suggestions?
10 DEPUTY EXECUTIVE OFFICER CACKETTE: I think that
11 one of the underlying issues as you discuss these broader
12 points is that we have to go back and look at the absolute
13 values of credits, the relative values of credits. And
14 I'm not sure that we can do that, you know, in 5 minutes
15 here.
16 So, you know, there's issues for example like on
17 the plug-in hybrids. When they were in silver, we bumped
18 the number way up to make them look attractive, even
19 though they're only in silver. You put them in gold, you
20 may have over-incentivized them. And we need to go back
21 and look at how that plays against BEVs if you decide to
22 put BEVs in there and against fuel cell vehicles.
23 So it's going to take a little bit of thought.
24 Also, how we would, you know, do the challenge you just
25 put out, should the Board decide that, on re-lease
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1 credits. We want to make it rich and inviting, but not
2 result in the gaming situation, so that's a balance. And
3 we'll need to look at that.
4 CHAIRPERSON LLOYD: That's exactly what I was
5 checking with Ms. Witherspoon on whether, in fact, they
6 could look at that now or whether they would need some
7 time to further examine the ramifications of that.
8 DEPUTY EXECUTIVE OFFICER CACKETTE: One other
9 item is we still have a list of issues we'd like to share
10 with you, if you finish this part of the discussion. And
11 I just want to remember that one of them is travel and
12 that affects these numbers by approximately 70 percent.
13 So again it's important to figure out what you'd like us
14 to do in that case.
15 BOARD MEMBER D'ADAMO: On the travel, is that
16 just limited to the fuel cell?
17 DEPUTY EXECUTIVE OFFICER CACKETTE: Well, that's
18 an issue as to whether it's limited to fuel cell, and how
19 we structure it if it's to include other vehicles or not
20 and for how long. And as the New York people said,
21 there's a problem even on the fuel cells that if the
22 numbers get too big, they travel in a way that makes the
23 credits large in New York, which essentially wipes out
24 their ability to get silver vehicles. Sort of glutts
25 credits there, so we need to think about that a little bit
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1 too. But we'll bring that up maybe after you've done that
2 and it could be a refinement whatever you decide here on
3 the numbers.
4 CHAIRPERSON LLOYD: Dr. Burke.
5 BOARD MEMBER BURKE: Well, I read the Yogi Berra
6 quote book, too. My favorite was, "That restaurant is so
7 busy that nobody ever goes there anymore."
8 (Laughter.)
9 BOARD MEMBER BURKE: But the one, I guess,
10 that -- I have the book -- woudl deal with this is, "That
11 was such a good decision I don't how I made it."
12 (Laughter.)
13 BOARD MEMBER BURKE: South Coast obviously has an
14 interesting stake in this issue. My seatmate described to
15 Tim Carmichael how we should keep a global image of this
16 decision today. And it's very difficult for those of us
17 who live in the highest density of the problem to keep a
18 global issue. Because we live with it on a day-to-day
19 basis as do a great number of people in the state of
20 California. But we are probably the highest impact.
21 My concern here is not with the science
22 particularly. My concern here was with the process. This
23 has been worked on by staff in the past few months. And
24 my comments yesterday were not alleviated. The people
25 that I would think that would support this proposal were
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1 at best neutral on this proposal, were at best neutral.
2 Now, if it is, in fact, the plugging in of some
3 numbers or having some PZEVs as you're asking, it would
4 seem that in our process, that would have been
5 accommodated, but it wasn't.
6 I was touched by, and I can't remember which
7 board member said it yesterday, the difficulty of changing
8 something as complex and compound as this issue from the
9 dais. It's really difficult. And it takes almost solemn
10 like -- Solomon like attitude here. And, you know, as
11 much as I'd like to believe it I don't think I'm Solomon.
12 So if I were a dictator instead of board member,
13 I would say, you know, you've got a real good start here,
14 why don't you go back and work with it another month or 2
15 come back and sit down and talk to me about it.
16 I'm not dictator. I am board member. I love Ron
17 Roberts comments, you've got to get something that works,
18 because that's what it's all about.
19 So what I'm going to do is listen to the rest of
20 my colleagues who are like Solomon and see what they say.
21 I'm waiting for yours, Professor, I'll sit back and wait
22 for your comments. But it's a very difficult decision
23 here and one in which makes me even more hesitant because
24 I remember sitting here 2 years ago. And we struggled --
25 no it wasn't here, it was in the other building. But we
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1 struggled and struggled and took all that testimony and
2 listened to all these people and we were adamant in our
3 decision. I mean absolutely adamant in our decision. And
4 here we are 2 years later saying well, you know, we've got
5 to be adamant in this decision.
6 It's really an interesting process to be involved
7 with, I'm glad I'm here, but I'm not glad I'm here.
8 CHAIRPERSON LLOYD: Supervisor Roberts had a
9 comment.
10 BOARD MEMBER ROBERTS: Just a quick one. There's
11 something that needs to be corrected, I think, since we're
12 discussing it. And you continue to put it on the screen.
13 The math is not correct for that third column. It doesn't
14 add up to 30,200. Just because we're getting into a
15 discussion, I'd like to see it a little closer.
16 CHAIRPERSON LLOYD: You're right.
17 BOARD MEMBER ROBERTS: I think it's about 25,700.
18 And so those don't follow in quite the same pattern. And
19 just because it might have some bearing on what people are
20 thinking here.
21 CHAIRPERSON LLOYD: Yes. By the way, just before
22 Professor Friedman and I guess Mr. Calhoun speaks, I would
23 like to comment something on the process that Dr. Burke
24 brought up and also rather a point that Sandy brought up.
25 As you know, I have the privilege of serving the Governor
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1 here on a daily basis, as long as he wants me to, as long
2 as he's there.
3 And believe me I think we've given access to
4 people as much as possible. The fact that the staff
5 proposed this change indicates different inputs. We've
6 had tremendous detailed discussions with the affected
7 industry. I think we've had excellent dialogue with the
8 industry but each of those are different, because we're in
9 different stages of the process.
10 It wasn't our idea to come back today, that was
11 because of the lawsuit. And I'm not debating the merits
12 of the lawsuit. The fact that it was there, we are in a
13 democracy and people have a right to take what action they
14 want.
15 But that was not the desire at that time. The
16 fact is we are back here. But also I feel that during the
17 process we learned information, during that time. And you
18 know I think as a public body, I don't think it would be
19 responsible not to take the information into account as we
20 came back here.
21 But you're right, Dr. Burke, this is tremendously
22 complicated. I've sat down with staff and gone through
23 some of these issues and it really is very tough, as we
24 continue to see now.
25 But I think what we're seeing is the fact of --
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1 two things I would like to just say on that. One is that
2 as staff has indicated, we're not sacrificing air quality.
3 In fact, we're probably increasing that. The other piece
4 about that is that we have a timeframe on this. So the
5 more time we take on this before we go ahead and get
6 another program under way, we are losing precious time, so
7 we can't get these vehicles on the road as fast as
8 possible.
9 So we're caught and staff is caught -- we're all
10 caught on that issue. If we had another 6 months, it
11 would be great. But we've heard from many of the people
12 out here we need to go faster, harder and try to get the
13 regulations out there and try to provide some surety for
14 industry, who was working very hard on this. That's what
15 we're trying to do.
16 So believe me, again I'm just speaking on behalf
17 of staff in this case, it's a tough job.
18 Professor Friedman, Mr. Calhoun?
19 I'm just going to take a pit stop.
20 BOARD MEMBER HUGH FRIEDMAN: You don't want to
21 hear what I have to say, is that it.
22 (Laughter.)
23 BOARD MEMBER HUGH FRIEDMAN: Well, Yogi Berra
24 wasn't it he who said that, "It ain't over till it's
25 over", or until the lady sings or something. So we'll
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1 see when we hear some singing here.
2 First of all, I certainly endorse what my friend
3 and neighbor from San Diego said about what I consider
4 rather an unfortunate take on all the publicity that's
5 preceded this hearing to the extent that it's been seen in
6 headlines have been seen as staff proposing to pull the
7 plug on the ZEV mandate or in any way undermining it,
8 other than trying to make it square with what we now
9 understand to be reality.
10 This ZEV mandate, which is so noble and which is
11 it so important for our futures and particularly for the
12 futures of our children and grandchildren and their
13 health, was a prediction to begin with in 1990. It was
14 crystal-balling, but it was a determination to get some
15 science going and to require those who make vehicles and
16 sell them in this state to begin to make and sell an
17 increasing number of vehicles that were not emitting the
18 pollution that can choke us.
19 And we've then had to monitor as we go along this
20 work in progress, and learn from the experiences, good and
21 bad, that have presented themselves. And I wasn't here 10
22 years ago, but I can sympathize with these of you who were
23 and have had to go through this at it stage by stage.
24 I think the staff proposal is a good basic
25 proposal in maintaining the 2001 requirements basically,
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1 but fixing them in light of the legal issues resulting
2 from the lawsuit, and providing an alternative path which
3 tries to incentivize a number of the other technologies
4 that seem promising.
5 I have a sense that we're with the fuel cell
6 about where everybody was in 1990 with the battery. Maybe
7 a little less optimistic about the fuel cell. Apparently,
8 everybody was predicting the battery was just around the
9 corner. And even when I came into this four or five years
10 ago and was in Michigan and in battery factors and other
11 places, it was just a matter of mass production, and we're
12 going to have much longer life, and much cheaper in terms
13 of cost at fairly small volumes.
14 But that said, I do think that the staff proposal
15 is too modest. I think that we need to require much more
16 and a specific quantity, at least as a target. And then
17 that will be subject to an earlier, before it kicks in, to
18 a technology advisory panel assessment to give us
19 guidance, not to set the policy, but to help us understand
20 where we are technologically.
21 I personally would prefer to see more zero
22 emission vehicles mandated between now and 2008, but I'm
23 satisfied that with the questions about cost and what
24 would be made in the near term for zero, a good
25 satisfactory demonstration of numbers, such as 250, and I
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1 think that's a minimum, and I think it should not
2 personally -- I'm troubled that that would include
3 transportation or travel credits.
4 I think we need in this state, my sense is we
5 ought to require 250 for this state. And not to take away
6 from New York or Massachusetts, but you know, I don't like
7 the notion that we could end up with very few here. I
8 don't think that would really happen. But I think it's
9 our responsibility to make sure it doesn't happen. Maybe
10 I'm misunderstanding that issue, but that's my sense of
11 it.
12 Because the trade off is, even though it's a very
13 low number, it should be enough, I'm told, and I'll accept
14 those who know better, that 250 will be enough in these
15 short-term years to demonstrate and to allow people to
16 experiment, the manufacturers, and to develop.
17 And with it the trade off and the benefit we get
18 is we are, as I understand it, we are significantly
19 increasing the mandate on the near zero emission, the
20 volume, the number, the PZEV the AT PZEV. And we're
21 driving and continuing to force technology there, and
22 we're going to get a lot more emission reductions, which
23 we sorely need in the state in the next few years from
24 mobile sources.
25 So if my understanding is correct that that's
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1 what we're doing with the staff proposal, then I can live
2 with it until 2009. And that's when I join my colleagues
3 here in feeling that there is, as I said earlier in some
4 questions during the testimony, I don't have any
5 reluctance to pick a number that has some sound basis
6 based among other things on automaker CEO announcements
7 and pronouncements as to what they expect and see their
8 vision, what their plan is for many many more, many more
9 fuel cell vehicles than we're talking about here, assuming
10 that that's the vehicle of choice, the fuel cell, than
11 these numbers.
12 And I'm content with the staff on, I guess, the
13 medal standards, if you will, or a precedent of 10 times
14 multiples of 10. And I could live with either the first
15 column or the second column of the Cal ETC proposal.
16 They're very close in numbers. And I wouldn't draw a line
17 in the sand on either in terms of choosing between them.
18 I am concerned though about giving the automakers
19 the full freedom and choice to pick the ZEV technology.
20 My concern is that they'll all go for the fuel cell, and
21 that we won't see anymore battery electric. And that, at
22 least, is on the road. There are people who have made
23 them, people who buy them, swear by them, love them, dream
24 about keeping them, and are sorely disappointed, because
25 in some cases, they can't.
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1 And so I, too, think that those that have been
2 sold and made we ought to see what we can do legally and
3 appropriately to if not restore them to make sure that any
4 additionals that are leased or sold do what we can to try
5 and cajole, or if it's permitted and legal, require that
6 they be available, so that they can be available on the
7 long term for those who want to buy them.
8 It may well be that that was an inhibiting factor
9 in marketing them to begin with, it seems to me. Why
10 invest in something if you can't keep it if you like it.
11 So again there are questions. There will always
12 be lingering doubts, despite Toyota's, I'm sure, good
13 faith statements on the RAV4, EV RAV4. And despite GM's
14 earlier assurances on the EV1, there will always be
15 lingering doubts whether in fact there could have been a
16 better college try to market these, and they could have
17 been provable successes if sold in great volume.
18 I realize there are infrastructure issues and
19 other things, but I'd like to do more to see is there some
20 way we could do more on the electric vehicle, the battery
21 electric. By that I mean within these numbers to either
22 incentivize or to mandate up to a certain percentage.
23 Finally, I don't feel as strongly that plug-in
24 hybrids should be gold. I think they should be as close
25 to gold as we can have. I call them tarnished gold or
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1 fools gold.
2 (Laughter.)
3 BOARD MEMBER HUGH FRIEDMAN: All of them.
4 Platinum. Give them something heavy. But when they're
5 not being driven in battery mode, they're gasoline
6 vehicles. And they may not even be low-emission gasoline
7 vehicles, like SULEV or ULEV. During the time I can't
8 quarrel when they're being driven in battery mode when
9 that switch is on or up or whatever, they're entitled to
10 that kind of credit. But the fact is they can also be
11 driven a different way.
12 I really am concerned about keeping faith with
13 this mandate as others have said. And I believe that I've
14 benefited greatly from the testimony I've heard. I came
15 here to listen and I've listened. And I had some
16 inquiries from the press and I didn't want to talk or
17 comment because I hadn't made my mind up. This is the
18 forum. This is the process.
19 I mean it's flawed. It's not perfect. But you
20 have talented staff, very thoughtful hard-working staff
21 give you a proposal, pieces of which they run by some of
22 us, but they can't run by very many of us because of the
23 obvious legal constraints. And they get bits and pieces
24 of feedback. They hold workshops. They get input from
25 all the constituent interests and the stakeholders, and
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1 then they fashion something. And then it's out there for
2 comment. And then it's revised in light of the responses
3 and comments from the interests, affected interests.
4 And then it's further out there in the public,
5 and we have it, and we are, as we will report shortly, we
6 are available at least most of us to try to make ourselves
7 available to all of the interests who want to talk to us.
8 And we listen and we hear. And, of course, there are very
9 differing and conflicting tugs and pulls.
10 And out of that we then come to a 2-day meeting.
11 We listen to people that we've not heard from before and
12 people we've heard a lot from before.
13 It is complicated. And I'm glad I have people
14 explaining it, because even though I've been a lawyer for
15 40 plus years, if I had to read this for the first time,
16 particularly if I were someone like an aboriginal or from
17 Mars who just landed, I'd read that and I'd say this is
18 not as Rousseau so said in the state of nature. This is
19 incredible. How could the human mind come up with this
20 kind of a complex entangled scheme.
21 (Laughter.)
22 CHAIRPERSON LLOYD: But would it put you to
23 sleep?
24 (Laughter.)
25 BOARD MEMBER HUGH FRIEDMAN: But the scheme makes
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1 sense. It makes sense given what we're trying to
2 accomplish. It makes as much sense as about anything else
3 I can think of.
4 So with that, I'll listen to you with what Mr.
5 Calhoun has to say.
6 CHAIRPERSON LLOYD: I did hear you say --
7 BOARD MEMBER CALHOUN: I was a little worried
8 there for a few minutes. I wasn't sure you were going to
9 finish the statement.
10 CHAIRPERSON LLOYD: But in the back, I was able
11 to hear you, so I was not ignoring you.
12 Mr. Calhoun.
13 BOARD MEMBER CALHOUN: Thank you, Mr. Chairman.
14 I guess I'd like to echo something Ron Roberts said
15 earlier, and that is about the impression that was had by
16 a lot of people concerning the staff report.
17 Nowhere did I get from the staff report that the
18 staff intended to eliminate the ZEV requirement. I think
19 most of the people in this room are supportive of moving
20 in the direction of zero emissions. Certainly, I am. And
21 that's what this whole business has been about for the
22 last 30 years.
23 However, in the process of trying to get there, I
24 think we have to be somewhat reasonable. And if I were to
25 criticize something that has happened in the past, I think
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1 in some instances we've not been reasonable. And
2 certainly we have to take into consideration the status of
3 technology and the cost.
4 Nowhere in the process here in the last couple of
5 days have I heard much discussion about the cost of all
6 these different proposals. When new technology comes out,
7 the auto manufacturers will put forth practically
8 everything that's necessary in order to try and meet what
9 the requirement is because they're running a business and
10 they don't want to stop selling cars.
11 However, you have to take into consideration the
12 cost involved, especially in the early years. You have to
13 take into consideration the cost that's involved. Now,
14 there's no questions in my mind, because I know this
15 happens, once they have met certain requirements, they're
16 going to do everything they can to take the cost out.
17 So it's important to take that into
18 consideration. And that's why I'm concerned about, in the
19 early years, having a fairly low requirement. And
20 certainly I wouldn't want to see any number higher than
21 what the staff has proposed there, 250. I'd like to see
22 it a little less than that.
23 And in the out years, yes, increase the numbers,
24 but I think that at that time the manufacturers will have
25 taken most of the -- I won't say most of the cost out
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1 there. They will never take most of it out, but they will
2 certainly improve on the cost. And I'd like to see that
3 factor taken into consideration.
4 If I would recommend anything to my colleagues,
5 it would be that we reduce the number of vehicles that we
6 require starting in 2009, I guess, reduce that number
7 some.
8 BOARD MEMBER HUGH FRIEDMAN: Reduce it from what,
9 Joe?
10 BOARD MEMBER CALHOUN: Well, it's at 2,500 now.
11 And this is in the early stages now.
12 BOARD MEMBER HUGH FRIEDMAN: We haven't picked.
13 We haven't voted on any number.
14 BOARD MEMBER CALHOUN: No, I understand that. I
15 understand that. You have some numbers up there, that
16 you're going to vote on.
17 BOARD MEMBER HUGH FRIEDMAN: But you're
18 suggesting that they should be lowered, is that what you
19 mean?
20 BOARD MEMBER CALHOUN: Two thousand, 1,500. And
21 I'm certainly supportive of keeping the pressure on. And
22 that, in effect, is about all I have to say.
23 CHAIRPERSON LLOYD: We're going to quick --
24 BOARD MEMBER CALHOUN: One other thing that I
25 want to emphasize. Nowhere in any of these proposals up
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1 here did I hear anything about cost effectiveness. And I
2 think that's a factor also.
3 Thank you.
4 EXECUTIVE OFFICER WITHERSPOON: Alan, just on
5 that one point.
6 CHAIRPERSON LLOYD: Chairman.
7 EXECUTIVE OFFICER WITHERSPOON: Just on the point
8 of cost effectiveness. Dr. Lloyd, excuse me.
9 Just on the point of cost effectiveness, whatever
10 proposals the Board adopts today, the staff will analyze
11 in great detail the cost impacts of what you've chosen to
12 establish as targets, in addition to the environmental
13 impacts, depending on assumptions about the fuel cell
14 deployment, where the hydrogen will come from, that sort
15 of thing. We have to do that as part of our legal
16 responsibilities. It would be in the 15-day package and
17 in the final statement of reasons.
18 CHAIRPERSON LLOYD: We're going to take a few
19 minute break, but before that, before we vote a request of
20 one of the Board members. Just a short break.
21 BOARD MEMBER HUGH FRIEDMAN: I failed to mention
22 again, I said during the hearings that I personally am
23 interested in the staff exploring further and reporting
24 back on giving credit for stationary fuel cell technology
25 and installations that are functionally equivalent with
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1 mobile uses in this state on some kind of a basis.
2 CHAIRPERSON LLOYD: Yeah, I think staff is going
3 to do that, because I would --
4 BOARD MEMBER HUGH FRIEDMAN: That was a 6-month
5 thing or three months -- within three months.
6 CHAIRPERSON LLOYD: Yeah, I would certainly echo
7 that. The same thing with the infrastructure I think
8 we're doing. One of the things I would say on the numbers
9 now, and I'll come to this time at the numbers. I feel
10 very strongly having worked with part of the fuel cell
11 partnership here on the early year number, the 250. I
12 realize how much this is costing companies. I know what
13 is involved there, and part of the process.
14 And also I feel very strongly that I hope that
15 the process and the partnership will continue. And so
16 having talked to a number of the number of companies
17 involved, while I say this that the number to some of you
18 may look pretty meager, the dollars are not meager. And
19 also as we look at this technology to go ahead,
20 infrastructure is a big piece of that.
21 However, I do feel that in the 2009 and 2011 time
22 period I would say the staff's number is probably very
23 reasonable, because having sat beside Dr. Burns' at the
24 congressional testimony a few weeks ago, the target for
25 General Motors and others, but I will say I can say
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1 firsthand there, would mean that the 2,500 in that time
2 period should be easily obtainable.
3 And, again, I was impressed by the technology
4 trip that General Motors took out to Sacramento and
5 showing their range of technologies.
6 And so that's just one company. And I know the
7 goals of the Japanese manufacturers and the progress that
8 they're making in Japan and the numbers in Japan. I
9 certainly could not condone -- I certainly could not
10 support any number less than that. And, in fact, I have
11 to bite hard not to go significantly higher.
12 But as I say, the one thing I have learned since
13 2 years ago just the point that Joe and that Mr. Calhoun
14 and Supervisor Roberts made that just because you put
15 numbers out there it's not necessarily so. But the one
16 thing I've learned on the fuel cell partnership -- and the
17 fuel cell partnership I indicated before that this is a
18 true partnership.
19 And I'm looking to my colleagues in the back of
20 the room there, and I'm looking forward to continuing this
21 in an honest and sincere -- and I know you were sincere in
22 pushing this technology and also down here.
23 But I also realize that you know that the nearer
24 you get in those are significant numbers. And we also
25 recognize that we get out later. We have this technical
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1 advisory panel as well as the fuel cell group to tell us
2 whether those numbers are reasonable. My expectation is
3 that they will be very reasonable.
4 MS. D'ADAMO: Mr. Chairman.
5 CHAIRPERSON LLOYD: Legal counsel advises me that
6 we may be able to take a one-minute break but we're going
7 to lose people, lose our quorum. So maybe -- can we just
8 hold one minute here.
9 BOARD MEMBER McKINNON: I'm not leaving.
10 CHAIRPERSON LLOYD: Well, we're going to be
11 starting the ex parte, and we're going to be finishing --
12 apparently we're going to be losing a quorum in 15
13 minutes.
14 BOARD MEMBER McKINNON: I'll be able to hear.
15 CHAIRPERSON LLOYD: Okay. No, we're not going to
16 be able to take a break. Because we do in fact before we
17 start to vote -- the other issue I'd strongly support is
18 the issue of doing everything we can to see how we can
19 retain these vehicles. And I think that's to me the
20 amount of testimony I've heard on that part of it, it is
21 actually disheartening to see you've got operating
22 vehicles out there than those to be crushed.
23 Now, I don't know how we'd do that, but on the
24 other hand I think everything should be done to try to do
25 that.
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1 The other issues I think get so complex that I
2 think we're asking staff obviously to look at that and
3 report back here.
4 Those, I think, were the key points that I -- the
5 other point I think that to reinforce what John White said
6 this morning what this Regulation has accomplished and the
7 fact is that when we're looking at the PZEVs and the AT
8 PZEVs increases. That does a tremendous amount for air
9 quality using the existing infrastructure. And that's not
10 to be under-estimated.
11 The other point I think was I've particularly
12 noted what he said of quoting, I think it was the Chairman
13 of General Motors saying that there is actually not only a
14 fuel economy but an emissions benefit to the AT PZEVs.
15 And, you know, maybe get that confirmed for me what I
16 always understood was the issue.
17 But anyway, with that, Ms. D'Adamo.
18 BOARD MEMBER D'ADAMO: Yes I just had -- I'm just
19 wanting to understand your position a little bit more on
20 the early years 2005 to 2008. Because if we were looking
21 just at fuel cells, I can understand perhaps lower
22 numbers. But if we now are considering putting batteries
23 into the mix, plus we've got this travel issue, and then
24 also the re-release, I'm thinking perhaps a higher number
25 with maybe a minimum on fuel cells. And I'd even favor
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1 some sort of limitation on travel. I'm real nervous about
2 these vehicles getting placed elsewhere.
3 CHAIRPERSON LLOYD: This is what I was assuming,
4 Ms. D'Adamo, that the staff would come back with this
5 analyzing those different scenarios. My concern was to
6 ramp up the cost of this expensive technology. But I
7 think I hear you and I would support the general thrust of
8 that. But I think I'd like to see that analysis from
9 staff.
10 All I was saying is that knowing the significance
11 of the 250 in terms of the fuel cell being of what that
12 costs, we've got to be careful what we do with that. But
13 I also hear the other part, and I'm completely with you
14 about getting those existing vehicles back in there. I
15 think that staff would understand those would be the
16 things that you would do analyzing.
17 EXECUTIVE OFFICER WITHERSPOON: Actually, there
18 is a policy issue that we need the Board's direction on on
19 this issue of 250 versus 500. And what I understood Ms.
20 D'Adamo to be asking is should the Board go to 500 with
21 the understanding that the additional 250 or, you know,
22 the BEV equivalent to be multiples, would be made up with
23 batteries and would not push fuel cell manufacturing up
24 necessarily.
25 CHAIRPERSON LLOYD: Or in that time period, but
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1 with a deep swallow I said plug-in hybrids for a short
2 time.
3 EXECUTIVE OFFICER WITHERSPOON: I'll come back to
4 plug-in hybrids. The policy issue is whether you either
5 want to compel manufacturers to do both things, if, in
6 fact, 250 represents the upper limit of their fuel cell
7 production ability and then they must at the same time, if
8 they're on the alternative compliance path, either build
9 or purchase BEV credits from another manufacturer, is that
10 appropriate, is that fair, is it reasonable? That's one
11 policy question.
12 The other question is if they really do not wish
13 to be engaged in two markets at the same time, does it
14 make any sense to have 500 fuel cell vehicles? Let's say
15 they just put their heads down and say we don't want to do
16 BEVs at all. We'll go ahead and make the full 500 fuel
17 cell vehicles, but these are very immature fuel cells at
18 an R&D stage. Is any benefit gained by having an
19 additional 250 of them at potentially a million dollars a
20 piece.
21 And so it is a tough question, it's a policy
22 question, and we do need your guidance before you vote on
23 whether you want 250 or 500 as the target in the first
24 three year window of time.
25 CHAIRPERSON LLOYD: I'm just saying I could not
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1 support putting additional burden on those companies
2 there. Particularly those who've gone ahead in good
3 faith.
4 EXECUTIVE OFFICER WITHERSPOON: Then if --
5 CHAIRPERSON LLOYD: Then the other thing what you
6 were just saying.
7 EXECUTIVE OFFICER WITHERSPOON: Would you like me
8 to piece through the issues one at a time that Ms. D'Adamo
9 was talking about the travel, the plug-in hybrids, the
10 re-release, I will.
11 On the matter of travel, we think Professor
12 Friedman is right, it will probably play out that most of
13 the cars come to California because of our weather, they
14 do have temperature management difficulties; because of
15 the California fuel cell partnership; and because of the
16 South Coast hydrogen infrastructure, which is already in
17 place and they are building upon.
18 We have a very strong draw in California. We're
19 not expecting a lot of leakage of these vehicles to the
20 eastern states. We do have some more subtle travel
21 issues. Mr. Cackette talked about New York and
22 Massachusetts impacts with how credits multiply in their
23 states and what they do to their silver obligations et
24 cetera.
25 Also, as you substitute in BEVs, what in any of
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1 these three-year windows, whether or not you wish us to
2 include that in the travel provision we've structured such
3 that they don't multiply. We think that's probably a
4 minor issue at these numbers. It's a also a good thing to
5 have BEV volumes.
6 So we'd be inclined as a preliminary
7 recommendation to say keep the travel provision we've
8 written for fuel cells only and let it float for the other
9 categories of ZEVs. And we would recommend sunsetting the
10 travel clause in 2012 -- well at the end of 2011, because
11 if these targets prove correct, we'll be approaching
12 commercialization. And the multiplier effect is just not
13 that important later on. So that's how we would address
14 travel.
15 On re-release we'll look at it. Mr. Cackette
16 indicated it's a gaming issue. And we will try to carry
17 the credits we establish previously forward and have them
18 be appropriate. Of course, any time you do give credit
19 for putting an old vehicle back on, your diminishing the
20 pressure to bring new ones. But we'll find the best
21 balance point and put that in the 15-day change proposal.
22 On plug-ins, we talked a bit about the credit
23 level. We had lavish credits in the silver category. If
24 we move them to gold, we need to re-ratio what those
25 credits are. Many board members have proposed the
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1 possibility of a sunset. Staff would suggested to you it
2 won't be much incentive if you give the credit and take it
3 away. So if we're going to do this, we would recommend
4 doing it for the long term.
5 However, balancing that consideration, we were
6 liberal about the definition of plug-in hybrids in the
7 silver category. You need only a 10-mile all electric
8 range. We would suggest to you that if you want to put
9 this in the gold category, that perhaps we should be
10 requiring a 20-mile minimum range instead. That that
11 would be truly more ZEV like and a greater possibility of
12 true ZEV miles.
13 MR. McKINNON: Mr. Chairman.
14 CHAIRPERSON LLOYD: Mr. McKinnon.
15 BOARD MEMBER McKINNON: Yeah, I absolutely agree
16 with changing it to 20 miles or even 30. The notion is
17 that it's a commuter vehicle that's used on electric day
18 after day, and exceptionally -- or as an exception is used
19 with gasoline.
20 Mr. Chairman, I have another comment and it's
21 about the numbers. I sort of started off the discussion
22 by proposing the Modisette numbers. If I was going to
23 lean in a direction other than the Modisette numbers, it's
24 towards the Union of Concerned Scientists.
25 And I'm concerned that we've picked numbers that
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1 are based entirely on fuel cells. What if fuel cells
2 don't work?
3 I would like to see us look at a program that
4 doesn't prescribe fuel cells, doesn't prescribe battery
5 electric, but leaves the choice there. And frankly the
6 difference between 500 and 250 -- if I was developing fuel
7 cells, I might only want to make three the first time.
8 CHAIRPERSON LLOYD: The battery option is in
9 there. It's been in there for awhile. But I hear you.
10 I have a little bit of a concern on the staff's
11 recommendation of putting in plug-ins forever. Because to
12 me then basically we do not have a zero emission vehicle
13 requirement.
14 BOARD MEMBER McKINNON: Mr. Chairman, I have a
15 proposal of a way to solve that problem. Let's put a
16 sunset that is reviewed by the technology review panel.
17 And I think we've changed the name of that. I don't think
18 we talked about it.
19 CHAIRPERSON LLOYD: That's right.
20 BOARD MEMBER McKINNON: But we're sort of
21 talking. You know, we keep calling it something
22 different. And I like technology review panel actually.
23 But maybe we do a sunset that they sort of make
24 recommendations as to whether or not we extend it in,
25 what, 2010 or 2008. I mean I don't know.
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1 CHAIRPERSON LLOYD: I would go 2008 for that time
2 period, and then review it. I'm comfortable with that.
3 But I understand Mr. Cackette's argument there,
4 but I'm not persuaded.
5 BOARD MEMBER RIORDAN: Mr. Chairman, I certainly
6 mentally thought with the inclusion of the plug-in HEV, a
7 minimum of 30 miles. I think when you think about the
8 traveling public and I'm trying to visualize more than
9 just southern California, but I have to visualize southern
10 California, 30 miles has just got to be the minimum. It's
11 got to be. And maybe it should be more, but 30. Now, is
12 that a problem? Do you technically see that as a problem
13 for that?
14 DEPUTY EXECUTIVE OFFICER CACKETTE: I think it
15 plays out as an issue of cost, these plug-in hybrids.
16 That's what you're referring to I believe, have to have
17 the gasoline engine in it, whether they're essentially
18 five miles or 50 miles. And to get each mile of all
19 electric range you're adding more battery to provide the
20 energy to make it go that far. So, you know, 20 miles I
21 think it covers half the VMT a person would normally -- I
22 think at 20 miles it's something like half of the VMT
23 would be covered by the ZEV part. The other half would
24 have to be on gasoline, depending on the recharging
25 availability.
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1 But all I'm saying is if you go to 30, then it's
2 starting to look more and more like a full BEV with an
3 engine added on. At 20, it's starting to look more like a
4 city car with an engine added on I guess.
5 So each time you're just adding that much more
6 battery, 50 percent more battery if you go that extra 10
7 miles, which means you're adding two, three, four thousand
8 dollars to the cost of the vehicle to get that 10 miles
9 and you get some additional fraction of the travel.
10 BOARD MEMBER RIORDAN: I know that it's
11 difficult, because I don't design cars. But I do know
12 what people drive. And if our theory is that we want them
13 to use electric all the way, to and from wherever they're
14 going, it seems maybe --
15 DEPUTY EXECUTIVE OFFICER CACKETTE: I think the
16 critical is that when it's below 20, you're going to start
17 wondering whether people will bother to plug-in, because
18 the engine comes on every time.
19 BOARD MEMBER RIORDAN: That's my problem, right.
20 DEPUTY EXECUTIVE OFFICER CACKETTE: At 20 it will
21 get most people to work and maybe back, maybe not. But
22 what I was trying to emphasize that it adds significant
23 cost each 10 miles that you add on the vehicle gets bigger
24 and heavier and so it's a tradeoff. And I can't think
25 where the right number is. Either that's on the value, I
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1 guess on places on the amount of ZEV miles versus the
2 extra costs and complexity.
3 CHAIRPERSON LLOYD: Given what I --
4 BOARD MEMBER RIORDAN: And you're saving on
5 gasoline, Mr. Cackette.
6 CHAIRPERSON LLOYD: Going on, it seems to me that
7 the most we can do is get staff to take the direction
8 we've got. I'm not sure whether we can vote on anything
9 besides giving the general direction that we want to
10 strengthen significantly the proposal.
11 What's your guidance here?
12 GENERAL COUNSEL WALSH: If the Board were to take
13 action in terms of consensus for example on the issues
14 that have been outlined both in your discussion and by Ms.
15 Witherspoon, that there is sufficient discretion and
16 authority delegated to the Executive Officer to carry out
17 that direction, to put together a version of the
18 regulation with the changes necessary to reflect your
19 direction, put that out for a 15-day comment period and
20 then adopt the regulations at the end of that period after
21 considering all of the comments that come in, with the
22 additional direction that should there be issues that
23 warrant the issues our regulations will be brought back to
24 the Board to be finalized.
25 But our standard practice would be to allow the
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1 executive officer to do that unless there are issues of
2 significance that come up and would warrant additional
3 input from the Board prior to finalizing the regulations.
4 CHAIRPERSON LLOYD: That might be putting a lot
5 of onus on the executive officer, given what I see going
6 on. I'm not sure what my colleagues think. I think I'd
7 be more comfortable coming back, because as I said, I
8 think it puts an undue burden I think.
9 Ms. D'Adamo.
10 BOARD MEMBER D'ADAMO: Just a quick question,
11 what would that do to the timing of this becoming
12 effective. Are you talking about coming back at the next
13 hearing?
14 CHAIRPERSON LLOYD: Can we come back in a month?
15 EXECUTIVE OFFICER WITHERSPOON: You're putting me
16 in a difficult spot here, being well aware that the
17 Chairman does not favor adding plug-in hybrids to gold,
18 but to come back means delaying the regulation, because
19 it's --
20 CHAIRPERSON LLOYD: One month.
21 EXECUTIVE OFFICER WITHERSPOON: However long.
22 I'm struggling to know what we would do in a month. The
23 policy issue is pretty clear, whether they should be in
24 gold at all. They are not fully zero emitting vehicles.
25 And what we have suggested is if you take the choice of
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1 putting them into gold what kinds of cautions need to be
2 added to that.
3 CHAIRPERSON LLOYD: What I thought I said was put
4 them in there. Sunset 2008. Be reviewed as part of the
5 panel.
6 EXECUTIVE OFFICER WITHERSPOON: The only in
7 betweener I heard was the issue of a sunset. And you can
8 certainly add it and have the panel look at it, and the
9 staff revisit it as we get closer to '08.
10 CHAIRPERSON LLOYD: And then the issue of what
11 the range is going to be on that.
12 EXECUTIVE OFFICER WITHERSPOON: Right. And
13 that's where we had left off. You may not need to decide
14 exactly. You can express the goal that we capture as much
15 of people's normal daily trips. Mr. Cackette was
16 explaining, staff believes, 20 is a whole lot better than
17 10. That 30 gets a lot more expensive and may work
18 against the desire to have plug-in hybrids come in. But
19 we can analyze that more fully and we will propose what we
20 think is the best balance point on that in the 15-day
21 changes.
22 Would that satisfy you?
23 CHAIRPERSON LLOYD: But again on the issue of you
24 know the sentiment the Board to try to keep battery
25 electrics open, there are various options there and
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1 implications that we thought that you would need to take a
2 look at and then come back to us.
3 EXECUTIVE OFFICER WITHERSPOON: We definitely in
4 the 15-day package have to address the appropriate ratios.
5 Whether you want it back in front of the Board means
6 another public hearing on the amendments we proposed. As
7 opposed to us taking your general direction, turning it
8 into a specific proposal, doing 15-day changes and then
9 you delegating to me, the executive officer, the
10 responsibility for completing the final package, in light
11 of your general policy direction and the comments
12 received.
13 BOARD MEMBER McKINNON: Mr. Chairman.
14 CHAIRPERSON LLOYD: Yes, Mr. McKinnon.
15 BOARD MEMBER McKINNON: I would like to, if I
16 could, make a motion to adopt the inclusion of the Cal ETC
17 numbers including the BEV ratios that are spelled out in
18 it. And the numbers don't include the addition on the
19 graph that was made. What I'm talking about is the
20 numbers that were laid out in Cal ETC's comments.
21 I think that gives us sort of the three time
22 periods, big overall goal numbers and it gives us the
23 ratios for inclusion of other vehicles.
24 CHAIRPERSON LLOYD: I would concur with that
25 except for the 250 instead of 500. The others are the
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1 same.
2 BOARD MEMBER McKINNON: Mr. Chairman, that wasn't
3 my motion. My motion was for 500. I don't have a second
4 yet.
5 BOARD MEMBER BURKE: I'll second the motion if
6 you'll accept this.
7 No, it was a secret second. Matt, if you would
8 consider adding, as a friendly amendment, that the review
9 period instead of being 2008 be three years from now
10 instead of 5 years from now and then have a 2-year review
11 period at 2006 and 2008.
12 BOARD MEMBER McKINNON: I'll accept that as a
13 friend amendment.
14 EXECUTIVE OFFICER WITHERSPOON: A crucial
15 clarifying question whether BEV substitution is to be
16 mandatory or permissible.
17 BOARD MEMBER McKINNON: Permissible in this
18 motion, permissible.
19 CHAIRPERSON LLOYD: So if they didn't want to
20 make BEVs, they would have to make fuel cells.
21 BOARD MEMBER McKINNON: And there's no percentage
22 involved. If the first shot at making fuel cells says
23 that it's smart to make three, and they want to fill it in
24 with BEVs, that's fine. If they want to make all fuel
25 cells, that's fine.
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1 DEPUTY EXECUTIVE OFFICER CACKETTE: And just to
2 be clear and all BEVs, that's fine? No floor on fuel
3 cells is what you're saying?
4 BOARD MEMBER McKINNON: That's right.
5 CHAIRPERSON LLOYD: So you're saying, the path
6 they can go on now is they can use the BEV path now. The
7 alternate path you're basically giving a forced BEV as
8 well if they can't handle that number of fuel cells.
9 BOARD MEMBER McKINNON: That's correct. And they
10 determine the mix.
11 BOARD MEMBER CALHOUN: What about the suggestion
12 that Alan made of the number being 250 instead of 500.
13 CHAIRPERSON LLOYD: If it's 250, I would agree.
14 I can't agree to jumping that number up if they decide to
15 go with fuel cells. I think that's very dangerous. But I
16 will agree with the subsequent numbers jumping that up
17 given that option.
18 BOARD MEMBER D'ADAMO: Mr. Chairman, but if we
19 allow for the flexibility that some of us are pushing for
20 on BEVs, in particular on the re-lease of sale with
21 generous credits, wouldn't that erode your attempts on
22 fuel cells, or couldn't it possibly --
23 CHAIRPERSON LLOYD: I'm just concerned about
24 getting back to some of the comments Supervisor Roberts
25 and Mr. Calhoun said that some of the companies have,
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1 whether we like it or not, feel that they've gone through
2 the experiment and they've now made significant
3 investments on hybrids, and they're making significant
4 investment on fuel cells.
5 And now if we're going to be forcing them to
6 spend significant dollars on something which they feel
7 there's no subsequent market for in this time period,
8 that's where my concern is, again having worked with them
9 very closely knowing what they're putting into that, those
10 numbers. But if you want to, I say in those early years,
11 reduce that and then go back to the higher numbers, I
12 think --
13 BOARD MEMBER D'ADAMO: I'm just -- I'm looking
14 for other options on BEVs. I think the fuel cell numbers
15 if it were just fuel cells, but I wouldn't be supporting
16 that anyway because of the BEV situation. And I'd like to
17 encourage automakers that are finished, maybe they can
18 contract out to purchase credits from someone else so that
19 it's not --
20 CHAIRPERSON LLOYD: Then I would feel I would
21 want to hear staff come back to us, investigate the
22 implications of this and report back to the Board, because
23 there are ripple effects here and I don't know what they
24 are.
25 BOARD MEMBER McKINNON: Mr. Chairman, I have a
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1 motion that's before the Board, but I am -- if the outcome
2 of the motion is that it passes, I have absolutely no
3 problem with having staff come back and say, you know, how
4 it all fits together. I mean we're sitting here making
5 policy that's fairly complex from up here and it doesn't
6 always work very well.
7 So I have no problem with that. But the 500
8 number at the start is not disrespecting your judgment
9 about fuel cell, and I think 250 fuel cells is a lot of
10 money, but we don't know that that's what will happen.
11 And we're struggling to get zero emission vehicles. And I
12 really worry that there's even merit to make 250 fuel
13 cells at the first deal.
14 I mean I've followed development of all sorts of
15 things, primarily aircraft, and you know -- I don't think
16 we have enough with 250 and so that's --
17 BOARD MEMBER HUGH FRIEDMAN: Just a question.
18 I'm not clear what you gain with doubling the number, even
19 though it's optional whether it's BEV or fuel cell.
20 BOARD MEMBER McKINNON: I think it's the
21 overall -- what we gain is the overall look at zero
22 emission vehicles. We may get battery electrics. We may
23 get plug-in hybrids. We may get some mix, but we get a
24 number that it's sufficiently close to what we were trying
25 to get done before this process was interrupted.
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1 And I think that's important. I think
2 Californians want us to work on zero emission vehicles.
3 And if it works out that there's fuel cells and there's
4 less of them, but they work, great. But I have my doubts
5 at the first.
6 CHAIRPERSON LLOYD: Supervisor DeSaulnier.
7 BOARD MEMBER DeSAULNIER: I just have a process
8 question having been through this several times. I want
9 to make sure we get this as right as possible. And I may
10 not be as bright as some of my colleagues. Actually, I'm
11 sure I'm not.
12 But for me there's a comfort level in what you
13 just said Matt about coming back next month. It may be a
14 question of semantics, but clearly we're close to having
15 something really important. And I would like to fully
16 understand sort of the secondary consequences of what
17 we're talking about.
18 And I don't want to, with all due respect,
19 entrust that to staff. I'd like to know what we're voting
20 on. I look back on what we voted on in 2001, and I regret
21 not having a better understanding on the NEV credits.
22 So from my perspective, I'm fine with the
23 direction we're going in, but I would like to have more
24 information in terms of the possible implications.
25 CHAIRPERSON LLOYD: And, again, I would second
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1 that, because I'm fine with what my colleagues want to do
2 there, I just want to know what extent and the ripple
3 effects given my comments on the fuel cell numbers, too.
4 BOARD MEMBER HUGH FRIEDMAN: I share that. I
5 think the staff has at least got a symmetrical proposal.
6 I understood it. And the rationale for the 250, which I
7 understood the automakers who are -- the subjects are
8 victims of this, felt that this was achievable. To double
9 it without knowing really the basis and what the
10 consequences would be, conceding that the goal is
11 laudable, the purpose of it is laudable.
12 I'm content with the 10-time multiple. I'm a
13 little less comfortable with CalETC because I don't know
14 the rationale for those numbers. And the addition is, I
15 think, I get 25 thousand 7 something. But as --
16 BOARD MEMBER McKINNON: That addition wasn't in
17 the proposal. That was an addition error that was done in
18 the staff graph.
19 BOARD MEMBER HUGH FRIEDMAN: No, I accept it. So
20 I mean actually it's a little less than what the staff ten
21 times would end up. But I'm not crystal clear on what the
22 multiples are, what the reasons are.
23 BOARD MEMBER DeSAULNIER: Mr. Chairman, in terms
24 of my desire to get a little more information, I don't
25 want people to think that I want it to go down. I
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1 actually still think, with all due respect to the
2 Chairman, I would be more inclined to go up to Jason's
3 numbers. So having said that, but I'm not fearful that
4 the extra 30 days is going to weaken that position. We're
5 all going to -- we've indicated where we're coming from,
6 we just need more information.
7 CHAIRPERSON LLOYD: No, I think the message is
8 here we're actually talking about -- we're actually
9 discussing, and if you like maybe we have slight
10 disagreements. We're not disagreeing over the goal.
11 We're talking about zeros here. We're all talking about
12 that. We all talk about increasing the number of PZEV and
13 AT PZEVs. We're just looking at how do we best get to the
14 zero, and what's the appropriate number particularly in
15 these early years.
16 BOARD MEMBER McKINNON: Mr. Chairman, I would be
17 willing to change my motion to be a motion that just gave
18 a sense of the Board so that we could proceed forward to
19 other issues that are involved here. There's a number of
20 other issues, but this motion would be just sort of to get
21 a sense of the Board.
22 And if that isn't appropriate, I'm willing to
23 even withdraw it, if we're going to come back and look at
24 this in 30 days with numbers. And I need my second's kind
25 of concurrence on how you want to proceed on that.
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1 BOARD MEMBER BURKE: That's fine. I'm fine.
2 BOARD MEMBER RIORDAN: Mr. Chairman, you can
3 simply continue. I'm trying to think of the correct
4 parliamentary procedural --
5 GENERAL COUNSEL WALSH: Are you talking about
6 continuing --
7 BOARD MEMBER RIORDAN: There's a motion before us
8 with a second. And you can have that continued to a date
9 certain, which would be the next hearing. Allow staff to
10 come back with the, you know, further analysis that might
11 be needed for us then to take a final action on that
12 motion. Would that be acceptable?
13 CHAIRPERSON LLOYD: And given the direction that
14 you're saying, Mr. McKinnon, that we're asking staff to
15 look at providing this dual path, if you like, in terms of
16 the batteries and the fuel cells, and what's the right
17 proportion there. How do we treat existing vehicles,
18 existing BEVs there.
19 BOARD MEMBER McKINNON: It's a little more than
20 that, Mr. Chair. It's also sort of the big number
21 discussion. And I think so -- but I have no problem
22 continuing it. And by the time we hear the staff's
23 report, you know we may just defeat the motion and find a
24 clearer way to do it 30 days from now.
25 EXECUTIVE OFFICER WITHERSPOON: Let me see if I
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1 can help here. I'm sensing a far greater amount of
2 agreement than disagreement. I do think the key issue is
3 the first interval 250 versus 500. I think a shadow issue
4 behind the next 2 intervals is the amount of credit for
5 BEV substitution and Supervisor DeSaulnier and Mr.
6 McKinnon both got at that.
7 Mr. McKinnon proposed that we use Cal ETC's
8 ratios exactly as they are. Staff had recommended
9 previously that any ratios we would use be roughly based
10 on cost of the relative technologies, you know, at the end
11 of the year of each of those intervals. And we don't know
12 what the Cal ETC ratios are based on. But if you are
13 willing to have staff proceed with Matt's logic, we can
14 tell you what we think the ratios ought to be for plug-in
15 hybrid substitution, BEV substitution in each of those
16 intervals.
17 And then at the end point, the numbers are very
18 much the same. I'm not sure there's an argument here at
19 all. The question we didn't get to yet in this dialogue
20 between the Board members is post 2014, would you have the
21 staff proposal return to the red line immediately or
22 smooth the ramp out between 2014 and 2018 and reach the
23 red line at that point.
24 But I don't see a huge difference. Well, at the
25 bottom of your slide it indicates what happens with the
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1 red line. It's essentially 25,000 per year. And in the
2 three-year interval it's 73,000. So, you know, if you've
3 stopped at about 25,000, 30,000, over a three-year period
4 the next year if you didn't smooth it out, that would
5 become an annual production number versus a triennial one.
6 And you may want to smooth it.
7 But I would love to have the Board find a
8 consensus today. You're so close. And to go on another
9 month is to invite another round -- I mean, you can close
10 the record. But in point of fact, there will be another
11 round of debate and dialogue with the staff from all
12 parties. And we think we could perhaps get to a policy
13 consensus amongst you all today.
14 But I'll leave that back again to the Board to
15 see if you agree you're as close as I think you are.
16 CHAIRPERSON LLOYD: Now, any comments?
17 BOARD MEMBER CALHOUN: Can we close the record
18 and not take anymore testimony?
19 CHAIRPERSON LLOYD: We have done that. We have
20 closed the record.
21 BOARD MEMBER CALHOUN: So even if we came back,
22 we could still make a decision without --
23 CHAIRPERSON LLOYD: Yes, right.
24 GENERAL COUNSEL WALSH: Excuse me, Dr. Lloyd.
25 The final step of completing the record would be board
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1 members disclosing any ex parte communications that they
2 have.
3 CHAIRPERSON LLOYD: Yes, correct. We haven't got
4 to that yet.
5 Well, maybe we should do that. I'm just trying
6 to think -- I guess we should do that now even if we
7 come -- we're going to come to some motion here.
8 BOARD MEMBER McKINNON: Mr. Chairman, we have a
9 motion.
10 CHAIRPERSON LLOYD: Yeah. But yes then in fact
11 we should declare our ex parte communications.
12 BOARD MEMBER HUGH FRIEDMAN: Well, before we lose
13 the proposal or the suggestion from our Executive Officer
14 and before I lose it, it seemed to me that it should be
15 put in perspective. And it seems to me that I'm sensing
16 that is what we are talking about. I don't know that I'm
17 prepared to vote other than to ask on a 15-day notice ask
18 that they come back with those changes and
19 recommendations.
20 BOARD MEMBER D'ADAMO: I heard Ms. Witherspoon to
21 say in order to do that, staff does need some additional
22 direction, in particular 250 versus 500 or somewhere in
23 between.
24 BOARD MEMBER HUGH FRIEDMAN: Well, then maybe we
25 ought to vote on that if we need to.
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1 BOARD MEMBER D'ADAMO: Were there other issues
2 that you needed direction?
3 EXECUTIVE OFFICER WITHERSPOON: Mr. Cackette is
4 reminding me, I'll list them again 250 versus 500 in the
5 first interval; whether there's fuel cell vehicle floor or
6 not, staff had recommended at least the 50 percent floor
7 for fuel cell vehicles; whether you agree with staff's
8 proposal for rationing the credits between the
9 technologies, we proposed a cost based approach looking at
10 the end year of each interval, you know what's the
11 relative cost of the fuel cell versus a CityCar versus a
12 plug-in hybrid et cetera. And that's how we would round
13 it off and we would attempt to make the electric vehicle
14 choices slightly more attractive knowing that there is
15 resistance to getting those into the market.
16 We also need your guidance on post 2014, how
17 quickly you would like us to return to the red line,
18 whether immediately in 2015 on an annualized basis or to
19 smooth the ramp between 2014 and 2018.
20 And plug-in hybrids, a sunset in '08 or not. I
21 think we came to a consensus on a range that we would push
22 it as high as it was feasible to capture as much VMT and
23 not undo our efforts on the cost side and that would be
24 part of the 15-day proposal.
25 CHAIRPERSON LLOYD: Ms. Witherspoon, I think that
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1 one of the issues here, and I can understand very, very
2 much your desire to kill this thing today --
3 (Laughter.)
4 CHAIRPERSON LLOYD: -- and mine also. I have no
5 desire to do this. But on the other hand, I am still -- I
6 think you've heard we all want to point in the right
7 direction. We all want to make sure that the message gets
8 out. That mandate is here. We're all committed to
9 cleaning up the air faster. We're all committed to zero
10 emission vehicles.
11 But there are ways in which we get there. And
12 they have implications. The travel issue, looking at some
13 of the other issues that we've discussed. I'm just
14 concerned that at least -- I'm probably closest of any of
15 the Board members here to some of the issues. And I'm not
16 sure how we put something together that we would all know
17 what we're doing, the unintended consequences.
18 So I'm really maybe looking forward to taking an
19 extra month, so they come back to us where we don't have
20 to take anymore public testimony. But we have some
21 clarity in terms of what we're voting on, the specifics.
22 But there's no doubt to the rest of the world what we're
23 saying. We're strongly committed to our program and the
24 zero emission vehicle requirements, and also increasing
25 the PZEVs and the hybrids.
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1 But I think there are issues that we need to
2 study carefully. And, again, you can hear me, the trend
3 I'm sensing with my colleagues. I'm supportive of that,
4 but I want to know how we get there.
5 Supervisor DeSaulnier.
6 BOARD MEMBER DeSAULNIER: Mr. Chairman, what I'm
7 sensing from staff is I don't think the Board wants to
8 reopen everything, and if I'm being redundant from what
9 Alan just -- I'm sorry, the Chairman just said, I'm sorry.
10 But you know basically I think we could have a motion that
11 approves the resolution in front of us, includes that the
12 Board wants a number higher than the staff recommendation
13 with a minimum of the first column, which is not where I
14 will be in a month, and then directs you to further
15 investigate those issues that you've talked about, the
16 travel issue, the re-release issue, because I think all of
17 us are interested in that, the implications, and the
18 tarnished gold versus the gold issue.
19 And if there's something I'm missing, I think we
20 have to frame it around that. That's not a lot to finish
21 with, but it does at least give me a comfort level that
22 we're not going to reopen everything, but we are going to
23 have some answers to the implications of the direction
24 we're going in.
25 BOARD MEMBER RIORDAN: Which essentially is the
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1 motion before us. Well, it is an analysis before we vote
2 that then we can be an informed voter.
3 BOARD MEMBER DeSAULNIER: Well, as long as
4 everyone is clear with that. Maybe it's a question of
5 semantics. I wasn't clear that that's what the motion
6 was. If that's clear to everyone --
7 BOARD MEMBER RIORDAN: No. You're right, that
8 isn't the motion, per se. But it is to the motion that's
9 on the table before us.
10 CHAIRPERSON LLOYD: Our motion is getting as
11 complex as the regulation.
12 (Laughter.)
13 BOARD MEMBER DeSAULNIER: You know what they say
14 about sausage, Mr. Chairman.
15 GENERAL COUNSEL WALSH: If I may, it sounds like
16 what the Board is looking for is perhaps an embedded
17 motion that would provide a sense of the Board in terms of
18 a direction to come back with a specific proposal that
19 would then be the subject of Mr. McKinnon's motion that
20 the Board could then take action on next month. That's
21 what I'm hearing.
22 BOARD MEMBER HUGH FRIEDMAN: Question. Would
23 that be different than an action on this resolution with
24 the indicated changes?
25 GENERAL COUNSEL WALSH: Yes. That --
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1 BOARD MEMBER HUGH FRIEDMAN: This would not be a
2 15-day notice.
3 GENERAL COUNSEL WALSH: That embedded motion
4 would be different from an action on the resolution. It
5 would be --
6 BOARD MEMBER HUGH FRIEDMAN: Which is what I
7 think Mark was referring to.
8 GENERAL COUNSEL WALSH: Basically providing some
9 additional direction to staff in terms of coming back with
10 what would essentially be the 15-day proposal to you next
11 month.
12 BOARD MEMBER HUGH FRIEDMAN: I for one would like
13 it restated, if you're willing.
14 BOARD MEMBER McKINNON: Mr. Chairman, one way I
15 could approach this is I could withdraw my motion, and I
16 could take the motion that I made and break it in pieces
17 so that we've got a sense of the Board. And then that
18 would give staff sort of the big broad strokes to deal
19 with and then work at the numbers and make sure we haven't
20 set up a way to be gamed or some of the other
21 possibilities.
22 And so I'm willing to do that and my second has
23 said he's amenable to that.
24 So I withdraw the motion and I would like to make
25 a motion to determine the sense of the Board on the model
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1 year 2005 through 2008 fuel cell number. And I'll stop
2 there. And I would move a number of 500 fuel cells or a
3 proportional set of other Battery Electric Vehicles or
4 plug-in hybrid electric vehicles that are proportioned
5 credit wise relative to cost.
6 BOARD MEMBER BURKE: I always get in trouble
7 trying to put words in your mouth. I just want to
8 understand the motion myself now. Because is really what
9 you're saying is you're really saying 500 cars of the mix
10 of which you described? Because when you said it before,
11 you said well they could do three fuel cells, right?
12 Can you clarify that.
13 BOARD MEMBER McKINNON: What I'm saying is 500
14 fuel cells or a proportional number in that period of
15 different types of battery electrics. There's different
16 credits. So in the proposal Cal ETC made, it would take
17 approximately 10; is that correct? This is at 50 percent.
18 In the first year it would take 10 Type 2 EVs to
19 replace one of the fuel cells. Or it might take 20, am I
20 doing the math wrong because it's 50 percent of -- it's
21 20, 40.
22 So type 2's the proportional number of type 2 EVs
23 would be 20 EV's. Type 1 EVs it would take 40 of them.
24 So the corresponding pattern is it's either in that period
25 of time 500 fuel cells. And what I'm suggesting and that
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1 this is the sense of the Board, that the ratios be talked
2 about in terms of what the cost is.
3 So that is giving you a lot more room than
4 even -- considering the Cal ETC report, it's saying look
5 at costs of fuel cells and then what are the proportional
6 equal equivalent costs of the others.
7 BOARD MEMBER BURKE: Can we hear what staff has
8 to say about that.
9 EXECUTIVE OFFICER WITHERSPOON: Actually, we need
10 to hear what you have to say about that.
11 CHAIRPERSON LLOYD: I cannot go with 500 fuel
12 cells. But I thought where we were heading was for staff
13 to look at the implications of various scenarios, and then
14 come back to us, which would include that, Mr. McKinnon.
15 BOARD MEMBER McKINNON: Mr. Chairman, I had a
16 motion that I withdrew. And I withdrew that motion with
17 the understanding that we were going to go through the
18 numbers to get the sense of the Board so that we gave
19 staff -- and I took the very first piece of that motion
20 and tried to put it into words and tried to give the
21 flexibility to staff to use costs to determine it.
22 BOARD MEMBER BURKE: Does that allow staff to
23 come back and say well 500 is too big, we need 350 or does
24 that say on the other vehicles we can modify their value
25 in this system?
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1 BOARD MEMBER McKINNON: The latter.
2 CHAIRPERSON LLOYD: And this would impact
3 different companies potentially?
4 BOARD MEMBER McKINNON: Yes.
5 EXECUTIVE OFFICER WITHERSPOON: Staff has already
6 said we believe that 250 is the right number for this
7 interval of time. And once you express the will of the
8 Board on you want to go higher beyond staff's
9 recommendation, we would assess what that might mean.
10 If you just double it in fuel cells, it means
11 $500 million rather than $250 million worth of investment
12 at a million dollars a car. Because we're doing a cost
13 equivalent BEV substitution, it would be the same
14 investment in BEVs, and then always figure out exactly how
15 many vehicles that is of each type.
16 But you're doubling the investment dollars
17 essentially by going from 250 to 500. And you're
18 potentially making even more fuel cell vehicles than are
19 needed to demonstrate the technology.
20 On the plus side, you're potentially drawing BEVs
21 back into the market, but you might be asking
22 manufacturers to involved themselves in BEVs when you
23 don't wish to any longer, and that's why they're going to
24 the alternative compliance path instead of the base
25 regulation in order to stay with BEVs.
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1 BOARD MEMBER McKINNON: Okay. Mr. Chairman, I
2 didn't get a second. And it doesn't seem to be that we're
3 actually doing this to get a sense of the Board to give to
4 staff. We're having a debate over it. I didn't get a
5 second so I don't have a motion, and maybe there's another
6 way.
7 BOARD MEMBER CALHOUN: Let's go with the staff
8 proposal. I'm receptive to going with the staff proposal
9 to get this over with.
10 CHAIRPERSON LLOYD: So what you're saying is
11 include the staff proposal and come back to us.
12 BOARD MEMBER CALHOUN: No, I'm saying the staff
13 proposal that they have before us today.
14 BOARD MEMBER BURKE: But the staff proposal
15 doesn't have numbers in the 2009 to 2014 years.
16 GENERAL COUNSEL WALSH: I guess for clarification
17 it would be helpful, Mr. Calhoun, to know whether --
18 there's a column there labeled staff proposal and then the
19 10 times, which was the modified numbers.
20 BOARD MEMBER ROBERTS: Modified staff.
21 BOARD MEMBER RIORDAN: Mr. Chairman.
22 Mr. Calhoun, did you make a motion?
23 BOARD MEMBER CALHOUN: Yes, I move it, Mr.
24 Chairman.
25 CHAIRPERSON LLOYD: That would include -- if
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1 people wanted to put in some batteries, that would include
2 that?
3 BOARD MEMBER BURKE: But I'm confused on what
4 would be the numbers for 2009 through 2015?
5 CHAIRPERSON LLOYD: Are you talking about the --
6 I thought you were talking about the 10X proposal?
7 BOARD MEMBER CALHOUN: Yes.
8 CHAIRPERSON LLOYD: The second column.
9 BOARD MEMBER BURKE: Oh, I'm sorry. I
10 misunderstood.
11 CHAIRPERSON LLOYD: But with the same comment on
12 the bottom on BEVs.
13 EXECUTIVE OFFICER WITHERSPOON: That's up to you,
14 but yes, that would be what staff would recommend that you
15 take that approach.
16 BOARD MEMBER D'ADAMO: Mr. Chairman.
17 CHAIRPERSON LLOYD: Yes.
18 BOARD MEMBER D'ADAMO: I actually favor where Mr.
19 McKinnon was headed, but I don't have enough confidence to
20 be so pushy as to say 500 is definitely where it's at.
21 I understand where you're coming on the fuel
22 cells. And I think we need a little more time to actually
23 look at, for example, where Mr. McKinnon just left off on
24 the range of you could do 3 fuel cells, the rest BEVs and
25 then, Ms. Witherspoon, you said it would depend on
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1 investment.
2 Well, then I thought well what about the 2001
3 proposal and where would we compare on what's being
4 expected of automakers with an investment.
5 So I think there are just so many questions that
6 are unanswered, I would be uncomfortable with going with
7 the 10 times proposal, because I'm just really concerned
8 of the unintended consequences.
9 I have been pushing for quite some time to get
10 BEVs into the mix. What if we get gamed with BEVs being
11 in the mix and you end up, or not you personally, but I
12 know you're pushing for fuel cells, you end up with a much
13 smaller number than 250. So I'm uncomfortable with
14 directing staff on the 10 times proposal.
15 CHAIRPERSON LLOYD: Don't get me wrong, I'm not
16 pushing for full cells at the expense of that. I like the
17 zero emissions. I have heard some of the auto
18 manufacturers seeing what they see as a path to zero. But
19 also, as I indicated before, I also hate the testimony
20 from people who are losing their vehicles.
21 And that's where I felt that if we, you know --
22 obviously, going forward I prefer the 10X with the
23 potential for batteries. But whether that should be
24 compulsory or whether it should be optional, those are the
25 sort of things I was thinking maybe staff could analyze.
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1 And analyze what the consequences would be for the very
2 reason that you're talking about how that would impact
3 different companies.
4 BOARD MEMBER D'ADAMO: I was just expecting that
5 once we look at the numbers that there would be a way to
6 game the system if we start off with 250. So we're going
7 back and forth on 250 versus 500. I'm willing to --
8 initially, I wanted to support Mr. McKinnon. I'm willing
9 to just kind of back off, wait a month. But I would not
10 be interested in getting locked in on 250 today either.
11 BOARD MEMBER RIORDAN: And I think that's why we
12 need to have further analysis. I really do. I mean I
13 think our dilemma is -- it reminds me of huge budgets and
14 you get down to very minute little programs. And you
15 argue over these funny minute programs and the whole of
16 the budget is so much bigger, and we're really arguing 250
17 cars, which, you know, we're all comfortable with the
18 bigger numbers on the years out.
19 And I think staff has got to be sensitive to us
20 that we just don't know where to be in that early period
21 of time of 2005 to 2008. And it ought to be real simple
22 to do a quick analysis for us that gives us, okay, what
23 are 250 and what are 500 going to mean to the industry, to
24 the public, to whomever the stakeholders are. And I think
25 that would help us tremendously. I just don't think we
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1 should be arguing over these small little numbers right
2 now.
3 CHAIRPERSON LLOYD: And if you put the plug-in
4 hybrids into gold, what does that mean, because I think I
5 heard Mr. Cackette say that has ramifications as well.
6 BOARD MEMBER RIORDAN: Right. And that along --
7 I mean there are some other things that need to go along
8 with it. But we're basically really arguing over 250
9 vehicles. That it shouldn't take us too long with good
10 analysis to know where we should agree or disagree amongst
11 ourselves.
12 BOARD MEMBER BURKE: Mr. Chairman, back to Mr.
13 McKinnon's proposal. If he says 500, and in that -- if
14 you move some of these other vehicles into this, they
15 would apply for 500, right. So I don't know what makes
16 his proposal so outrageous, if you put a floor in there of
17 250 fuel cell cars.
18 CHAIRPERSON LLOYD: Dr. Burke, I don't know how
19 that's going to ripple through what's already out there.
20 What people have already got credits. How that impacts
21 those. And that's what I want to know. I want to know,
22 for example, does that have a disproportionate impact on
23 you, or Ms. Riordan or Joe or me.
24 I just don't know from that, because we don't
25 have it. And I don't want to see the people out there.
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1 What we do know is it's going to have a
2 beneficial impact on what people are breathing, because
3 we're not talking about differences -- these are all
4 zeros.
5 BOARD MEMBER BURKE: But your basic proposal from
6 staff initially was only 250 fuel cell cars, so you get
7 that. Okay, take that.
8 The add on is either fuel cell or other cars that
9 you have in the gold standard. So you're not losing
10 anything. You're gaining something no matter what
11 happens.
12 CHAIRPERSON LLOYD: Let me use an example. I
13 guess I don't want to use an example here. But let's just
14 use -- you used Honda. They are on the fuel cell path.
15 They have decided that they didn't see a viable market for
16 battery electrics. And I suppose I know they're not
17 making a plug-in hybrids. So I don't know about the other
18 option there. What would be their requirement there that
19 they would have to then buy credits from someone.
20 Does another company maybe have credits right
21 through 2008. And so it has no impact on that. That's
22 what I was indicating, Dr. Burke. I just don't know. And
23 these -- also I have to understand why they in fact have
24 an impact on one company and maybe not on another.
25 BOARD MEMBER FRIEDMAN: Well, I don't think we
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1 ought to lose site of the fact that we are mandating the
2 silver and the bronze in greater volume, and that's going
3 to give us a big bang for the buck. These are production
4 cars. They're available by some of the manufacturers.
5 And those who don't have them can make them or buy credits
6 or do something else. I really -- but this is a mix, and
7 it is a complicated equation.
8 And I'm concerned about distorting, what was said
9 earlier, unintended consequences. That's my only concern.
10 I don't know what the effect would be. We've not had a
11 full opportunity to vet it.
12 EXECUTIVE OFFICER WITHERSPOON: The one thing
13 staff can say unequivocally is that if you increase the
14 target from 250 to any higher number, you are increasing
15 the burden on the manufacturers in the near term. We
16 chose 250 based on the stretch goals of the manufacturers
17 as they have been discussed and evaluated in the
18 California fuel cell partnership. And in our private
19 conversations with them, you are pushing them on fuel
20 cell, and we're quite confident that it is a stretch for
21 them. And to double it for a company like Honda that
22 wishes to do fuel cells and fuel cells only is to push
23 them way over the mark on what they think is the right
24 number of fuel cells for the interim period.
25 And so as the Chairman indicated, Honda would
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1 have no choice either to make cars they don't think they
2 need for demo purposes or to propose BEV credits, which is
3 a new and greater obligation than they would have under
4 the proposal we brought to you, so that that is definitely
5 the effect of this debate is to make the alternative path
6 more stringent than staff proposed, recognizing as you
7 just did we balanced our stretch goal on fuel cells with
8 higher obligations on silver vehicles to make up that
9 difference. And then this would back out a little of the
10 silver but be a very high burden we think on the BEV and
11 fuel cell side.
12 BOARD MEMBER HUGH FRIEDMAN: I wonder if we could
13 just ask the staff to see if there's any additional ways
14 we could incentivize battery electric production in these
15 interim years, as a device.
16 CHAIRPERSON LLOYD: Mr. McKinnon.
17 BOARD MEMBER McKINNON: You know, what would be
18 helpful to me is to be able to look at these numbers in
19 context of the number of cars sold by each of the
20 manufactures in the state of California.
21 Because I'd be interested in the difference
22 between 250 and 500, if it isn't more than something like
23 a dollar per car sold in California.
24 Anyway, when it comes back, I don't have a
25 motion.
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1 CHAIRPERSON LLOYD: So am I getting a sense -- we
2 don't have a motion now.
3 GENERAL COUNSEL WALSH: Well, you do have a
4 motion but you don't have a second.
5 CHAIRPERSON LLOYD: Do we have a motion here to
6 come back -- have staff come back to us?
7 BOARD MEMBER RIORDAN: And I'll second that and
8 allow for their analysis of the item before us.
9 BOARD MEMBER HUGH FRIEDMAN: So if I understand
10 it, we've got a motion and a second before us on the
11 resolution 03-4 with the --
12 BOARD MEMBER RIORDAN: No, this would not be a
13 motion on the resolution.
14 CHAIRPERSON LLOYD: This would be a motion just
15 to have staff to come back to us.
16 BOARD MEMBER HUGH FRIEDMAN: Okay.
17 BOARD MEMBER D'ADAMO: Mr. Chairman.
18 CHAIRPERSON LLOYD: Yes.
19 BOARD MEMBER D'ADAMO: I do have a question of
20 Ms. Walsh. In the interim period since we've closed the
21 record, would we be foreclosed from having further ex
22 parte communications with stakeholders, and also what
23 about staff during that interim period?
24 GENERAL COUNSEL WALSH: You would not be
25 foreclosed from having further contacts. You would need
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1 to disclose those when we come back next month. That
2 would have to be made a part of the record, yes.
3 CHAIRPERSON LLOYD: So we would just -- so
4 building on that suggestion would be we'd hold on to our
5 ex parte list today, add on to that and then use that next
6 time before we have to come to a vote.
7 BOARD MEMBER McKINNON: Yes.
8 GENERAL COUNSEL WALSH: You could do that.
9 BOARD MEMBER HUGH FRIEDMAN: So we don't have to
10 reveal these today?
11 GENERAL COUNSEL WALSH: Under this proposal, you
12 can -- yeah, you would be able to come back next month.
13 CHAIRPERSON LLOYD: It will be expected we'd hear
14 from all stakeholders again. So I'm comfortable with that
15 suggestion. Yes, we have the motion.
16 BOARD MEMBER HUGH FRIEDMAN: Can I hear it again.
17 BOARD MEMBER RIORDAN: Yeah, it's to continue the
18 item that's before us with --
19 BOARD MEMBER HUGH FRIEDMAN: To the next meeting.
20 BOARD MEMBER RIORDAN: Yes. And ask for staff
21 analysis.
22 CHAIRPERSON LLOYD: Close the record, ask for
23 additional staff analysis. They will report back to us
24 and then we will vote at the next board meeting.
25 All in favor say aye?
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1 (Ayes.)
2 CHAIRPERSON LLOYD: Anybody against?
3 Unanimous. And sorry but we have to come back
4 again.
5 Thank you all for very much. I know it's going
6 to be tough again, but at least I'm comfortable -- much
7 more comfortable here. And, again, I think we've come
8 along way in this hearing.
9 Thank you.
10 (Thereupon the California Air Resources Board
11 meeting adjourned at 12:30 p.m.)
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1 CERTIFICATE OF REPORTER
2 I, JAMES F. PETERS, a Certified Shorthand
3 Reporter of the State of California, and Registered
4 Professional Reporter, do hereby certify:
5 That I am a disinterested person herein; that the
6 foregoing California Air Resources Board meeting was
7 reported in shorthand by me, James F. Peters, a Certified
8 Shorthand Reporter of the State of California, and
9 thereafter transcribed into typewriting.
10 I further certify that I am not of counsel or
11 attorney for any of the parties to said meeting nor in any
12 way interested in the outcome of said meeting.
13 IN WITNESS WHEREOF, I have hereunto set my hand
14 this 14th day of April, 2003.
15
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22 JAMES F. PETERS, CSR, RPR
23 Certified Shorthand Reporter
24 License No. 10063
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