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









                   THURSDAY, SEPTEMBER 25, 2003

                             9:00 A.M.







    JAMES F. PETERS, CSR, RPR
    CERTIFIED SHORTHAND REPORTER
    LICENSE NUMBER 10063

    TIFFANY C. KRAFT, CSR, RPR
    CERTIFIED SHORTHAND REPORTER
    LICENSE NUMBER 12277


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                                                              ii

                            APPEARANCES



    BOARD MEMBERS

    Dr. Alan Lloyd, Chairperson

    Mr. Joseph Calhoun

    Ms. Dorene D'Adamo

    Supervisor Mark DeSaulnier

    Professor Hugh Friedman

    Dr. William Friedman

    Supervisor Barbara Patrick

    Mrs. Barbara Riordan



    BOARD MEMBERS EXCUSED

    Dr. William Burke

    Mr. Matthew McKinnon

    Supervisor Ron Roberts



    STAFF

    Ms. Catherine Witherspoon, Executive Officer

    Mr. Tom Cackette, Chief Deputy Executive Officer

    Mr. Michael Scheible, Deputy Executive Officer

    Ms. Lynn Terry, Deputy Executive Officer

    Ms. Kathleen Tschogl, Ombudsman

    Ms. Kathleen Walsh, General Counsel


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                       APPEARANCES CONTINUED



    STAFF

    Mr. Gerhard Achtelik, Air Pollution Specialist, MSCD

    Ms. Analisa Bevan, Manager, ZEV Implementation Section

    Ms. Crystal Reul Chen, Air Resources Engineer, Retrofit
    Implementation Section, MSCD

    Mr. Bob Cross, Chief, MSCD

    Ms. Cynthia Garcia, Population Studies Section, Research
    Division

    Ms. Annette Hebert, Chief, Heavy-Duty Diesel In-Use
    Strategies Branch, MSCD

    Mr. Jack Kitowski, Chief, On-Road Controls Branch

    Mr. Bob Loscutoff, Chief, Monitoring and Laboratory
    Division

    Ms. Alexa Malik, Board Secretary

    Mr. George Poppic, Staff Counsel

    Mr. David Salardino, Mobile Source Control Division

    Ms. Nancy Steele, Manager, Retrofit Implementation
    Section, MSCD

    Mr. Jim Watson, Monitoring and Laboratory Division


    ALSO PRESENT

    Mr. Tom Addison, Bay Area Air Quality Management Districts

    Ms. Yvette Agredano, California Chapters of SWANA

    Mr. David Achiro, Tahoe Truckee Sierra Disposal Co., Inc.

    Mr. Don Anair, Union of Concerned Scientists

    Mr. Jeff Arnold, Association of Rotation Molders


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                       APPEARANCES CONTINUED

    ALSO PRESENT

    Mr. Kelly Astor, CA Refuse Removal Council

    Ms. Diane Bailey, NRDC

    Mr. Rick Bell, Dupont

    Ms. Emily Brown, Inform

    Mr. Doug Button, South San Francisco Scavenger Co., Inc.

    Mr. Todd Campbell, City of Burbank & Coalition for Clean
    Air

    Mr. Frank Caponi, L.A. County of Sanitation

    Mr. Richard Caglia II, Industrial Waste and Salvage

    Mr. Bill Dobert, Specialty Solid Waste, CRRC

    Mr. Sean Edgar, California Refuse Removal Council

    Ms. Shiela Edwards, Marine Sanitary Service

    Mr. Mark Figone, East Bay Sanitary Company, Inc.

    Mr. Jack Fiori, California Waste Recovery Systems

    Mr. Tom Fulks, Green Car Institute

    Ms. Sheryl Granzella, Richmond Sanitary Service

    Mr. Bill Guerry, Outdoor Power Equipment Institute

    Mr. Chuck Helget, Allied Waste Industries

    Mr. David Huerta, City of Fremont

    Ms. Bonnie Holmes-Gen, American Lung Association

    Ms. Yvonne Hunter, League of California Cities

    Mr. Robert Kittell, Electricab Energy

    Dr. Joseph Kubsh, Manufacturer's Emission Control
    Association


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                       APPEARANCES CONTINUED


    ALSO PRESENT

    Mr. Mark Leary, California Integrated Waste

    Mr. Jed Mandel, Engine Manufacturers Association

    Mr. Alan Marchant, Turlock Scavenger Company

    Mr. Ruben Martinez, Diesel Air Fleet Service

    Mr. John McNamara, California Refuse Removal Council

    Mr. Jim Medich, City of West Sacramento

    Mr. Sam Mendoza, City of San Diego

    Mr. Daniel Meyers, City of Los Angeles

    Mr. Harry Miller, Tracy Delta Solid Waste Management Co.

    Mr. David Modisette, Public Policy Advocates

    Mr. Michael Mohajer, L.A. County Solid Waste Management
    Committee

    Ms. Patricia Monahan, Union of Concerned Scientists

    Mr. Kevin Mullins, Mill Valley Refuse Service

    Mr. Graham Noyes, World Energy

    Mr. Louie Pellegrini, Peninsula Sanitary Service

    Ms. Kathryn Phillips, Center for Energy Efficiency &
    Renewable Technologies

    Ms. Mary Pitto, Regional Council of Rural Counties

    Mr. Ronald Proto, CCRC Member Consulting Group

    Mr. David Raney, Honda

    Mr. Andy Rose

    Mr. Greg Sanders, Varner Brothers, Inc.


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                       APPEARANCES CONTINUED

    ALSO PRESENT

    Mr. Harry Schrauth, City of Oakland

    Mr. Dennis Shuler, Gilton Solid Waste Management

    Mr. Wendel Smith, Global Fuel

    Mr. Scott Smithline, Californians Against Waste

    Mr. Kent Stoddard, Waste Management

    Mr. Timothy Vail, General Motors

    Mr. Tim Ward, CA Independent Oil Marketing Association

    Mr. Paul Wuebben, South Coast AQMD

    Ms. Stephanie Williams, CA Trucking Association

    Mr. David Wilson, City of Los Angeles

    Ms. Karen Wilson, Sacramento Metropolitan Air Quality
    Management District


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                               INDEX
                                                          PAGE


    Pledge of Allegiance                                    1

    Roll Call                                               1

    Item 03-7-1
         Chairman Lloyd                                    16
         Executive Officer Witherspoon                     17
         Staff Presentation                                17
         Q&A                                               21

    Item 03-7-2
         Chairperson Lloyd                                 22
         Executive Officer Witherspoon                     23
         Staff Presentation                                25
         Ombudsman Tschogl                                 42
         Q&A                                               44
         Mr. Mark Leary                                    54
         Ms. Yvonne Hunter                                 58
         Mr. Daniel Meyers                                 60
         Ms. Mary Pitto                                    61
         Mr. Harry Schrauth                                62
         Mr. Michael Mohajer                               62
         Ms. Yvette Agredano                               65
         Mr. Sam Mendoza                                   68
         Mr. Frank Caponi                                  75
         Mr. Jed Mandel                                    77
         Ms. Emily Brown                                   89
         Mr. David Huerta                                  92
         Mr. Graham Noyes                                  93
         Ms. Stephanie Williams                           100
         Mr. Tim Ward                                     116
         Mr. Kelly Astor                                  118
         Mr. Bill Dobert                                  132
         Mr. Greg Sanders                                 135
         Mr. Jack Fiori                                   138
         Mr. Andy Rose                                    141
         Mr. Mark Figone                                  143
         Mr. Dennis Shuler                                147
         Ms. Sheila Edwards                               149
         Mr. Kevin Mullins                                151
         Mr. Louie Pellegrini                             154
         Ms. Sheryl Granzella                             157
         Mr. Ronald Proto                                 158
         Mr. Doug Button                                  159
         Mr. David Archiro                                161


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                          INDEX CONTINUED
                                                          PAGE


    Item 03-7-2 continued
         Mr. Henry Miller                                 162
         Mr. Alan Marchant                                165
         Mr. John McNamara                                166
         Mr. Richard Caglia                               171
         Mr. Sean Edgar                                   172
         Mr. Chuck Helget                                 176
         Mr. Kent Stoddard                                179
         Mr. David Wilson                                 184
         Mr. Paul Wuebben                                 187
         Mr. Ruben Martinez                               188
         Dr. Joseph Kubsh                                 191
         Mr. Scott Smithline                              193
         Ms. Karen Wilson                                 195
         Mr. Todd Campbell                                197
         Ms. Bonnie Holmes-Gen                            203
         Mr. Todd Addison                                 206
         Ms. Patricia Monahan                             208
         Ms. Diane Bailey                                 212
         Mr. Wendel Smith                                 214
         Q&A                                              215
         Motion                                           230
         Vote                                             234

    Item 03-7-3                                           235
         Chairperson Lloyd                                235
         Executive Officer Witherspoon                    237
         Staff Presentation                               239
         Q&A                                              266
         Ombudsman Tschogl                                284
         Mr. David Raney                                  287
         Mr. Bill Guerry                                  297
         Mr. Joseph Kubsh                                 310
         Mr. Don Anair                                    314
         Mr. Rick Bell                                    316
         Mr. Jeff Arnold                                  321
         Mr. Jeff Medich                                  326
         Mr. Dave Modisette                               328
         Mr. Jed Mandel                                   337
         Discussion                                       354
         Motion                                           355
         Vote                                             359


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                          INDEX CONTINUED
                                                          PAGE

    Item 03-7-4                                           360
         Chairperson Lloyd                                360
         Executive Officer Witherspoon                    361
         Staff Presentation                               362
         Q&A                                              371
         Mr. Timothy Vail                                 378
         Mr. Tom Fulks                                    384
         Mr. Robert Kittell                               395
         Ms. Kathryn Phillips                             399
         Discussion                                       405

    Adjournment                                           410

    Reporters' Certificates                               412


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                                                              1

 1                          PROCEEDINGS

 2           CHAIRPERSON LLOYD:  Good morning.  The September

 3  25th, 2003, public meeting of the Air Resources Board will

 4  now please come to order.

 5           Dr. Friedman, will you please lead us in the

 6  pledge of allegiance.

 7           (Thereupon the Pledge of Allegiance was

 8           Recited in Unison.)

 9           CHAIRPERSON LLOYD:  Thank you.

10           Will the Clerk of the Board please call the roll?

11           BOARD CLERK MALIK:  Dr. Burke?

12           Mr. Calhoun?

13           BOARD MEMBER CALHOUN:  Here.

14           BOARD CLERK MALIK:  Ms. D'Adamo?

15           BOARD MEMBER D'ADAMO:  Here.

16           BOARD CLERK MALIK:  Supervisor DeSaulnier?

17           Professor Friedman?

18           BOARD MEMBER WILLIAM FRIEDMAN:  Here.

19           BOARD CLERK MALIK:  Dr. Friedman?

20           BOARD MEMBER HUGH FRIEDMAN:  Here.

21           BOARD CLERK MALIK:  Mr. McKinnon?

22           Supervisor Patrick?

23           SUPERVISOR PATRICK:  Here.

24           BOARD CLERK MALIK:  Ms. Riordan?

25           BOARD MEMBER RIORDAN:  Here.


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 1           BOARD CLERK MALIK:  Supervisor Roberts?

 2           Chairman Lloyd?

 3           CHAIRPERSON LLOYD:  Here.

 4           Thank you very much.

 5           Before we start this morning, I'd just like to

 6  highlight a couple of my activities in the last week, and

 7  one of those is Mike Scheible and myself had a chance to

 8  go down to the port of Los Angeles last week to see

 9  firsthand some of the issues being faced by the port and

10  also understand what can be done in terms of mitigating

11  air quality and emission issues there.  So again, we had a

12  great hosting of the visit, and I think it was very, very

13  educational.  Everybody has the opportunity to do that --

14  it was really impressive.  And to see it's the third

15  largest port in the world behind Singapore and Hong Kong,

16  although that's traded sometime with the Port of Long

17  Beach.

18           A few interesting pieces, looking at the truck

19  traffic coming in there as well as now the increasing

20  train and rail traffic, so I think there's nothing like

21  going in firsthand and seeing what's going on.

22           Another week a delegation of us had gone down

23  including Ms. D'Adamo to visit three dairies down in

24  Modesto area, and again, that was very educational to see

25  what was going on and to understand the complexity.


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 1           I'd just like to indicate the first slide

 2  indicates the opportunity that Mike and I had to go out in

 3  the early morning and to actually go up on one of these

 4  rope ladders and we climbed up on the container ship.  You

 5  can see the containers right at the top.  It's about 200

 6  feet going up there.  So we had to make sure when you got

 7  on board, if it was rising and falling, make sure you got

 8  out on the up.

 9           BOARD MEMBER RIORDAN:  Mr. Chairman, is that --

10           CHAIRMAN LLOYD:  That's me going up.  Mike -- we

11  have another picture of Mike also.  Mike was there.  We

12  had a great time.

13           That's the real story.  We were disappointed that

14  we didn't have to travel further.  But the person who did

15  the photography, his wife is a professional photographer

16  so he said he could embellish that for us.  But it was

17  very -- it's like the fishtail.  But on the serious side,

18  it was very educational.  A lot can be done.  But also you

19  look at this when you have 70,000 hour power diesel

20  engines coming in.  You can understand the magnitude and

21  also understand what can and cannot be done when we talk

22  about electrification and whatnot.  It's easier for new

23  engines than older engines.  But also the port -- I was

24  impressed by the staff and the management there of trying

25  to do things and I think again we learned a lot.


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 1           Next, in the last few days some of you might have

 2  seen the Michelin Bibendum, the challenge they've had in

 3  bringing vehicles all over the world to California and

 4  they've invited 2- to 300 journalists.  Started off in

 5  Sacramento and then moved onto the raceway in Sonoma

 6  yesterday.  Again, I had the pleasure of participating

 7  both days.  And again, I think it gave great pleasure to

 8  see the variety of vehicles out on the raceway.  All the

 9  way from high performance and the super clean.  We had the

10  new Prius there.  All of the engine manufacturers had

11  wonderful models, examples including some of the boutique

12  cars.  And coming away from that also you can see the

13  dedication of Michelin to the whole issue of the

14  environment and air quality issues.

15           One graphic which came out of there, reminded me

16  when we look at tires and the importance of tires, no

17  matter what we're driving, we still are driving on those

18  tires.  One in at least five gallons of gasoline we use --

19  for every five tanks, one tank of that is really wasted on

20  rolling resistance.  If you look at trucks, that's two out

21  of every five.  That's a dramatic indication of what can

22  be done.  More focus is coming on that issue.  You might

23  have seen the announcement by the Governor together with

24  the Governors of Washington and Oregon encouraging -- one

25  of the items encouraging state freight and others to use


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 1  the most fuel-efficient tires as possible.  That's

 2  something I think we can all do.  And you can see that

 3  really translated back in terms of new useful things that

 4  the public can do.

 5           The other part I would also say on behalf of my

 6  colleagues, I was really proud to see the number of clean

 7  vehicles and the presentation on the super clean vehicles

 8  the PZEV, joint work of Honda and U.C. Riverside and also

 9  with clean gas from Chevron and Texaco.  In fact, these

10  cars are so clean, you can see the progress being made,

11  not only are these vehicles clean at the start but also

12  maintaining that cleanliness.

13           And then you also had the Toyota Prius, and they

14  had a very nice example here so that they showed that

15  driving the Pruis 150,000 miles produces fewer emissions

16  than painting a 500 square foot room.  In fact, one of the

17  vehicles qualified for the ATP ZEVS.  I think the PZEVS

18  and ATP ZEVs are going to have a dramatic impact on

19  improving air quality.  This goes all the way to -- for

20  example, if you want to go from Paris to Peking

21  approximately 7,000 miles, it's less emissions than a can

22  of insect repellant.  Now it's just a dramatic example of

23  what can be done.  We're going to try to get some more

24  copies of this.  But I think the general public can relate

25  to these, but we're also getting the benefits in


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 1  California.

 2           We did get presented on behalf of Michelin --

 3  because ARB and staff played a significant role in helping

 4  Michelin with this event, so we got what they call a

 5  Michelin Bibendum trophy.  And as you can see here -- I'll

 6  pass it to my colleagues.  It's heavy.  But it's really

 7  nice.  But again, I would like to particularly single out

 8  Jim Fischer, Dr. Shannon Baxter of our staff and others,

 9  but those are the ones that have worked diligently on

10  this, Jerry and his staff yesterday.  So it was very, very

11  good.

12           Now after that, a tour of some of the technology

13  and exciting things to be done.

14           I have both the pleasure and the sad event.  And

15  as most of us know, at this time our Chief Counsel,

16  Kathleen Walsh is going to be migrating west.  And it's

17  going to be, I think, a great loss for us, but also a

18  great opportunity for Kathleen.  Now firsthand, of course,

19  you will be knowledgeable about the travel issue, being

20  safe, indicating why they need I&M in the Bay Area.  So we

21  really have a friend.  And she is going to be, as you

22  know, joining the Bay Area Air Pollution Control District.

23           I'd like to read a resolution -- also recognize

24  her husband, Paul Benson, who's sitting in the front.

25  Paul, if you can just stand and we'll recognize you.


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 1  Thank you.

 2           The Resolution we prepared here, Resolution

 3  0-3-28.  Whereas, Kathleen C. Walsh has loyally served the

 4  California Air Resources Board as General Counsel for

 5  seven years, having joined the ARB as legal counsel in

 6  1982 after beginning state service with the Office of

 7  Administrative Law;

 8           Whereas, for the past 20 years, Ms. Walsh has

 9  been a master at juggling numerous complex legal matters

10  with aplomb, patience, thoroughness, and a fresh breeze of

11  humor;

12           Whereas, armed with her experience as lead

13  counsel for the Monterey County Office of Legal Aid, her

14  superior organizational skills, and her ornate sense of

15  balance and fairness at the Office of Administrative Law,

16  Kathleen single-handedly created the Office of

17  Administrative Appeals for ARB's heavy-duty vehicle

18  inspection program by working literally around the clock

19  during summer and fall of 1991, becoming the ARB's first

20  Administrative Law Judge and holding her first hearing in

21  early 1992;

22           Whereas, during her two years as Administrative

23  Law Judge for the heavy-duty vehicles inspection program,

24  through her unprecedented dedication, Ms. Walsh endured,

25  considered, and decided 1157 appeals out of the


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 1  approximately 8500 citations issued, a marathon race

 2  through 50 hearings a month;

 3           Whereas, as Senior Staff Counsel, Kathleen

 4  assisted the Executive Office and the Board on numerous

 5  critical projects of vehicular emission control, such as

 6  the adoption of tough new standards for heavy-duty

 7  vehicles, passenger cars, and motorcycles and cutting-edge

 8  provisions for zero-emission vehicle;

 9           Whereas, Kathleen's stamina and ability to remain

10  calm under pressure were again demonstrated in the

11  development of the 1994 State Implementation Plan for

12  ozone, which has more than once saved important ARB

13  initiatives;

14           Whereas, with her characteristic compassion and

15  generosity, Kathleen has always found time to discuss the

16  quirky practice of law with law students and aspiring

17  young lawyers, inspiring several to pursue the profession;

18           Whereas, Kathleen has also inspired her two sons

19  to pursue professional careers, with her son Matthew

20  becoming a mechanical engineer and her son Joshua becoming

21  a lawyer;

22           Whereas, during her long and fruitful career at

23  the ARB, Ms. Walsh has excelled at all aspects of complex

24  legal practice, drafting hundreds of legal opinions,

25  pursuing and wisely avoiding litigation, drafting key ARB


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 1  regulations, and negotiating difficult settlement

 2  agreements on matters as diverse as the SIP, locomotives,

 3  and ZEVs, creatively securing ARB's interests;

 4           Whereas, Kathleen has sacrificed her scholarly

 5  preference for secluded legal opinion drafting to

 6  successfully manage a growing staff of attorneys,

 7  enforcers, and regulations' coordinators; to provide

 8  immediate and cogent legal advice to the Board and to

 9  staff; and to be constantly available to assist in all

10  manner of urgent policy matters;

11           Whereas, Kathleen has elected to jump from the

12  frying pan into the fire by joining the legal staff of the

13  Bay Area Air Quality Management District as Assistant

14  Counsel.

15           Now, therefore be it resolved, that the Board

16  offers fervent gratitude for the significant contribution

17  Ms. Walsh has made to the practice of air pollution and

18  administrative law in California and for her substantial

19  contribution to improving air quality for our citizens.

20           Be it further resolved, that the Board wishes

21  Kathleen the best during her tenure at the Bay Area

22  District and urges her not to suffer too much nostalgia

23  for the warmth of Davis and Sacramento during the foggy

24  cold San Francisco summers.

25           With that, Kathleen, I would really say, I think


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 1  we'll all miss you at a time, when up here, when we look

 2  for advice, we look down and see your calm demeanor and

 3  your always excellent opinion.  I think we're really going

 4  to miss that.  But rest assured, as indicated in the

 5  resolution, you've already been a tremendous contribution.

 6  We look forward to working with you.  I take you at your

 7  word, your commitment, you're not going to come back and

 8  testify before us.  And with that, I wish you the very

 9  best.

10           And I'd like -- if my colleagues would like to

11  add some words, please feel free to do so.

12           BOARD MEMBER D'ADAMO:  Well, I'd like to add to

13  what the Chairman just said by just thanking you

14  personally.  There have been numerous times, as you know,

15  throughout the years where I felt maybe a little bit of an

16  increased obligation as being the law member to make

17  certain on certain legal issues that I had a better

18  understanding of the issues, when, in fact, I didn't.  And

19  I always knew that I could call on you, and you were

20  always prompt in your response.  And most importantly, I

21  could rely on your expertise so that I could look better

22  and so this Board could make the right decisions.

23           So it's not often that we get to engage in

24  professional careers where we feel like we can make a

25  difference.  Not only have you made a difference, but


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 1  you've always done so with the utmost professionalism.

 2  And you and your family should be proud of your

 3  achievement.  We wish you well and look forward to seeing

 4  you after you go to work for the Bay Area and breathing

 5  all that nice clean, crisp air.  Good luck.

 6           CHAIRPERSON LLOYD:  Moving from D.D. on down the

 7  line.

 8           SUPERVISOR DeSAULNIER:  Always hard to say

 9  something nice about an attorney, present company

10  excepted, D.D.

11           CHAIRPERSON LLOYD:  Jed, take notice.

12           SUPERVISOR DeSAULNIER:  I just -- first of all,

13  this is good news/bad news for me, of course.  When

14  Kathleen called and told me that she would be coming to

15  the Bay Area, at the time I was talking to the soon-to-be

16  former regional administrator for Region 9 congratulating

17  him for coming to the Bay Area.  We're delighted to have

18  you.  But on the other hand, I will miss you up here and

19  your level of professionalism.  And for someone who's a

20  non-attorney but likes to practice attorney as a local

21  politician, the way you've reminded me professionally

22  there are things like the Constitution that I have to be

23  reminded of some control over what I do, I appreciate your

24  professionalism and the way you've dealt with me

25  personally and look forward to dealing with issues like


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 1  transport into the valley as you represent the Bay Area.

 2           BOARD MEMBER WILLIAM FRIEDMAN:  Kathleen, I just

 3  want you to know I learned a great deal from you, and it's

 4  been a privilege to have worked with you.  And I wish you

 5  the very best and I thank you.

 6           BOARD MEMBER HUGH FRIEDMAN:  Kathleen, I came

 7  prepared to make about an hour's worth of remarks, but

 8  there's very little left to say after that resolution,

 9  which is comprehensive and covers almost every facet of

10  your service long before I came to the Board, and your

11  contributions.

12           And I want to second what our law member said as

13  well.  I'm glad that you're going to the Bay Area, which

14  is my home as well.  And I'm glad that the fact that

15  DeSaulnier is on that Board back down there doesn't deter

16  you in any way.  He has such an introspect for lawyers, as

17  you know.  You'll do a great job down there.  And I'm sure

18  he's delighted, as they all should be.

19           I just wanted to join in wishing you every good

20  wish, utmost satisfaction in this new passage.  And you

21  and your husband, your family -- and you must be very

22  proud to have at least one out of two become a lawyer.  So

23  they took a role model.  So congratulations.

24           And at the appropriate time, I'd like to second

25  D.D.'s motion to pass the resolution, if I may.


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 1           BOARD MEMBER RIORDAN:  Kathleen, I want to thank

 2  you for your thoughtful advice that you've given to us

 3  over the years.  It has been an extraordinary time.  We've

 4  accomplished a great deal, thanks to staff people like

 5  yourself.  And we're going to miss you, but we hope that

 6  you can offer as much to the Bay Area as you've offered to

 7  us.  And we hope that you and Paul both enjoy your

 8  retirement -- quote, retirement.  And we welcome you back,

 9  but again, not to testify, just to see you.  And we

10  certainly understand the delight that you must have in

11  moving to the Bay Area.  I can't think of a more beautiful

12  city to be in.  And thank you for those long hours of time

13  that you spent trying to keep us on the straight and

14  narrow.

15           BOARD MEMBER CALHOUN:  Kathleen, I've already had

16  a chance to talk with you, but I'm going to add a couple

17  things.  You succeeded in getting Mike promoted to

18  Executive Officer, and you didn't stop there.  You got him

19  promoted to Judge, so you're deserving of a nice relaxing

20  job with the Bay Area Air Quality Management District.

21           SUPERVISOR PATRICK:  Kathleen, I, too, would like

22  to thank you very much.  It's all been said, but we, as a

23  Board, have really appreciated your sage advise.  We have

24  always felt comfortable that we were on a very sound legal

25  footing.  Some of us do not have the benefit of being


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 1  attorneys, as a couple of our members do, and we really

 2  appreciate your advice.  And we're going to miss you very

 3  much.  But those of us in the San Joaquin Valley are

 4  particularly appreciative of having another friend at the

 5  Bay Area District.

 6           SUPERVISOR DeSAULNIER:  First assignment is

 7  downwind lawsuits.

 8           SUPERVISOR PATRICK:  She made me stay out of

 9  those.

10           CHAIRPERSON LLOYD:  We had a proposal, seconded

11  to the resolution.  All in favor say aye.

12           (Ayes)

13           CHAIRPERSON LLOYD:  Thank you.

14           (Applause)

15           CHAIRPERSON LLOYD:  I want to afford you an

16  opportunity if you'd like to say something, but don't feel

17  obliged to do so.

18           GENERAL COUNSEL WALSH:  Well, I will keep it

19  brief.

20           CHAIRPERSON LLOYD:  No.  Take as much as you

21  want.  I didn't mean it that way.

22           GENERAL COUNSEL WALSH:  I know we have a lot to

23  do today.  And I cannot possibly say everything that is in

24  my head and my heart today.  This has been a wonderful

25  place.  I grew up as a lawyer here.


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 1           CHAIRPERSON LLOYD:  Is your microphone on?

 2           GENERAL COUNSEL WALSH:  I think so.  Yeah.

 3           This has been a great Board.  And it has

 4  succeeded a few other great boards, some of you were on

 5  them.  It's changed over time.  But it has kept getting

 6  better over my time here.  I have been amazed and proud as

 7  I watched those of you who sit up there, looking at the

 8  audience behind us who sit here, at your thoughtfulness

 9  your care, your concern.  You have an incredibly hard jobs

10  to do, and you do it well.  I know that a lot of that is

11  helped by the wonderful staff here at ARB.  And I'm proud

12  to be a part of that staff.

13           As I move on to the next stage in my life --

14  which I'm very happy and pleased to be doing.  It is a

15  long time dream.  And believe it or not, the idea of going

16  back to the fog and the ocean breeze is just music to my

17  heart.  I spent many, many a day as a young child along

18  the Carcinus Straights between the railroad tracks and the

19  bay.  I was to stay off the railroad tracks and out of the

20  water, but we had an amazing amount of fun between those

21  two dangerous places.  I'm so looking forward to the

22  change.

23           But I will never forget the folks I have met

24  here, and I wish you the very best of luck.  I will still

25  be a Californian, still breathing the air.  I look to you


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 1  for the fine, fine work this Board does to protect the air

 2  for Californians.  Thank you very much.

 3           CHAIRPERSON LLOYD:  Thank you very much indeed.

 4           Catherine, can you just for the Board just give

 5  us a brief update about how we're going to go about -- not

 6  replacing Kathleen, but replacing the position?

 7           EXECUTIVE OFFICER WITHERSPOON:  Our two most

 8  senior counsels are alternating starting tomorrow as

 9  acting general counsel.  That's Bob Jenne and Tom

10  Jennings.  And we have already done the interview process.

11  We do have superb candidates.  And we hope to finish the

12  selection process, acquire a freeze exemption, and clear

13  the Governor's office review sometime by the middle of

14  October.

15           CHAIRPERSON LLOYD:  Thank you very much.

16           With that, I'd like to move on to the first item,

17  Agenda Item 0-3-7-1.  Again, I'd like to remind anyone in

18  the audience who wishes to testify on today's agenda item

19  to please sign up with the Clerk of the Board.  Also, if

20  you have a written statement, please give 30 copies to the

21  Board.

22           The first agenda item is our monthly Board update

23  on recent finding on health effects of air pollution.

24  Staff will be presenting recent findings related to ozone

25  and asthma.


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 1           So Ms. Witherspoon, if you'd like to begin staff

 2  presentation.

 3           EXECUTIVE OFFICER WITHERSPOON:  Thank you, Dr.

 4  Lloyd.

 5           In April of this year, staff presented a study

 6  about the responses of allergic asthmatics exposed to

 7  ozone in controlled chamber experiments.  Those results

 8  show that asthmatic individuals challenged with an

 9  allergen showed heightened effects when exposed to ozone.

10           Today staff will present results from a new study

11  that provides further biological evidence for the

12  synergistic effect of allergens and ozone.

13           Cynthia Garcia from the Population Research

14  Division will discuss the study results.

15           (Thereupon an overhead presentation was

16           presented as follows.)

17           MS. GARCIA:  Thank you, Ms. Witherspoon.

18           Good morning, Chairman Lloyd, and members of the

19  Board.  For today's health update, I will be discussing

20  two recent toxicological studies on allergen responses.

21  These studies will provide information on possible

22  mechanisms behind ozone's respiratory effect and help

23  explain the results in previous studies on the effects of

24  ozones on sensitive individuals with asthma.

25                            --o0o--


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 1           MS. GARCIA:  The health effects of air pollution

 2  on asthmatics have been a concern to the Board for some

 3  time, due to the fact that asthma is one of the most

 4  common chronic and disabling diseases among children and

 5  adults.

 6           Previously the children's health study found that

 7  children that live in high-ozone communities have reduced

 8  lung functions, and those who play several sports in those

 9  high-ozone communities are more likely to develop asthma

10  than children who play no sports.  In addition,

11  epidemiological studies have found increased medication

12  use and increased asthma symptoms were associated with

13  ozone exposure and asthmatics.

14           These studies provide a significant link between

15  ozone and asthma among sensitive individuals.  However,

16  they do not provide us with a biological explanation for

17  why children and asthmatics may be more vulnerable to

18  ozone effects.  The following studies attempted to.  In

19  April of this year, we presented to the Board a control

20  chamber study.  The results showed that asthmatic

21  individuals challenged with an allergen showed increased

22  asthmatic effects when exposed to ozone, demonstrating a

23  synergistic effect between ozone and allergen.  The next

24  two recently-published studies that I will be introducing

25  to the Board today provide further biological evidence of


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 1  the synergistic effect between allergens and ozone.

 2                            --o0o--

 3           MS. GARCIA:  This study on guinea pigs was

 4  designed to examine the effects of ozone on

 5  hyperresponsiveness, which is an increased tendency of the

 6  bronchial airways to constrict, and one of the hallmarks

 7  of asthma in humans.  This study used an animal model to

 8  explain the effects of ozone exposure in non-allergic and

 9  allergic animals.  Using this model, the study sought to

10  determine whether long-term engine-emitted exposure to

11  ozone reduces or worsens airway hyperresponsiveness in

12  animals who are sensitive to allergens and irritants.

13           The results of this experiment demonstrate that

14  animals exposed to ozone alone did not develop airway

15  hyperresponsiveness.  However, animals sensitive to

16  allergens showed increased airway hyperresponsiveness when

17  exposed to ozone and then challenged to the allergen or

18  irritant.  Therefore, ozone exacerbates the constriction

19  of the bronchial airways synergistically with the

20  allergen.  This increased tendency of the bronchial

21  airways persisted for up to four weeks after ozone

22  exposure ceased.

23                            --o0o--

24           MS. GARCIA:  The second study examined the

25  responsiveness of a mechanism of bronchial muscle


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 1  contraction after exposing the isolated bronchial tissue

 2  to ozone.  The experimental results indicate that exposure

 3  to ozone potentiates the contraction response in human

 4  bronchial when challenged to a specific allergen.  This

 5  synergistic effect of allergen and ozone depends on both

 6  the concentration and duration of exposure to the

 7  pollutant.  This graph shows the effect of ozone on

 8  bronchial responsiveness to an irritant challenge.  The

 9  higher the concentration and the relation of exposure, the

10  higher the contraction due to the irritant challenge.  At

11  very high doses, there is a toxic effect with the downward

12  trend.  These two toxicological findings combined help

13  provide the possible biological explanation for why and

14  how sensitive individuals are the most susceptible to the

15  effects of ozone.

16                            --o0o--

17           MS. GARCIA:  We have seen from these two

18  toxicological studies that ozone and allergen appears to

19  have a synergistic effect in the lungs.  The effects

20  depend on the duration of concentration of ozone exposure.

21  These results contribute to our knowledge of how ozone

22  works to worsen the medical symptoms related to asthma.

23  These studies indicate that some asthmatics may be

24  particularly vulnerable to the harmful effects of ozone.

25  In addition, this will help provide general information to


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 1  the Board during ozone standard review process.

 2           Finally, further study on long-term ozone

 3  exposure and its effect on vulnerable asthmatic

 4  populations is underway.  The Fresno Asthmatic Children

 5  Environment Study, FACES, funded by ARB, is assigned to

 6  help clarify the role of ozone and allergens such as

 7  pollens, molds, and other toxics in its exacerbation of

 8  asthma.

 9                            --o0o--

10           MS. GARCIA:  Thank you for your attention today.

11  I will be happy to answer any questions.

12           CHAIRPERSON LLOYD:  Thank you very much indeed.

13           BOARD MEMBER WILLIAM FRIEDMAN:  Both of these

14  studies are in the category of descriptive biological

15  basic research, and they're helpful.  They are stepping

16  stones to what we really need to find out, which is the

17  true basic cellular and molecular mechanism that instigate

18  asthma.  After all these years, we still don't have a

19  clue.  We have a lot of clinical research.  And in fact,

20  as we all know, we're funding very important clinical

21  research in Fresno in the FACES study.  But until we

22  really nail down precisely what triggers asthma, we're not

23  going to be able to get rid of the problem.  And these

24  are, you know, reasonable studies, but they're just real

25  stepping stones to get where we need to go.  There's a lot


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 1  more work that needs to be done.

 2           CHAIRPERSON LLOYD:  Thank you very much.  Thanks

 3  very much.  Thank you, staff.

 4           We'll move ahead to Agenda Item 03-2-7, the

 5  proposed diesel particulate control measure for solid

 6  waste collection vehicles.

 7           Diesel particulate matter was identified by this

 8  Board as a toxic air contaminant in 1998.  The health

 9  impacts of diesel include lung cancer, increased hospital

10  admissions, and premature mortality.  Diesel PM also

11  worsens allergies, asthma, and other respiratory and

12  cardiovascular diseases.  The average statewide potential

13  cancer risk associated with diesel PM emissions is 540

14  potential cases per million.  In the South Coast air basin

15  with the emissions even higher, the cancer risk from

16  diesel air is estimated to be 1,000 cases per million

17  people.

18           In 2000, this Board adopted a comprehensive risk

19  reduction plan for controlling diesel PM.  At that time,

20  we set a goal of reducing diesel PM in California by

21  75 percent by 2010 and 85 percent by 2020.  To meet these

22  goals, the plan identified three primary strategies:  More

23  stringent standards for new diesel engines, a lower sulfur

24  limit of 15 PMM for diesel fuels, and controls on existing

25  diesel vehicles and equipment.


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 1           ARB staff and Board have been actively working on

 2  several plans to achieve these goals.  The Board has

 3  adopted new engine standards heavy-duty diesel vehicles, a

 4  fleet rule for transit buses, an incentive program and

 5  protocol for older, high emitting school buses, a

 6  verification procedure for diesel PM retrofit

 7  technologies, and a lower sulfur diesel fuel rule that we

 8  just finished this past month.

 9           Staff has worked on a host of diesel retrofit

10  rules for various vehicles and engine categories, with

11  many of those rules in the workshop process right now.

12  Staff is also verifying diesel retrofit technology as

13  rapidly as they can, with several devices now approved and

14  more in the pipeline for review.

15           We are encouraged by efforts by the industry to

16  address the reduction in PM on new engines and working

17  aggressively to reduce those in existing engines.  And

18  today we are, in fact, looking at a measure to reduce PM

19  emissions from solid waste collection vehicles.

20           Ms. Witherspoon, will you please introduce this

21  item and begin staff's presentation.

22           EXECUTIVE OFFICER WITHERSPOON:  Yes.  Thank you,

23  Chairman Lloyd and members of the Board.

24           Our ultimate goal, as expressed in the diesel

25  risk reduction plan, is to clean up virtually every diesel


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 1  engine in California.  This is a huge undertaking, and

 2  we're still in the learning process as to the best

 3  approach for each engine family and each individual

 4  vehicle fleet.

 5           In addition, because diesel control technologies

 6  are still in the process of being born, we've had to

 7  adjust our regulatory strategies as we've gone along to

 8  reflect the actual performance and availability of various

 9  control devices and other emission control options.  We

10  once thought it would be as simple as putting a diesel

11  filter on almost everything.  We now see it's going to

12  require a skillful combination of retrofit controls,

13  engine upgrades, accelerated retirement, vehicle

14  replacement, and the use of cleaner diesel fuel

15  formulations for alternative fuels.  That's the direction

16  that staff is now taking.

17           With the proposed solid waste collection vehicle

18  rule, staff is proposing to require best available control

19  technology phased in by model year groups over a

20  seven-year period.  As designed in this rule, BACT for

21  diesel PM includes ARB-verified emission control

22  strategies, such as particulate filters, oxidation

23  catalysts, alternative diesel formulations like lubrizol

24  and other technologies that may be verified in the future.

25  The definition of BACT in this rule also includes the use


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 1  of alternative fuels and replacement with newer clean

 2  diesel engines which will be available beginning in 2007.

 3           We chose to do solid waste collection vehicles

 4  early in the diesel risk reduction process because of

 5  their presence in residential communities.  These vehicles

 6  are in everyone's neighborhood once or twice a week

 7  resulting in direct near-vehicle exposures.  I should tell

 8  that you the waste collection industry was not thrilled

 9  about being the first on our list, but notwithstanding

10  those concerns, has generally responded in a thoughtful

11  and responsible way to this initiative.  Staff has had

12  many discussions with industry representatives and has

13  reworked portions of the rule in response to their

14  suggestions and practical concerns.

15           The California Integrated Waste Management Board

16  was also a key player in development of this rule and in

17  making sure we have fully coordinated California's waste

18  management and air quality objectives.  The Executive

19  Director of the Integrated Waste Management Board, Mark

20  Leary, is here to testify this morning, once we get to

21  that part of the proceeding.

22           The staff presentation this morning will be given

23  by Ms. Crystal Reul Chen of the Mobile Source Control

24  Division.

25           (Thereupon an overhead presentation was


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 1           presented as follows.)

 2           AIR RESOURCES ENGINEER CHEN:  Thank you,

 3  Ms. Witherspoon.

 4           Chairman Lloyd, and members of the Board, it is

 5  my pleasure to present the staff's proposal for

 6  controlling diesel particulate matter from on-road

 7  heavy-duty residential and solid waste collection

 8  vehicles.

 9                            --o0o--

10           AIR RESOURCES ENGINEER CHEN:  Today's

11  presentation includes a brief history on the need for this

12  regulation leading directly to a summary of the proposed

13  regulation and supported by a discussion of technical

14  feasibility and cost effectiveness.  I will conclude the

15  presentation with the remaining issues and staff's

16  recommendation.

17                            --o0o--

18           AIR RESOURCES ENGINEER CHEN:  The Board

19  identified diesel particulate matter, or PM, as a toxic

20  air contaminant in 1998.  Its health impacts include

21  increased risk of lung cancer, aggravation of chronic

22  respiratory symptoms such as asthma and eye, nose, and

23  lung air irritation.  Also, PM in the air is tied to

24  increased hospitalization and mortality in those with

25  existing heart and lung diseases.


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 1                            --o0o--

 2           AIR RESOURCES ENGINEER CHEN:  In California,

 3  studies have estimated that diesel PM emissions are

 4  responsible for 70 percent of the total potential cancer

 5  risk from all toxic air contaminants.  No level of

 6  exposure in diesel PM is considered to be safe.

 7                            --o0o--

 8           AIR RESOURCES ENGINEER CHEN:  In 2000, this Board

 9  adopted a plan to significantly reduce diesel PM emissions

10  and the associated potential cancer risk from all sources.

11  The proposed control measure we have brought before you

12  today focuses on reducing diesel PM emissions from

13  existing engines, specifically solid waste collection

14  vehicles.  This is the second rule to focus on reducing

15  in-use emission.  The first one was a fleet rule for

16  transit agencies.

17                            --o0o--

18           AIR RESOURCES ENGINEER CHEN:  The benefits of

19  this rule, if adopted, are substantial.  Staff estimates

20  that 80 premature deaths will have been prevented by 2020

21  at a cost of $900,000 per death prevented.  This cost can

22  be compared to U.S. EPA's value of 4.2 to $5.9 million per

23  premature death.  In addition, cancer risk from exposure

24  to diesel PM from collection vehicles is expected to

25  decrease.  Over 2 million pounds of PM and 30,000 tons of


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 1  oxides of nitrogen, or NOx, and hydrocarbon, or HC, will

 2  not have been emitted to the air.  And we estimate the

 3  cost per household that receives trash collection service

 4  at an average statewide to be less than $1 per year.  This

 5  is a cost effective method to reduce diesel PM and save

 6  lives.

 7                            --o0o--

 8           AIR RESOURCES ENGINEER CHEN:  Now I will give you

 9  an overview of the proposed regulation by describing the

10  regulations' four general discussions:  Scope and

11  applicability, specific requirement for municipalities,

12  general requirements for solid waste collection vehicle

13  owners, and enforcement.

14           In my presentation, I will be including staff's

15  proposed 15-day changes to the original staff proposal.  A

16  summary of the proposed changes have been provided to you

17  and is available outside the room.

18                            --o0o--

19           AIR RESOURCES ENGINEER CHEN:  As proposed, it

20  affects both municipalities and private owners of solid

21  waste vehicles.  Municipalities may own and operate their

22  own fleets or contract for trash collection services with

23  private haulers.  The vehicles covered by this rule are

24  those with 2006 and older model year engines and vehicles

25  weighing more than 14,000 pounds gross vehicle weight and


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 1  used to collect residential and commercial solid waste.

 2                            --o0o--

 3           AIR RESOURCES ENGINEER CHEN:  In order to comply

 4  with this rule, the vehicle owner must choose the best

 5  available control technology for each of the vehicles in

 6  its fleet following the phased-in implementation schedule.

 7  The owner is required to keep records to demonstrate

 8  compliance and make those records available on request to

 9  ARB.

10                            --o0o--

11           AIR RESOURCES ENGINEER CHEN:  We have provided

12  owners with several options for complying with the best

13  available control technology requirements.  The owner may:

14  Repower using either a diesel engine or power system that

15  meets the .01 grams per brake horsepower hour particulate

16  matter standard or one that meets the .1 gram per brake

17  horsepower hour with the addition of a retrofit device;

18  replace the diesel engine with an alternative fuel for

19  pilot ignition engines; or retrofit with a product that is

20  verified with the highest diesel PM emission reduction

21  available, such as a particulate filter or oxidation

22  catalyst.

23                            --o0o--

24           AIR RESOURCES ENGINEER CHEN:  If an owner

25  installs a retrofit system, it must be ARB verified.  From


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 1  the verified systems available, the owner must apply the

 2  technology that reduces diesel PM by the greatest amount

 3  or highest verified level that the manufacturer agrees is

 4  feasible for the vehicle.  Also the use of the system must

 5  not void the original engine warranty if one is still in

 6  effect.  And finally, the system must be commercially

 7  available.

 8                            --o0o--

 9           AIR RESOURCES ENGINEER CHEN:  Several retrofit

10  strategies are verified and available for collection

11  vehicles.  Four Level 3 systems, which achieve an 85

12  percent reduction in diesel PM, are verified for 1994 to

13  2002 model year heavy-duty engines.  Three of these are

14  passive diesel particulate filters and one reduces both

15  NOx and PM.  No Level 2 strategies are verified yet.

16  Three systems are verified for 1991 to 2002 model years

17  that achieve Level 1 or at least a 25 percent diesel PM

18  reduction.  These systems include a diesel oxidation

19  catalyst.

20                            --o0o--

21           AIR RESOURCES ENGINEER CHEN:  The implementation

22  schedule has been designed with the goals of phasing in

23  implementation by technical feasibility and cost.  We have

24  tried to balance the availability of technologies such as

25  the .01 gram per brake horsepower hour PM engine which


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 1  will be available in 2007 with providing time for owners

 2  to spread out the cost of compliance.  Note that the group

 3  with model years 1988 to 2002 engines is split into two

 4  groups, 1988 to 1993 model year engines and 1994 to 2002

 5  model year engines, to ensure that the older vehicles are

 6  implemented on the same schedule as the newer engines.

 7                            --o0o--

 8           AIR RESOURCES ENGINEER CHEN:  Let me now walk you

 9  through the options currently available for each model

10  year group.  For 1960 to 1987 model year engines, the

11  options currently are to repower to a newer diesel engine,

12  or replace with an alternative fuel or pilot ignition

13  engine, because no retrofit products are verified yet for

14  these engines.  Should verified retrofitted devices become

15  available, our proposal is to restrict the use of Level 1

16  products, such as a diesel oxidation catalyst, only to

17  companies with fewer than 15 vehicles.

18                            --o0o--

19           AIR RESOURCES ENGINEER CHEN:  Some engines in

20  1988 to 1993 model year engine group have an additional

21  option.  Diesel oxidation catalyst systems are verified

22  for 1991 through 1993 engine model years.  And staff

23  expects they may be verified for 1988 to 1990 engines in

24  the future.  In addition to retrofitting with a diesel

25  oxidation catalyst system, 1988 to 1993 model year engines


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 1  may also be repowered or replaced.

 2           For 1994 through 2002 model year engines even

 3  more options exist, as diesel particulate filters and

 4  oxidation catalysts systems are already verified for

 5  engines of this group.  Retrofits are expected to be

 6  implemented more frequently than engine repowers and

 7  replacement because of the lower cost of retrofit devices.

 8                            --o0o--

 9           AIR RESOURCES ENGINEER CHEN:  Finally, for 2003

10  to 2006 model year engines, staff believes diesel

11  particulate filters will be verified in the future,

12  although none are currently verified.

13                            --o0o--

14           AIR RESOURCES ENGINEER CHEN:  To provide owners

15  with additional flexibility, staff is proposing that some

16  extensions be available for owners.  First for those

17  owners who bring 50 percent or more of their vehicles into

18  compliance early, an extension on the 100 percent

19  implementation date is available.

20           Second, if no verified retrofit product is

21  commercially available, an owner may apply for a

22  compliance extension after he's evaluated his fleet to

23  find all vehicles that can be implemented on schedule.

24  1987 and older model year engines would only be eligible

25  for a one-year extension.


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 1           Finally, companies with fewer than four vehicles

 2  are not required to phase in implementation but would

 3  simply need to comply with the 100 percent implementation

 4  date.

 5                            --o0o--

 6           AIR RESOURCES ENGINEER CHEN:  Now I will discuss

 7  the benefits and cost effectiveness of the proposed rule.

 8                            --o0o--

 9           AIR RESOURCES ENGINEER CHEN:  First, I will

10  discuss the benefits from the standpoint of tons of

11  emissions produced.  As you can see, this rule should

12  provide immediate and significant reductions in diesel PM

13  emissions.  The chart shows three different implementation

14  scenarios.  One based on currently-verified technologies

15  as of spring 2003, and two scenarios that hypothesize

16  possible future verification of technologies.

17           Diesel PM reductions from the collection vehicle

18  fleet in California as a result of this proposed

19  regulation will range from 49 to 67 percent in 2010 and 40

20  to 54 percent in 2020.  Similarly, the rule will also

21  reduce NOx emissions primarily from expected engine

22  repowers and replacements.  Staff used the same three

23  implementation scenarios as I discussed previously.  NOx

24  reductions from the collection vehicle fleet in California

25  as a result of this proposed regulation should range from


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 1  15 to 31 percent in 2010 and from 4 to 13 percent in 2020.

 2                            --o0o--

 3           AIR RESOURCES ENGINEER CHEN:  As a result of

 4  reducing diesel PM emissions by 2020, staff estimates 80

 5  premature deaths would be prevented.  As you know,

 6  particulate matter in the air is correlated with increased

 7  hospital emissions and mortality.  The cost of premature

 8  death prevented would be $900,000.  Comparing this

 9  estimate cost to U.S. EPA's value of between 4.2 and 5.9

10  million for avoided deaths, this proposed regulation is a

11  very cost effective mechanism to prevent premature deaths.

12                            --o0o--

13           AIR RESOURCES ENGINEER CHEN:  Similarly, the

14  cancer risk from diesel PMs would be reduced by up to 27

15  cases per million in heavily affected areas near roadway

16  to landfills and up to four cases per million in an

17  average neighborhood.

18                            --o0o--

19           AIR RESOURCES ENGINEER CHEN:  Staff determined

20  this rule will cost 63 million over seven years,

21  increasing to a total of $154 million over 17 years.  The

22  original cost reported in the June 6 staff report over a

23  seven-year implementation phase-in period was $73 million.

24  The new cost analysis corrected some errors in the

25  original analysis and extended the time period to reflect


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 1  full implementation.  The estimated cost effectiveness of

 2  the proposed regulation on a cost-per-emissions reduced

 3  basis is $32 per pound of diesel PM reduced and a $1.79

 4  per pound of NOx plus hydrocarbon reduced.

 5                            --o0o--

 6           AIR RESOURCES ENGINEER CHEN:  Finally, because

 7  the cost of trash collection is usually charged to the

 8  households receiving service, staff calculated a cost of

 9  compliance per household.  With about 12.5 million

10  households in California, the average statewide cost of

11  compliance per household over the entire lifetime of the

12  proposed regulation would be about $12, or an average cost

13  per household of approximately 70 cents per year.  In

14  other words, the average increase in the sanitation fee

15  charged to each household statewide should average less

16  than $1 per year.

17                            --o0o--

18           AIR RESOURCES ENGINEER CHEN:  Now I will turn to

19  the results of the staff's analysis of the technological

20  feasibility of this regulation.

21                            --o0o--

22           AIR RESOURCES ENGINEER CHEN:  We collected

23  exhaust temperature profiles through data logging 60

24  collection vehicle engines and determined that about 12

25  percent of California's total collection vehicles could be


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 1  retrofitted with passive diesel particulate filters.

 2  Although the average fleet wide is only 12 percent, as you

 3  can see, particulate filters are most compatible with

 4  front end and side loaders.  In addition, particulate

 5  filters work well on newer engines, such as the 1994

 6  through 2002 model years.

 7                            --o0o--

 8           AIR RESOURCES ENGINEER CHEN:  Staff analyzed the

 9  results of fleet in-use experiences both in the

10  United States and Europe.  The two fleets with the most

11  experience are the city of Los Angeles and New York City.

12  Los Angeles first participated in BP ARCO's demonstration

13  of their low sulfur diesel fuel and particulate filter.

14  Since that pilot demonstration which started in 2000,

15  about 360 filters have been installed on L.A. collection

16  vehicles.  No problems have been associated with them, and

17  L.A. plans to install about 600 more on remaining vehicles

18  in their sanitation fleet, including other truck types.

19           New York City has approximately 30 diesel

20  particulate filters installed on their sanitation trucks

21  and plans to install about 100 more on other collection

22  vehicles in their fleet.

23                            --o0o--

24           AIR RESOURCES ENGINEER CHEN:  ARB also

25  commissioned a study of diesel particulate filter usage


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 1  and experiences in Sweden.  Driven by a mandate to control

 2  particulate matter emissions in specific urban areas,

 3  there were as of January 2003, 22 retrofitted collection

 4  vehicles and 24 vehicles with diesel particulate filters

 5  installed as original equipment.  No filter-related

 6  problems have been reported by the vehicle owners, and the

 7  program is considered to be a success.

 8                            --o0o--

 9           AIR RESOURCES ENGINEER CHEN:  That completes the

10  presentation of the proposed regulation and its technical

11  feasibility.  Now I will describe issues raised by

12  stakeholders.

13                            --o0o--

14           AIR RESOURCES ENGINEER CHEN:  Waste haulers are

15  concerned about cost recovery, primarily by those

16  companies that collect trash under a contract with the

17  municipality.  The industry proposed as a solution that

18  the municipality with the contract be responsible for

19  compliance.  Staff initially proposed joint responsibility

20  with municipality, but has withdrawn that proposal as

21  discussed on the next slide.

22           In order to find out more about contracts, staff

23  worked with the Integrated Waste Management Board on a

24  survey.  Surveys were e-mailed to our municipality

25  contracts, plus all of the recycling coordinators.


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 1  Surveys were returned from 74 cities, 12 counties, and 4

 2  military bases representing about one-third of the

 3  population of California and the most populated major

 4  cities and counties.

 5           Staff asked if contracts included a provision

 6  allowing for an increase in rates, including when there

 7  was a change in law.  Of those with contracts, 87 percent

 8  of the contracts allowed for rate increases for changes in

 9  the law, such as this proposed regulation, or other

10  non-specified increases in the cost of doing business.

11  The time to negotiate a rate change reported in surveys

12  ranged from two weeks to three years, with most reporting

13  less than a year for a rate renegotiation.  Of the other

14  contracts, most will be renegotiated at some time during

15  the implementation of this rule, allowing for a rate

16  increase.

17           Staff is proposing two additions requested by the

18  industry, adding language that states the Board's intent

19  to encourage rate renegotiations and biannual progress

20  reports on implementation to foster dialogue.

21                            --o0o--

22           AIR RESOURCES ENGINEER CHEN:  As mentioned

23  earlier, staff is proposing changes based on issues raised

24  by the municipalities.  Municipalities argued to staff

25  that the joint responsibility provision would be overly


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 1  burdensome and costly as they lacked resources to enforce

 2  compliance and have no control over vehicle purchasing and

 3  maintenance decision.  As a result of these discussions,

 4  staff proposes removing most of the requirements currently

 5  listed in Section 2021.1 with only some reporting

 6  requirements remaining.  In addition, staff recommends

 7  that joint responsibility for compliance be eliminated.

 8                            --o0o--

 9           AIR RESOURCES ENGINEER CHEN:  Finally,

10  environmental organizations have argued that this rule

11  would be more stringent.  They have proposed several

12  changes to make the rule more stringent; limiting

13  exemptions to one-year, splitting large groups with model

14  year 1988 to 2002 engines, and closing loopholes they

15  perceive to be in the rule.  In addition, they have asked

16  staff to accelerate compliance of the oldest vehicles by

17  two years.

18           Staff compared the cost effectiveness of this

19  alternative with that of the proposed regulation and found

20  it to be about the same as staff's proposal.  By beginning

21  implementation two years earlier for 1960 to 1987 model

22  year engines, an additional 18 percent diesel emission

23  reduction would be achieved for an associated cost

24  increase of about 14 percent.  Staff feels that bringing

25  the 1960 to 1987 engine model year group into compliance


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 1  earlier would impact small business more immediately

 2  because more small businesses own the older vehicles.

 3                            --o0o--

 4           AIR RESOURCES ENGINEER CHEN:  Therefore, staff is

 5  proposing to limit exemptions to one year for only the

 6  oldest vehicles, to split the 1988 to 2002 group, and to

 7  tighten up the implementation phase-in.  Staff is adding

 8  language to clarify the active fleet calculation to ensure

 9  that 100 percent of the vehicles are implemented on time

10  and that vehicles cannot be double counted in two

11  implementation groups, and that an owner must evaluate all

12  of his fleet before he can apply for an exemption for any

13  engine.  Staff is not, however, proposing to accelerate

14  implementation of the oldest vehicles.

15                            --o0o--

16           AIR RESOURCES ENGINEER CHEN:  The engine

17  manufacturers have submitted comments questioning ARB's

18  authority to adopt this regulation on two fronts.  First,

19  they assert we are regulating new engines and should

20  therefore obtain a waiver from the U.S. EPA.  Second they

21  assert that if we claim we are, in fact, regulating

22  non-new-engines, that we lack the authority to do so.  Our

23  legal office will address these issues during the witness

24  testimony.

25                            --o0o--


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 1           AIR RESOURCES ENGINEER CHEN:  Now I will conclude

 2  by summarizing the benefits of the rule and staff's

 3  recommendations.

 4                            --o0o--

 5           AIR RESOURCES ENGINEER CHEN:  To recap, the

 6  proposed regulation would result in significant cost

 7  effective benefits.  An estimated 80 premature deaths will

 8  be prevented by 2020 at a cost effective $900,000 per

 9  death prevented.  Cancer risk from exposure to diesel PM

10  from collection vehicles would be significantly reduced.

11  This proposal would result in between a 49 and 67 percent

12  reduction in diesel PM by 2010 and a 40 and 54 percent

13  reduction by 2020.  And the cost to Californians is

14  estimated to be less than $1 per household.  Staff

15  believes the benefits of the proposed regulation are

16  substantial.

17                            --o0o--

18           AIR RESOURCES ENGINEER CHEN:  Given the benefits

19  the proposed regulation can bring to Californians, staff

20  recommends the Board adopt new Sections 2020, 2021,

21  2021.1, and 2021.2 and direct staff to prepare 15-day

22  changes as outlined in our presentation for public comment

23  and adoption.

24           Given that this is a new rule affecting people

25  who have not been directly impacted by our rules before,


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 1  staff plans to develop implementation guidelines and

 2  conduct outreach and education for those affected by the

 3  rules.  Staff believes the proposed regulation can

 4  successfully be implemented over the coming seven years.

 5  Thank you.

 6           CHAIRPERSON LLOYD:  Thank you very much.  Madam

 7  Ombudsman, would you please describe the public

 8  participation process that occurred while this item was

 9  being developed and share any concerns or other comments

10  that you may have for the Board at this time?

11           OMBUDSMAN TSCHOGL:  Thank you, Chairman Lloyd and

12  members of this Board.

13           To develop the control measure proposal before

14  you, staff has worked with many stakeholders over the past

15  three years.  They held four public workshops at various

16  locations in El Monte, Los Angeles, Oakland, and

17  Sacramento.  The workshops were held in the afternoon and

18  evening to ensure as much participation as possible.  The

19  attendees representing the solid waste collection

20  companies and their associations, California Trucking

21  Association, Engine Manufacturers Association, field

22  suppliers, technology providers, and environmentalists and

23  other interested parties.

24           In 2000, staff initiated a feasibility study that

25  ran for more than two years.  For the study, more than 100


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 1  different companies voluntarily provided their engine and

 2  their vehicle data for the inventory, and over 60

 3  companies received free smoke capacity tests on their

 4  vehicles.  Another six companies allowed staff to collect

 5  vehicle profile data for 60 vehicles, and thereby learned

 6  which technology would serve the vehicles.  Each of these

 7  companies received updates to the development of the rule.

 8           During 2002 and 2003, staff met approximately ten

 9  times with the work group that included members of the

10  California Refuse Removal Council, plus representatives of

11  Waste Management and BPI.  Staff had many phone and

12  e-mails contacts with various municipalities throughout

13  the state and held three separate meetings with them to

14  discuss the rules and implementation issues.

15           A joint effort was undertaken with the Integrated

16  Waste Management Board to provide information to those

17  possibly missed in the earlier contract.  Staff also

18  discussed the proposed rule with environmental

19  organizations on numerous occasions.  In addition, staff

20  attended several of the South Coast Air Quality Management

21  District's workshops and work group meetings on their

22  clean on-road residential and commercial refuse vehicles

23  rule.

24           Staff created a separate website in addition to

25  the diesel risk reduction website posting all documents


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 1  including presentations associated with this rule.  As

 2  revisions to the control measure were made, subscribers to

 3  various list serves received notices of workshops and

 4  changes to the website.  On June 6th, 2003, staff hosted

 5  the public notification and the staff report on the

 6  website.  In summary, staff has worked with many

 7  stakeholders through workshops, meetings, conference

 8  calls, focused work group meetings, one-on-one

 9  communication to develop this solid waste vehicle proposed

10  rule.  Thank you.

11           CHAIRPERSON LLOYD:  Thank you very much.

12           Questions.  Any question from the Board at this

13  time?

14           Mr. Calhoun.

15           BOARD MEMBER CALHOUN:  Would the staff comment

16  again on the durability and effectiveness of these

17  systems?

18           HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

19  HEBERT:  First of all, the systems have to go through a

20  very rigorous verification process where they have to

21  basically prove out durability to 50,000 miles and prove

22  that emissions are maintained at the same emissions level

23  as they were new.  They have to do a minimum amount of

24  in-field testing, actually be on a vehicle or piece of

25  equipment to show that they function properly in the


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 1  field.  And then they also carry a five-year 150,000 mile

 2  warranty.

 3           BOARD MEMBER CALHOUN:  Another question.  It's my

 4  understanding the municipalities are no longer responsible

 5  for the control that's taken out.

 6           HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

 7  HEBERT:  Yes, sir.

 8           BOARD MEMBER CALHOUN:  Now, what about those

 9  vehicles that the municipalities only accept?

10           HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

11  HEBERT:  They are considered the owner, and they must

12  comply with the program.

13           BOARD MEMBER CALHOUN:  Who enforces this?

14           HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

15  HEBERT:  It's going to be the Air Resource Board.  We will

16  do it through our periodic smoke inspection program by

17  checking records, cross-checking vehicles that are

18  documented to have devices on or retired or have been

19  replaced.  And then as we get a little bit further into

20  the program by the heavy-duty roadside inspection, then

21  the vehicles will be cross-checked with what they're

22  supposed to have on them, or if they're supposed to have

23  been retired and the vehicle should not be in the fleet

24  any longer.

25           CHAIRPERSON LLOYD:  Professor Friedman.


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 1           BOARD MEMBER HUGH FRIEDMAN:  There is a -- in the

 2  proposed rule there is a compliance extension automatic

 3  for an owner of "three or fewer" of these vehicles.  That

 4  is, they don't have to phase-in regardless of the model

 5  year, as I understand it.  And is that right?

 6           HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

 7  HEBERT:  It's for each group.  If they have less than four

 8  vehicles, they don't have to comply with the 100 percent

 9  requirement for each group.

10           BOARD MEMBER HUGH FRIEDMAN:  I'm not clear on

11  that.

12           HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

13  HEBERT:  Well, if they only have four vehicles, chances

14  are they either have, you know, in the same --

15           BOARD MEMBER HUGH FRIEDMAN:  No.  They have fewer

16  than four.  If you have four, there's no extension, as I

17  understand it.  It's fewer than four.

18           HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

19  HEBERT:  Fewer than four.

20           BOARD MEMBER HUGH FRIEDMAN:  I don't want to

21  quibble, but you plucked a number.

22           HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

23  HEBERT:  Fewer than four.

24           BOARD MEMBER HUGH FRIEDMAN:  And Annette, suppose

25  the mix -- does it matter what the mix of those four model


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 1  years are?  Some could be very old some, some could be

 2  new -- of the three or two.  But regardless of their model

 3  year, they don't -- they don't have to meet or comply

 4  until 2010; is that correct?

 5           RETROFIT IMPLEMENTATION SECTION MANAGER STEELE:

 6  This is Nancy Steele.

 7           CHAIRPERSON LLOYD:  Can you put the mic on?  Is

 8  your mic on?

 9           RETROFIT IMPLEMENTATION SECTION MANAGER STEELE:

10  Yes.  This for the model years 1988 to 2002, they would

11  have to comply by 2007.  For 1960 to 1987 vehicles they

12  would comply by 2010.  So they have one, two, or three

13  vehicles, those would be their final compliance dates.

14           BOARD MEMBER HUGH FRIEDMAN:  So when you say

15  compliance extension, what do you mean?

16           RETROFIT IMPLEMENTATION SECTION MANAGER STEELE:

17  Rather than having to comply --

18           BOARD MEMBER HUGH FRIEDMAN:  Early.

19           RETROFIT IMPLEMENTATION SECTION MANAGER STEELE:

20  It would be difficult to figure out what 10 percent of

21  three is.  So we thought it would be easier -- plus since

22  these are very small businesses, we also thought it might

23  help them out.

24           BOARD MEMBER HUGH FRIEDMAN:  Well, 10 percent of

25  four is .5.


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 1           RETROFIT IMPLEMENTATION SECTION MANAGER STEELE:

 2  Well, because most of the compliance dates are 25 percent,

 3  50 percent, 100 percent, actually, that first year is the

 4  only one.

 5           BOARD MEMBER HUGH FRIEDMAN:  So one out of four?

 6           RETROFIT IMPLEMENTATION SECTION MANAGER STEELE:

 7  Yes.

 8           BOARD MEMBER HUGH FRIEDMAN:  How is "owner"

 9  defined?  I couldn't find a definition anywhere in the --

10  but I may have just missed it.

11           RETROFIT IMPLEMENTATION SECTION MANAGER STEELE:

12  We're using the same definition as used by the heavy-duty

13  vehicle group.  That means the owner is the person that

14  owns the vehicle legally and also has control over the

15  vehicles.

16           BOARD MEMBER HUGH FRIEDMAN:  Or directly or

17  indirectly to affiliates?

18           RETROFIT IMPLEMENTATION SECTION MANAGER STEELE:

19  Yes.

20           BOARD MEMBER HUGH FRIEDMAN:  It's broad.  You

21  couldn't take a fleet and set up six or eight or ten

22  different entities, each of which owned three?

23           RETROFIT IMPLEMENTATION SECTION MANAGER STEELE:

24  Yes.

25           BOARD MEMBER HUGH FRIEDMAN:  Not that anybody


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 1  would do that.  But that covers it.  Okay.  Thank you.

 2           CHAIRPERSON LLOYD:  Dr. Friedman.

 3           BOARD MEMBER WILLIAM FRIEDMAN:  I just want to

 4  get a better handle on numbers.  In the state, how many

 5  such vehicles are we talking about, total?

 6           HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

 7  HEBERT:  It's about a little over 11,000.  Between 11- and

 8  12,000 right now.

 9           BOARD MEMBER WILLIAM FRIEDMAN:  And then of that,

10  how many owned are by entities with four or less vehicles?

11           HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

12  HEBERT:  Four or less vehicles --

13           BOARD MEMBER WILLIAM FRIEDMAN:  I'm sorry.  Less

14  than four vehicles.

15           HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

16  HEBERT:  It's probably less than 1 percent, I would guess.

17           BOARD MEMBER WILLIAM FRIEDMAN:  So you're talking

18  about 1,000 or so -- of the total number of vehicles, it's

19  going to be 1,000.

20           HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

21  HEBERT:  Less than 1,000.

22           BOARD MEMBER RIORDAN:  Less than 1,000.

23           BOARD MEMBER WILLIAM FRIEDMAN:  And in the model

24  years '60 to '87, with the 12,000, how many are in that

25  category?


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 1           HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

 2  HEBERT:  Just '60 to '87, not counting how big their

 3  fleets are?

 4           BOARD MEMBER WILLIAM FRIEDMAN:  Just for 1960 to

 5  '87 engine model years, in that group, how many of those

 6  vehicles exist?

 7           HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

 8  HEBERT:  It's about a third of the population, so that

 9  would be --

10           BOARD MEMBER WILLIAM FRIEDMAN:  About a third.

11           HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

12  HEBERT:  About 3,000.

13           BOARD MEMBER WILLIAM FRIEDMAN:  And then '88 to

14  '93?

15           HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

16  HEBERT:  '88 to '93 would be about 15 percent.  Let me

17  look that up.  It's about 15 percent.

18           BOARD MEMBER WILLIAM FRIEDMAN:  So about 15

19  percent or so --

20           HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

21  HEBERT:  Is 15, one-five.

22           BOARD MEMBER WILLIAM FRIEDMAN:  About 50 percent

23  or more is '94 to the present?

24           HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

25  HEBERT:  Yes, sir.  A little bit more.


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 1           BOARD MEMBER WILLIAM FRIEDMAN:  Thank you.

 2           CHAIRPERSON LLOYD:  What about the -- in the

 3  summer you don't talk about the NOx benefits.  But you're

 4  assuming we're going capture some NOx benefits as well.

 5           HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

 6  HEBERT:  Yes, sir.  About -- depending on how all the

 7  verifications lay out, between 15 and 30 percent NOx

 8  reduction.

 9           CHAIRPERSON LLOYD:  That also depends on what

10  retrofit device they're going to use.

11           HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

12  HEBERT:  It also depends heavily on repowers and

13  replacements.  That's where the bulk of the NOx reductions

14  come from.

15           CHAIRPERSON LLOYD:  So when you look at the

16  number of vehicles -- in terms of the number of

17  properties, when you talk about these 12,000 vehicles, how

18  many properties are we talking about?  And then if we

19  bring that down, how many properties have three or less

20  vehicles?

21           HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

22  HEBERT:  There's about 700 companies -- so 14 percent of

23  the companies have three or less.

24           CHAIRPERSON LLOYD:  14 percent, one-four?

25           HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF


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 1  HEBERT:  Of the companies, but they don't have --

 2           CHAIRPERSON LLOYD:  But 14 percent of those

 3  companies then.  Okay.  So that's --

 4           HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

 5  HEBERT:  Of the 70 companies.

 6           CHAIRPERSON LLOYD:  That's what we're talking

 7  about.  How are they -- are they distributed evenly

 8  throughout the state?

 9           HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

10  HEBERT:  Yes, sir.

11           CHAIRPERSON LLOYD:  Yes.  Professor Friedman.

12           BOARD MEMBER HUGH FRIEDMAN:  One more question.

13  What are the owners of the 13 percent of the fleet, the

14  current contract-covered fleets that don't have a reopener

15  because of law change -- because of a change such as this?

16  What are they to do to recover the cost?

17           EXECUTIVE OFFICER WITHERSPOON:  Professor

18  Friedman, because the rule is phased-in over a seven-year

19  period, we believe virtually all the contracts will open

20  at some point during that window.  So even if there's not

21  an explicit reopener clause, there's both an opportunity

22  to request reopening before the contract lapses, and then

23  once the contract lapses, to increase the rate to recoup

24  the cost of having complied both before that lapse date

25  and subsequently.


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 1           CHAIRPERSON LLOYD:  Can I ask a question of the

 2  witnesses?  We have over 30 witnesses here signed up.  Of

 3  those, how many -- and I won't -- of the 700 companies, we

 4  obviously have 100 here or less.  So on the witness

 5  list -- could you put your hands up in the audience --

 6  represent companies that have three or less?

 7           BOARD MEMBER D'ADAMO:  They're out driving trucks

 8  today.

 9           Mr. Chairman, what I'm wondering is maybe the

10  definition of what is a small company is too small, and

11  more of what's out there may be some of the smaller

12  mid-size operators that operate more.

13           CHAIRPERSON LLOYD:  So if I --

14           BOARD MEMBER D'ADAMO:  If I could have that

15  information.

16           CHAIRPERSON LLOYD:  So if I rephrase that to 15

17  or less, how many would go up?  15 or less.

18           (Thereupon, there was a show of hands.)

19           CHAIRPERSON LLOYD:  One, two.  Okay.

20           (Thereupon, there was a show of hands.)

21           CHAIRPERSON LLOYD:  50 or less.  That's helpful.

22           EXECUTIVE OFFICER WITHERSPOON:  Dr. Lloyd, a

23  comment on the witness list.  I believe we don't have the

24  complete one before you, because there was another batch

25  of names including all of the environmental


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 1  representatives.  So I think the witness list is more than

 2  40 individuals.

 3           CHAIRPERSON LLOYD:  More than 40?

 4           EXECUTIVE OFFICER WITHERSPOON:  More than 40.

 5  Four-zero.

 6           CHAIRPERSON LLOYD:  Thank you.

 7           EXECUTIVE OFFICER WITHERSPOON:  It's 45.

 8           CHAIRPERSON LLOYD:  I definitely don't have that

 9  one.  Thanks.

10           EXECUTIVE OFFICER WITHERSPOON:  It's coming.

11           CHAIRPERSON LLOYD:  With that, I better -- unless

12  there are any more questions, we better promptly move

13  ahead to the witness list.  And I would like to call up

14  the first of the three witnesses signed up, Mark Leary,

15  Integrated Waste Management Board, Yvonne Hunter, and

16  Daniel Meyers.

17           Welcome, Mark, and thanks for coming.  And thank

18  Linda and the Board and you for working diligently with

19  staff and helping us throughout this issue.  So really

20  shows great teamwork.  Thanks for coming today.

21           MR. LEARY:  Thank you, Dr. Lloyd, and thank you

22  members for this opportunity to testify before you.

23           I am Mark Leary, the Executive Director of the

24  California Integrated Waste Management Board.  I'm here to

25  provide testimony on behalf of our Chair, Linda


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 1  Moulton-Patterson.  Unfortunately, the Chair is unable to

 2  testify here today due to some recent arthroscopic surgery

 3  that has precluded her from traveling to Sacramento.  I'm

 4  here to present her remarks.

 5           It's a pleasure to be here today and have this

 6  opportunity to discuss the proposed diesel particulate

 7  matter control measures for the on-duty heavy-duty diesel

 8  fueled solid waste collection vehicles.  Our number one

 9  mission at the Integrated Waste Management Board is to

10  protect public health, safety, and the environment for all

11  Californians.  It's because of this mission that we share

12  your concern for California's air quality.

13           Our staff has been working diligently with the

14  Air Resources Board since the inception of this rule

15  making.  As such, we want to gratefully acknowledge and

16  appreciate the ongoing efforts of the Air Board and have

17  greatly enjoyed the opportunity to work with your staff.

18           As a representative of the California Integrated

19  Waste Management Board, we support the Air Board rules in

20  this area.  We look forward to continuing our work

21  together to address these air quality issues through our

22  cross-media affiliations.

23           We understand there's a definite need to reduce

24  diesel fuel particulate matter.  As the former Mayor of

25  Huntington Beach and one of Governor Davis' appointees


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 1  representing the public sector, the Chair is sensitive to

 2  the concerns of local jurisdictions and counties.  Our

 3  job, therefore, moving forward is a delicate one.

 4           We are all currently enduring financial

 5  limitations that impede our daily actions.  Yet, it's my

 6  intention to show good faith in resolving these

 7  situations.  It is precisely because of these concerns and

 8  the uncertainty of the upcoming legislation that we hope

 9  to work together to address these limitations.  The Waste

10  Board is fully aware of the importance of clean air and a

11  clean environment and respect the Air Board's role in

12  managing and protecting California's air quality, just as

13  we value our own role as environmental stewards when it

14  comes to waste diversion and landfill monitoring.

15           The principal component of our stewardship is

16  defined by Integrated Waste Management Act of 1999 which

17  required California's jurisdictions to reduce landfill

18  disposal by 50 percent by the year 2000.  Through the

19  planning of waste diversion efforts of local

20  jurisdictions, California has reached 48 percent on a

21  statewide average.  And as a result, California now has

22  adequate disposal capacity for the next 15 years.

23           In addition, the Waste Board's implementation of

24  the Act has created a new materials management economy

25  based on the conservation and creative reutilization of


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 1  our resources.  This strategy has eclipsed the

 2  disposal-based waste management system of the past and has

 3  set the stage for substantial economic growth.

 4           Currently, California's newly developed diversion

 5  and recycling businesses amount to a $10 billion industry

 6  consisting of 5300 enterprises and employs 85,000

 7  Californians.  Waste diversion's almost twice the economic

 8  impact on a per-ton basis as waste disposal.  Given this

 9  growth in employment and business development, the Board

10  is continuing to pursue higher levels of waste diversion

11  as we strive for zero waste, which will ultimately benefit

12  California's economy and protect California's resources.

13           However, these efforts have resulted in placing

14  more diesel-powered waste collection vehicles and trucks

15  on our California roadways and created an unintentional

16  increase of particulate emissions, hence our support for

17  your rule.

18           In conclusion, I'd like to reiterate we are

19  committed to joining the Air Resources Board as we set the

20  appropriate policies in motion to guide the development of

21  a sustainable California.  By doing so, I'm certain that

22  we can continue to work together and ensure all

23  California's resources are protected now and for future

24  generations to come.

25           On behalf of our Chair, Linda Moulton-Patterson,


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 1  thank you for this opportunity to testify.

 2           CHAIRPERSON LLOYD:  Thank you very much, Mark.

 3  Thank you.

 4           Yvonne Hunter, Daniel Meyers, Mary Pitto.

 5           MS. HUNTER:  Good morning, Board members.  I'm

 6  Yvonne Hunter with the League of California Cities, and I

 7  thank you very much for this opportunity to testify.

 8           As you probably have heard from us and numerous

 9  local governments, we were in strenuous opposition to the

10  rule as it was originally put out.  The League, California

11  State Association of Counties, the Rural -- I'm sorry --

12  Regional Council of Rural Counties -- I always get that

13  confused -- and the Solid Waste Association of North

14  America sent a letter in July outlining our concerns.  The

15  concerns that -- and staff adequately reflected them --

16  dealt with what we viewed was the inappropriate

17  requirements on local government to serve as the

18  enforcement of compliance arm of the ARB, in part in areas

19  over which we had no control.  And to sort of add insult

20  to injury, the rule, the way we interpret it, put us on

21  the hook for penalties if our haulers didn't comply.

22           I need to specify also that I'm speaking on

23  behalf of my colleague Karen King from CSAC.  She was not

24  able to attend, but she and I have been in close

25  communication.  She asked me to say all of my remarks,


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 1  save one at the end, applies to CSAC as well.

 2           One of the key issues that local government

 3  raised and that we talked to the staff about extensively

 4  is how solid waste is regulated in local governments and

 5  the roles that cities and counties have and do not have.

 6  And the key thing is a distinction between those haulers

 7  who operate under a contract or a franchise -- usually

 8  it's an exclusive contract or franchise -- where we have

 9  rate-setting authority, as opposed to those haulers who

10  operate under a business license, a permit, perhaps under

11  a franchise that's not exclusive, where basically the

12  hauler operates with the permission of the local

13  government, and that is it.  The hauler establishes its

14  own price structure.  It negotiates with businesses.

15           I'd say 98 to 99 percent of residential solid

16  waste is either collected by the local government itself

17  or through an exclusive franchise or contract, but a lot

18  of the commercial is collected through what's called open

19  competition.  And in many instances while the hauler may

20  get a business license permit, we don't distinguish it

21  between them.  And we perhaps can't even differentiate

22  them with a permit from those who ask for a permit for a

23  beauty salon.  So we needed to distinguish those issues in

24  the regs.

25           I need to compliment and thank the staff.  Your


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 1  staff -- you have great staff.  And over the last month

 2  we've had extensive conversations, e-mails, meetings with

 3  them.  They were very gracious with their time, generous

 4  with their time.  And the changes that they are proposing

 5  clearly address all of our concerns.  We think it makes it

 6  a much better rule, and we would encourage you to adopt

 7  those changes.  And if you do, the League and CSAC will

 8  remove our opposition.  And the League -- I'm authorized

 9  to go ahead and say that the League will enthusiastically

10  support the rule.

11           I also need to emphasize that our opposition was

12  focused on those operators that work through contract or

13  franchising, in no way reflected any opposition from

14  municipal-run operations.  So the League is very happy to

15  work with you in getting any information out to local

16  governments about this rule, and we thank you very much

17  for your cooperation.

18           CHAIRPERSON LLOYD:  Thank you very much, indeed.

19           Daniel Meyers.

20           I'm going to ask if people can keep their

21  comments to about three minutes, if you would.  As I'm

22  looking ahead, I'm just doing the arithmetic here looking

23  ahead to the number of witnesses and multiplying.  It's

24  pretty high so --

25           MR. MEYERS:  I will keep it brief.  Good morning,


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 1  and thank you for the opportunity to present today.

 2  Again, my name is Dan Meyers, representing the city of

 3  Los Angeles.  I just want to say the city does support the

 4  Board's goal to improve air quality throughout the state.

 5  And the city is committed to complying with all fleet air

 6  standards.  In fact, clarification, I turned in a card in

 7  opposition.  In fact, the city supports the rule in

 8  general.  We do oppose certain language of the rule,

 9  specifically hearing Yvonne from the League of Cities, of

10  the role of municipalities.  Cities strongly opposes

11  making the municipalities responsible for complying with

12  the Air Resource Board and strongly opposes making cities

13  liable for violations and fines.

14           CHAIRPERSON LLOYD:  So with the modification

15  you're okay?

16           MR. MEYERS:  Absolutely.

17           CHAIRPERSON LLOYD:  Great.

18           MR. MEYERS:  So with that -- I mean, that pretty

19  much summarizes it.

20           CHAIRPERSON LLOYD:  That's all we need.  That's

21  great.

22           MR. MEYERS:  Thank you.  See, that's brief.

23           CHAIRPERSON LLOYD:  Thank you.

24           Mary Pitto, Harry Schrauth, Michael Mohajer.

25           MS. PITTO:  Good morning.  I'm Mary Pitto with


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 1  the Regional Council of Rural Counties, and I appreciate

 2  this opportunity.  I'm here to just let you know that with

 3  the changes as staff has proposed, the Regional Council of

 4  Rural Counties are withdrawing our opposition and support

 5  the rule.  But I especially -- we would like to note that

 6  we would like to maintain the original phase-in schedule

 7  for older vehicles as they're likely to be -- the three or

 8  less vehicles because they're likely to be in our

 9  jurisdictions.  We represent 30 rural counties.  Thank

10  you.

11           CHAIRPERSON LLOYD:  Thank you very much indeed.

12           Does staff have a problem with that?

13           EXECUTIVE OFFICER WITHERSPOON:  It will come up

14  during the environmental testimony later.

15           CHAIRPERSON LLOYD:  Okay.

16           MR. SCHRAUTH:  Chairman Lloyd and members of the

17  Board, I'm Harry Schrauth with the Recycling Solid Waste

18  Program, Supervisor for the city of Oakland.  The city of

19  Oakland appreciates the assistance of your staff in

20  working with us on our previous objections to the role of

21  municipalities.  And with the proposed changes that we

22  heard today, the city of Oakland would support the staff

23  recommendation.

24           CHAIRPERSON LLOYD:  Thank you very much indeed.

25           Mike Mohajer, Yvette Agredano, and Sam Mendoza.


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 1           MR. MOHAJER:  Good morning, Chairman Lloyd, and

 2  members of the Board.  I'll do my best to be within the

 3  three minutes.  My name, for the record, is Mike Mohajer.

 4  I'm with the Los Angeles Integrated Waste Management Task

 5  Force.  Our Task Force was formed pursuant to California

 6  Integrated Waste Management Act and its members include

 7  appointees of the California Board of Supervisors, League

 8  of Cities, South Coast AQMD, City of Long Beach, as well

 9  as the waste industry.

10           I would like on behalf of the L.A. County

11  Department of Public Works and the Task Force to express

12  our appreciation to you and your staff in being so

13  responsive to some of our comments that was expressed in

14  the two letters that was forwarded to you in August 21st

15  and September 11th, 2003.  Not having seen the specific of

16  the proposed amendment that staff discussed here --

17  however, I have been in the background involved, that's

18  why on the card I said I'm not opposing it.  I'm not in

19  favor of it because I haven't seen the written language,

20  and hopefully after this period we'll get a chance.

21           But having said that, some of the rumors that I

22  have heard are that -- there are three areas that we do

23  have concern.  The first one, we believe the information

24  that the ARB staff is looking for can be obtained from

25  local enforcement agencies that are approved by the Waste


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 1  Board pursuant to Section 40130 of the Public Resources

 2  Code and 71332 of the Title 14 of the Code of Regulations.

 3           In reference to Los Angeles County, you also note

 4  the implementation that waste collection in a majority of

 5  the cities as Yvonne mentioned for the commercial is open

 6  market and in the unincorporated areas are also open

 7  market.  So it made it very difficult for municipality, 88

 8  cities, and the county unincorporated area to enforce

 9  those.  So I was real pleased to hear that compliance has

10  been eliminated.  But it is still -- in reference to the

11  Section 2021.2, I would say paragraph B that still remains

12  that it be submitted -- information submitted to us by the

13  haulers are wrong, then the municipalities are going to be

14  subject to penalty.

15           And lastly, I saw this revised language that as

16  far as the scope of applicability is concerned, I saw some

17  language that now Air Board is expecting that the cities

18  and the contractors negotiate a new rule.  And our

19  position is that really the contracts between the

20  municipalities and the haulers are -- that is where it

21  stops.  And the Air Board doesn't need to be involved,

22  even indicating as it's indicated in this scope of

23  applicability.

24           So hopefully we can work with you.  But again, I

25  want to express thanks very much for everything your staff


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 1  has done, a substantial change from original draft.

 2           CHAIRPERSON LLOYD:  Thank you very much indeed.

 3           Yvette Agredano, Sam Mendoza, Frank Caponi.

 4           I notice here you've got oppose here.

 5           MS. AGREDANO:  Yes, that's correct.

 6           CHAIRPERSON LLOYD:  Although when we had the

 7  representative of the League of Cities, SWANA was a piece

 8  of that.  Can you clarify why you're one of the members of

 9  the signing of that opposing and when, in fact, we had

10  Yvonne Hunter testify she's changed her mind.

11           MS. AGREDANO:  Well, it is correct.  Yvette

12  Agredano representing the California Chapters of SWANA.

13           It is correct that we submitted a joint letter in

14  opposition of the rule back in July with the League of

15  Cities and CSAC and CRRC.  However, although we do

16  appreciate staff working with us to address those

17  concerns, the California Chapters of SWANA still do have

18  some concerns with the proposed regulations.  And you

19  should have before you a letter dated September 23rd

20  detailing our concerns, so I will just summarize them here

21  for you.

22           The first concern that we have -- it's more of an

23  alternative proposal.  And that is that the information

24  that the ARB is seeking to gather on haulers, under Title

25  14 of the California Code of Regulations, that is already


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 1  designated to the local enforcement agencies.  Under

 2  Section 17332, LEAs are required to maintain a complete

 3  listing of all persons holding approvals to provide solid

 4  waste collection services within its jurisdiction.

 5  Currently, the LEAs maintains that list, and it includes

 6  most, if not all, of the information that the ARB is

 7  seeking under these proposed regulations.

 8           We feel that the regulations should be amended so

 9  that the ARB works solely with the LEA, instead of with

10  local governments to gather the information.  Since before

11  you had proposed regulations, local governments would only

12  have to provide information on those haulers for which

13  they regulate the rates.  We're wondering where the ARB

14  would receive the information on the haulers for which

15  local governments do not regulate the rates.  And it is my

16  impression that the ARB would collect that information

17  from the same reports as provided by the LEA.  So we are

18  just wondering why the LEA cannot provide the information

19  on all haulers.  We feel that failure to amend the

20  regulations in this manner will result in the duplication

21  of efforts and ineffective application of state and local

22  resources towards gathering this information twice.

23           Our second concern is that we are currently

24  opposed to the section under 2021.1 which states

25  noncompliance by a municipality would have them subject to


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 1  penalties.  We feel that this proposed rule would subject

 2  local governments to penalties for failure to submit the

 3  proper reports or for submitting a late report, which may

 4  be a result of haulers not providing the proper

 5  information to these municipalities.  We feel that this

 6  noncompliance language should be taken out of the proposed

 7  regulations.  And we would be willing to work with staff

 8  further on these two issues.  And I will be available for

 9  questions if you do have any.

10           CHAIRPERSON LLOYD:  Thank you.

11           Staff, any comments?

12           EXECUTIVE OFFICER WITHERSPOON:  We looked at the

13  issue of adding local enforcement agencies -- that's what

14  LEA stands for -- to the regulations, and we were

15  concerned that as a group that they were unaware of these

16  late-breaking discussions and not had an opportunity to

17  represent themselves in the discussion.  It could arguably

18  create a notice issue for us and a clout over the

19  regulation.  We do believe that the whole subject of

20  reporting is something that we're going to work our way

21  through in the implementation process.  And as the witness

22  alluded, we, of course, will draw on every resource

23  available to us to get the data we need.  You will hear

24  later testimony from industry seeking a BACT report on how

25  it's going, and we'll use every source available.


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 1           With respect to the penalty provision, it's only

 2  a penalty if the local governments do not provide the

 3  information that's required of them.  And our intent is

 4  that's principally when they're the owners of the

 5  vehicles -- and we would not go after them, enforce

 6  against them for something that the haulers did not do.

 7  It's just there for completeness.  I think it should stay

 8  in the regulation, and we'll be judicious about the use of

 9  it.  There are times when local governments don't submit

10  anything at all, and we just need to send them a citation

11  to say, "You really do have to abide by this regulation.

12  You own these vehicles."

13           CHAIRPERSON LLOYD:  Thank you.  Thank you very

14  much.  Sam Mendoza, Frank Caponi, Jed Mandel.

15           MR. MENDOZA:  Good morning.  My name is Sam

16  Mendoza with the city of San Diego.  We own and manage a

17  fleet of 138 refuse haulers for the city.  In 1999, we

18  embarked in a special dual fuel program with the money

19  from the ARB, Carl Moyer money, and the city of San Diego

20  was an expenditure of about $4.6 million in one of the

21  best available technologies at the time.

22           Since that date, we have banked 76.5 tons of NOx

23  by reducing -- using the dual fuel program.  Additionally,

24  we have reduced the PM by 50 percent.  We are asking for a

25  special consideration for the 77 trucks.  We agree with


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 1  the PM proposal, and it is a good one.  However, we have

 2  only been in this program about two and a half years.  Our

 3  contractual obligation is for five years.  And it seems

 4  that it should not be outdated in a two-and-a-half year

 5  cycle.  All of the vehicles that we own other than that

 6  are seven years, 70,000 miles, and they -- you know, they

 7  stay that way.

 8           The other concerns that we have, of course, we

 9  paid 30,000 for each one -- each system on there.  We

10  have -- in the Level 1 on the last one that we had, it

11  called for a reduction of 25 to 69 percent.  We've

12  actually achieved 50 percent PM reduction, and that is

13  certified on your executive order which you should have a

14  copy of A 3260021 reduces it from .10 to .05 using the

15  dual fuel engine.  We also showed that the engine does run

16  one tenth -- 1 to 10 ratio -- excuse me.  A little bit

17  nervous.  And we have supplied the documentation in front

18  of you to show that the delusion rate including the 1200

19  RPM diesel is 90.50.

20           The only request that we would have is that the

21  best available control technology for that engine be

22  modified slightly to allow a emergency fallback limp home

23  motor, rather than have it shut off on the highway and

24  stall in the middle of the road.  What that does, of

25  course, it just allows us to get home.  We can't operate


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 1  any longer than the specific time.  It has to be repaired

 2  before it sees the road again.

 3           CHAIRPERSON LLOYD:  Thank you.  Questions?

 4           Dr. Friedman.

 5           BOARD MEMBER WILLIAM FRIEDMAN:  So 62 percent of

 6  your vehicles are spewing out diesel PM; right?  I mean --

 7           MR. MENDOZA:  Yes.

 8           BOARD MEMBER WILLIAM FRIEDMAN:  These are the

 9  numbers.  What would you like us to do about that?

10           MR. MENDOZA:  The remaining fleet we are -- we do

11  agree with the program, and we will implement the PM

12  program as proposed.  We don't have any problem.

13           The only consideration that we would like is for

14  going into this program early, you know, without any

15  mandate and cleaning up the air, which we've already

16  banked, you know, 76 tons of NOx, and we've reduced the PM

17  by 50 percent without having to do so.  So all we're

18  asking for is for these 77 trucks that we still are in

19  contractual obligation is we would have some type of

20  consideration for the remaining three years, you know, or

21  four years that we have to pay these trucks off.

22           BOARD MEMBER RIORDAN:  Excuse me, Mr. Chairman.

23  Has staff thought about this unique case?

24           EXECUTIVE OFFICER WITHERSPOON:  It's a dilemma.

25  The vehicles that the witness is talking about are new


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 1  purchases, and new vehicles would have entered the fleet,

 2  in any event, less clean than what was purchased, you

 3  know, less NOx reduction.  And so there were public moneys

 4  applied.  And the city of San Diego moved in this

 5  direction with dual fuel and principally for the NOx

 6  reductions.

 7           The rule before you is a particulate control

 8  rule, and we've tried to think through different ways of

 9  giving them some flexibility, whether you excluded the

10  77 vehicles from your calculation as you went through the

11  percent that needed to be regulated or moved them to

12  different groups.  But we're not completely convinced

13  that's overly burdensome since we're talking about

14  particulate effects, and the particulate is still there.

15  But if you want us to keep searching for the right

16  approach for this unique situation, we will continue

17  endeavoring to do so and try to come up with something in

18  the 15-day change period.

19           MR. MENDOZA:  The reminder of the fleet will be

20  in compliance and also will all the future purchases.  We

21  have no problem with the proposed regulation.  It is a

22  good one.  We agree with it.  However, this one being not

23  even halfway through our cycle where we have to continue

24  to pay this for five years, we feel that we have started

25  early and we should receive some type of consideration for


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 1  it.

 2           CHAIRPERSON LLOYD:  I would like to take maybe

 3  Ms. Witherspoon up on the suggestion that in this

 4  particular case staff continue to work with the city and

 5  see if we can come up with a mutually satisfactory

 6  agreement and maybe report back to us on that.

 7           BOARD MEMBER RIORDAN:  I think that's only fair,

 8  Mr. Chairman.

 9           CHAIRPERSON LLOYD:  Ms. D'Adamo.

10           BOARD MEMBER D'ADAMO:  I just had a question on

11  one of the witness' last points.  I'm not sure I

12  understood it, about the emergency situation with the

13  vehicle having to pull over.  Could staff respond to that?

14           MR. MENDOZA:  As it states is that it cannot

15  operate on diesel at any time.  We are only asking for the

16  modification on these 77 trucks to allow us to limp home

17  or run on diesel, you know, when they stall, rather than

18  stalling in the middle of the road and having them towed

19  in.

20           EXECUTIVE OFFICER WITHERSPOON:  The issue is that

21  we've defined BACT in the regulation to include

22  alternative fuel vehicles that are pure alternative fuels.

23  So this particular product does not meet our BACT

24  definition.  You have two things you can do about that.

25  One is to change the BACT definition, which we would


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 1  oppose.  And the other is to craft a different sort of

 2  exemption, a different kind of flexibility that recognizes

 3  the unique characteristics of these vehicles.  They have a

 4  limp home mode and in pure diesel operation are not

 5  uniformly alternative fuel vehicles.

 6           CHAIRPERSON LLOYD:  Thank you.  Professor

 7  Friedman.

 8           BOARD MEMBER HUGH FRIEDMAN:  Is this a unique

 9  situation?

10           CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:  There

11  have not been a real large number of these types of

12  engines sold, and the company that makes them happens to

13  be in San Diego.  So I think that their market has been

14  more received in that area.

15           BOARD MEMBER HUGH FRIEDMAN:  But it's not a broad

16  widespread problem?

17           CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:  Not

18  real broad, no.  I don't think that exact technology is

19  even being manufactured any more, if I'm correct.

20           There are different types now that have better

21  environmental qualities.  But the issue with this is that

22  the vehicle actually runs on both fuels all the time.  The

23  limp home mode thing is what happens if you run on natural

24  gas.  It can get home on diesel.  That's something we can

25  deal with.


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 1           But if you look at the emission levels of the

 2  engines, they're certified at about half of the standard

 3  that a normal diesel would be.  But that's the same

 4  standard, by the way, that transit buses are certificated

 5  to.  And we're requiring transit buses to retrofit with

 6  particulate filters as well.  So these match the newer

 7  transit bus performance, and we require that retrofit on

 8  them.

 9           So I think the issue from our standpoint would be

10  to try to take a look at the timing.  And when you see

11  these 25, 50, 75, 100, maybe there's a way of shoving them

12  to the end and giving them more time to spread out the

13  money because they did do things to try to get the NOx

14  emissions down voluntarily early on.  And maybe that's an

15  equitable way of dealing with the engines.  We could do

16  that, with your direction in 15 days try to craft

17  something that would make --

18           CHAIRPERSON LLOYD:  Would that seem to be

19  promising?

20           MR. MENDOZA:  Sure.  That's great.  Anything

21  would be promising.  We really don't have anything at all.

22  So any consideration we would be -- would be given --

23  especially in light of the state's budget, our department

24  got cut $1.7 million this year, so we're scrambling.

25  Anything you could do would be very helpful.


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 1           CHAIRPERSON LLOYD:  I think we could direct the

 2  staff to work closely here and see about the issues Tom

 3  was raising as well.  Thank you very much.

 4           MR. MENDOZA:  Thank very much, Dr. Lloyd, Board.

 5           CHAIRPERSON LLOYD:  Frank Caponi, Jed Mandel,

 6  Emily Brown.

 7           MR. CAPONI:  I'm Frank Caponi, and I'm

 8  representing the L.A. County Sanitation Districts.  We

 9  support ARB's efforts in reducing diesel PM.  In fact, we

10  are part of ARB as well as the South Coast AQMD in testing

11  PM removal technologies as well as alternative engines on

12  both off-road and on-road vehicles.

13           The card that Dr. Lloyd has in front of him

14  presents us in opposition to this rule.  I'm willing to

15  remove that opposition conditionally pending some changes

16  to the rule.  We support generally the -- we support the

17  staff's recommendations.  I think Yvonne Hunter had put it

18  appropriately when she said that the municipalities cannot

19  be the enforcement arm of the ARB or any regulatory

20  agencies.  That's really what we're here today to speak

21  to.

22           The San district does not operate any residential

23  or commercial collection vehicles.  We are here, though,

24  to represent our -- or speak for our member cities as well

25  as our local governments.  These governments and local


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 1  cities cannot be held to enforce the rules of the ARB or

 2  any regulatory agency.

 3           But also it's important that I think we have an

 4  opportunity today to get this right because we're not only

 5  speaking of this rule, but there will be other rules

 6  coming up before you that will address retrofitting out

 7  fleets and holding municipalities responsible.  So with

 8  that regard, we hope that you accept the staff's

 9  recommendations.

10           Just some specifics about the staff

11  recommendations, on Section 2020, they propose to change

12  some definitions as necessary.  We cannot support that

13  language.  We do not support any definition that we don't

14  have in front of us and that we can't see the actual

15  language.  So hopefully in the next 15 days we can see

16  that language and fully support the rule.

17           We support all of the revisions that remove any

18  of the compliance on the part of the municipalities.

19  You've heard some previous testimony about reports --

20  reporting requirements that the municipalities will still

21  need to make.  We hope you will listen to those comments.

22  We don't think there should be any reason for any

23  duplicative requirements of the municipality.  If they're

24  collecting this information from other sources, then

25  that's where the collection should be.  We shouldn't have


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 1  dual reports here.

 2           And then finally, there's a Section D of 2021

 3  which holds the municipalities similarly responsible for

 4  incorrect information.  The municipality really cannot be

 5  held to bad information that's given to them by haulers or

 6  any other sources.  So in concert with removing some of

 7  the other provisions, we also support the removal of

 8  Section D.

 9           And with that, as I said, we would remove our

10  opposition and fully support the rule.  Thank you very

11  much.

12           CHAIRPERSON LLOYD:  Thank you.

13           Comments from staff?

14           EXECUTIVE OFFICER WITHERSPOON:  It's the same

15  comment as before.  It's the completeness issue for

16  enforcement.  It would be our intent to only go to a

17  penalty choice when a local government was not reporting

18  about its own vehicles accurately -- about its own

19  vehicles, but not to seek to reach through them to the

20  haulers.

21           CHAIRPERSON LLOYD:  Thank you.

22           Jed Mandel, Emily Brown, David Huerta.

23           We were just confused here, Jed, looking at your

24  letter and looking at what box you checked.

25           MR. MANDEL:  It's always prudent to be neutral


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 1  before this Board.

 2           (Laughter)

 3           CHAIRPERSON LLOYD:  You think you'll get better

 4  treatment if you put neutral rather than opposed?

 5           MR. MANDEL:  I think I know better than that.

 6  But as you'll hear in a moment, one of the reasons we're

 7  neutral is because we are strong proponents of the

 8  retrofit programs.  We have concerns about some of the

 9  implementation issues of this particular proposal.

10           But for the record, my name is Jed Mandel.  I'm

11  here today on behalf of the Engine Manufacturers

12  Association.  EMA's members include principal

13  manufacturers of the diesel fuel and alternative fuel

14  engines used in the solid waste collection vehicles

15  covered by today's proposal.

16           As I said a moment ago, as I hope you are all

17  aware, EMA is a strong proponent of retrofit programs.  We

18  are committed to working with ARB to develop a voluntary

19  incentivized retrofit program and other programs as a key

20  component of ARB's overall air quality improvement

21  strategy.

22           EMA supports retrofit programs that are

23  cost-effective, workable, and incentive-based, as opposed

24  to mandatory programs that enforce replacement, rebuild or

25  retrofit of engines before it makes economic or regulatory


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 1  sense to do so.

 2           The proposed rule is a mandatory program, and

 3  therefore I am opposed to it.  EMA is opposed to it.  But

 4  we do think it could be modified and become an

 5  incentivized program, which we would support.  In

 6  addition, as we detailed to you in separate written

 7  comments that were submitted to the record before the

 8  Board, the proposed rule is inconsistent with both federal

 9  and state law.  Even if the proposed rule were authorized,

10  it is seriously flawed because it fails to require the

11  availability and use of ultra low sulfur diesel fuel, a

12  subject that I've spoken to you about on many different

13  occasions.  But with retrofit programs, I think you know

14  how strongly we support the use of clean diesel fuels.

15           At present, ultra low sulfur diesel fuel will not

16  be required on a statewide basis until September 2006.

17  The proposed rule, however, would be implemented sooner.

18  Without the availability of ultra low sulfur diesel, the

19  desired PM retrofit technologies cannot function.  ARB has

20  recognized the linkage between the availability and use of

21  ultra low sulfur diesel as an enabler of PM retrofit

22  technology on many occasions and specifically in the urban

23  bus rule.  In that rule, the staff worked to assure that

24  ultra low sulfur diesel would be available for transit

25  fleets and adopted a rule requiring the use of ultra low


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 1  sulfur diesel.  You should do the same here.

 2           Despite our concerns about the rule, engine

 3  manufacturers want to work with ARB to implement cost

 4  effective, voluntary programs and encourage fleet owners

 5  to turn over and upgrade their motor vehicle fleets to

 6  lower-emitting technologies as soon as practicable.  EMA

 7  fully recognizes the potential benefits created by

 8  applying new technology to existing engines.  Engine

 9  manufactures who develop and are developing new

10  technologies, many of which have applications existing

11  designs.  Voluntary incentivized retrofit programs can be

12  a cost effective and practical tool for heaving emission

13  reductions and should be a key component of ARB's overall

14  program.

15           It would be our recommendation that the Board

16  direct the staff to implement this and similar retrofit

17  programs that you'll be hearing in October.  I believe

18  there's one in November.  It's the United Airlines Full

19  Travel Act, I think, coming back here to see you

20  frequently.  But we would encourage you to direct the

21  staff to work with all stakeholders on an effective and

22  voluntary incentivized program instead of a mandatory

23  program.  I'd be pleased to answer any questions.

24           CHAIRPERSON LLOYD:  Thank you.  Any questions or

25  comments?


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 1           You're saying you want to work voluntarily.  We

 2  trust you to work with us.  This is the same industry that

 3  we're going to come back in a few months and see how you

 4  complied with the consent decree.

 5           MR. MANDEL:  There are members of the industry

 6  who are subject to that consent decree.  But the industry

 7  as a whole, including those manufacturers, they are

 8  absolutely committed and incentivized to retrofit-type

 9  programs.  And just to give you some sense, we are working

10  literally as we speak on developing a program that we can

11  roll out on a nation-wide basis, which obviously there

12  would be very significant benefits to California.  We're

13  very serious about doing this.  We're trying to figure out

14  a way for it to make the most economic sense.  Obviously,

15  there's a question of who pays for it and how it gets paid

16  for.  But as the cliche goes, we think the program has

17  legs.  We're very concerned about the way in which it's

18  implemented on a mandatory basis and obviously concerned

19  about the statutory authority in California.

20           CHAIRPERSON LLOYD:  Can we ask Ms. Walsh to

21  comment on that?

22           GENERAL COUNSEL WALSH:  Yes.  Mr. Mandel has

23  raised two issues, one having to do with federal law.

24  Under federal law states are generally preempted from

25  adopting standards for new motor vehicles and motor


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 1  vehicle engines.  Of course, California enjoys the ability

 2  to have a waiver of that preemption.  In this case we're

 3  not really travelling on that ground in any event.  The

 4  regulations for the most part affect used vehicles,

 5  vehicles that are in use.  And there is no federal

 6  preemption that would effect this Board's ability to

 7  regulate in that arena.

 8           State law gives this Board ample authority to be

 9  addressing this particular problem of diesel PM.  In the

10  statutory provisions for addressing toxic air containments

11  such as particulate matter, there's specific authority to

12  adopt regulations that apply best available control

13  technology to motor vehicles and motor vehicle engines in

14  a written comment submitted on behalf of EMA.  There's an

15  intimation there that authority is limited to new motor

16  vehicles.  But that's based on some language taken from

17  the statute out of context.  The statute itself is very

18  broadly drawn in terms of this Board's authority.  And

19  there's no question that we have the authority to address

20  PM emissions -- toxic PM emissions from used motor

21  vehicles in a fashion that staff has proposed.

22           There is a statutory provision that is sited also

23  in the written comments from EMA related to the use of

24  certified devices on in-use vehicles.  That statute, which

25  does provide a limitation that requires specific statutory


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 1  authorization to require those types of devices on used

 2  vehicles, was adopted by the Legislature pre-1975 and a

 3  very specific factual context that does not apply here.

 4           We now are in a world where since that statute

 5  was adopted, we have not only the Toxic Air Contaminant

 6  Act, which is a 1983 vintage statute with clear direction

 7  to this Board to attack the emissions of toxic air

 8  contaminants from motor vehicles, new and used, also

 9  provisions in state law in the same chapter that the

10  specific NOx device language cited in the EMA's letter

11  comes from which directs this Board to attack emissions

12  from used heavy-duty diesel vehicles with a specific

13  direction to adopt maximum controls for those vehicles,

14  and this would be used vehicles.  That statute is a much

15  later adopted statute.  And to the extent Section 43600

16  would require specific legislative authority, I think you

17  have it there in Section 43701 to do exactly what staff

18  has proposed here.

19           CHAIRPERSON LLOYD:  Thank you.

20           Comments?

21           Dr. Friedman.

22           BOARD MEMBER WILLIAM FRIEDMAN:  Can we get a

23  comment about the low sulfur issue?  According to the

24  numbers that I asked for earlier, about 13 percent of the

25  vehicles are to be -- implementation is to occur prior to


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 1  uniform low sulfur diesel being available.  What is

 2  staff's comment about that?

 3           HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

 4  HEBERT:  Well, if you look at best available control

 5  technology there was instances where the operators/owners

 6  can choose solutions that do not require the use of ultra

 7  low sulfur diesel fuel.  There is technology in our

 8  verification pipeline that are emitable to commercial

 9  diesel fuel and ultra low sulfur diesel fuel.  So we

10  decided not to force the fleet-wide use of ultra low

11  sulfur due to various issues about delivery, you know,

12  price increases or above the standard commercial diesel

13  fuel price.  So we decided to leave it up to the owner in

14  selecting which technology you wanted to go with or which

15  option you wanted to go with, whether or not you would

16  switch over to ultra low ahead of the 2006 schedule.

17           EXECUTIVE OFFICER WITHERSPOON:  The regulation

18  also carries within it the authority of the Executive

19  Officer to waive the device requirement if the fuel is not

20  available.  And so we already know what the current

21  distribution of the diesel fuel is, and it would be sort

22  of an automatic process.  If these fleets were located in

23  far flung rural areas, we couldn't even contemplate going

24  to the trap requirements until the fuel is there.  And

25  either that would cause us to grant the one-year exemption


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 1  or to say just don't do Level 1 or talk about other

 2  possibilities like the rebuilds and the retirement.

 3           CHAIRPERSON LLOYD:  Ms. D'Adamo.

 4           BOARD MEMBER D'ADAMO:  How is a fleet operator to

 5  know what to do as far as timing?  I imagine we're not

 6  going to know and neither are they until they're butting

 7  up against a deadline, specifically in a situation where

 8  you expect it may become commercially -- the fuel may

 9  become commercially available.

10           CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:  I think

11  one thing is that in the major urban areas the fuel is

12  virtually available now, and virtually anybody can get it.

13  So for the vast majority of these vehicles, we know fuel

14  is there.  And these are secondary fuel vehicles.  They

15  can use low sulfur, should they choose to go with trap

16  retrofit approach on some of the vehicles.  And, of

17  course, that is only essentially two-and-a-half years away

18  before it would be the only fuel in the marketplace.

19           So what we're dealing with here is the need in

20  some limited instances to perhaps give these one-year

21  exemptions to let people that are having trouble getting

22  into rural areas, et cetera, delay until mid '06, in which

23  case the fuel is available.  And that's no longer an

24  issue.

25           EXECUTIVE OFFICER WITHERSPOON:  I asked staff to


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 1  put the schedule back up so you can see the years in which

 2  the control requirements hit for the different model year

 3  realms.  We're talking about that '88 through 2002 family

 4  with four and five implementation dates and low

 5  percentages where traps are certified, and traps are only

 6  certified now for '94 and newer.

 7           BOARD MEMBER WILLIAM FRIEDMAN:  That's 13 percent

 8  of the total, according to the numbers you gave me before,

 9  are involved in that number.  Because you told me there

10  were over 50 percent of all these vehicles in that '98 and

11  2002 category, and now you're talking about 35 percent or

12  55 percent.  That's 1,000 vehicles.

13           EXECUTIVE OFFICER WITHERSPOON:  What I'm getting

14  at is that where traps do not exist, either they are not

15  required at all and you move to another BACT

16  interpretation, such as rebuilding the engine or

17  repowering the engine -- I mean or replacing the vehicle,

18  if there's a hard requirement to comply or the trap is

19  available but the fuel is not, in which case the trap

20  installation requirement can be waived based on the

21  geographical location of the fleet until fuel is

22  available.

23           BOARD MEMBER WILLIAM FRIEDMAN:  It sounds like

24  there's going to have to be --

25           MR. MANDEL:  It makes no sense.  There is ultra


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 1  low sulfur diesel generally available all to states.  It

 2  makes sense to require its use, at least choosing to use

 3  PM aftertreatment technologies, which are very cost

 4  effective, reasonable approaches.  That is required.

 5           CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:  It is

 6  essentially required because the way BACT works is if the

 7  trap is available, a filter is available for one of your

 8  engines.  And that group you're talking about, Dr.

 9  Friedman, that's the '94 and newer one.  If it's

10  available, then you use the device.  And you can only use

11  the device if the fuel's available.  So what's going to

12  happen in most of the areas the fuel is available, the

13  decision that you have to use the device means you have to

14  switch to ultra low sulfur fuel.  And it's only in those

15  instances where it's simply not available at a reasonable

16  price in that area, which is outside the major urban areas

17  there would be a need to say, "Well, gee, without the

18  fuel, you can't use the device."

19           The choice is at that point would be go to a

20  lower efficiency device or get a delay because the fuel is

21  not available.  No device works on your equipment.  And

22  that, of course, delay would only be good until '06

23  because that's when everybody has it available to them.

24           And if you look at the phase-in, you can see

25  there's flexibility to move the vehicles around.  By '06


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 1  you're only doing 50 percent in that period.  So if you're

 2  having problems and you want to avoid the trap because you

 3  can't get the fuel for a couple of years, you can focus on

 4  some of the other vehicles that have retrofit or other

 5  options available that don't require low sulfur fuel.

 6  There's flexibility here to get around most of the

 7  situations, and I think there will be relatively few.

 8           MOBILE SOURCE CONTROL DIVISION CHIEF CROSS:  I'll

 9  remind you of the concern staff has is the pricing of the

10  fuel when you get into mandating.  As you try to mandate

11  it, you get in situations where folks have copied markets,

12  and the waste haulers are concerned about that.

13           CHAIRPERSON LLOYD:  Yes, Mr. Calhoun.

14           BOARD MEMBER CALHOUN:  You mentioned the fact

15  that the industry is currently working on a program to

16  roll out nationwide.  Is that a retrofit program?

17           MR. MANDEL:  Yes.

18           BOARD MEMBER CALHOUN:  When do you expect to have

19  it in place?

20           MR. MANDEL:  I'm hesitant to over-promise because

21  we are really looking at developing it now and asking for

22  proposals from contractors and consultants to work with us

23  how to do it.  So in fairness, I think we're still a bit

24  away from being able to share with you the details of it,

25  but we are -- it is on our agenda.  We are working on it


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 1  as we speak.  And I suspect being able -- before we can

 2  come back to you and have some -- we still might be

 3  six months to a year away.  This is not an insignificant

 4  program as you can imagine.

 5           CHAIRPERSON LLOYD:  This really is an incentive

 6  to keep you on track in that process.

 7           MR. MANDEL:  You may want to look at it that way,

 8  yes.  If I could, Dr. Lloyd, just make one brief comment.

 9  I know you're running short of time.  I do want to take

10  some credit to make sure that we engage Kathleen today on

11  her last day of work.  So you know, we're going to miss

12  her, and take one opportunity to express to her our best

13  wishes.  We've enjoyed working with her and wish her very

14  well.

15           CHAIRPERSON LLOYD:  That's very nice of you.

16  Again, I would like to also to thank the industry for its

17  continued progress, continued work with us on the very

18  important issue.  So in fact, we are coming to these much

19  cleaner diesel engines with retrofits as well as.  So we

20  appreciate that.

21           MR. MANDEL:  Thank you.  We'll continue to work

22  on that.

23           CHAIRPERSON LLOYD:  Emily Brown, David Huerta,

24  Graham Noyes.

25           MS. BROWN:  Good morning.  First, I'd just like


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 1  to say the proposed measure set forth the vital vision of

 2  replacing the high diesel vehicles in most California

 3  communities with cleaner trucks.  And for this, I think

 4  the ARB should be commended.  I say this in spite of

 5  Inform's overall opposition to this bill as written.

 6           My name is Emily Brown.  I'm a research policy

 7  associate at Inform.  I'm here today to briefly summarize

 8  the full written testimony of our Senior Research Fellow,

 9  Jim Cannon, which was submitted electronically this week.

10           Inform is a national nonprofit environmental

11  research organization that analyzes alternative fuel

12  vehicles, advanced technologies, and the public policies

13  that can ensure the most rapid progress towards the area

14  of sustainable transportation.

15           Inform's most recent focus has been on the U.S.

16  refuse truck sector.  Our 2003 report, "Breathing Garbage

17  Trucks, New Technologies For Cleaner Air," is the first

18  independent assessment of local environmental impacts of

19  this predominantly diesel vehicle sector and the

20  opportunities for change.  Two of the major findings of

21  Inform's report are that refuse trucks, one of the oldest

22  and most polluting vehicle sectors in the U.S., should be

23  an extremely high priority target for pollution reduction,

24  and also that natural gas is the cleanest fully-commercial

25  vehicle technology for the sector.


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 1           It should come as no surprise to anyone here that

 2  California was the site of 92 percent of the nearly 700

 3  U.S. natural gas refuse trucks identified by Inform in

 4  late 2002.  Twenty-three distinct natural gas programs

 5  were operating in California at that time.  And since the

 6  publication of our report, seven new natural gas refuse

 7  truck projects have emerged in the state.

 8           The use of the natural gas in these refuse trucks

 9  is already helping California achieve three critical

10  public policy objectives.  First, of course, it is

11  reducing air pollution.  This is not only PM, the focus of

12  this rule, but also nitrogen oxides and hydrocarbon.  And

13  it's doing this with engines that are up to 98 percent

14  quieter than diesel trucks.  Secondly, the use of natural

15  gas in refuse trucks is helping California achieves its

16  goal of reducing the state's dependence on foreign oil.

17  And finally, expanded use of natural gas is propelling

18  California along the road to a hydrogen cell future due to

19  the synergies between these fuels.

20           Regulatory agencies in California have played a

21  role in the progress to date by providing strong

22  regulations and incentives that have driven the

23  alternative fuel vehicle market.  A pioneering role for

24  the refuse truck sector from the Air Resources Board could

25  provide vital support for the shift to clean alternative


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 1  fuel vehicles that is already underway.  Unfortunately, by

 2  focusing almost exclusively on diesel technology, the

 3  current version of the program assumes a diesel fuel

 4  future for the sector and misses a vital opportunity to

 5  truly promote the best available technologies for PM

 6  emission reductions reflected in an equally viable

 7  alternative fuel --

 8           BOARD MEMBER HUGH FRIEDMAN:  Ms. Brown, you're

 9  allotted time has expired.  Could you --

10           MR. BROWN:  The Air Resources Board can shape a

11  much more effective regulation by eliminating the third

12  path, best available control technology definition; by

13  eliminating the program exemptions for fleets pursuing the

14  diesel path; by shortening the program implementation

15  period and eliminating the automatic extension for the

16  oldest and dirtiest programs; and by strengthening the

17  benefits to operators choosing to switch to alternative

18  fuels.  Thank you.

19           BOARD MEMBER HUGH FRIEDMAN:  Any questions?

20  Comments?

21           Mr. Huerta, city of Fremont.

22           MR. HUERTA:  Good morning.  My name is David

23  Huerta.  I'm with the Environmental Services Division of

24  the city of Fremont.  We're pleased with the proposed

25  changes that staff has made that will pull the city out of


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 1  the enforcement role that had been envisioned earlier.

 2           It does leave one small concern that still we

 3  have to deal with, which is we just recently negotiated a

 4  contract with our waste hauler, and the contract contains

 5  provisions for the use of an alternative fuel engineered

 6  to reduce emissions.  And this cost has already been

 7  rolled into our contract.  So with the overlay of

 8  additional rules, it's going to make it rather complicated

 9  to try to separate out exactly how much it costs.  That

10  is, how much this is going to cost.  This will also be

11  even more complicated since we're getting radically

12  different information as to cost estimates from our

13  hauler.  I just would hope that this information is taken

14  into consideration.  Thank you.

15           BOARD MEMBER HUGH FRIEDMAN:  Any question or

16  comment?

17           Thank you.

18           Mr. Noyes, and then Stephanie Williams.

19           MR. NOYES:  Good morning, members of the Board.

20  Graham Noyes from World Energy.  We're the largest

21  supplier of biodiesel in the country.  I had a brief

22  presentation to give -- that basically focuses on an

23  alternative measure, basically alternative performance

24  based option that we have throughout the process --

25  particularly over the last six months or so been strongly


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 1  recommending as a way to build some additional

 2  flexibility, some more cost effectiveness, while actually

 3  realizing larger PM reductions than the rule would as

 4  proposed now.

 5           (Thereupon an overhead presentation was

 6           presented as follows.)

 7           MR. NOYES:  I will be speaking using biodiesel as

 8  an example, and biodiesel's verified federal reduction

 9  numbers as an example.  But this option would be equally

10  available using the pure NOx and aquazol, potentially a

11  Fisher-Tropsch if it went through the CARB program.

12                            --o0o--

13           MR. NOYES:  I'm going to move through this

14  presentation very quickly because I appreciate your time

15  restraints on this.  On this slide, the key factor is on

16  the CARB verification program for alternative diesel fuels

17  that were going through.  They're still in the process.

18  That is not complete.  So I'm using the federal

19  verification numbers that have been confirmed and

20  complete.

21           In terms of where biodiesel now is in the waste

22  collection industry.  It's been used for years quite

23  successfully by a large number of fleets that are in

24  support for it because it's essentially a fuel retrofit

25  option.


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 1                            --o0o--

 2           MR. NOYES:  In formulating this proposal, what we

 3  tried to do was use the existing rule as a floor,

 4  recognize all of CARB's goals in this, and not sacrificing

 5  any of those goals.  In particular, at least hit the PM

 6  reductions that the proposed rule in its present form

 7  would; not increase NOx or any other emissions; utilize

 8  CARB procedures to determine what alternative fuels would

 9  contribute to this; reduce the compliance at least to some

10  fleets; compliance cost to some fleets; and also provide

11  the collateral benefits that alternative diesel fuels can

12  provide in terms of reducing petroleum dependence and

13  global warming contribution.

14                            --o0o--

15           MR. NOYES:  Our change was basically a

16  performance-based option that said given the inventory of

17  the particular fleet, if that fleet should choose to use

18  an alternative diesel fuel that's completed CARB's interim

19  procedure for certification of emission reductions for

20  alternative diesel fuels and that fleet can show that the

21  PM reductions that they would achieve using that

22  alternative fuel fleet-wide would equal or exceed the PM

23  reductions that the schedules would provide, they be

24  allowed that option.  Essentially, if they can reduce PM

25  as much through another route that's CARB approved, they


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 1  should be entitled to do that.

 2                            --o0o--

 3           MR. NOYES:  The details of this have been

 4  submitted to CARB staff.  We're not going to do a lot of

 5  math up here.  Just provide the chart and summaries.  To

 6  date, I have not heard that any of the technical analyses

 7  was incorrect, and I have built in the assumptions into

 8  this presentation so they are obvious and straightforward.

 9           BOARD MEMBER WILLIAM FRIEDMAN:  Your time has

10  elapsed so if you can complete the presentation.

11           MR. NOYES:  Very good.  I'll move through it even

12  quicker than I have been already.  I do think this is a

13  very significant topic.

14           BOARD MEMBER WILLIAM FRIEDMAN:  It is.  And we do

15  have in writing your correspondence, two pages.

16           MR. NOYES:  Very well.  I'll move through very

17  quickly.

18           We used all of the CARB exemptions in terms of

19  vehicle inventory, in terms of emission standards, in

20  terms of what the PM reduction would be realized within

21  the CARB program.  And the key thing to look at here is

22  the first three years.  The most difficult years for

23  implementation where a B20 solution can reduce PM

24  significantly.

25                            --o0o--


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 1           MR. NOYES:  This shows it in chart form over what

 2  the current CARB plan would do.  If you add up the

 3  difference between the first three years of the B20 and

 4  the first three years of the best available control

 5  technology, you see for this fleet a 700 pound reduction

 6  in PMs.  If you carry that out over the entire inventory,

 7  as specified in the CARB report, you're talking about 139

 8  tons of PM reduction that this option could deliver.

 9                            --o0o--

10           MR. NOYES:  And this translates at the 14.11 ton

11  rate to reducing 10 premature deaths of the methodology

12  contained in the reports.

13                            --o0o--

14           MR. NOYES:  It's a win for the industry, cost,

15  flexibility and proven technology that they can switch to

16  overnight.

17                            --o0o--

18           MR. NOYES:  It's a win for CARB because CARB can

19  get after the older vehicles that are not available for

20  retrofits.  So it will enhance the PM reduction.  It will

21  achieve CARB's other goals, and it will show that CARB is

22  flexible to consider alternatives and has a respect for

23  cost concerns.

24           I appreciate the extra time.

25           BOARD MEMBER WILLIAM FRIEDMAN:  Thank you,


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 1  Mr. Noyes.  Has that been presented to staff, Mr. Noyes?

 2           EXECUTIVE OFFICER WITHERSPOON:  Yes.  We've been

 3  aware of this issue for some time.

 4           BOARD MEMBER WILLIAM FRIEDMAN:  And you've taken

 5  this into account?

 6           EXECUTIVE OFFICER WITHERSPOON:  We have taken it

 7  into account.  The regulation as proposed by staff does

 8  allow biodiesel to qualify as Level 1 and Level 2 controls

 9  as a 25 percent, 50 percent control respectively.  And as

10  Mr. Noyes indicated, they're in the verification process

11  now of certifying exactly what the return is.

12           I think the difference between us is that he'd

13  have staff move to an overall fleet average approach

14  instead of the model year groupings in BACT approach we

15  have recommended instead.  We have issues about

16  enforceability with changing the structure of the rule.

17  We have issues of the resources that would be demanded of

18  the staff to carry that out as we move from a fleet of 700

19  companies to ever larger numbers as we continue moving

20  through the diesel risk reduction plan.  So generally

21  speaking, it's not manageable for us, but we have not

22  precluded the use of biodiesel as a compliance option

23  within the rule we have recommended to you.

24           BOARD MEMBER WILLIAM FRIEDMAN:  Any comments or

25  questions from the Board?


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 1           Thank you, sir.

 2           MR. NOYES:  If I can simply follow up on that

 3  point.  In terms of compliance, we currently certify fuel

 4  purchases for U.S. military, utility companies, state

 5  fleets.  It's one of the easiest compliance techniques

 6  available.  Biodiesel, pure NOx, probably Fischer-Trophs

 7  will not hit that 25 percent floor.  That 25 percent floor

 8  is an arbitrary floor, and it's inhibiting the ability of

 9  CARB to reduce its PM reduction.

10           BOARD MEMBER WILLIAM FRIEDMAN:  Do you want to

11  respond?

12           EXECUTIVE OFFICER WITHERSPOON:  Yeah, if I might.

13  When I indicated that biodiesel could qualify, I was

14  referring to B100, which isn't used as much because it's

15  more costly.  And B20 probably does not rise to the level

16  of our first incremental control, which is at least 25

17  percent reduction in emission.  B20 would not hit that.

18           I think one of the other things that concerned

19  staff is that all the biodiesel products increase NOx

20  emissions.  This is a particulate matter control measure,

21  but we don't think it's detrimental the way we structured

22  it to NOx.  We're going to get concurrent NOx reductions

23  in the 15 percent to 30 percent range.  But were we to

24  create a pathway for biodiesel itself, for PM only, we

25  would have a NOx benefit.  That would be something you had


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 1  to consider and mitigate.

 2           BOARD MEMBER WILLIAM FRIEDMAN:  Thank you again.

 3           MR. NOYES:  We were extremely concerned about

 4  that as well.

 5           BOARD MEMBER WILLIAM FRIEDMAN:  Sorry?

 6           MR. NOYES:  The verification measure -- the CARB

 7  verification measure in place for any of alternative

 8  diesel fuels, including biodiesel, would be NOx.  And

 9  there is no NOx risk.  The fuel would not be certified if

10  it was raising NOx.  Thank you.

11           BOARD MEMBER WILLIAM FRIEDMAN:  Ms. Williams.

12           CHAIRPERSON LLOYD:  And then Tim Ward and Kelly

13  Astor.

14           (Thereupon an overhead presentation was

15           presented as follows.)

16           MS. WILLIAMS:  Good afternoon.

17           CHAIRPERSON LLOYD:  Good morning.

18           MS. WILLIAMS:  Is it morning still?  I'm hungry.

19           CTA submitted on the CARB's diesel retrofit

20  reduction plan on August 25th, 2002 -- you remember, Alan,

21  we carefully supported the retrofit in noncompetitive

22  trucking fleets and for additional costs to be passed on

23  to the shipper or user.  This is still our position.  It's

24  approved by our Board.  We support a voluntary and

25  subsidized program.  We recommend any regulation be tied


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 1  to funding source and any particulate trap or device would

 2  not exceed the 2006 PM standard.

 3                            --o0o--

 4           MS. WILLIAMS:  On the current rule, we have

 5  issues with the warranties still.  They fall on the backs

 6  of the users, the smallest economic unit.  We have -- the

 7  Board recommendations to address warranty -- the issues

 8  have not been provided in this rule that -- and have not

 9  relieved the trucking industry's liability when something

10  goes wrong.  It was supposed to be handled in the first

11  rule.  As you remember, we talked about the verification

12  procedures.  We had a long discussion at the Board hearing

13  about the warranties.  The CARB staff was supposed to come

14  back at that time and say what the cost effectiveness

15  based on the warranties -- Ms. D'Adamo asked them to come

16  back at 150, 300, and 450 in the rule making.  It hasn't

17  been done.

18           We have very significant concerns about the

19  warranty issues and that they fall on the end user rather

20  than the manufacturer -- the engine manufacturers and the

21  trap manufacturer working on the liabilities in the time

22  failure.

23           The fuel supply issue is further boutiqued by

24  having a year period where vehicles that could use traps

25  and should be buying traps for the future because they are


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 1  qualified -- they're part of the 12 or 13 percent that

 2  could use particulate traps, would be encouraged to use

 3  some other technology rather than wait until 2006 when the

 4  fuel is available.  Put the trap on, and put the money

 5  there in 2006 would be better for the environment and for

 6  cost effectiveness of the companies.

 7           And the last-minute attempt to exempt

 8  municipalities from the responsibility, this is the

 9  shipper, which pays the bill.  This is like having Walmart

10  or Target come in and say, "We're not going to pay you

11  more to ship these goods just because CARB diesel costs

12  more, because the national average is 30 cents less, and

13  we're not going to pay you."  So I think this is

14  incredibly bad for the waste industry.  It's incredibly

15  bad for the trucking industry.

16           We find out about it at the last minute.  No

17  notice.  We find out the 15 days -- why?  Why would you

18  exempt the people who pay the bills?  This is the shipper.

19  They have to say, "We're going to pay more, and we're

20  going to pass it on to the customer."  If they don't make

21  that decision, we have no control.

22           So the cost analysis is incomplete and

23  underestimated.  The retrofit devices are $9500 for a

24  vehicle, $1500 to put on a device that detects when

25  there's pressure problems.  And it costs money to take the


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 1  vehicle out of the service.

 2           Incremental fuel costs we talk about over and

 3  over again.  And the ability to cite the retrofit and

 4  reengine in California state law is problematic.

 5           I'm going to skip through some of these because I

 6  know I only have three minutes.

 7                            --o0o--

 8           MS. WILLIAMS:  Regulatory authority, the sections

 9  provided do not say anything about retrofit.  In fact,

10  they actually demonstrate that you don't have authority

11  for anything but new emissions, in-use standards, idling,

12  motor vehicle fuel specifications.  There's no retrofit

13  authority provided in the sections that ARB has used.  And

14  in fact, the section that we found that are above and

15  beyond what ARB used, 43600, these have to be the smoke

16  testing statutes they we're familiar with.  This is right

17  in that section where we went to court in 1991.  Section

18  43600 specifically prohibits insulation devices on used

19  motor vehicles, unless mandated by the statute.  That's

20  because we don't want 100 different devices on vehicles.

21           And no offense to the speaker before me, but a

22  bunch of sales people at our office is telling, "This is

23  the mandated device.  You have to buy this.  The state

24  said you have to."  How are we supposed to know which

25  device is mandated?  We have no direction.  There's no


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 1  regulations.  This puts a serious and incredible burden on

 2  the end user that should not be there.

 3           Section 43701, which is part of this smoke

 4  testing program, specifically requires that any

 5  significant modification of the engine should be made

 6  during maintenance or overhaul of the vehicle engine.

 7  That's California statute.  Not that you couldn't get a

 8  bill passed, but you need to.

 9                            --o0o--

10           MS. WILLIAMS:  Just to let you know what the

11  field prices are today, we're about 36 cents more than San

12  Francisco, the Oregon corridor.  We're about 18 cents

13  between Arizona and L.A.  We're about 30 cents between San

14  Diego and Arizona.  So we haven't resolved the issue on

15  fuel prices between California carriers and the boarder

16  states, New Mexico borders, and moving to be open quickly.

17  We really want to get this accomplished.  We are really

18  are at a competitive disadvantage.

19           CHAIRPERSON LLOYD:  Can you -- you've been about

20  five minutes.

21                            --o0o--

22           MS. WILLIAMS:  Changes to the rules.  This is my

23  last -- this is the municipalities' free ride, the shipper

24  getting a free ride.  This is like the port saying, "We're

25  not going to pay you anymore to carry those containers.


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 1  We want you to make $50 a load.  We don't care if you

 2  can't afford the fuel prices.  We don't care if you don't

 3  have health insurance.  You take that load for $50 and we

 4  don't care if your costs get bigger."

 5           There's a difference between the port haulers and

 6  any other segment of the industry.  The shipper pays for

 7  cost increases.  They have to, or the system doesn't work.

 8  We don't manufacture.  We move it.  They've been removed

 9  from the definition of the contract.

10           They're removed from the compliance requirement.

11  They've been removed from the reporting requirement, from

12  the identification of funding sources.  Why are they

13  removed from the identification of funding sources?  If

14  they're saying no -- in Orange County they say "no new

15  taxes," and the waste hauler there says, "We have to do

16  this."  And they say, "We're not going to give you any

17  more money," somebody needs to know.

18           Removed from the refusal to comply.  Removed from

19  the notification of Executive Officer.  The shipper has

20  been removed on a 15-day notice period.  Nobody's been

21  notified.  This has a significant impact on labor too

22  because there's only so much money in the company.  That

23  either goes to drivers or environmental -- it doesn't go

24  to both places.

25                            --o0o--


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 1           MS. WILLIAMS:  So here's the copy of the removals

 2  that we found.

 3           And our last point is the questionnaire that went

 4  to municipalities is very biased.  And the information

 5  collected is very biased.  This is the questionnaire.

 6  These are the actual questions.  What is the term of the

 7  contract?  How many years does the contract have left?

 8  How many automatically renew unless cancelled?  Does your

 9  contract have a provision to allow for negotiation rate

10  increases during the contract term?  Do they?  How many?

11           How come we don't have this data?

12           How long would it take to negotiate a rate

13  increase once a new rule's adopted?  Are there any other

14  conditions in your contract that allow for a rate

15  increase?  Based on the review of your proposed rule, will

16  your agency require additional resources to comply with

17  this rule?

18           We know it's going to cost a lot of money to

19  retrofit.  Of course, they're going need additional

20  resources.  They're going to have to pass it on to the

21  consumer.  Help us pass it on to the consumer.

22           And the last question, which is in bold because

23  it's very problematic, ARB has been asked by the refuse

24  industry to consider changes, changing the regulation to

25  place all of the responsibility -- rather than sharing the


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 1  responsibility -- for compliance on the municipality

 2  holding the contract -- the shipper -- with no

 3  responsibility on the vehicles' owner.  What would be your

 4  response to this proposal?  How do you think this could

 5  affect your contract?  Come on.  Of course, nobody wants

 6  to be regulated or pay.  It's unfair.

 7                            --o0o--

 8           MS. WILLIAMS:  We ask that the verification rule

 9  making breakdown be moved back.  It's in my comments.

10  You'll see on the warranty issue.  The warranties were

11  supposed to be brought up in this rule making.  In the

12  record there's nothing here on the warranty.  Nothing

13  about pointing fingers between engine manufacturers and

14  trap manufacturers.  And these warranties were in the

15  Board on February 13th, supposed to be part of the packet

16  and have not been.

17           And here's our proposal.  That we would support

18  moving this forward -- and I think if you look behind you,

19  you can see that this -- it's minor changes to the

20  initial -- what was handed out, not in the 15-day rule.

21  But if you do not change the categories -- the translation

22  of Category 1 will be, move or sell these trucks, 1988 to

23  2002 because they cost too much to keep.  Number 2 would

24  be 1960 to '87, buy these trucks, because these are what

25  you want in your fleet because this is the cheapest way to


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 1  comply.  And number 3, hold off purchases on 2004 and 2005

 2  model years because you'll have to retrofit them.

 3           This is not the message you want to send to the

 4  market-based buyers of trucks.  What you want to say is do

 5  it in a way that's cost effective that gets the best

 6  environmental benefit.  This will get you there.  Having

 7  fuel early that costs too much is not going to get you

 8  there.  And having the oldest vehicles be the highest

 9  market value is not going to get you there.

10           CHAIRPERSON LLOYD:  Thank you.

11           Staff response quickly to the warranty issue.

12           Stephanie, when you talk about the difference

13  between out of state diesel prices and in state in this

14  particular case --

15           MS. WILLIAMS:  I just wanted to let you know what

16  the prices were yesterday.

17           CHAIRPERSON LLOYD:  I know you remind us that --

18           MS. WILLIAMS:  I remind you that every time I'm

19  here.  So next time you say it's 2 cents at the

20  Legislature and what it should be -- I've showed you over

21  and over again the differential.

22           EXECUTIVE OFFICER WITHERSPOON:  The warranty

23  issue that we discussed at the time the Board adopted

24  verification procedures is whether staff had calculated

25  the costs accurately since truckers preferred to buy


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 1  extended warranties, and extended warranties would be more

 2  expensive than the base cost assumed in the regulation.

 3           There are currently no extended warranties

 4  available for these trap devices.  So we cannot report

 5  back to you on what the cost is and how the calculation

 6  changes.  They're simply not available.

 7           MOBILE SOURCE CONTROL DIVISION CHIEF CROSS:

 8  There was also a substantial debate after hearing --

 9           CHAIRPERSON LLOYD:  Can you speak up?  I don't

10  know whether it's on.

11           MOBILE SOURCE CONTROL DIVISION CHIEF CROSS:

12  There was a lot of debate at the hearing about how long

13  the warranties are that are provided by the truck engine

14  manufacturers and how long the engines last and all of

15  that discussion where I think Stephanie was contrasting

16  the life of the trap to the life of the engine and all of

17  that.

18           I know my staff did go back and get all of that

19  information from the engine manufacturers and get back to

20  Stephanie in terms of sharing it with her for comment.

21  And I think that the basic thing we found was that the

22  engine manufacturer warranties weren't as long as she had

23  said at that hearing.  I think what they were --

24           MS. WILLIAMS:  Is there a way -- rather than find

25  out at the Board meetings, is there a way -- since it was


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 1  supposed to be at the --

 2           MOBILE SOURCE CONTROL DIVISION CHIEF CROSS:  The

 3  point is to get the extended warranties she talked about,

 4  you had to pay.  And so we basically provided all the data

 5  that we had.  And as Kathleen said, we do look into the

 6  availability of extended warranties and they're not

 7  available yet.  The trap manufacturers are very aware of

 8  the issue and we're working with them.  But we can't give

 9  you an answer today.

10           CHAIRPERSON LLOYD:  It might be good to get a

11  status report.

12           BOARD MEMBER D'ADAMO:  I think this is an

13  important issue.  It's far beyond the issue of cost

14  effectiveness.  Because I know that we're going to hear

15  testimony later today about the possibility or suggestion

16  of acceleration of the rule until the state-of-the-art

17  trucks are available so we don't have to go through this

18  issue of traps.

19           I'm concerned about the impact that these

20  retrofit devices would have on the users, not just in

21  terms of cost, but certainty issues, convenience, having

22  to go -- you know, truck manufacturer and now retrofit

23  manufacturer and trying to get the two of them to talk to

24  each other --

25           MOBILE SOURCE CONTROL DIVISION CHIEF CROSS:


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 1  That's kind of all done.  I think the thing we have to

 2  remember is, as staff said in their presentation, only 12

 3  percent of the trucks are amenable to trap retrofit.  So

 4  out of all of those -- you know, and that basically

 5  excludes the older ones.  That's basically the 93 current

 6  trucks are amenable, and it's just a few of those.  And we

 7  did our homework in terms of testing trucks to find out

 8  which of those few were amenable to traps.

 9           And so we're looking at a small sub-portion of

10  the fleet which has this concern.  The traps that would go

11  on have gone through extensive testing through

12  verification process.  And then they've also been

13  fleet-tested by the city of L.A. and there are 300 trucks

14  and in New York.  So I think that as long as the rules for

15  properly applying the traps are followed, I don't think we

16  have a concern or a warranty concern.

17           The city of L.A. is fine.  They're not having

18  troubles with them.  I think when they're misapplied,

19  then, yeah, you do have problems.  That's why the

20  verification requirements are so clear on what's

21  appropriate application and what isn't.  But the bulk of

22  the regulation is things like retiring old vehicles, how

23  retrofits of some of them have no durability are applied,

24  and things like that.  I think that what's happening is

25  the debate is focusing on traps when that's only 12


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 1  percent of the vehicles that we have to deal with.

 2           BOARD MEMBER D'ADAMO:  But that wouldn't be the

 3  case -- I know we haven't had this testimony on this yet.

 4  But if we provide for acceleration, would that be expand

 5  that number?

 6           MOBILE SOURCE CONTROL DIVISION CHIEF CROSS:  No,

 7  because it's the older vehicles.

 8           EXECUTIVE OFFICER WITHERSPOON:  It would

 9  accelerate the pace at which old vehicles were scrapped,

10  but it wouldn't change the implementation or penetration

11  of traps.

12           BOARD MEMBER D'ADAMO:  I must have misunderstood.

13  I thought that you'd have to utilize a trap along with an

14  engine or a vehicle that's -- a current vehicle in use,

15  wouldn't there be a combination, use both?

16           EXECUTIVE OFFICER WITHERSPOON:  For every age

17  group, you have to use BACT, whatever BACT is.  There

18  aren't any certified traps for the old engines.  So it

19  just doesn't come up.

20           As they buy newer engines, then the engine that's

21  part of the model year grouping is required to have traps

22  when they're certified for those engine families.  So then

23  they get on a new compliance schedule.

24           But as Mr. Cross indicated, we're not seeing any

25  failures.  We arranged a site visit for waste industry


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 1  representatives down to L.A. sanitation district, and they

 2  came away much reassured and impressed by what was going

 3  on.  They had issues on everything from maintenance, to

 4  the reaction of the mechanics, to the warranty and other

 5  things we've been talking about.  I think that allayed

 6  their concerns enormously about the segment of the fleet

 7  that might end up with traps.

 8           BOARD MEMBER CALHOUN:  Are we talking about

 9  possible damage to the trap itself or to the --

10           MS. WILLIAMS:  To the engine.  The BACT pressure

11  ruins the engine.  The liability falls on the end user

12  because once you modify the engine, you own it.  There's

13  no engine manufacturer that will warranty it.  And the

14  trap manufacturer is going to say, "No, you did

15  something."  You've left us in a place where we have no --

16  it's a lemon law, is the only way we'll be able to save

17  ourselves.

18           I would ask before you move forward, that you sit

19  down with some of my members -- their Board meeting is on

20  this issue, the warranty and the liability issue for us in

21  November.  And I'd like to clarify when the Air Resources

22  Board and our Board -- before we move forward on whatever

23  it is we end up doing -- that, one, we're not liable for

24  new trucks when we put traps on; two, we're not liable if

25  the trap has a BACT pressure issue and has a catastrophic


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 1  failure.

 2           And there's a misunderstanding here about how

 3  poorly the vehicles did in the testing.  The data that we

 4  got shown from -- the Air Resources Board showed a number

 5  of vehicles had failures.  So they've just risen the

 6  temperature level and said, "We're only going to do it to

 7  these vehicles, and you can do this down here."  We are

 8  not engine manufacturers.  We are truckers.  My

 9  maintenance guys have eighth- and ninth-grade educations,

10  and you're asking these people to decide what kind of

11  manufacturer equipment goes on vehicles.  It's just

12  severely wrong.

13           EXECUTIVE OFFICER WITHERSPOON:  We are not, in

14  fact, asking them to decide.  We are issuing lists of

15  exactly what devices have been verified for exactly which

16  kind of engine and which model years.  So it's simply a

17  look-up matter, that this device is certified by the Air

18  Resources Board is appropriate to their engine and is

19  available in the market to them.

20           MOBILE SOURCE CONTROL DIVISION CHIEF CROSS:  The

21  failures were not on certified applications.  In other

22  words, what we were doing was looking at the extremes to

23  find out where they do fail, which is something that one

24  would want to do in any program like this, find out where

25  they do fail so when you do set the limits, you set the


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 1  right ones.  So I think -- Stephanie wasn't at the L.A.

 2  sanitation district.  I was a skeptical too, to be honest

 3  with you.  It was a really, really impressive show.  But

 4  with respect to warranty, just really quickly, if the trap

 5  hurts the engine, it's on the trap manufacturers.

 6           MS. WILLIAMS:  Could you put it in the rule?

 7           MOBILE SOURCE CONTROL DIVISION CHIEF CROSS:  It

 8  is in the rule.

 9           MS. WILLIAMS:  It doesn't specify.

10           MOBILE SOURCE CONTROL DIVISION CHIEF CROSS:  Take

11  a look at the latest verification amendments.  It is.

12           MS. WILLIAMS:  The 15-day rule?

13           HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

14  HEBERT:  The verification procedure regulation itself

15  states there that if the retrofit device damages the

16  engine, the retrofit manufacturers are responsible for

17  repair.

18           MS. WILLIAMS:  As a caveat, about certain

19  maintenance practices, which are not defined, it's an out

20  for the verification.

21           CHAIRPERSON LLOYD:  Clearly we have to get that

22  resolved.  What I would like to do is to follow up with

23  that issue.  We need to expand upon, maybe report back to

24  the Board.  But the other thing, we have the Diesel

25  Retrofit Advisory Committee coming up.  I think it's


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 1  October 14th.

 2           EXECUTIVE OFFICER WITHERSPOON:  That's correct.

 3  And the Board will be revisiting the verification

 4  procedures as they relate to --

 5           CHAIRPERSON LLOYD:  I think that's an

 6  opportunity.  And hopefully staff will invite some of the

 7  members.  Because clearly I think we need to be able to

 8  close the gap -- the information gap and the trust gap

 9  between the members and what we're doing with staff.  So

10  we'll definitely work with you on participating --

11           MS. WILLIAMS:  I think the most important thing

12  we can do is get the statute language decided before

13  somebody moves in a direction that's not good for either

14  of us.

15           Thank you.

16           CHAIRPERSON LLOYD:  Thank you.

17           Tim Ward, Kelly Aster, Bill Dobert.

18           I would say, by the way, to Board members, we do

19  have a meeting of that International Diesel Retrofit

20  Committee.  It's meeting in Pasadena.  I think it's

21  October 17th.

22           Maybe after this we'll take a five-minute break

23  to allow the court reporter to take a break.  And

24  hopefully we're going to try to get through this item

25  before we take our lunch break.  Thank you.


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 1           MR. WARD:  Good morning.  I'm Tim Ward, Tom Ward,

 2  Incorporated.  I'm a fuel distributorship in --

 3           CHAIRPERSON LLOYD:  Can you bring the microphone

 4  closer to you?

 5           MR. WARD:  I have fuel distributor in Fireball.

 6  I'm also representing California Independent Oil Marketers

 7  today.  Also I'm here to say I'm representing Terry

 8  Perkins with Fireball Disposal.

 9           Terry's business and I are very similar.  We have

10  five trucks, all of them are '87 and older.  The economics

11  of our businesses are basically the same.  This is going

12  to be an expensive endeavor for us, putting these traps on

13  our trucks.  We can't afford to buy new ones.

14           So we're asking for more time for the '87 and

15  more.  We only have five trucks apiece.  For example, I

16  made $18,000 two years ago, and 30,000 last year.  But

17  because of workman's comp, increased insurance, they're

18  going to take 25,000 of my profit away from me this year.

19  So we're asking for more time.  And I think more time also

20  gives us an opportunity to lessen the expense on the

21  device that they developed for NOx reduction.  If you give

22  us smaller guys a little more time, we might have to only

23  put on one machine that will take care of the NOx problems

24  too.  So that's what I'm asking.

25           CHAIRPERSON LLOYD:  Thank you.


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 1           Ms. Witherspoon.

 2           EXECUTIVE OFFICER WITHERSPOON:  I just want to

 3  clarify, Mr. Ward is not affected by this regulation.

 4  He's concerned about the precedent it sets for future

 5  regulations and whether or not we would use the same

 6  timetable for '87 and older vehicles -- is that correct?

 7           MR. WARD:  No.  Actually, I'm -- we have our own

 8  issue with ARB coming up in December.  I'm representing

 9  Fireball Disposal at that particular time.

10           CHAIRPERSON LLOYD:  Thank you.

11           So as I mentioned, let's take a five-minute break

12  for the court reporter, and then we'll come back.  And

13  then after that we will continue the item until we finish

14  it and then take a lunch break.

15           (Thereupon a recess was taken.)

16           CHAIRPERSON LLOYD:  We're recommencing with Kelly

17  Astor, Bill Dobert, and Greg Sanders.

18           What I would ask, I know there's a lot of people

19  here all opposing in a row.  If they've got similar

20  testimony as the person before, please try to conserve

21  some time so we can get through this item in a reasonable

22  time.  I don't know where that starts.  Thanks.

23           MR. ASTOR:  Thank you, Mr. Chairman.  Kelly Astor

24  on behalf of the California Refuse Removal Council.  It's

25  been my privilege to serve the CRC for some 20 years as


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 1  general counsel.  In addition to doing that, I'm a solid

 2  waste franchise attorney.

 3           I'm interested in particular in the cost issues

 4  related to compliance with the rule.  There was a graphic

 5  presented during staff's presentation suggesting that some

 6  87 percent of municipal contracts allow for rate increases

 7  for changes in the law.  That number is basically

 8  consistent with my general understanding.  But the

 9  significance of that I think is sometimes overstated.

10           The fact that the contracts may allow for

11  compensation to be recovered is the starting point, not

12  the end point.  I'm here to tell you as one who has

13  negotiated literally dozens of these such contracts, very

14  often you don't get all that you ask for.  So the

15  compensation issue is one that has been paramount in at

16  least my mind throughout the couple of years we've had an

17  opportunity to work with your staff.

18           And of those ten workshops -- or four workshops

19  and ten meeting that staff alluded to I've been grateful

20  to be present at most of them.  Staff has gone as far as

21  it's able in one sense, but the recent set of amendments

22  which essentially take the municipalities out of the rule

23  are troublesome to the industry that I represent.  Again,

24  we're a regulated industry.  In the main, these contracts,

25  particularly in the residential context, are exclusive


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 1  contracts.  There is no competition.  In exchange for

 2  operating without competition, the cities have reserved

 3  themselves, as naturally they should, with a right to set

 4  our rates.

 5           So we get what I call begging rights.  We get the

 6  right to go talk about what the costs of this rule are

 7  going to be, but that isn't the end.  That's why I'm

 8  particularly pleased with staff's indication just in the

 9  last day or so that they're willing to do two things to

10  improve the rule.  While we still remain opposed to the

11  rule, these are important changes.  One, it's vital to us

12  there's a look back or review undertaken by your Board

13  annually so you can find out, in fact, are the haulers

14  getting paid, or are cities giving only part of what they

15  need to ensure compliance.

16           In addition to that, it's important to us that

17  the intent language that we originally asked for be

18  restored to the rule.  Now the intent language we're

19  asking for is not precisely the same of that which is set

20  forth in the September 25th staff proposed changes

21  handout.  This talks about language expressing the intent

22  of the Board that collection -- contractors can negotiate

23  with their cities regarding the recovery of costs.  That's

24  already in franchise agreements.

25           I'd like it to go a little stronger, similar in


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 1  form to the language that we represented several months

 2  ago, which basically expresses the intent the staff told

 3  us two years ago when these negotiations started.  That

 4  is, it's not this Board's intent these costs be borne by

 5  the service provider, rather the recipient ultimately is

 6  the one that should bear these costs.  If that issue is

 7  taken care of, the only other remaining issue that we have

 8  in general terms with the rule are the technical issues.

 9           I'm not the one really qualified to speak to

10  those, but I will tell you this.  This industry is, after

11  all, an environmental industry.  Our commitment to air

12  quality has been unwavering.  From the outset of our

13  negotiations with your staff, we've made clear the fact we

14  embrace our obligation to help with containing the air

15  quality objectives of this rule.  We've also said we

16  support the adoption of a rule.  It's never been an issue

17  that we don't support the adoption rule.  It's always been

18  about what form should that rule take.  I think it's

19  important we be credited with that.

20           Again, others will talk about some of the

21  technical issues that arise that haven't been fully

22  satisfied.  And it's largely for those reasons and to some

23  degree the compensation issues we remain opposed to the

24  rule.  But I will say that the staff has gone to great

25  efforts to accommodate us.  We're looking for further


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 1  accommodation.  I'm open to any questions you may have.

 2           CHAIRPERSON LLOYD:  Thank you.

 3           Ms. D'Adamo.

 4           BOARD MEMBER D'ADAMO:  I realize that staff --

 5  and appreciate that staff was trying to achieve some sort

 6  of balance here in putting forth the most recent intent

 7  language.  I'm not sure if the language that you propose

 8  would upset a balance on the other side regarding the

 9  municipalities.

10           What I'd like to see is perhaps some language in

11  the regulation that commits our staff to work with the

12  waste haulers and the municipalities regarding this issue

13  and the incremental cost.

14           MR. ASTOR:  I think that's helpful.  The one

15  thing I would suggest, when we go to talk to the city

16  attorneys, city manager, and their whole contract

17  negotiating staff, it would be very helpful -- we hold

18  very few of the cards.  We're not complaining.  We're

19  delighted with the current system.  But the fact of the

20  matter is most of the leverage is with the cities we work

21  for.

22           If we had something expressed by this Board --

23  ideally in the language of the rule itself as opposed to

24  the resolution that said, "A funding source needs to be

25  identified, and it is not the intent of this Board that


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 1  these costs be borne by the service provider."  That would

 2  go a long way towards alleviating our concerns.  Because

 3  if it doesn't say that, if we don't get the increases,

 4  there are competitive impacts to this rule which have

 5  never been fully articulated or analyzed.

 6           BOARD MEMBER D'ADAMO:  What I'm looking for is

 7  some future commitment by this Board not to get involved

 8  in individual contracts, but to be working globally toward

 9  this issue of incremental cost.

10           EXECUTIVE OFFICER WITHERSPOON:  During the course

11  of development, we did express our commitment to helping

12  the waste companies explain the rule they were under to

13  local governments, the expectations of the state.  And you

14  heard in the staff presentation, we're going to continue

15  to do outreach.  You also heard Yvonne Hunter say she's

16  going to help us hit all the communication networks so

17  that is understood by all the parties.

18           You also indicated there's a delicate balance

19  here.  There is.  We offered to restore intent language

20  that we had previously.  We ran that by all the local

21  governments that came and testified previously.  They're

22  okay with our version of the language.  I think they might

23  be troubled -- I certainly can't be sure that they would

24  be all right with the sort of amplified version that's

25  being recommended.


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 1           And one thing that we want to take care to avoid

 2  is we can't guarantee the outcome here.  But certainly our

 3  own analysis, our calculations of cost, telling you what

 4  it is per household, that's how we expect it to play out.

 5  And it won't be perfect in every instance, but we wouldn't

 6  want you to say the rule's conditioned on full cost

 7  recovery exactly the way the waste industry interprets it

 8  for their company, their contract.  It's more directional

 9  from the Board, that's the general intent in the rule.

10           BOARD MEMBER D'ADAMO:  I'm not looking for the

11  rule to be conditioned upon.  I don't think the witness is

12  either.  I'm just looking for a little bit more than what

13  we have.  And also the municipalities that testified today

14  spoke to the issue of liability.  They didn't necessarily

15  speak to this issue.  I'm just wondering since the

16  liability issue as the main stated concern here, perhaps

17  we can go a little bit further.

18           EXECUTIVE OFFICER WITHERSPOON:  They did talk to

19  us privately about the other issue, about the cost, how

20  the negotiations go, the kinds of information they wish to

21  have, and back and forth.  It will be a negotiation.  But

22  they are willing to step up.  They understand why we're

23  doing the rule.  They didn't tell us, "Forget about it.

24  There's no way the cities and counties will pass these

25  costs onto the consumers, their rate reverses."  We


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 1  weren't getting that message from local government.  And

 2  we're beginning to keep working with them to see it

 3  through.

 4           BOARD MEMBER D'ADAMO:  I'm just wondering if we

 5  can go a little further on the intent language.

 6           EXECUTIVE OFFICER WITHERSPOON:  I'd be reluctant

 7  to do that since the removal of the local governments'

 8  opposition was contingent on all the things we talked

 9  about, the specific language we showed them on intent of

10  putting that back.  We would almost need to go track them

11  all down somewhere in the building.  And a lot of them are

12  still here.

13           BOARD MEMBER D'ADAMO:  At a minimum I think we

14  need to commit this Board and the staff -- I think we can

15  go with stronger language on what we can do, as you say,

16  with outreach and working with local governments.

17           EXECUTIVE OFFICER WITHERSPOON:  That we can do.

18  And maybe during the lunch break --

19           CHAIRPERSON LLOYD:  Can you help us here identify

20  specifically where we can locate the language in the

21  material we have?

22           EXECUTIVE OFFICER WITHERSPOON:  It's in the

23  15-day package.  Can you see what staff is holding up?  A

24  single page.  It should be there.

25           CHAIRPERSON LLOYD:  Okay.  Single page.


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 1           BOARD MEMBER HUGH FRIEDMAN:  If it's only a

 2  sentence or two on intent, could you read it, please.

 3           HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

 4  HEBERT:  It's more of a summary of what we did.  And we

 5  added a statement to the scope and applicability section

 6  of the rule that "an intent making it clear that the Board

 7  expects that municipalities and solid waste collection

 8  vehicle contractors will negotiate regarding recovery of

 9  costs incurred to implement this regulation."

10           GENERAL COUNSEL WALSH:  The Board Clerk has just

11  pointed out to me that actually that is attached to the --

12           BOARD MEMBER HUGH FRIEDMAN:  We can't hear you.

13           GENERAL COUNSEL WALSH:  It's attached to the

14  yellow-faced package.  That would be proposed Resolution

15  03-7-3.

16           BOARD MEMBER RIORDAN:  It's at the back of the

17  packet.

18           MR. ASTOR:  Members, to give you a contrast,

19  here's the language we would like to see.  "It is the

20  Board's intent that municipalities demonstrate a funding

21  source to ensure compliance with Section 2023 and that

22  rate regulated fleet operators are fully compensated for

23  the actual and necessary retrofit fuel maintenance and

24  recordkeeping costs."  It's still just an expression of

25  intent, but it goes beyond saying we should talk about it


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 1  because, again as I pointed out, our franchise agreements

 2  already give us the right to talk about it, but there's no

 3  expression of the direction we'd like to see the cities

 4  go.

 5           BOARD MEMBER RIORDAN:  Mr. Chairman, I think it's

 6  sometimes difficult to work this language out at the last

 7  minute.  I can see how one could interpret the suggestion

 8  in a way that might create an imbalance, which I'm not

 9  sure we want to create this imbalance.  We want to keep

10  everything on a point where we're asking the cities to

11  accept an opportunity to look at this and to find some way

12  to compensate.  But I have some trouble with your words

13  just clearly as you read them just to me in the last few

14  minutes, and I'm hoping maybe the cities can perhaps offer

15  some comments.

16           CHAIRPERSON LLOYD:  I guess we're asking for

17  Ms. Hunter.  I know Supervisor DeSaulnier also had a

18  request to speak.

19           SUPERVISOR DeSAULNIER:  I know how meetings run

20  in Sacramento, especially having watched the one last

21  night, so I'm just sitting quietly to get my opportunity,

22  Chairman Schwarzenegger.

23           MS. HUNTER:  Mr. Chairman, members, Yvonne Hunter

24  with the League of Cities.  Again, thank you for the

25  opportunity to comment.  Kelly Astor and I and the waste


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 1  industry, we've all gone around in circles on this issue,

 2  and we're sympathetic to their concerns.  It's the first

 3  time I've actually heard in a long time the language that

 4  Kelly read, and we simply couldn't go there.  It would tip

 5  the delicate balance that Catherine had talked about.

 6           What would be very helpful to local governments

 7  would be for the ARB staff -- and we've talked to the

 8  staff about this -- to provide information to both

 9  haulers, but more importantly to local governments on the

10  actual costs of some of these technologies.  So that when

11  the haulers come to the local governments for discussions,

12  we have some reference point.  We can say, "Yeah, you're

13  right.  That is the cost," or, "No, I'm sorry.  You know,

14  we don't know."

15           We look at them as our partners in providing

16  service.  But I think that would be very, very helpful.

17  And we pledge to work with the industry and work with the

18  Air Board to make this work within the framework of

19  conditions and terms and franchises and contracts.

20           CHAIRPERSON LLOYD:  Thank you.

21           BOARD MEMBER D'ADAMO:  I'm comfortable with that.

22  I just think that the intent language needs to say that,

23  to include our role.

24           EXECUTIVE OFFICER WITHERSPOON:  We'd be happy to

25  do that.


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 1           CHAIRMAN LLOYD:  Supervisor DeSaulnier.

 2           SUPERVISOR DeSAULNIER:  Perhaps it's all been

 3  said, but I agree with D.D.  Having been in local

 4  government for well over a decade and having been involved

 5  in my fair share of franchise agreements -- and I don't

 6  know how many we have in our county, but it's multiples.

 7  I don't see how we can fix this, I mean, the franchises

 8  get audited, at least in my experience -- I don't know

 9  about other people in local government -- as to what

10  they're spending.  Their pass through should be a

11  reasonable pass through that we can tie to what the actual

12  costs are.  I don't think -- that's not something that we

13  can not -- we're unable to do, I should say.  So it may be

14  just a question of semantics but if we can work on --

15  and I know you've worked on it forever.  But between now

16  and the end of the hearing, I don't see how we couldn't

17  come to some conclusion that would be reasonable for

18  everyone so --

19           CHAIRPERSON LLOYD:  So what you're saying, some

20  cost recovery, but that's got to be the true cost?

21           SUPERVISOR DeSAULNIER:  Right.  Over the period

22  of time we're doing this, they -- and I know every

23  franchise isn't the same -- but those that do have audit

24  requirements should be able to go back and look at those,

25  the true costs, the actual cost.


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 1           CHAIRPERSON LLOYD:  Yeah.

 2           SUPERVISOR DeSAULNIER:  Thank you.

 3           CHAIRPERSON LLOYD:  Quit when you're ahead.

 4  Thanks.  No.  If you need to come back later -- but I

 5  think we have --

 6           MS. HUNTER:  I just want to make sure we don't

 7  tip the balance too far where we're no longer in support.

 8           CHAIRPERSON LLOYD:  I don't think so.

 9           SUPERVISOR PATRICK:  If I might make a comment.

10  I know we're ready to move on.  I have to agree with this

11  woman from the League of Cities.

12           I think that we should have no role whatsoever in

13  the negotiations between the local governments and the

14  franchise folks.  If you want to strengthen language or

15  something that said, you know, it's our intent that they

16  be compensated for this through the pass through that goes

17  to the taxpayer, I think that's okay, although I don't

18  have any objection to the language that we have in there

19  now.  But I think we need to be very, very careful about

20  going too far in saying that it's simply the haulers who

21  are going to tell the local government how much this is

22  going to cost because that is certainly not acceptable.

23  And so, you know, I think that the language that was

24  presented by the Refuse Removal Council goes way beyond

25  what I would be willing to accept.


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 1           CHAIRPERSON LLOYD:  I thought what we were

 2  looking at here was trying to use a technical resource --

 3  economic resource; is that right?

 4           SUPERVISOR PATRICK:  Absolutely.  And to be able

 5  to have information about what the true and actual costs

 6  of this, I think is -- that's the role that we would play.

 7  But certainly not getting any further into any

 8  negotiations process in that.

 9           EXECUTIVE OFFICER WITHERSPOON:  As I understand

10  the Board's direction, it is to keep the intent language

11  the way the staff proposed it, but to add to it the

12  explicit role of the Air Resources Board staff in

13  communicating the local governments what we believe the

14  cost of compliance with the regulation to be; is that

15  correct?

16           CHAIRPERSON LLOYD:  Two of my colleagues on the

17  right, is that okay?

18           EXECUTIVE OFFICER WITHERSPOON:  I'll repeat.

19           SUPERVISOR DeSAULNIER:  We were talking about --

20  what was the word we used earlier?  Recalcitrant local

21  government?

22           CHAIRPERSON LLOYD:  But I think the key issue

23  here is that you raised some issues.  And Barbara wants to

24  make sure we didn't go too far, and that is what I think

25  Ms. Witherspoon was saying, that we modify the language to


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 1  indicate that the Air Resources Board will provide

 2  information to the local municipalities so in fact there

 3  would be evidence that the costs are really what they

 4  cost.  I think that sounds good.

 5           SUPERVISOR DeSAULNIER:  I think that's fine.  But

 6  at some point there are actual costs they will be able to

 7  demonstrate physically in terms of bills and products they

 8  buy that will be passed through.  It's not rocket science.

 9           EXECUTIVE OFFICER WITHERSPOON:  What the

10  distinction is, is what is the cost attributable to the

11  regulation versus the cost tied to company choice or other

12  reasons like buying more new trucks than the reg would

13  compel them to do.  That's where the dividing line is

14  going to be.

15           SUPERVISOR DeSAULNIER:  I understand.

16           CHAIRPERSON LLOYD:  Thank you.

17           We have Bill Dobert, Greg Sanders, Jack Fiori.

18           MR. DOBERT:  Good afternoon.  Just change over

19  here.  I'm Bill Dobert.  I'm the current Northern District

20  President of the Californian Refuse Removal Council.  I'm

21  also the CFO of Speciality Solid Waste in Sunnyvale.  For

22  a family business we're a jack-of-all-trades.  I'm also --

23  even though I've got all this white hair -- the youngster

24  in this industry.  I've only been in this thing for about

25  12 years, having previously been a banker.


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 1           The company, Specialty, I work for has been

 2  around for 50 years.  I guess what I'm here to talk about

 3  is essentially what Kelly talked about, what you've been

 4  discussing, and that's the compensation issue.  When I got

 5  into this business, franchise agreements were 20 pages, 30

 6  pages, 40 pages.  And over the years the cities have

 7  decided to hire consultants to do the work for them and

 8  make the decisions, and the franchise agreements are now

 9  150 pages long.

10           I heard a number that 87 percent of the franchise

11  agreements have a provision in there allowing for -- and

12  somehow I guess it was synonymous with guaranteeing that

13  any regulatory change we would get compensated for.  Well,

14  some of you have been involved at the counsel level.  You

15  know the result.  Some of the discussions are smooth.

16  Some of them aren't.  It's not as easy to say there's

17  three words in a franchise agreement that says if you go

18  out and spend, what we don't know is what's going to be

19  the cost at this point.  If it's going to be millions and

20  millions of dollars or if it's going to be something less.

21  We're going to be able to show invoices, which we will, to

22  substantiate what we have paid for, and they're going to

23  say, "We'll just build it into your payment next month."

24           CHAIRPERSON LLOYD:  How large is your company, by

25  the way?


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 1           MR. DOBERT:  Our company is about 45 to 50

 2  trucks.  Pretty much representative of most of the folks

 3  that raised their hand in the group back here.

 4           The problem is it's just not that easy any more.

 5  And so that's why it's critical to us that we guarantee --

 6  and once again, I've heard that from Yvonne there's no

 7  indication from the cities that they don't want to say,

 8  "If you spend the money, show us the invoices.  As long as

 9  it's within what the rules and regulations say you're

10  supposed to buy, that we will build it in and you will get

11  compensated."  I don't think there's any indication that

12  anybody said they want to provide any company with

13  financial hardship because of this.

14           CHAIRPERSON LLOYD:  So this is your major issue?

15           MR. DOBERT:  This is our major issue.  And the

16  only thing is we want you to know that in concept we

17  support clean air and providing whatever you want us to

18  do.  We've done it with AB 939, and we will continue to do

19  that.

20           CHAIRPERSON LLOYD:  Well, I think you've heard

21  the sentiment, and we're trying to work something out

22  here.  So I hope you and the succeeding people who testify

23  bear that in mind, the fact we're trying to work that out,

24  and please try to limit your testimony.

25           MR. DOBERT:  We appreciate that.  And we hope it


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 1  will be part of the final outcome of the next 15 days.

 2           CHAIRPERSON LLOYD:  Again, you heard that staff

 3  is going to come back to see how this rule is working out,

 4  and so you're not signing on for a lifetime here.  We're

 5  very sympathetic and concerned about how this plays out,

 6  and we want to work with you on that.

 7           MR. DOBERT:  Thank you.  I appreciate that.

 8           CHAIRPERSON LLOYD:  We have Greg Sanders, Jack

 9  Fiori, and Andy Rose.

10           BOARD MEMBER D'ADAMO:  Mr. Chairman, as the next

11  witness is approaching, I was also wondering if we could

12  ask the waste haulers if they could provide us with

13  information as to their fleet size when they come up here.

14           MR. SANDERS:  Certainly.

15           CHAIRPERSON LLOYD:  That's good.

16           MR. SANDERS:  Honorable Chairman, members of the

17  Board, my name is Greg Sanders.  I work for Varner

18  Brothers in Bakersfield.  We have a fleet of approximately

19  45 trucks that we put out on the road every day and are

20  involved in environmental quality and environmental issues

21  every day.  And we've been doing that in this community

22  and Bakersfield and Kern County for the last 63 years.

23           We attempt to be very actively involved in

24  statewide issues.  When it became apparent this was going

25  to be an issue that was going to affect us and that we


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 1  needed to work with CARB, we immediately came and became a

 2  part of the negotiations and discussions with your staff

 3  regarding this issue.  We have been involved for the last

 4  18 months.  We have been involved as a company in regard

 5  to testing equipment.  We have tested diesel oxidation

 6  catalysts.  We have tested ultra low sulfur diesel long

 7  before we were ever required because our contracts require

 8  us every day to pick up refuse.  We cannot not pick that

 9  up.  And if the technology does not work, we have to know

10  beforehand, before it threatens our contracts and what we

11  do.

12           I come before you today with a completely

13  different message than I intended 24 hours ago.  And it's

14  a real world message.  At 2:00 yesterday afternoon, I met

15  with an industry leader regarding our plans for the future

16  and essentially where we were going.  He had been a part

17  of providing us, our company, with data logging and for

18  information that we would need that was critical to move

19  forward with our program.  I was informed by one of the

20  top people in the industry that there are individuals --

21  that there are engineers had misread our data.  And that

22  the data was now going to require us to go to a diesel

23  particulate filter, which essentially is three times the

24  cost of where we had intended on going and had been

25  planning on going for the last year.


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 1           There is not only the cost associated with this

 2  dramatic change that at a time that is very tough for us

 3  as an industry, but there's also the infrastructure

 4  because if we have to go to DPFs -- and I understand

 5  staff's concern about the potential year of giving us

 6  leeway to have ultra low sulfur diesel on site.  But

 7  realize if I have to go to a diesel particulate filter, I

 8  have to have an entirely new above-ground tank for that

 9  fuel, and I have to go through a series of different hoops

10  to get that fuel.

11           And I told you earlier we had been involved in

12  the testing.  Our latest invoice showed we're paying 14

13  cents a gallon additional -- 14 cents for ultra low sulfur

14  diesel fuel.  If it's not mandated as a part of this, that

15  cost is going to continue to remain high.

16           CHAIRPERSON LLOYD:  Can you -- three minutes have

17  gone.

18           MR. SANDERS:  Okay.  Very quickly, we've got a

19  crisis of confidence, and part of the problem simply rests

20  with the fact that we don't believe that there is a broad

21  enough technology base out there to support all of the

22  issues that need to be addressed.  And there aren't enough

23  people in the industry or around this country to move this

24  rule forward as it's currently written.

25           And the cost -- and just to summarize, this was a


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 1  real issue.  This was a huge issue for us.  I had to make

 2  a call yesterday to my owner to tell him that my estimates

 3  for our program had gone from tens of thousands of dollars

 4  to hundreds of thousands of dollars.  That's a real world

 5  happening.  That's what happened to me yesterday.  Not a

 6  very pleasant day.  So understand that these technology

 7  issues are real, that for us they have to be addressed

 8  before we can move forward.  And we feel it's critical

 9  that they be dealt with.

10           We have attempted to be proactive.  We've

11  attempted to work with staff and do the things in advance.

12  We will continue to do that.

13           CHAIRPERSON LLOYD:  Thank you very much.  I think

14  we will have people testifying on these devices later on.

15  Thank you.

16           Jack Fiori, Andy Rose, Mark Figone.  Again,

17  Ms. D'Adamo -- how many trucks do you have?

18           MR. FIORI:  Sorry.  We have 18 trucks.

19           CHAIRPERSON LLOYD:  18.

20           MR. FIORI:  My name is Jack Fiori.  I'm the Vice

21  President of California Waste Recovery Systems.  Our

22  business office is located in Lodi, and we provide

23  residential and commercial solid waste and recycling

24  services to San Joaquin and Sacramento counties.  We're a

25  privately owned business owned by the Vaccarezza family


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 1  for more than 75 years.  We implemented the first three

 2  carts back in San Joaquin and Lodi back in 1993 and first

 3  two-cart residential collection systems in Sacramento

 4  County, one in Galt and the other in what is now Elk

 5  Grove.

 6           As has been said, like most small garbage

 7  companies, we've been recycling and diverting reusable

 8  materials from the waste stream since our inception.  Like

 9  most small garbage companies, we're used to helping

10  communities do the right thing and be part of a solution

11  when it comes to the protection and preservation of the

12  environment.  We support the air quality objectives of the

13  control measure as proposed.  And we are not in

14  disagreement with the implementation time line if the

15  technology is proven, if it's on the shelf, and if it's

16  available to help us get there.

17           Beyond that, and using your own numbers, nearly

18  90 percent of the solid waste recycling collection in

19  California has been performed through the municipal

20  contracts we've been discussing.  Many of these agreements

21  have fixed rates and do not include provisions to allow us

22  to recover for expenditures.  Speaking personally, we have

23  two franchises with exclusive contracts.  One is pretty

24  clean.  One is nowhere close to clean language.  I expect

25  some challenges.  I expect some difficulties with that.


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 1           And as business people, I think we both agree

 2  that many times the word "negotiate" is a synonym for the

 3  word "compromise."  And to use the staff's numbers from

 4  before, if I understood them correctly, in round numbers,

 5  staff suggests that a dollar a year will be the cost per

 6  household on this.  And to carry that a step further, the

 7  typical household pays about $200 a year for solid waste

 8  service using the number 16, $17 per house, per month, and

 9  rounding off.  So a dollar of $200 is half a percent.

10           Well, those of us that have to go in and we've

11  got fixed rate changes or fixed rate adjustments based on

12  CPI, we're only going to get 2 1/2, 3 1/2, 4 percent.  So

13  now we're going to dedicate a half a percent of the 3

14  percent, is a significant piece.  And over the long haul,

15  it's going to cause a company like ours to fall back in

16  the race.  Because if CPI is what we need to stay level,

17  we're no longer going to get it.

18           In closing, I urge you to reconsider the proposed

19  rule.  I ask you to include adequate provisions to allow

20  for time extensions if the proven equipment is not

21  available to meet the emission standards.  I'd ask you to

22  provide a mechanism so the haulers can recover their costs

23  by complying with standards in the case where municipal

24  franchises otherwise prevent it.

25           CHAIRPERSON LLOYD:  Thank you very much.


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 1  Clearly, we are concerned about the small facilities as

 2  well.  So thank you very much.

 3           Now we have Andy Rose and Mark Figone and Dennis

 4  Shuler.

 5           MR. ROSE:  My name is Andy Rose.  I come from a

 6  slightly different perspective than my colleagues in the

 7  hauling industry.  I'm an attorney and financial advisor,

 8  and I finance these companies.  So when costs increase --

 9  I'm actually speaking against interests.  This is a good

10  thing for me.  I actually urge you to raise the cost a lot

11  because I'll have to do more financing, and I'll make more

12  money.  However, it doesn't really work if the haulers

13  can't afford to do it.  Most of the haulers are going to

14  have to borrow money to do anything of any magnitude.  I

15  want to basically reinforce -- let me finish that.  I

16  represent about 65 haulers in California.  Most of the

17  haulers -- a vast majority of any size of the group the

18  haulers that are speaking here.  We're missing one, and we

19  intend to get him at some point.  The rest are all

20  clients.

21           I want to ditto what Kelly said, but let me just

22  bring up a couple things.  Supervisor DeSaulnier suggested

23  that some of the contracts do provide for cost of service

24  recovery.  And that's very true.  Unfortunately, they're

25  in a very big minority of contracts statewide.  I also, as


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 1  Kelly does, serve as a financial advisor, but I also

 2  negotiate these contracts.  When you have one of those

 3  types of contracts, you're absolutely right, it's a good

 4  thing because you can negotiate the present price of

 5  service you're going to get back.  The vast majority do

 6  not have that.

 7           The '87 percent you guys sought, a lot of those

 8  literally say you can come to the Council and ask.  And

 9  Kelly describes it properly as the begging rights.  There

10  are Councils that say no.  There are also agreements --

11  and some of the consultants were referred to earlier --

12  that actually don't want to put any extraordinary increase

13  provisions, period, in those contracts.  In other words,

14  you may not come back.  We don't care what happens to you.

15           Another trend is most of the contracts -- I would

16  say probably the majority go up by inflation.  The latest

17  trend with the consultants is not to give you all the

18  inflation.  They give you 50 percent of the inflation or

19  something like that.

20           So I want to make it very clear that while I

21  understand the intent -- and everyone is agreeing here

22  that the intent is wonderful.  And everyone here says,

23  "Yes, we should do this.  The cities should do this."

24  When you get down to the ground as a practical matter, I

25  would predict a great number of haulers are going to have


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 1  a very difficult time getting anything from their cities.

 2           Finally, let me give you one specific example.

 3  Workman's comp and fuel have gone up precipitously, as you

 4  know, during the period of the last year.  One of my

 5  haulers who I think had 13 or 14 franchises went and asked

 6  under the provisions that were in those contracts for

 7  increases, based on those greatly increased cos,ts 400 or

 8  500 percent for workman's comp.  Two out of their 13

 9  agreed to do that.

10           Finally, borrowing money, we have to go to banks.

11  There are two issues here.  One is technology and one is

12  cost recovery.  We've talked about cost recovery.  You're

13  going to hear more about that.  I don't know much about

14  the technology.  All I can say is it's very important that

15  when we go to a bank to borrow money for something like

16  this that we can truly say to the bank, "Yes, this

17  technology works.  And yes, we'd like to amortize these

18  trucks over seven to ten years, and they actually will

19  last that long, and our operation and maintenance costs

20  are reasonable."  If we can not prove that, the hauler is

21  going to have a hard time borrowing the money, which means

22  they're going to have a hard time complying.

23           CHAIRPERSON LLOYD:  Thank you very much.  Thank

24  you.

25           Mark Figone, Dennis Shuler, and Sheila Edwards.


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 1           MR. FIGONE:  Good afternoon.  My name is Mark

 2  Figone, and I'm the General Manager of East Bay Sanitary,

 3  and we have the exclusive contract for the city of El

 4  Cerrito.  We have currently only 11 diesel units, however,

 5  we are in ongoing discussions with the city in an attempt

 6  to acquire the recycling collection.  So I would like to

 7  speak optimistically and say we have 15 truck haulers, and

 8  I would like to speak as such.

 9           CHAIRPERSON LLOYD:  Okay.

10           MR. FIGONE:  We have just 15 employees.  And in

11  consolidation in our industry over the past few years,

12  we've remained one of the few independent small haulers in

13  the county.  My grandfather acquired the franchise in

14  1940.  And since that time, we've been very successful in

15  maintaining relationships with successive council members,

16  staff, and with citizens of El Cerrito as well.

17           I came to work full time for the company in 1986.

18  I represent the third generation of our family managing

19  the business, and I'm proud of the business we've built,

20  and I hope to continue with it for many, many years to

21  come.

22           El Cerrito, as you know, is a vanguard on

23  environmental consciousness.  They began the separation

24  and collection of recyclable materials back in the 1970s,

25  long before the advent of AB 939.  As I just mentioned,


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 1  they continued the collection, but we support them and

 2  have throughout the years in terms of doing some of their

 3  hauling of materials they collect.  We also provide

 4  billing services and help distribution of some of their

 5  outreach and public education materials.

 6           I mention this to emphasize the fact that both

 7  East Bay Sanitary and the city of El Cerrito have a long

 8  history of concern for the environment.  We share the same

 9  concerns as this Board and the state -- the citizens of

10  the state for clean air and other environmental friendly

11  business practices.

12           I'm here today to express my concerns, however,

13  that this proposed rule as written represents a

14  significant risk to the ongoing success of my family

15  business.  El Cerrito is a very hilly community.  We're

16  hard on our equipment.  Just not to be redundant, but we

17  want to echo the representative from CTA's concerns about

18  the technology uncertainties.  And we see a scenario where

19  as they unfold, it will create an excessive burden -- cost

20  burden for our business.

21           As has been mentioned also, we just completed a

22  two-year rate review process with our city.  We have a

23  rate model on board.  The rate model did not anticipate

24  the kinds of costs this new rule could potentially create.

25  And we have the option to renegotiate, but also as has


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 1  been mentioned, renegotiation is not a guarantee that we

 2  will be able to recover these initial costs.

 3           Rather than being terribly redundant, I'd just

 4  like to close and say that, again, as currently written,

 5  this rule places us at a competitive disadvantage, given

 6  our size and given the fact that we have much larger, more

 7  well funded public companies that surround us.  They have

 8  a much quicker ability to come in and respond to these

 9  kinds of cost increases without having to go directly to

10  the rate payers.  So without some or protection for

11  funding, it puts us at risk.  Thank you.

12           CHAIRPERSON LLOYD:  Thank you very much.

13           BOARD MEMBER RIORDAN:  Mr. Chairman, I just have

14  one quick question.  You just negotiated the contract.

15  How long is that contract now?  What is the --

16           MR. FIGONE:  Our current contract is 12 more --

17  12 more years.

18           BOARD MEMBER RIORDAN:  And does it --

19           MR. FIGONE:  The rate model is negotiated

20  separately.  The contract was already in place.

21           BOARD MEMBER RIORDAN:  The contract is in place.

22  Then when do you renegotiate a rate increase?

23           MR. FIGONE:  We would -- the rate model allows us

24  or the city to come at any time, given any significant

25  change in our cost of operations or under the city's


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 1  suspicion that things have changed.

 2           BOARD MEMBER RIORDAN:  Thank you.

 3           CHAIRPERSON LLOYD:  Thank you very much.

 4           Dennis shuler, Sheila Edwards, Kevin Mullins.

 5           MR. SHULER:  Good afternoon.  My notes originally

 6  said good morning.  I'm Dennis Shuler.  I'm the

 7  Environmental Affairs Manager for Gilton Solid Waste

 8  Management.  Our company currently operates about 50

 9  trucks.  This is a family-run organization.  Currently,

10  the third generation in this family is running it.  I've

11  personally been involved with the company for about eight

12  years.  I've been in environmental work here for 29 years

13  in California.

14           The first thing we want to say from our company,

15  we are totally 100 percent in favor of what the Board is

16  doing in terms of establishing standards and helping with

17  emissions related to diesel engines.  We have never

18  questioned that, and we are totally in support.

19           We live in the central valley where we have some

20  significant air emission problems.  We know.  We raise our

21  families there.  We coach soccer teams.  So this is to our

22  benefit.  But as you've heard from other speakers here, we

23  as a refuse hauler in the valley do have problems with

24  this particular set of regulations.  I'm not going to

25  speak on everything.  I'm just going to speak on one


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 1  issue.

 2           Our company currently serves under contract ten

 3  different jurisdictions; three counties and seven cities.

 4  We have contracts with each one of those jurisdictions,

 5  and every one of those contracts is different.  But each

 6  one of them has three things in common.  First, they get

 7  to set the rates.  And that means a great deal in terms of

 8  what we're able to do in terms of operating our business.

 9  Secondly, we're mandated in every one of the contracts

10  that we have to meet all federal, state, and local

11  regulation's statutes.  So that's a condition upon every

12  contract we have.  And lastly, all of these contracts have

13  language in them regarding us coming to them -- and the

14  key word, asking for a rate review or asking for a rate

15  adjustment.  Under none of these contracts are we

16  guaranteed that we will receive rate increases.

17           The key word I heard in your staff's comments was

18  they did the survey and they came back and asked the

19  question did they allow for rate adjustments.  That

20  doesn't mean they occur.  Just to be brief, I stand in

21  front of city councils and boards all the time.  We

22  present our members with the full analysis for these folks

23  every single year.  That doesn't mean that our costs are

24  going to be compensated.  Many, many times our costs show

25  we need a 4 percent increase, and staff will recommend to


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 1  their elected official maybe 2, 2 1/2 percent.  So we're

 2  facing this all the time.

 3           I'll finish up quickly.  I just wanted to again

 4  reemphasize we're totally in support of CARB's goal to

 5  reduce emissions.  We just question whether or not this

 6  set of regulations at this time is going to accomplish

 7  what you want.  Thank you very much.

 8           CHAIRPERSON LLOYD:  Thank you.

 9           Sheila Edwards, Kevin Mullins, Louie Pellegrini.

10           I would ask the people testifying -- I realize

11  this is very important to you, otherwise you wouldn't be

12  here.  But please try to identify what we can do.  Because

13  the individual case studies, while we can hear that, we

14  cannot really address all those in the individual context.

15  The broad context we could.  It would really help us in

16  the long run.  Thank you.

17           MS. EDWARDS:  Thank you, Chairman.  I will be

18  brief.  My name is Sheila Edwards.  I work for Marine

19  Sanitary Service and Recycling Marin County.  Excuse me.

20  I've been waiting so long I forgot my voice.  I represent

21  the Garbino family who could not be here today.  It's a

22  family business, and they are running the business and

23  working hard at.  But they send their regards and their

24  support for this clean air process.

25           CHAIRPERSON LLOYD:  How many trucks do they have?


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 1           MS. EDWARDS:  We operate approximately 100

 2  trucks, source separated collection, so many trucks run

 3  the same routes.

 4           I will be brief with my statement.  Our concerns

 5  are, again, the cost assurances.  It's going to come out

 6  one way or the other.  Right now we have been very proud

 7  to have reached a 70 percent diversion rate in our county.

 8  We operate the first recycling center on the west coast.

 9  Now, granted, that is in excess of what the state mandate

10  is, but it would be a shame to lose something in our

11  recycling diversion in order to pay for costs to reach the

12  air pollution requirements.

13           The second is the technology, where we don't know

14  where we stand with that.  Some of the equipment and the

15  machinery is not available yet.  We don't know what will

16  happen when we apply that machinery to our existing

17  trucks.  And again, there are no assurances as to what

18  will occur if the trucks go down and the machines blow up.

19           I won't repeat any more of what has been said

20  before.  I thank you for your time.  We are dedicated to

21  providing quality sanitation and recycling services to our

22  communities, maintaining our recycling diversion rate, and

23  cleaning up the air.  We support your work here, and we

24  look forward to working with you to craft a rule that is

25  achievable for our community and meets the air quality


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 1  objectives.

 2           CHAIRPERSON LLOYD:  Thank you very much.

 3           Kevin Mullins, Louie Pellegrini, Sheryl

 4  Granzella.

 5           MR. MULLINS:  Good afternoon, Mr. Chairman, Board

 6  members.  My name is Kevin Mullins.  I'm from the Mill

 7  Valley Refuse Service.  I bring greetings the Bedio family

 8  who could not be here today.  They're busy servicing our

 9  18,000 customers in the cities of Mill Valley, Corte

10  Madera, Tiburon, and Almonte.

11           My company has provided collection and recycling

12  services for these communities since 1906, almost 100

13  years.  We operate about 40 trucks, and I'm here to

14  express the company's strong support for the clean air,

15  yet we are opposed to this proposal on a number of

16  grounds, which I'll briefly discuss now.

17           First and foremost, as a rule is written, this

18  could potentially bankrupt our company.  This is a small

19  family-owned.  This is their life savings at stake here.

20  I say this not only as a concerned citizen, but as an

21  accountant and an economist, and because I do their books.

22           Our company operates under contracts that do not

23  ensure increase on the rates being charged to offset the

24  tremendous financial burden this rule contemplates.  For

25  example, last year with the massive increases of workers'


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 1  compensation, a lot of our elected officials that we

 2  service said, "Tough luck."  We got half the increase that

 3  we asked for.

 4           Going forward, I want you guys to understand that

 5  is a family's life savings that we're risking here on a

 6  technology that's not exactly proven.  And some of the

 7  stuff in the staff report discusses that the impact is

 8  not -- will be insignificant, and there's no potential

 9  cost impact.  If we're not allowed to pass this on, this

10  is the people's homes.  This is the people's lives.  This

11  is college fund we're talking about here.  This is a small

12  family.  We're worth about $10 million, but if we are to

13  revamp our entire fleet, it would cost about $4 million.

14  So leverage that, that's 40 percent of our equity.  That's

15  a risk that the owners cannot afford to take.

16           Second, as a small business, we see that our

17  company will be crippled with the debt load if forced to

18  absorb the cost without recovery from the customers.  The

19  national waste companies may be able to shift their old

20  trucks to areas out of state and bring new trucks in from

21  elsewhere subsidized by profits from their massive

22  corporate infrastructure.

23           The Bedio family is a business that is formed to

24  stay in business, and we do not have this luxury of being

25  able to shift costs or subsidize our expenses with sources


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 1  from elsewhere.  By weakening the company's strength, the

 2  rule as written threatens to put them out of business.  I

 3  don't think this is what California wants.  We are in the

 4  business of environmental protection and fully support the

 5  need for clean air.  We have achieved a diversion rate

 6  of -- I believe the current number is 74 percent.  So we

 7  take the environment very seriously.  We cannot, however,

 8  successfully implement or support the rule that does not

 9  provide for mechanisms for us to recover our costs.

10           The most recent example that illustrates this or

11  points this out is the bankruptcy of the electric

12  utilities because if you control one side but not the

13  other, who gets stuck in the middle?  It's the service

14  provider, which would be us.  In short, we wind up

15  becoming debt laden and no longer economically viable.

16  This is a company that's been around -- survived the Great

17  Depression and is now in its third generation, just to be

18  put out by an environmental rule that can be done using a

19  multitude of different methodologies.

20           A solution, for example, is a model successfully

21  used under AB 939 to require the municipalities to comply

22  with public policies and objectives.  The municipalities

23  who granted the authority to assess local fees for solid

24  waste management, not the private vehicle owner, are in

25  the position to ensure that the costs of compliance are


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 1  ultimately borne by the rate payer.  This isn't clear.

 2  We've achieved 74 percent where I think much of the state

 3  and the country is around 30 or 40 percent.

 4           I thank the Board for considering my remarks, and

 5  I'm available for any questions that you have.

 6           CHAIRPERSON LLOYD:  Thank you.  Louie Pellegrini,

 7  Sheryl Granzella, Ronald Proto.

 8           MR. PELLEGRINI:  Good afternoon, Mr. Chairman and

 9  Board members.  My name is Louie Pellegrini.  I'm the Vice

10  President of Peninsula Sanitary Service, a family company

11  on Stanford University.  We run 15 trucks --

12           CHAIRPERSON LLOYD:  One-five?

13           MR. PELLEGRINI:  One-five.  We're also involved

14  with some other companies that we operate in San Mateo,

15  Santa Clara, and Alameda County.

16           On a daily basis, I'm responsible for 100 trucks

17  leaving the yard every morning.  Believe me, that is not

18  an easy feat.  My experience is third generation, 30 years

19  have been driving the trucks, repairing the trucks,

20  negotiating the contracts, negotiating the rates,

21  inspecting equipment, and it's not an easy -- our business

22  isn't simple anymore.

23           We have embraced alternative fuels.  In the '70s,

24  our fleet were propane-fueled equipment.  The technology

25  was there.  The support wasn't there.  It fumbled.  In the


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 1  early '90s we got involved with CNG conversion on our

 2  service vehicles and our large collection vehicle.  We had

 3  to change the engine out.  The technology is always

 4  playing catchup.  We are currently running 12 compressed

 5  natural gas trucks in one of our franchise agreements.

 6  It's working.  My fear on the technology side and the age

 7  and number of trucks that we have is that we're putting

 8  the cart before the horse in that it's not proven.

 9           In our franchise agreements in keeping our rates

10  down with the rate payers and the elected officials happy,

11  we have scheduled equipment replacements going out from

12  seven to ten years.  Our franchises have life left of 11

13  to 20 years.  This has all been scheduled to provide a

14  reasonable rate increase to recover costs and provide

15  efficient services to our customers.

16           We embraced AB 939.  We met the rules of our

17  cities.  We invested a lot of money.  My concern with the

18  technology and the rule is there isn't any offramp if the

19  technology does not come to fruition like it's supposed to

20  here.  My biggest fear is that I will not have the ability

21  to provide the service because equipment does not

22  function.

23           The trend in the new franchises is liquidated

24  damages, missed customers, inability to complete routes,

25  $150 a day fines if we can't complete the route.  I feel


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 1  between a rock and a hard spot basically sitting here

 2  today that we're depending on manufacturers for traps,

 3  engines, and the cities not wanting to step forward to

 4  partnership, with technologies being borne here, a lot of

 5  phrases that kind of tie it all together, but it's on our

 6  backs.  And my confidence level to be able to go forward

 7  and get the job done, I feel we're at risk.  And --

 8           CHAIRPERSON LLOYD:  I think you heard -- I think

 9  your confidence issue is staff is going to work this

10  issue, monitor the issue.  You heard the engine

11  manufacturers want to work here.  We have some testimony

12  from some of the aftertreatment.  And clearly we need to

13  work together.  But we're not going to leave you in

14  isolation there.

15           MR. PELLEGRINI:  I'll just finish up here.  I'm

16  speaking from where the rubber meets the road.  In the

17  last ten years, I rolled out five major fleet retooling

18  collection systems, interact with the chassis

19  manufacturers, the truck manufacturers, the engine

20  manufacturers.  Murphy's law, it doesn't always go as it's

21  supposed to.  A lot of promises, but we're going to set a

22  rule here that's going to effect us down the road.

23           CHAIRPERSON LLOYD:  We have a checks and balances

24  here.  We have staff reporting back.  We obviously share

25  some of your concern that there will be enough faith to go


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 1  ahead.  Thank you very much.

 2           MR. PELLEGRINI:  Thank you.

 3           CHAIRPERSON LLOYD:  Sheryl Granzella, Ronald

 4  Proto, Doug Button.

 5           MS. GRANZELLA:  My name is Sheryl Granzella, and

 6  today I represent the Richmond Sanitary Service, which is

 7  the subsidiary of Republic Services.  Much of what I was

 8  going to say today has already been said.  I don't want to

 9  be redundant and go on and on.

10           CHAIRPERSON LLOYD:  Supervisor DeSaulnier will

11  appreciate that.

12           SUPERVISOR DeSAULNIER:  I'm in charge of

13  redundancy.

14           MS. GRANZELLA:  Richmond Sanitary Service has

15  provided waste collection, recycling services to western

16  Contra Costa County for more than 80 years.  My father

17  served as President of Richmond Sanitary Services for 45

18  years until the company sold to Republic Services in 2001.

19  And I, like many of these people in the room, grew up in

20  this business.

21           CHAIRPERSON LLOYD:  Did you say how many trucks

22  you had?

23           MS. GRANZELLA:  I'm getting there.

24           CHAIRPERSON LLOYD:  Sorry.

25           MS. GRANZELLA:  Today we operate 70 trucks at


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 1  Richmond Sanitary Service alone, but Republic Services has

 2  well over hundreds of trucks in California.  But Richmond

 3  Sanitary Service has six exclusive franchises and six

 4  municipalities.  As you've already heard, all the terms in

 5  these agreements are different.  And every one of them are

 6  different.  And they don't all have the same thing.

 7           We feel we perform an essential public service

 8  for our customers.  We're very concerned about the

 9  environment.  We strongly support the air quality that

10  CARB is seeking with its proposed rule.  We really ask

11  that you help support all of us with our concern for our

12  capital and our operating cost that we in the industry

13  will need and we need to recover from our rate payers.  So

14  I appreciate all that's been said today about how you're

15  going to change the language to work with us.  Thank you

16  very much.

17           CHAIRPERSON LLOYD:  Thank you very much indeed.

18  Ronald Proto, Doug Button, David Achiro.

19           Maybe if the speakers could line up in the front

20  so we can save a little bit of time.  It all adds up here.

21           MR. PROTO:  Good afternoon, Mr. Chairman, members

22  of the Board.  I don't want to repeat what everybody has

23  already said, but I do want to punctuate it.  What I've

24  heard is that you do want to work to help these folks

25  recover money.


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 1           My name is Ron Proto.  I'm an associate member of

 2  CRRC.  I'm a consultant, but I'm not a consultant that

 3  generates 120-page contracts.  I try to get them back down

 4  to 20.  But what separates me from most consultants is

 5  that I've worked on their side as an operator for over 40

 6  years, and I know what it is to negotiate a contract.  The

 7  language could be in there, but as Kelly Astor said and

 8  Andy Rose said, it's only a starting point.

 9           What I heard on the left was, "We need to put

10  language in there that allows them to recover."  What I

11  heard on the right was, "Well, we should only be

12  advisories."  What I heard in the center was, "Well, we

13  can't put too much in there because then we'll lose the

14  support of the cities."  I ask you respectfully whatever

15  language you put in there to help the industry recoup its

16  dollars needs to be very clear and very specific.  You've

17  made a regulation that's going to cost them a lot of

18  money.  You should also put wording in there that allows

19  them to recoup it.  Thank you very much.

20           CHAIRPERSON LLOYD:  Thank you very much.

21           Doug Button, David Achiro, and Harry Miller.

22           MR. BUTTON:  Good morning, Mr. Chairman, members

23  of the Board.  I'm President of South San Francisco

24  Scavengers.  We operate in the Bay Area approximately 42

25  vehicles.  We've been in business since 1914, second/third


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 1  generation run business by nine family members -- nine

 2  different families, I should say.

 3           First off, I'd like to say I applaud your work.

 4  And I, too, express and share your concerns with the

 5  environment, and I believe our company does too.  I look

 6  forward to the day we can come here and say we have

 7  reduced particulate matter, NOx emissions are down.  But

 8  what I'm concerned about is what I hear your staff saying

 9  is that you're going to require us -- and I mean my

10  industry and my company -- to retrofit, repower, or

11  replace 11,000 vehicles in the next seven years depending

12  on what category you fall into.  But it will be within the

13  next seven years.  That's a monumental task.

14           You're asking us to do it with technology that,

15  again, I hear your staff telling me have neither been

16  developed, tested, or that will be warranted for the life

17  of the equipment that we have to put it on.  I hear them

18  say that in L.A. we've tried it on 360 vehicles.  And so

19  the warranty shouldn't be a concern.  Excuse me.  L.A.

20  last time I was there was flat.  And I operate in a very

21  hilly area.  Where are the tests for San Francisco?  I

22  heard nothing on that.  I saw nothing in the reports.  I

23  don't know anything about -- I heard nothing about the

24  Sierras or the Nevadas range where we still have companies

25  that operate.


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 1           And yet, they're going to be putting on these

 2  technologies and requiring us at the end of the day when

 3  all of you pass these rules that we go home, we go to our

 4  councils and we're asking where we have begging rights to

 5  get more money to get this cost replaced.  We go to them

 6  and say, "Yes, we want to do it."  While at the same time

 7  we're telling them labor is going up.  Insurance is going

 8  up.  Workers' comp, all these things.  It's not going to

 9  be easy, especially when we can't tell them this is

10  something everybody else is doing.

11           You're making us do this before the rest of the

12  state.  We're held out as poster children that we've got

13  dirty trucks, and that's not the case.  We have been

14  environmentalists for 89 years, and I think every other

15  company here is too.  I'd love to see this happen.  Don't

16  make us do it alone.  Thank you.

17           CHAIRPERSON LLOYD:  Thank you very much.

18           Ms. Witherspoon, I think you made an

19  understatement when you said the industry wasn't too happy

20  with us.

21           David Achiro, Harry Miller, and Alan Marchant.

22           EXECUTIVE OFFICER WITHERSPOON:  I think you've

23  heard them all say they support our objective.  It's all

24  concern about cost.

25           CHAIRPERSON LLOYD:  Yes, exactly.


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 1           MR. ACHIRO:  Hi.  I'm David Achiro from Tahoe

 2  Truckee Sierra Disposal.  We have about 40 trucks.  I just

 3  want to concur with Kelly and with Doug Button.  I want to

 4  make it short.  I'm going to keep it short for you guys.

 5  I concur with what they say.

 6           We're in the Tahoe Truckee area.  My father

 7  started the business in 1964.  Back then, we had one

 8  truck, one, you know, tractor, and one pickup.  And now

 9  we've grown a little bit.  But I just want to concur with

10  them that we do need to get the municipalities involved

11  with this, if this is going to work at all.  Because they

12  can -- they can say no.

13           We just negotiated a contract with the county,

14  and we want to keep in good terms with them.  But we -- we

15  were a little beat up.  And without some sort of something

16  on the municipalities, they can -- even if we do give them

17  the information and the cost, they can still say no.  I'll

18  just end it there.

19           CHAIRPERSON LLOYD:  Thank you very much indeed.

20           Harry Miller, Alan Marchant, and John McNamara.

21           MR. MILLER:  Good afternoon, Board members.

22  Thank you.  And good afternoon, I guess.  I'm with Tracy

23  Delta Solid Waste Management.  We're the hauler for the

24  city of Tracy and the southwestern portion of San Joaquin

25  County.  We operate some 50 vehicles there in the solid


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 1  waste business.  And it's a small family-owned company, a

 2  second going into third generation right now.  I am, among

 3  other things, Recycling Coordinator with the company.  As

 4  with most small businesses, we wear a lot of hats.

 5  Hopefully not too many of them at the same time because it

 6  gets confusing.

 7           I bring greetings from the Repetto family this

 8  case, which is the owners of the company.  And the reason

 9  they're not here is because they're presently

10  negotiating -- well, probably having lunch now -- but

11  negotiating the agreement to upgrade the recycling

12  services for the city of Tracy to go into a full -- let's

13  call it a single-stream system now.  That's another

14  subject.

15           We fully support clean air.  We love in the

16  central valley of California and families and children,

17  what have you.  And you know, we want everything that

18  everyone else wants, but we want businesses that are going

19  to survive as well.

20           We operate under a contract with the city of

21  Tracy and San Joaquin County and a couple of other areas.

22  In every instance we have the agreement that we can go

23  back and say, "Yeah, we've had this increased cost," but

24  it doesn't necessarily mean that they're going -- that the

25  city or the county or whoever is going to increase our


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 1  funding.  It's just all iffy.  And in business we hate

 2  being iffy.

 3           Which brings me to the second point.  You know,

 4  the staff's numbers we think are a little bit fuzzy, just

 5  simply.  We operate, as I said some, 50 trucks.  If we're

 6  retrofitting 50 vehicles at -- I heard the number of

 7  $9,000 or 9500, I believe it was a vehicle, we've got

 8  $500,000 we're looking at.  Our city and our surrounding

 9  area, there's 20,000 people.  At a dollar a home per year,

10  that's $140,000 over seven years.  There's some bit of a

11  discrepancy here.  So I have some question about the cost.

12           We operate old trucks for one very good reason;

13  we have to be competitive.  We, unlike the large haulers,

14  can't afford to go out and buy new trucks all the time.

15  And the new recycling program we're putting in, we are

16  using trucks that we bought from one of the larger haulers

17  and we're refitting those at the present time.

18           I just recently heard one of the staff members

19  say that, "Well, you know, all the haulers are talking

20  about is cost."  And I don't really think that's the case.

21  I think what we're talking about is survival.  Because if

22  we can't recover our costs, there's a very good chance

23  we're not going to.  And particularly small haulers are

24  going to be subject to predatory large companies coming in

25  and forcing us to sell.


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 1           And with that, thank you very much.

 2           CHAIRPERSON LLOYD:  Thank you.  We understand the

 3  issue.

 4           Alan Marchant, John McNamara, Richard Caglia.

 5           MR. MARCHANT:  I'm Alan Marchant, President of

 6  Turlock Scavenger Company.  Third generation in our

 7  company.  We've been here for 68 years in Turlock, and we

 8  operate some 30 trucks.  We're in the 30 truck category.

 9  I would love to be able to cure the air pollution problem

10  in the San Joaquin Valley area.  It's a soot bowl.  We

11  know that.  I have children, grandchildren, and definitely

12  don't want to see them with any problems either.

13           One of the concerns I have is we're a small

14  company.  The only thing I can offer my city is service.

15  We don't have the big funds like the big companies.  We

16  can't do that.  The concern I have is we put the

17  particulate filters on these trucks -- a lot of our trucks

18  are the old trucks.  We're not going to be able to repower

19  those trucks because they don't make engines for this

20  model of truck that we invested in in the past.  We're

21  going to have to go out and purchase a lot of new trucks.

22           The concern I have is putting these particulate

23  filters on these newer trucks that aren't the 2007s and,

24  yeah, I know there's supposed to be a guarantee on this

25  particulate filter, but in the meantime, this truck blows


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 1  up.  That truck's sitting.  And somebody's arguing who's

 2  going to be who -- who's going to take care of that.  I

 3  got to get that truck on the road.  I don't have a choice.

 4  I have to pick up that garbage.

 5           The other concern I have is I've probably got one

 6  of the greatest rapports I think with my city.  We have a

 7  great city.  They've just had major increases on clean

 8  water issues and sewage issues and all this.  For me to

 9  come in and ask them for more money from my side, I

10  question it in this these times.  And I can tell you that

11  if I don't get these rate increases to purchase these

12  trucks, I will be out of business.  Thank you.

13           CHAIRPERSON LLOYD:  Thank you.  And rest assured

14  that -- I understand that you actually serve one of our

15  Board members, and that we will hear firsthand how this

16  rule is being implemented.  So D.D. does a great job of

17  representing that part of the valley.  And in this case we

18  really have -- we will have real time feedback.  So rest

19  assured, I'm sure we will hear firsthand.

20           MR. MARCHANT:  She does do a good job.  And thank

21  you.

22           CHAIRPERSON LLOYD:  John McNamara, Richard

23  Caglia, and Sean Edgar.

24           MR. McNAMARA:  Good afternoon, Mr. Chairman.  My

25  name is John McNamara, and I represent the CRRC Southern


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 1  District.  I'm here from Southern California this morning.

 2           I want to share with you a case study.  It's a

 3  story about our recent experiences in Southern California

 4  with fleet emission rules that taught us a lot.  The South

 5  Coast Air Quality Management District implemented the rule

 6  1193 that regulates the refuse fleet industry in Southern

 7  California.  It's been in place for two years.  My company

 8  working for CRRC documented many failures that occurred in

 9  the first year and -- actually year and a half of that

10  implementation.  We provided a copy of that report to your

11  staff back in April.

12           And it documented -- and I want to highlight some

13  of the things -- some of the most notable things; 40

14  engines that were a failure in a fleet of 300 natural gas

15  vehicles.  All the fuel tanks in one fleet of 30 natural

16  gas vehicles failed completely.  The municipal fleet of

17  105 vehicles that had dual fuel vehicles had a 70 percent

18  downtime rate.  We documented all that in order to try to

19  better the rule.  And to this point, we're not satisfied

20  that's occurred with the South Coast AQMD.

21           As a result of that, what we also documented in

22  the refuse industry in Southern California is that truck

23  orders have flattened and are declining in sales.  We now

24  in Southern California have less options for clean burning

25  engines.  And in one case, one vehicle class or engine


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 1  class we have no manufacturer that can provide us with the

 2  product that some of the tractor trailer class of vehicles

 3  that we have use for taking away from the transfer station

 4  to the landfill.

 5           In our opinion, as we've documented this, rule

 6  1193 has actually resulted in dirtier air.  We haven't

 7  been able to move on to clean burning engines like we

 8  wanted to and they're not available.  There's less

 9  providers now than when we started in the rule process.

10           The irony of this is that the private refuse

11  haulers have historically been out in front on this issue

12  of regulations in clean burning engine technology.  We've

13  been -- you heard about some of them, how we had a propane

14  fleet and a CNG fleet.  And we feel that the CARB rule --

15  and we provided you specific technical issues we feel

16  inhibit us from going forward with this same type of rule.

17           I want to give you an example of some of the

18  types of programs that the refuse industry has introduced

19  and done on a voluntary basis before the rules were ever

20  written.

21           CHAIRPERSON LLOYD:  What should we be doing with

22  respect to this rule?

23           MR. McNAMARA:  We provided you with written

24  comments earlier this month.  We ask that dual fuel be

25  introduced as a option in the rule and be addressed.


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 1  We've been asking for that for a couple of years.  We're

 2  not saying it be 100 percent adopted or embraced, but at

 3  least you give us some consideration.  And we've heard

 4  some testimony on that earlier.

 5           I also wanted to address one of the Board

 6  member's comments that this is a small portion of the

 7  fleet.  Actually, the city of L.A. has 105 vehicles that

 8  are being used right now.  They're planning on adding 100

 9  more so it will be 205 in the city of Los Angeles.

10  Republic Industries has about 30 dual fuel LNG vehicles.

11  Waste Industries has about 30 dual fuel vehicles.  Waste

12  Management and BPI both have dual fuel vehicles.

13           CHAIRPERSON LLOYD:  Just a matter of application

14  here from the legal counsel.  Clearly, you're subject to

15  the South Coast fleet rule.  If we pass this, which takes

16  priority?

17           MR. McNAMARA:  I couldn't answer that.

18           GENERAL COUNSEL WALSH:  Both rules would apply.

19  The rules have been --

20           CHAIRPERSON LLOYD:  Both rules would?

21           GENERAL COUNSEL WALSH:  Yes.

22           CHAIRPERSON LLOYD:  How would both rules be

23  implemented?

24           EXECUTIVE OFFICER WITHERSPOON:  Within our rule

25  BACT definition includes natural gas vehicles, so the


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 1  purchase of any of these vehicles would apply.  To the

 2  extent that diesel vehicles also existed in some of these

 3  fleets, existing diesel vehicles not subject to the

 4  purchase requirements -- which is what the South Coast

 5  rule does -- would be subject to the retrofit, repowering

 6  or replacement.  But as they got replaced, our rule would

 7  push them into the South Coast rule.  When you go waste,

 8  then you have to buy a natural gas vehicle.

 9           CHAIRPERSON LLOYD:  With the natural gas you

10  mentioned some problems.  Are they still operating them?

11           MR. McNAMARA:   Not all of them.  In some cases

12  the fleets have actually shrunk or parked the vehicles

13  because they don't have the support.  We found a lot of

14  problems with the warranty issues and who's responsible

15  for what.  For instance, an LNG vehicle, they have a fuel

16  tank.  It's a cryogenic tank, and it costs about $5,000 as

17  compared to a diesel tank that costs maybe $200.  Those

18  tanks were provided, and the warranties weren't extended

19  all the way through in the way they should have been.  So

20  their product wasn't supported.  Some of these -- like I

21  said, the city of Los Angeles had 70 percent of its fleet

22  parked last year.

23           CHAIRPERSON LLOYD:  Do these vehicles have oxi

24  cats on them?

25           MR. McNAMARA:  Pardon me?


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 1           CHAIRPERSON LLOYD:  Do they have oxidation

 2  catalysts on them?

 3           MR. McNAMARA:  The city of L.A. might have on

 4  some of them.

 5           CHAIRPERSON LLOYD:  What about your fleet?

 6           MR. McNAMARA:  I don't have a fleet.  I'm just a

 7  regulator service director for California Refuse Removal

 8  Council.

 9           CHAIRPERSON LLOYD:  So it's just the city of L.A.

10  that has the oxidation catalyst?

11           MR. McNAMARA:  That's the only one I'm aware of,

12  but there may be others.

13           EXECUTIVE OFFICER WITHERSPOON:  Mr. McNamara also

14  brought up the issue of dual fuel vehicles, and we talked

15  about that earlier today with respect to San Diego and

16  15-day changes that we'll be looking at to address that

17  case.

18           CHAIRPERSON LLOYD:  Thank you very much.

19           Sean Edgar -- oh, sorry.  Richard Caglia.

20           MR. CAGLIA:  My name is Richard Caglia.  I

21  represent Industrial Waste and Salvage.  I, too, am a

22  third generation family member.  Our hauling company has

23  about 20 trucks currently.  I'm not going to stand up here

24  and echo everything you've already heard.  But there is --

25  I'm starting to feel like one of the first monkeys going


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 1  into space with unproven technology and burdensome

 2  technology and regulations that are going to cost our

 3  company millions of dollars, potentially.

 4           We're currently financing a $9 million facility

 5  which is a new facility.  It's a transfer station facility

 6  and recycling facility.  And I don't have to tell you

 7  again what you've already heard.  I just want you to know

 8  that I'm here.  We want to be part of the central valley

 9  solution.  We do support clean area.  I grew up with

10  asthma, so I still deal with it.  My daughter has it.  I'm

11  currently a Board member in our local Mayor, Alan Autry's,

12  Task Force for Clean Air.  I can appreciate everything

13  you're doing.  I was up here during the Archie Crippen

14  hearings with the Waste Board.  And I just appreciate you

15  listening to what we have to say.  And we appreciate

16  further comment and study from the staff's perspective.

17  And I don't want to feel like a monkey anymore.  Thank

18  you.

19           CHAIRPERSON LLOYD:  Thank you very much indeed.

20           Sean Edgar, Paul Wuebben, Ruben Martinez.

21           MR. EDGAR:  Chairman Lloyd and Board members,

22  thank you.  I'm Director of Regulatory Affairs for the

23  California Refuse Removal Council, north district.  In

24  this capacity I've personally spent more than 500 hours

25  working on this rule package alone.  Much of that quality


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 1  time has been spent with Ms. Witherspoon and your staff.

 2           And to not belabor this, but there are a few

 3  quick issues I want to address, number one being our

 4  industry does not build itself using uncertainty as its

 5  guide.  I've heard you mention San Diego so I just want to

 6  follow up very quickly.  Mr. Medonza was before your Board

 7  in April and went out and bought plus or minus of these

 8  super duper all fuel trucks and only eight of them

 9  grenaded, but we're really committed to the program.  Ten

10  percent failure rate -- I don't know if any of the eleven

11  members of your Board, if one or two or more of you would

12  be satisfied with a lesser degree of service when you roll

13  your recyclable or garbage cart out to the curb, we would

14  like to know that as an industry.  Because we do not

15  invest hundreds of millions of dollars in building the

16  facilities and the infrastructure to enjoy the benefits

17  that our industry is instrumental in providing to all

18  Californians in terms of resource conservation.

19           And perhaps your staff really hasn't zeroed in on

20  the amount of air quality benefits that recycling delivers

21  now.  As an example, material recovery versus virgin

22  resources.  Fed EPA is an example, has some very

23  compelling evidence that tells us that 90-plus percent

24  reductions in air emissions from using recyclable aluminum

25  versus mining new aluminum.  The same for paper.  Plastic


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 1  has its benefits.  The air quality emissions that we're

 2  delivering by virtue of every fewer ton that we put into

 3  the landfill every day is an exact benefit.

 4           We're not coming forward as someone in the ag

 5  team may have said, "Hey, we're a sacred cow, please don't

 6  regulate us."  This business has been used to being

 7  regulated.  We were regulated for public health and safety

 8  reasons.  We're regulated because we need to establish a

 9  recycling mandate.  In the same room every month, the

10  Waste Board tells the cities we serve, "recycle or die."

11           That is our livelihood.  And I say very clearly,

12  we've heard comments today from your staff and also from

13  the folks behind me, and I'm also speaking for the 20 or

14  30 others members who are out running their companies

15  today, we heard very clearly from them, they cannot rely

16  on uncertain technology to carry out their critical

17  business.  They cannot rely on "maybe."  When it comes

18  down to whether they'll be able to pick up your garbage or

19  recyclables, "maybe" does not work.

20           The last thought I will leave you with -- and due

21  to this tremendous degree of uncertainty, specifically in

22  Item 56 in the package, pages 3 through 6, there are about

23  20 bullets of specific requests that were made from this

24  Board.  We have highlighted those requests with your staff

25  and many of them for an extended period.  And staff, yes,


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 1  in the last few days have really been able to zero in to

 2  understand some of the frustration and anger that is

 3  expressed by the folks behind me.

 4           The last idea I will give you is that we are

 5  committed to work through some amendments to this package

 6  that make it more acceptable.  Ultimately if we fail, you

 7  as our customers fail.  The cities and counties mandated

 8  to recycle fail.  When everybody goes away and microphones

 9  are dead and the lights go down and our companies need to

10  go out, the truck needs to turn over at 3:00 in the

11  morning.  We're not at the stage with the technology that

12  our people are comfortable doing that.

13           They cannot risk the continued livelihood of

14  their families on a maybe, on a birthing process, on an

15  uncertainty that's not quite there yet, on representations

16  from folks who want to sell all sorts of different

17  products they can't stand behind long enough in order for

18  us to successfully use it in a field.  Because as

19  Mr. Pellegrini indicated, where the rubber meets the road

20  is where our obligations to you as our customer is.  And

21  we are not at that stage yet.

22           Appreciate your attention.  And I will dedicate

23  myself to another several hundred hours or however long it

24  takes to get through what our members, the folks that are

25  here, and the ones who aren't here need to get out of the


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 1  package.  We figured out how to make recycling work.  We

 2  can do this, figure out how to make this work.  We need to

 3  do a lot of tweaking on it.  We're dedicated to do it.

 4  Appreciate your time today.  Thank you.

 5           CHAIRPERSON LLOYD:  Thank you.

 6           We got a change in order here.  It's Chuck

 7  Helget, Kent Stoddard, David Wilson, then Paul Wuebben.

 8           You'll see Board members going periodically to

 9  the back.  We're trying to get a lunch.  But there's

10  microphones back there so we can hear -- speakers back

11  there so we can hear back there.  So that's what you see.

12  But we will be taking a shortened lunch break.  We're

13  listening all the time.

14           MR. HELGET:  Mr. Chairman, members of the Board,

15  I'm Chuck Helget representing Allied Waste Industries.

16  And Allied Waste Industries is offering qualified support

17  for this rule.  Allied is the second largest waste hauler

18  in the country, and we have about 1500 vehicles operating

19  in California.

20           Again, we're offering qualified support of the

21  regulations because we believe that a reasonable and

22  technically sound statewide program for particulate matter

23  reduction is in the best interest of the communities that

24  we serve.  From our perspective, however, this is not just

25  about cost recovery from the industry's perspective.  It


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 1  is about technology, technology availability, and

 2  technology warranties, and about cost controls on these

 3  technologies.

 4           We are concerned that the rules proposed depend

 5  heavily upon the availability of control technologies that

 6  are not yet commercially available or verified to achieve

 7  the various minimum levels of the PM reductions.  We are

 8  also concerned that there is no reasonable estimates that

 9  the cost of applying these yet-to-be-determined

10  technologies and for the new infrastructures necessary to

11  implement some of the alternative fuel technologies.

12           In order to provide our customers with reasonable

13  priced solid waste collection, we need a dependable fleet

14  of solid waste collection vehicles and a cost effective

15  fleet.  The time line for converting our fleet is

16  critically tied to the availability of control

17  technologies and to the operation of reliability of those

18  technologies.  At a minimum, we believe the rule should

19  stipulate that the warranty period for those -- for the

20  hardware portions of the diesel emission control

21  strategies be about ten years.

22           The compliance extension authority granted to

23  executive officers, as we said in our letter, we believe

24  shouldn't be discretionary.  And we also want to ensure

25  this rule remains balanced and encourages innovative


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 1  technologies that achieve the state air quality goals in

 2  the most economically efficient manner.

 3           Allied has implemented a biodiesel strategy for

 4  our fleet in Chula Vista with excellent results using a 20

 5  percent biodiesel blend with an additive called ethos.  We

 6  have achieved field verified 70 percent PM reductions for

 7  the entire fleet and strongly urge the Board to include

 8  biodiesel as a compliance option.  The current

 9  verification process is expensive and extensive, and as a

10  result discourages, to some degree, technological

11  innovation.  The rule should encourage high compliance

12  standards and cost effectiveness by providing the

13  flexibility of the fuel industry's projects.  When the

14  technology has been proven in the field, there should be

15  some mechanism to allow that technology to be used until

16  the compliance strategy has been completed in the lab.

17           Finally, these costs -- if the costs that we bear

18  from these technologies is significantly higher than your

19  staff has estimated, we will have a very difficult time

20  passing these costs through, not just with the communities

21  we serve and the franchises agreements that we have with

22  them, but with the commercial customers.  Because the

23  pricing for our commercial accounts are what the market

24  will beat.  And it will be difficult.

25           This is why we urge the Board to ensure that


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 1  local governments are kept in the compliance loop.  And in

 2  doing that, we believe it will ensure that we all share in

 3  the common goal of achieving a higher level of compliance

 4  and cost effectiveness through a fair rate setting

 5  structure.  We support the Board's efforts here --

 6           BOARD MEMBER HUGH FRIEDMAN:  Excuse me, sir.

 7  Your time has elapsed.

 8           MR. HELGET:  We support the Board's efforts today

 9  and pledge to work with the Board and staff.

10           BOARD MEMBER HUGH FRIEDMAN:  Thank you very much.

11           Any questions?

12           Mr. Stoddard.  Kent Stoddard.

13           MR. STODDARD:  Mr. Chairman, members, Kent

14  Stoddard representing Waste Management.  We are the

15  largest fleet of solid waste collection and recycling

16  vehicles in California.  We have approximately 3500

17  collection vehicles and about 10 or 12 percent of the

18  number are dedicated to 100 percent natural gas vehicles.

19           We met with staff yesterday about the rule to

20  express our concerns along with other representatives of

21  the industry.  And as a result of that meeting, we're

22  supporting the rule.  But I want to make it absolutely

23  clear this is a leap of faith for us.  We have many of the

24  same concerns that have been articulated by all of the

25  small haulers.


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 1           In effect, I'm a collection of small haulers.  We

 2  have about 70 terminals running on average 50 trucks at

 3  each one of those terminals.  This is a monstrous program

 4  for every hauler, whether they're big or small, to

 5  implement.

 6           And what I would ask the Board today is to really

 7  look hard at this issue of stranded costs.  There are

 8  many, many haulers that are going to have a tough time

 9  recovering the costs from local government.  And there's

10  been some discussion today about maintaining the proper

11  balance in the rule.  But the fact of the matter is in the

12  operative language of this particular rule, there is no

13  balance at all.  The burden falls entirely on the local

14  hauler -- that private hauler to comply with the rule.

15           What we're asking today is that you go as far as

16  you can with intent language and an expression of what the

17  desire of this Board is to encourage local governments to

18  work with their haulers.  I think at some point we need

19  some joint workshops with the industry, with environmental

20  groups, with the League of Cities, with the Board to make

21  sure local governments clearly understand the benefits of

22  this rule, and they are huge.  I mean, this is a very cost

23  effective regulation.  It will either fall on the industry

24  at a cost of $100 million or more, much of which they

25  can't recover, or it will be passed through to every


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 1  consumer, every rate payer at a rate of about 12 cents per

 2  month for clean air.

 3           So we are strongly supportive at what you're

 4  trying to do.  This is a good rule.  But there are some

 5  issues that have to be addressed.  We're all nervous about

 6  the technologies.  We haven't used these technologies very

 7  much.  We've seen enough to feel like we can get through

 8  it.  But this issue of making sure we don't have stranded

 9  costs, which would have just a devastating impact on

10  companies, whether they're large or small, is really a

11  critical issue.

12           We would really ask that at the end of the day,

13  at the end of this hearing when it's time to sit down and

14  work out that language, do everything you can to express a

15  clear interest that this is a partnership between haulers

16  and local governments and Air Board to make sure this

17  program is fair and equitable and works.  Thank you.

18           BOARD MEMBER HUGH FRIEDMAN:  Thank you.

19           Any questions?

20           BOARD MEMBER RIORDAN:  Mr. Chairman, just to the

21  staff.  Regarding the meetings that Mr. Stoddard asked

22  for, that seems to be a realistic request where you would

23  get those effected parties in a room.  Is that your idea

24  with outreach that you might do in terms of our role --

25  education bringing together the various constituents?


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 1           EXECUTIVE OFFICER WITHERSPOON:  We haven't fully

 2  thought through exactly what form the outreach would take.

 3  I was happy to hear the suggestion for the workshop and

 4  was immediately nodding at staff yes, let's do that.  And

 5  let's get the Waste Board there with us, along with the

 6  cities and the waste haulers and the rest to bring these

 7  issues together.

 8           And Supervisor DeSaulnier and I were talking

 9  about it, too, having a sidebar of how do we accomplish

10  this both prospectively before the rate haulers show up to

11  ask for what they need, and retroactively to keep tabs on

12  how it's going and if we need to do follow-up outreach.

13           BOARD MEMBER RIORDAN:  I think it's very

14  important prospectively because while the haulers have

15  certainly had an opportunity to work through this, most of

16  the cities have relied on their key staff people here in

17  Sacramento, League of California Cities or the Association

18  of County Governments.  But they've not been individually

19  properly involved, except maybe a rare few.  And I think

20  we need to reach out to all of those city councils and all

21  of those boards of supervisors because they're the ones

22  that are, you know, having their staff negotiate

23  contracts, and to understand why there may be a need to

24  reopen the discussion on capturing some of the costs of

25  this program.  So I think it's an excellent idea,


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 1  Mr. Stoddard, and we need to move forward on that.

 2           MR. STODDARD:  Thank you very much.

 3           BOARD MEMBER HUGH FRIEDMAN:  Mr. Stoddard, you

 4  have an attachment to your letter dated today, which

 5  proposes additional language for a resolution.  It seems

 6  to be very similar to the 15-day notice.  Is it similar to

 7  the one staff came back with?

 8           MR. STODDARD:  It's very similar to the one staff

 9  came back with.

10           CHAIRPERSON LLOYD:  What we already have.

11           MR. STODDARD:  The only difference I actually did

12  notice when they showed it to me yesterday is I think the

13  staff has come back and suggested biennial review as

14  opposed to an annual review.  There may be a 'tweener

15  there.  We'd like to see an annual review, at least in the

16  early years of implementation.  If things are going well,

17  as we hope they will, we can go to a biennial review.  We

18  feel that that's a really critical mechanism.  There's a

19  lot of trust here in local government stepping up to do

20  what needs to be done for the implementation of this rule.

21  But we would say let's trust and let's also verify and

22  make sure that this is actually going to work.

23           BOARD MEMBER HUGH FRIEDMAN:  Are there any

24  particular reasons for the biennial rather than annual?

25           EXECUTIVE OFFICER WITHERSPOON:  It's just staff


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 1  resources.  I think that Mr. Stoddard is right, it should

 2  start at annual and become biennial.  The other nuance is

 3  that his language talks about surveying regulated haulers

 4  only, and it would be our intent --

 5           BOARD MEMBER HUGH FRIEDMAN:  You're talking

 6  broadly?

 7           EXECUTIVE OFFICER WITHERSPOON:  We would talk to

 8  the municipalities about their interpretations.

 9           MR. STODDARD:  We're fine with that.  We agree.

10           BOARD MEMBER HUGH FRIEDMAN:  I think we have time

11  for maybe one for two more before the reporter needs to

12  take a break.

13           Mr. Wilson.

14           MR. WILSON:  Good afternoon.  My name is Dave

15  Wilson.  I represent the city of Los Angeles, Department

16  of General Services, Fleet Services.  And there's been a

17  lot of stuff talked about our fleet.  I'm kind of here to

18  set the record straight of what is happening with our

19  fleet.

20           Basically at this time we have 350-plus vehicles

21  fitted with the retrofit program of the particulate trap.

22  We also have about 150 to 160 dual fuel vehicles also

23  fitted with traps, but they were purchased from the

24  factory and the dealer.  And to make a long story short,

25  we've had pretty good luck with them.  There's been some


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 1  failures.  The failures that we have had, the

 2  manufacturers have stepped up -- either the manufacturer

 3  of the truck or the manufacturer of the trap has basically

 4  stepped up to the plate.  We were having an issue at one

 5  time with the traps breaking apart.  There was some

 6  integrity issue with the trap itself.  They stepped up to

 7  the plate and fixed it.

 8           It was mentioned earlier L.A. is flat.  L.A. is

 9  not flat.  I have trucks that work exclusively in the

10  hills, Hollywood Hills, Pacific Palisades.  And then the

11  only landfill that I have basically I have to pull 6

12  percent grade.  So I mean, this technology that we have

13  that we're working pretty good with basically is being

14  tested on a pretty good basis.

15           I don't know -- again, a lot of other stuff was

16  thrown out.  We have invested a lot in all fuel and these

17  resources.  We have two fuel sites going for dual fuel.

18  We have invested in some new shops that are all fuel

19  compliant.  Basically this is an undertaking that we kind

20  of saw the handwriting on the wall.  We decided to go with

21  it, and we have committed to it totally.

22           There have been some issues.  There have been

23  some mechanical issues.  But I've been involved in the

24  truck repair industry for close to 30 years, and I've had

25  a whole fleet of trucks out for a rear-end or transition.


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 1  So I mean, to hold this technology to a higher standard

 2  than that is unfair also.

 3           Again, you know, if there's any questions I can

 4  answer.

 5           CHAIRPERSON LLOYD:  Thank you.

 6           Any questions?

 7           BOARD MEMBER RIORDAN:  Only, Mr. Wilson, would

 8  you be willing to serve as sort of a resource for people

 9  who do want more information?  Are you available for that

10  if the city -- so that if people want to talk to you,

11  other haulers, to see what your experience has been, would

12  you give them that information?

13           MR. WILSON:  Absolutely.  And all the same

14  questions that are being asked here, all the same fears,

15  we've been through that already.

16           BOARD MEMBER RIORDAN:  Would you participate in

17  some of our outreach that we want to do early on in this

18  process when we talk to the various people who are going

19  to be involved?

20           MR. WILSON:  Absolutely.

21           MS. RIORDAN:  Thank you.

22           CHAIRPERSON LLOYD:  Thank you.

23           On that high note, we'll take a very brief recess

24  for the reporter.  Five minutes, seven minutes, something

25  like that.


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 1           (Thereupon a recess was taken.)

 2           CHAIRPERSON LLOYD:  I'd like to restart.

 3           Continue with Paul Wuebben, Ruben Martinez, and

 4  Dr. Kubsh.

 5           Sorry to keep you waiting, Paul.

 6           MR. WUEBBEN:  Thank you very much, Mr. Chairman.

 7  For the record, I'm Paul Wuebben representing South Coast

 8  Air Quality Management District.  And to address first the

 9  important question that the Chairman has been asking, we

10  have no refuse trucks, but we have lots of smog.  So with

11  that, we did provide a comment letter on this rule.  And

12  just to briefly summarize, that we strongly support the

13  staff-recommended rules.  We certainly appreciate the

14  complexity and the pragmatism that the Board is struggling

15  with here, and we do think that the staff's 15-day changes

16  that were brought forward are certainly sound and well

17  reasoned.

18           We would request that you consider some

19  acceleration of the implementation, as it's been suggested

20  by the staff.  If there were some acceleration of one of

21  the categories -- for example, I think they mentioned 14

22  percent enhanced PM reduction -- or an 18 percent

23  increased benefit with a 14 percent increased cost, based

24  on the tremendous cost effectiveness of this rule, it

25  would seem to be that would be a reasonable balance of


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 1  benefits to cost.  But we'll certainly let you sort that

 2  out.  But we would suggest that you at least consider

 3  providing the local districts possibly the authority to

 4  consider enhancing those timetables and accelerating them.

 5           So with that, I just would close by commending

 6  the staff for a lot of diligent work, especially in the

 7  updating of all the cost factors and in keeping this and

 8  all these changes, I think, relevant to the marketplace.

 9  And we close with urging your adoption of the rule.

10           CHAIRPERSON LLOYD:  Thank you very much, Paul.

11  We appreciate it.

12           Ruben Martinez and Dr. Kubsh.

13           MR. MARTINEZ:  Mr. President, Board members, my

14  name is Ruben Martinez.  My company is Diesel Air Fleet

15  Service.  I'm a smoke testor.  I've been smoke testing

16  diesel for five years now.

17           I actually just came to see what was going on in

18  Sacramento.  I service the Southern California area.  And

19  in listening to the discussion and reading some of the

20  material, I'm in favor of any program that's going to help

21  reduce PMs and NOx.  I just saw a couple of slides about

22  NOx.  PM naturally we can see.  It's visible.  What I see

23  and hear, it's going to be a hardship on smaller companies

24  and generally every one.

25           But what I would like to see is maybe from a


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 1  different angle.  You know, what I see out there is that

 2  there isn't the presence and the enforcement of the

 3  companies that are not complying.  I have companies that

 4  refuse to comply.  I have companies that crank up the

 5  engine -- I also used to be 22 years diesel mechanic --

 6  deliberately.  And I would like to see more presence of

 7  the ARB out there and a governing force in which to, you

 8  know, put more stringent on these people.  And if we were

 9  just to do that, we'd be able to bring the PMs

10  substantially down.

11           I have also tested some of the catalytic

12  converter particulate traps.  And with the new

13  technologies over the engines, they're real close.  So to

14  me it's like a waste of money.  I would rather them go

15  through NOx, you know, focus more than the PM, because

16  that's going to clean up with the new technology.

17           But just in saying that, it is going to create a

18  hardship.  But I would like to see more presence of the

19  ARB enforcement out there because it would really help a

20  lot of these people that are not complying.

21           Thank you very much.

22           CHAIRPERSON LLOYD:  If I understand it correctly,

23  if we are successful in eliminating air pollution and

24  eliminating visible emissions, you're out of business too?

25           MR. WUEBBEN:  I'll be out of business too.


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 1           CHAIRPERSON LLOYD:  A laudable goal for both of

 2  us.  We have a way to go.

 3           Professor Friedman.

 4           BOARD MEMBER HUGH FRIEDMAN:  Mr. Martinez, one

 5  quick question.  When you say the polluters are out there,

 6  are you talking about waste haulers or are you talking

 7  about --

 8           MR. MARTINEZ:  I have waste hauler customers.  I

 9  have trucking customers.  I have bus people, yes.  And I

10  have independent contractors that I can get because they

11  got fined, so they need to be smoke tested.

12           BOARD MEMBER HUGH FRIEDMAN:  So they do get fined

13  sometimes?

14           MR. MARTINEZ:  Yeah.  So you need to get what --

15  I have a graph I give my customers comparing each year so

16  they see where their vehicles are.  And I have some

17  customers that really want to improve.  And really, you

18  know, do better so I'm happy for that.

19           CHAIRPERSON LLOYD:  Thank you.

20           MR. MARTINEZ:  Thank you.

21           CHAIRPERSON LLOYD:  That raises, of course, the

22  issue -- and Paul, you can maybe recount for me the status

23  of the South Coast visible emissions reporting program.

24  Is that still active?  Maybe tell our staff what happens

25  when we use the call-in number.  Is this still active,


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 1  Paul?

 2           MR. WUEBBEN:  I don't believe that it is.

 3           CHAIRPERSON LLOYD:  You'll have to get back to

 4  me.  Okay.

 5           What about our staff, any --

 6           GENERAL COUNSEL WALSH:  We do have our smoking

 7  vehicle line, which is still operational.  And we do get

 8  calls on it on a regular and on-going basis.

 9           CHAIRPERSON LLOYD:  Okay.  Thank you.

10           Joe.  Joe, and then Scott Smithline and Karen

11  Wilson.

12           DR. KUBSH:  Good afternoon, Dr. Lloyd and members

13  of the Board.  My name is Joe Kubsh.  I'm Deputy Director

14  of the Manufacturer's Emission Control Association, and

15  I'm here to indicate our industry's strong support of the

16  proposal that's been put in order by staff today.

17           We think this proposal represents a balanced,

18  fair, and flexible approach to achieve significant PM

19  emission reductions and refuse hauler fleets here in

20  California in a cost effective manner.  We've provided our

21  written comments.

22           I'd just like to make a few comments with respect

23  to some of the technology remarks that were made by some

24  of the previous fleet operators, just to maybe allay some

25  of their concerns about the technologies that -- the


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 1  retrofit technologies that will be used to help provide

 2  some of the reductions in this rule.  Obviously, it's not

 3  staff's intent or our industry's intent to force people to

 4  put filters on technologies where they won't work.  That's

 5  why the verification process we worked very diligently

 6  with staff on is there to guarantee there's a good match

 7  between technologies and the applications and that they're

 8  proven to work in these applications.

 9           And as indicated by the staff presentation, the

10  experience in Los Angeles and New York with putting

11  filters on refuse haulers has been excellent.  The

12  experience based on filter applications both on these

13  classes of vehicles and others is growing every month.  By

14  our count, there are more than 70,000 filter-equipped

15  vehicles in the world today.  Most of those being

16  retrofits.  And when there's a good match between the

17  temperature window characteristics that are required to

18  achieve generation in the applications, the experience has

19  been excellent.  And we are confident that that experience

20  will be the same here in California.

21           But we also understand that filters will only

22  play a part of the role in achieving the reductions that

23  are required by this rule.  And it's important, I think,

24  for the fleet operators to understand that, again,

25  technologies will be verified to work with certain


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 1  temperature window constraints, in the use of ultra low

 2  sulfur fuel, for example.  And those technologies will not

 3  be forced into applications where they're outside of those

 4  boundaries.

 5           So, again, I want to commend the staff for the

 6  fine work they're doing in this area.  We continue to work

 7  very closely with them in trying to understand the role of

 8  retrofit technologies in these fleets and other fleets

 9  that you'll be considering in the coming months.  And with

10  that, I'd be happy to answer any questions that you might

11  have.

12           CHAIRPERSON LLOYD:  Thanks.  You'll be

13  participating in the meeting next month?

14           DR. KUBSH:  Yes, we will.

15           CHAIRPERSON LLOYD:  Will you be here also for the

16  next item?

17           DR. KUBSH:  Yes, sir.

18           CHAIRPERSON LLOYD:  Any questions?

19           Thank you very much.

20           Scott Smithline, Karen Wilson, Todd Campbell --

21  Councilman Campbell.

22           MR. SMITHLINE:  Mr. Chairman, Board members, my

23  name is Scott Smithline.  I'm with Californians Against

24  Waste.  Californians Against Waste has been advocating for

25  environmental protection and promoting and recycling


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 1  economy for 25 years.  We are in strong support of these

 2  proposed measures today.

 3           I won't go into the health effects of particulate

 4  matter.  It's, at this point today, obviously been well

 5  established.

 6           We do have some concerns, however.  We are

 7  concerned that the proposed measures failed to adequately

 8  deal with the financial relationship between contract

 9  service providers and the local agencies.  Many of these

10  fleets, as it's been testified to today, are under these

11  long-term contracts that are rate regulated.  We think

12  this will have on the ground, environmental impacts.

13           Basically the situation as we see it is

14  there's -- not only is there no incentive to try to

15  achieve the best environmental compliance, but there's

16  actually a restriction on funding to do that.  As I said,

17  we think this will have real environmental impacts.  We

18  would ideally like to see a very different approach,

19  something like Senate Bill 1078, Chesbro's Bill, where

20  there would be a fund set aside by increased tipping fees.

21  We understand that's not your venue.  But until such time

22  as something like that becomes available, we would

23  definitely like to see local agencies be required to work

24  with the contract service providers in such a way that

25  funding compliance -- funding for compliance will be


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 1  established.

 2           Again, we are in very strong support of these

 3  measures, and we urge you to adopt them with the

 4  amendments proposed by the NRDC.  However, at the same

 5  time, we also urge you to take the strongest steps you can

 6  to ensure that funding will be available for compliance

 7  with these measures.  Thank you.

 8           CHAIRPERSON LLOYD:  Thank you very much.

 9           Karen Wilson.

10           MS. WILSON:  Good afternoon, Mr. Chairman and

11  members of the Board.  My name is Karen Wilson.  I'm

12  Director of the Strategic Planning Division for the

13  Sacramento Metropolitan Air Quality Management District.

14           We would like to thank your staff for the hard

15  work that they have done on this measure and note that we

16  have worked with them for a number of years because, as

17  you are aware, our region continues to struggle to meet

18  the one-hour federal non-attainment standard for ozone.

19  And we are NOx limited, and so NOx reductions are what

20  we're going to have to get or we will fail to meet our

21  goal by 2005.

22           As you move forward with this regulation, your

23  staff has included NOx reductions as one of the flexible

24  BACT requirements that allows NOx reductions to occur.  We

25  really appreciate that.  We anticipate that this measure


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 1  will get us up to a third of a ton a day of NOx reductions

 2  as written with that option in it, so we appreciate that,

 3  in addition to the .02 tons per day of diesel particulate

 4  reductions.  That's very important on the ground in the

 5  neighborhoods.

 6           And I would like to point out, furthermore, that

 7  our city and county of Sacramento have worked with us over

 8  the last few years to convert their refuse fleets to

 9  alternative fuel vehicles.  Those are dual fuel trucks.

10  There's about 130 trucks between those two jurisdictions.

11           I have been in touch with your Ombudsperson today

12  to indicate that I don't know why the city and county are

13  not here, but they would be included with San Diego with

14  that request that as you look at that 15-day period for

15  additional comment and working through issues, that those

16  dual fuel trucks that don't meet the full particulate

17  emission reduction requirement in this rule.  They come

18  very close, but they were certified with the diesel in it

19  as part of the certification.  So that would void both

20  their certification and their warranty, apparently, to

21  change that out -- that technology out at this time.  So

22  we're in with San Diego and perhaps some from the

23  discussion of L.A. County as well.

24           So we have been assured by your staff, as we were

25  sure we would be, that you'll meet with the city and


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 1  county of Sacramento as well in clarifying the impact of

 2  this rule on the dual fuel vehicles they have in place

 3  because they taken the liberty of only about half.  So

 4  they still have -- as you know, the ordering time line on

 5  these vehicles is very long.  And they won't have the

 6  orders that they put in until the end of 2004.  So they

 7  have an existing issue with those that have that been

 8  delivered, as well as money they committed, some of their

 9  -- from their tobacco settlement money, recognizing the

10  public health link.  They've been very cooperative with

11  us.  These were purchased a couple years ago in

12  anticipation of NOx reduction benefits, when we did

13  calculate the particulate emission reduction benefits at

14  that time.  However, as you move forward with this rule,

15  we've gotten a little bit behind you.

16           So thanks very much for the work your staff has

17  already done.  We hope that our city and county can be

18  included in those discussions.

19           CHAIRPERSON LLOYD:  Thank you very much.

20           Councilman Campbell, Bonnie Holmes-Gen, Tom

21  Addison.

22           COUNCILMAN CAMPBELL:  Thank you, Chairman Lloyd.

23  Todd Campbell, Policy Director for the Coalition for Clean

24  Air and Councilmember for the city of Burbank.

25           I just want to first say that we're going to miss


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 1  you, Kathleen, but we're looking forward to working with

 2  you in the Bay Area.

 3       I also want to thank the Chairman and others that

 4  attended the Port of Los Angeles trip.  I was with the

 5  Governor when he announced that Kenneth Hahn Park -- his

 6  plans to reduce emissions down at the ports.  And as you

 7  said, the Port of Los Angeles and Long Beach combined

 8  being the third largest port in the world expecting to

 9  triple by 2020, it's a very important first step.  And

10  we're hoping to see further commitments in the future.

11           CHAIRPERSON LLOYD:  I can comment, Todd, if you

12  haven't had a tour down there, it's really worth while.

13           COUNCILMAN CAMPBELL:  Absolutely.

14           CHAIRPERSON LLOYD:  And I know you had a lot to

15  do with pushing to clean it up.  It seems to be working.

16           COUNCILMAN CAMPBELL:  We'd like to think so.  And

17  we're going to keep on trying.  We're not done.  But thank

18  you, Chairman.

19           Board members, I stand before you today in strong

20  support as an advocate and a Councilmember of the rules.

21  And I think I join at least seven other public health and

22  environmental groups in addition to dozen of cities that

23  firmly support the rules in prior testimony.

24           The adoption of this rule before you today is

25  instrumental in the emissions reduction goals set forth in


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 1  the agency's diesel risk reduction plan, which was

 2  originally adopted -- or started since our adoption of the

 3  risk with the acknowledgement of the toxic air contaminant

 4  identification of diesel particulates in 1998.  As you

 5  know, diesel particulates are extremely harmful,

 6  especially not only for our urban but also for our rural

 7  areas in California.

 8           Controlling diesel PM from refuse trucks is

 9  critical because waste collection vehicles spew toxic

10  diesel PM throughout residential neighborhoods.  And as a

11  Councilmember, I cannot tell you how many times I get

12  constituents complaining about refuse trucks running up

13  and down their streets.  I must at least get one call a

14  week, sometimes five calls a week.  And the biggest

15  frustration for me as a Councilmember is I can't regulate

16  the contracted portion of our fleets.  We're a

17  full-service city.  But we do have for the long haul

18  contracted fleets.

19           And in terms of costs, I can only speak for the

20  city of Burbank.  But I know that my staff or at least the

21  City Manager at the city of Burbank would be more than

22  willing to do to the right thing and work it out with the

23  waste haulers.  I don't see that as an issue.  Certainly,

24  there will be some negotiations.  But I certainly see and

25  I also view my Council as being proactive.  And especially


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 1  given we're inside or way deep in the South Coast air

 2  basin, it doesn't take a genius to figure out that we have

 3  an air quality problem, and we need to do everything we

 4  can to reduce not only emissions that are like smog

 5  emissions, but also reduce toxic emissions in our

 6  community.

 7           Despite our strong support, we would like to

 8  actually encourage some strengthening.  And this is

 9  particularly what you're interested in, Chairman.  It's

10  the -- we would like to see the cleanup of the pre-1988

11  vehicles move forward two years to 2005.

12           The staff has run analyses.  They found it would

13  be more cost effective.  They also found that it would

14  reduce 175 tons of additional toxic PM.  And there are

15  some concerns that were raised by the waste hauler

16  industry.  I acknowledge that.  I want you to remember

17  that there's a one year exemption.  I think that partially

18  addresses the issue of cost because certainly cities that

19  do have the contracts with refuse haulers can renegotiate

20  I think within a two-year period.  For example, if you

21  have a city that's not willing to renegotiate, you know,

22  the exemption may be granted by the Air Resources Board,

23  and then you'd have two years.

24           I think that would also give adequate time for

25  city councils and staff to get educated on the issue, and


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 1  I think that's really one of the main important goals that

 2  we all have here in this room is to educate city councils

 3  and local government about how important it is to reduce

 4  diesel exhaust.

 5           And in terms of technology, really the

 6  representative from the city of Los Angeles really

 7  explained most of what I wanted to express to you, but

 8  certainly diesel particulate filters and advanced

 9  technologies have not -- this is not the first time we are

10  applying them.  We have applied them also with the school

11  bus rule, which you know has been overcommitted in terms

12  of well subscribed, and certainly you don't have districts

13  turning away that money on those traps.  I think it's been

14  a very effective program, and the children are benefiting

15  from that.

16           The second thing that we would ask of the Air

17  Resources Board is to not allow first -- or Level 1 in

18  Level 2 traps for these pre-1988 vehicles.  We think that

19  these vehicles are so polluting -- remember, they're ten

20  times the emission levels of a 1994 model year refuse

21  truck.  So they are tremendous amount of -- source of

22  pollution in the vehicle fleet.  We would suggest that

23  they either retire them, they either repower them, or they

24  retrofit them with a Level 3 trap, which achieves about an

25  85 percent reduction in PM emissions.


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 1           Third, we would ask that at a later date the Air

 2  Resources Board commit to future NOx reductions.  In other

 3  words, we'd like to see a commitment from the Board and

 4  staff of developing a regulation that would specifically

 5  address smog forming oxide in refuse vehicles at a later

 6  date.  You know, given next months's meeting, we have a

 7  tremendous task in front of us to reduce emission or smog

 8  forming emissions, and I think that needs to be at least

 9  put out there so that we have in our sites and we see

10  opportunities as technology advances to take advantage and

11  harness those opportunities.

12           And then finally, we support the staff proposed

13  changes that limit the exemption to one-year for pre-1988

14  vehicles.

15           In conclusion, I want to leave you with one last

16  thought.  The air quality in the South Coast air basin is

17  the worst that it's been in the last six years or six

18  years ago.  The San Joaquin is no different.  In fact, I'd

19  say it's in the worst shape it's ever been.  We are

20  running out of time to reach attainment by 2010, and every

21  opportunity that we miss prevents us from achieving all of

22  our -- you know, the goal that I think we all share.

23  And I just want to say that I urge you to take action and

24  adopt a strong refuse rule today to stay the course for

25  future fleet rules that intend to reduce diesel toxic PM


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 1  and smog-forming nitrogen oxides.  With that, I thank you.

 2           CHAIRPERSON LLOYD:  Thanks very much, Todd.

 3  Thank you.

 4           Bonnie Holmes-Gen.

 5           MS. HOLMES-GEN:  Thank you, Mr. Chairman.  Bonnie

 6  Holmes-Gen with the American Lung Association of

 7  California.  And we also are a strong supporter of the

 8  rule that's before you today.  In fact, I don't think we

 9  can overemphasize how important this rule is to all of us

10  and especially to everyone who suffers from lung disease

11  such as asthma or other lung diseases.

12           You've singled out in your staff report the

13  premature deaths, and the number is very dramatic and

14  compelling.  And I think that it's very helpful to

15  understand that we are preventing up to 80 premature death

16  by 2020.  But premature deaths is really the tip of the

17  iceberg, as you know.  It's just as important to look at

18  the numbers of asthma attacks that would be prevented, the

19  number of upper and lower respiratory illnesses,

20  hospitalization from lung and heart disease, emergency

21  room visits, chronic bronchitis, school absences.  There

22  are so many impacts that are going to be avoided by

23  reducing diesel pollution from these vehicles and from

24  other vehicles in the fleet.  So I just wanted to point

25  out, of course, as you know, the impacts are so widespread


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 1  and affect so many people and the quality of life for so

 2  many in California, especially children.

 3           Our emphasis in this rule and others that you'll

 4  be looking at in the diesel risk reduction plan is to look

 5  at doing everything possible as quickly as possible to

 6  address the oldest vehicles, along with cleaning up, of

 7  course, newer vehicles also.  But that's one key focus

 8  that we have.  And that's why we've joined with the

 9  comments of the Natural Resources Defense Council, Union

10  of Concerned Scientists, Coalition for Clean Air and other

11  groups suggesting that there's more we can do to address

12  these older vehicles, to accelerate cleanup dates for the

13  '87 and older vehicles, to tighten up the control

14  requirements so that they cannot use the weaker Level 2

15  controls.  And we would hope you consider those comments

16  very seriously.

17           As has been mentioned, you have done some

18  analyses of these recommendations and found they are cost

19  effective, that they would result in reducing even more

20  diesel pollution without adding substantial cost to the

21  regulation.  So we believe you should move forward with

22  some strengthening changes.  We also, of course, committed

23  to look at what more can be done to reduce NOx emissions

24  and that would, of course, need to be at a later date in

25  terms of revisiting another regulation to deal with NOx.


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 1           Finally, I want to say that it's not surprising

 2  that when the Board is venturing out the adopt a rule that

 3  will affect a whole new sector that there are going to be

 4  some -- many questions and concerns and fears being

 5  raised, as you're hearing today.  And we just want to urge

 6  you to forge ahead as you have so many times in the past.

 7  The technologies are proven.  The staff has done a good

 8  job in trying to address as many of the concerns as

 9  possible, providing flexibility where it's reasonable.

10  You're talking about your willingness to support efforts

11  of haulers to achieve cost recovery by conducting

12  additional outreach and workshops and assisting them any

13  way we can.

14           I think you're doing everything possible you can

15  to make this a workable regulation, and now you just need

16  to move forward and adopt the rules.  Your charge is, of

17  course, to cleanup the air, reduce diesel pollution, and

18  this is an essential step forward, and we fully support

19  you in moving ahead.

20           CHAIRPERSON LLOYD:  Thank you very much, Bonnie.

21  And again, maybe you can pass on to Todd since you're

22  pretty well -- most of our Board meets in Sacramento, that

23  we actually are doing stuff and we have stuff in the last

24  five years to cleanup the air and maybe we should let Todd

25  know that.


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 1           A question from staff.  Is it possible -- I

 2  didn't think it was possible on some of the older engines

 3  to put on Level 3 traps.

 4           EXECUTIVE OFFICER WITHERSPOON:  It's not

 5  possible.  So the effect of denying Level 2 means that you

 6  force them to reengine or retirement.

 7           And what we've done is Level 1, 25 percent

 8  control is not good enough.  These are gross emitters.  We

 9  have to do better.  Level 2 is not yet certified, but

10  we're hopeful that some strategies may emerge, most likely

11  emulsified diesel fuel in combination with an oxidation

12  catalyst would be certified for this application.  That

13  would be 50 percent control, and we want to keep that

14  opportunity on the table in the event that the

15  verification comes through and that the owners have that

16  choice.  If we take that away, there is no Level 3.  There

17  will not be traps certified for these old vehicles.  The

18  only thing left is a new engine and an old chassis or a

19  new vehicle all together.

20           MS. HOLMES-GEN:  Can I comment, we don't think

21  the 50 percent is really adequate for those oldest

22  vehicles that are virtually uncontrolled.

23           CHAIRPERSON LLOYD:  Thank you.  Tom Addison

24  Patricia Monahan, Diane Bailey.

25           MR. ADDISON:  Good afternoon, Dr. Lloyd and


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 1  members.  I'm Tom Addison with the Bay Area Air Quality

 2  Management Districts.  I'm here today to speak in strong

 3  support of this regulation.  For the formal record, we

 4  submitted written comments, and I trust that you have

 5  those.

 6           I'd like to begin actually by agreeing with

 7  Mr. Mandel of the Engine Manufacturers Association on one

 8  critical point.  We also appreciate the abilities of your

 9  legal counsel.  But really that's not why I'm here.

10           SUPERVISOR DeSAULNIER:  Obviously, Tom.  If we

11  didn't, we wouldn't have given her the job.

12           MR. ADDISON:  So reducing public exposure to

13  diesel particulate really is a critical goal.  From our

14  perspective, that's one of our most important mutual

15  goals.  We think this regulation is key in helping that

16  happen, really because of where these vehicles are.  This

17  really held well on the transit bus rule.  That really is

18  largely where our support is coming from.  In dense urban

19  areas, like the Bay Area, you know, that's an especially

20  important issue.

21           We think that is a fleet sector that really lends

22  itself to cleanup well.  To date we've put $9.3 million of

23  our money, of local -- not state money or Moyer money, but

24  our money into cleaning these vehicles up.  We really see

25  this as being an area that is right for reduction.


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 1           Essentially, though, the problem that we sort of

 2  see is that we'll never have enough incentives to cleanup

 3  all these vehicles.  So it really is time to move from

 4  fishing with bait, which is what we've been doing, to

 5  fishing with nets.  So the regulatory approach now we

 6  think is the right one, and we think the proposal before

 7  us is both flexible, it's fair.  The reliance on BACT and

 8  how BACT is defined is a strategy that we support

 9  completely.

10           In an ideal world, the one thing that we would

11  love to see would be moving ahead a little bit faster on

12  the pre-'88 vehicles.  We've done a lot of them in the Bay

13  Area because we've gone after some of the vehicles that

14  lend themselves well to cleanup.  In an ideal world, we'd

15  love to see a little bit faster action on those, but I

16  think there are some legitimate reasons why, you know,

17  you've come up with the rule that you did today that

18  you've got in front of you.

19           I just close by reiterating our support for this

20  rule and by pledging to do what we can to work together to

21  continue to reduce public exposure to diesel particulate

22  before more rules come before you.

23           CHAIRPERSON LLOYD:  Thanks, Tom.  Appreciate it.

24           Patricia Monahan, Diane Bailey, Bob Lucas.

25           MS. MONAHAN:  I wish I was saying good morning


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 1  and not good afternoon.  My name is Patricia Monahan.  I'm

 2  a senior analyst with the Union of Concerned Scientists.

 3  I'd like to say from the start if you see a tear in my eye

 4  or if my voice starts to get a frog in it, it's just

 5  because I'm having an allergy attack.  I'm not actually

 6  trying to persuade you with overly emotive signs.

 7           CHAIRPERSON LLOYD:  And Kathleen is only going to

 8  the Bay Area so --

 9           MS. MONAHAN:  Well, in my three minutes I'd like

10  first to step back a moment and talk about the genesis of

11  this rule, which is diesel risk reduction plan -- the risk

12  reduction plan was published in 2000.  It anticipated that

13  this rule would have actually been published last year.

14  And given that the rule development began in 2001, you

15  would think that would be a reasonable time frame.

16           I think ARB has done a good job of really

17  workshopping this issue to death.  I mean, there's been

18  eight workshops -- at least eight workshops.  I attended

19  the first one in the summer of 2001.  I think staff has

20  tried to accommodate a lot of diverse interests in this.

21  But the reason why we're all working for this rule is

22  because of the tremendous health impacts, not just of this

23  rule, but of all the other ones that are comprising the

24  diesel risk reduction plan.  There are just the start.

25  There are many more to come.  And I think if we start this


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 1  rule by setting a precedent of, you know, having weak time

 2  frames, allowing for a lot of exemptions and loopholes,

 3  then we don't just impact this rule but we impact all the

 4  ones to come.

 5           One of the reasons I think staff chose this is

 6  because refuse haulers operate in communities.  They go

 7  through our neighborhoods.  Day to day they're exposing

 8  children, mothers, families.  So I think it's very

 9  important that we set a precedent right from the start

10  that we recognize there are going to be costs for

11  implementing these rules, but that the tremendous public

12  health benefits far outweigh the costs.  And that has to

13  be the root of our actions.

14           The diesel risk reduction plan proposed to get

15  280 tons per day.  This rule would get a little over one

16  ton per day reduction in 2010.  Again, it's not a

17  significant part, but it's an important precedent we're

18  setting here.

19           Compared to earlier drafts of the rule, the rule

20  has been weakened over time.  The earlier drafts contain

21  some NOx controls and now are not present in the rule.

22  You're heard from other environmentalists.  We would like

23  to see some find of future commitment to have the ARB

24  address NOx in the future so we're guaranteed emission

25  reductions from these vehicles.


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 1           You've also heard about -- that we would ask for

 2  an acceleration of the time frame.  ARB's own staff report

 3  indicated that moving forward the implementation time for

 4  these oldest vehicles is cost effective.  It will cut PM

 5  reduction costs from $54 per pound to $50 per pound.  And

 6  it adds 66 cents per household.

 7           Finally, we'd like to see stronger controls for

 8  the dirtiest engines, these pre-'88 engines that did not

 9  have to meet any emission standards.  Emission standards

10  started in 1988.  And the level of these -- the level of

11  emissions from these engines is at least ten times more

12  than 1994.  It's at least ten times.  We see a degradation

13  over time with PM from engine exhaust.

14           In conclusion, I'd like to say that we believe

15  the time is ripe to move forward.  This is about public

16  health.  This is about cost effectiveness.  This is a rule

17  that has been workshopped over and over again and an

18  opportunity for California to really take an important

19  step forward in implementing our diesel risk reduction

20  plan.  Thank you for the opportunity to speak.

21           CHAIRPERSON LLOYD:  Thank you, Patricia.  Again,

22  obviously we're committed to the same goal as you are.

23  We're a little bit disappointed that we've not been able

24  to move as fast as we can for the reasons staff said.  But

25  trying to work through all the technical issues.  We have


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 1  to be cautious there, otherwise we may be doing something

 2  we don't want to.  Getting that balance, and also as we

 3  seeing here, trying to get the balance with the different

 4  properties, that's very important because as you say, it's

 5  important technically to get underway.  But it's also

 6  important that we also treat the affected parties fairly

 7  as well.  And we've taken a little bit more time, but we

 8  hope it will be a more effective rule.

 9           MS. MONAHAN:  We appreciate that.

10           CHAIRPERSON LLOYD:  Diane Bailey, Bob Lucas, and

11  then lastly, Wendel Smith.

12           MS. BAILEY:  Good afternoon, Chairman Lloyd,

13  members of the Board and staff.  My name is Diane Bailey.

14  I'm a scientist with the Natural Resources Defense

15  Council.  And we have no waste haulers.  We don't have a

16  fleet.  But we're here today because we care a lot about

17  clean air and public health.  So thank you for the

18  opportunity to comment.  And I'll keep my remarks brief.

19           We strongly urge your support on this rule, and

20  we'd like to see it strengthened today in several ways

21  that you've already heard.  So I'll just summarize for you

22  again.  First, it's imperative the oldest vehicles be

23  addressed beginning in 2005, two years earlier than 2007.

24  We also urge that Level 2 controls, which only reduce

25  particulate matter by 50 percent, not be allowed for use


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 1  on these oldest vehicles that are pre-1988, as Level 1

 2  controls are currently not allowed in the present

 3  language.

 4           And finally we also urge you to come back and

 5  regulate NOx for the same vehicles in the future.  It's

 6  extremely important to cleanup the oldest and most

 7  polluting vehicles as soon as possible.  Statewide less

 8  than one-fifth of solid waste collection vehicles are

 9  these old pre-1988, yet they account for the majority of

10  the pollution from the entire fleet.

11           To illustrate how dirty these vehicles are, we

12  ran modeling shifting the implementation of these vehicles

13  up just two years showed that that would reduce PM by

14  350,000 pounds per year.  This is significant.  In

15  addition, this would only raise costs by 6 cents per

16  household for a total of 61 cents per household annually

17  for the whole rule.  And this is less than the tip that I

18  left for my coffee this morning.  We would argue this is

19  truly insignificant.  And again, this rule -- the changes

20  that we're asking for for this rule would actually improve

21  the cost effectiveness.

22           Furthermore, it's important to make sure that

23  when the oldest vehicles comply with this rule, they are

24  truly being cleaned up.  Because the oldest vehicles never

25  had to meet emission standards, we don't know exactly how


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 1  much they pollute.  But EPA estimates it's ten times more

 2  than comparable vehicles that are middle-aged in the same

 3  fleet.  Therefore, we believe that Level 2 controls, the

 4  ones that reduce by only 50 percent are inappropriate for

 5  these oldest vehicles.

 6           You've heard from many waste haulers today that

 7  they agree that cleaning the air is really important.

 8  Yet, for some reason many seem unwilling to be a part of

 9  the solution, while we believe that every business and

10  every sector has to be a part of cleaning up the air.

11           And in conclusion, we urge you today to adopt a

12  strong rule making the cleanup of the oldest most

13  polluting vehicles a priority and the cleanup of the

14  oldest -- and setting a standard for future retrofit rules

15  to address these polluter vehicles first.

16           Finally, on another note, we really appreciate

17  the Board's attention in visiting and considering

18  pollution from container ports and dairies.  Thank you.

19           CHAIRPERSON LLOYD:  Thank you.  Bob Lucas.  He

20  was are earlier.  I guess he's gone.  And Wendel Smith.

21           MR. SMITH:  If I had seen the sign-up sheet, I

22  would have signed up first rather than last.  I'm Wendel

23  Smith.  I serve on the Metropolitan Air Quality and

24  Transportation Committee.  I'm the incoming President of

25  the El Dorado County Chamber.  And I am working as a


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 1  consultant to a company called Global Fuel.

 2           We had a test unit that we know will increase

 3  mileage.  We've had it tested on diesels for several

 4  years.  We're a little short in cash, so we're looking for

 5  a partner to do some subsidized testing because we know

 6  this unit will get 15 percent increase in mileage that can

 7  offset some of the cost.  And so with it, we ask for two

 8  things to be considered; one, a fast track approach to

 9  testing; secondly, potentially to identify some testing

10  partners.  And if there's any funds out there in any way

11  that we can have a controlled test be involved because we

12  know we're taking it with all the gas fueled engines.

13  We're making dramatic improvements.  So the thought is to

14  get a subsidized testing program so the other technologies

15  out there would have an opportunity to move forward in

16  accelerated testing.  Thank you so much.

17           CHAIRPERSON LLOYD:  Thank you very much.

18           With that, that comes to the end of the public

19  testimony.

20           Do the staff have any additional comments to make

21  at this time before we --

22           EXECUTIVE OFFICER WITHERSPOON:  No.  I'll just

23  wait for questions from you.

24           CHAIRPERSON LLOYD:  I will now close the record

25  on this agenda item.  However, the record will be reopened


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 1  when the 15-day notice of public availability is issued.

 2  Written or oral comments received after this hearing date

 3  but before the 15-day notice is issued will not be

 4  accepted as part of the official record on the agenda

 5  item.  When the record is reopened for a 15-day comment

 6  period, the public may submit written comments on the

 7  proposed changes which will be considered and responded to

 8  in the final statement of reasons for the regulation.

 9           So with that, I will throw it open to my

10  colleagues to begin discussion and then we'll get into

11  some ex partes.

12           Supervisor DeSaulnier.

13           SUPERVISOR DeSAULNIER:  Did you want to do ex

14  parte now?

15           CHAIRPERSON LLOYD:  No.  Let's have a discussion

16  now.  They'll get into that before we go --

17           SUPERVISOR DeSAULNIER:  Well, first of all, I

18  think staff's done its usual great job.  Obviously this

19  took a lot of work.  It strikes me that there are four or

20  five things this comes down to just where I believe we

21  could move forward and continue and actually get on with

22  this work that's taken so long.

23           The dual fuel trucks, it seems like, from what

24  you have said, Kathleen, this is an opportunity to work

25  with San Diego and Sacramento to carve those out so we can


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 1  take care of that.

 2           On what the environmentalists have asked for, I

 3  would be supportive of all three of those, although it

 4  sounds like two of the issues are doable.  That is moving

 5  the date up on the pre-'88 trucks from 2007 to 2005 and

 6  making some kind of commitment -- maybe you could respond

 7  to that -- about future NOx reductions.

 8           The one that sounds more problematic is Level 2

 9  to Level 3.  So I don't know how we could -- my view would

10  be that we would continue to sort of monitor that.  If the

11  technology were to change in any way, we encourage that.

12  I'm sure we're supportive of trying to do that.  But with

13  what you have explained, it's pretty difficult to get

14  there.  So maybe you can respond to that when I get

15  through with the last couple.

16           I'm really concerned about the smaller haulers.

17  In my experience in local government -- you know, not

18  unlike other corporate entities and retail business, the

19  smaller haulers in the state of California have been

20  unduly punished because of the global marketplace and

21  national marketplace.  It's not there's anything

22  inherently evil or wrong with large companies, but I've

23  seen lots of small companies in my experience in the Bay

24  Area, particularly in Contra Costa County where they were

25  eliminated.  And to large degree they were lowballed out


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 1  of business.

 2           They all turned -- all the haulers turned out all

 3  right because they sold their interest and did quite well.

 4  But the result for the rate payer and for local government

 5  was you had a lot of short-term savings, but that changed

 6  very quickly because in other retail instances when the

 7  competition went away, and particularly the small

 8  competitors, then the pressure came back on local

 9  government to raise the rates.

10           I understand the balance here of not somehow us

11  becoming a party to either incentivizing local government

12  or haulers to pass the cost to the rate payer.  I don't

13  want to be a party to that.  But on the other hand, I want

14  to encourage local government to do the right thing and

15  pass this through.

16           And I know that those of us who have held local

17  office are sensitive to this.  We're the ones that will

18  get blamed for raising the rates on trash collection.  For

19  me at least, this is an inexpensive thing to do given the

20  public health benefits.  But we have to help our

21  colleagues in local government to see that and be able to

22  express it in the same form or fashion.  And from that

23  perspective I would, as I said earlier, along with D.D.,

24  I'd be more interested in stronger language rather than

25  the current language.


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 1           I think the idea of workshops and education, that

 2  would be really helpful particularly in partnership with

 3  some of the haulers and the Integrated Waste Management

 4  Board.

 5           So for me, I think that's about it.  Just again,

 6  I think staff has done a great job.  I know, Alan, you've

 7  been very involved.  And I think we're right on the cusp

 8  of doing something really good.  I think most of these

 9  things, as someone said -- it might have been Bonnie --

10  once we go through this, I think most of the haulers will

11  be pleased with what's happened.  But I think we do need

12  to partner with them to get the message out to local

13  government that we need to help them recover the costs.

14           Thank you, Mr. Chairman.

15           CHAIRPERSON LLOYD:  Just follow up so I don't --

16  I agree with you on both the first two points, Mark --

17  actually all the points you made -- about trying to

18  accelerate for the older vehicles.  Clearly it's

19  increasing hazard there.  And the more we can reduce that

20  faster for the older engines, the better off we're going

21  to be.

22           The other issue as staff knows, I've been

23  constantly pushing on trying to get whatever NOx we can

24  along with the particulate.  Because as we've heard for

25  the Sacramento area -- and they've been hitting us hard on


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 1  that in the South Coast.  So wherever we can, we need to

 2  capture both NOx along with the particulates because

 3  obviously NOx is a precursor to particulate, as well as a

 4  precursor to ozone, as well as a precursor to some of the

 5  nitro Ph's.

 6           So for all those reasons -- but I understand.  So

 7  I hope that staff will continue to make that push and

 8  whatever possible to try to get some co-commitment for NOx

 9  and PM.  And I also thoroughly agree with you, although I

10  think you're more knowledgeable in that, and I think D.D.

11  is going to express that as well and my colleagues here,

12  the concern that we look at some of these smaller

13  properties and are recognizing some of the difficulty they

14  have, because clearly we want to respect them.  We want to

15  clean up the air.  But we don't want to, as you say, put

16  some of these properties out of business, where then you

17  end up with large monopolies which in the longer term may

18  not be as effective with us.

19           Ms. D'Adamo.

20           BOARD MEMBER D'ADAMO:  Yes.  In the interest of

21  time, I'm just going to concur with what you just said,

22  Mr. Chairman, and Mark here as well.

23           On the issue of the smaller operators, my concern

24  mainly has to do with the acceleration.  I just want to

25  clarify that.  I'd be supportive of looking into anything


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 1  that we can do sooner.  But the concern that I have on the

 2  smaller operators is, not only is it rough on them, but

 3  also any possible unintended consequences if we end up

 4  with some of these larger companies coming and taking

 5  over.  I'm just looking at the situation in the valley

 6  where they are mostly run by smaller operators with the

 7  larger operators from, say, the Bay Area come in and would

 8  they be hauling perhaps waste into the valley and

 9  creating, you know, some unintended environmental

10  consequences.

11           So that has to do with -- that's my main concern

12  with wanting to make sure that if we do have an

13  accelerated program, that we have, you know, some way --

14  and we're asking how many trucks these operators have.

15  And it seemed like a range from anywhere from 10 to 50

16  trucks.  And then when the last two companies came in,

17  1500 trucks 500, you could add up all these small

18  operators that were here today wouldn't even come close.

19  So anything we can do on that.

20           And also I think we should do what we can to push

21  with the NOx reductions.  I think that cuing this issue

22  up, especially for where we're going to be next month in

23  South Coast is particularly important.

24           CHAIRPERSON LLOYD:  I think on the -- you know,

25  maybe we look at two-tier system here because you say --


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 1  and again, I assume that as staff looks at it, they will

 2  do the usual good job of looking at the impact.  But for

 3  example, on the refinery side, we look at some exemptions

 4  or delayed implementation to smaller refiners.  Maybe

 5  staff could look at whether that could be implemented

 6  here.

 7           EXECUTIVE OFFICER WITHERSPOON:  I'm sorry,

 8  Chairman Lloyd.  We were talking about some of the things

 9  you were already discussing.  Can you repeat the last part

10  about the small refiner --

11           CHAIRPERSON LLOYD:  All I was saying, I assume

12  staff is going to do its usual good job at looking at

13  impacts.  And you've heard from us that we're all

14  concerned that we want to push ahead as rapidly as

15  possible to get the older vehicles off the road, but we

16  also want to make sure that we're not unfairly impacting

17  some of these smaller properties.  In that case, can we

18  look at some of the larger properties maybe having an

19  accelerated schedule.  And then before we impose on some

20  of the smaller ones, to look at some of the economic

21  impacts.

22           EXECUTIVE OFFICER WITHERSPOON:  Have you thought

23  about what line you would draw between small and large

24  properties?  Are you looking for a suggestion from us?

25  Because I was hoping it would emerge from the testimony,


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 1  and it didn't break out.  They were all --

 2           CHAIRPERSON LLOYD:  I was hoping so too.

 3           EXECUTIVE OFFICER WITHERSPOON:  They were

 4  relatively big, what we would think of as big.  Even 50 is

 5  pretty big.  And for example, in the South Coast with

 6  their rule, they have a threshold of 15 for who's in who's

 7  out, and that would give very little relief on an

 8  accelerated schedule.

 9           We do believe that the older vehicles are

10  concentrated in the smaller fleets with pull ahead causes.

11  The only vehicles could be changed out faster.  It means

12  that the small guys will have to go seek the capital,

13  negotiate the rates, and be very successful because their

14  direct costs will be higher on average than what was

15  presented to you as, you know, for everyone will be.  But

16  the kinds of rate changes that they will need will be more

17  than that.

18           CHAIRPERSON LLOYD:  I think Supervisor DeSaulnier

19  maybe had a question.

20           SUPERVISOR DeSAULNIER:  Maybe, D.D., what I

21  was -- what I felt from the testimony is that if we can

22  help all of the haulers recover the cost, then we can

23  accelerate it.  And maybe there's a way -- and you

24  expressed it a little bit differently.  I agreed with you

25  to begin with.  But if we can recover the cost and it's


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 1  just intuitively -- even though I think someone from Waste

 2  Management said it wasn't true.  Intuitively it strikes me

 3  the small ones are the ones that are going to have the

 4  most trouble articulating the need for rate increases and

 5  the revenue stream.  So I was more interested in helping

 6  them all, but particularly focusing on the small ones.

 7  And maybe there's an option if they really are having

 8  trouble, we give them some kind of period for an exemption

 9  like -- pardon the expression -- a hybrid of what you

10  suggested.  That's not in the gold category, I know but --

11           BOARD MEMBER RIORDAN:  It is, I think, a

12  difficult -- staff's going to have to work on this because

13  there's going to be a whole host of items that affect a

14  smaller, you know, business.  Some of them are going to

15  have the older trucks, as Ms. Witherspoon just pointed

16  out.  If you require replacement of the older trucks,

17  that's going to be an immediate need for cash flow.  And

18  you provide then the rates to be up and that's going to

19  affect fewer people.

20           I think there are some times that we just are

21  going to have to look at this on a case by case basis and

22  try to help.  If our intent is to help some of the smaller

23  companies, you're just going to have to have the wisdom

24  of -- I don't know whom, but someone to figure out how to

25  do it without unintended consequences.  And good luck on


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 1  that.

 2           Otherwise, I think it's very commendable what

 3  you've all worked out.  And I think that if we can do the

 4  outreach -- and I'm just going to hope that we get on that

 5  very quickly, so that we can explain to the city councils

 6  and the Board of Supervisors the tremendous health

 7  advantages that accrue to this particular item.  I think

 8  we can be successful, but we need to start right away.

 9           CHAIRPERSON LLOYD:  Professor Friedman.

10           BOARD MEMBER HUGH FRIEDMAN:  Well, first, I, too,

11  want to applaud the staff for a very thoughtful balanced

12  solution or proposal for very a complicated, challenging

13  issue.

14           And I picked up on one concern, that is that -- I

15  think you've raised it, but we haven't directly addressed

16  it in our discussions here.  And that is the issue of

17  reliability or dependability, certainly.  And my sense is

18  that there is the best available proven technology,

19  certainly in Europe and other places.  And it's really the

20  application to a specific engine that's the issue or the

21  concern.  And I guess's that's education.  That's

22  experience, for particularly for smaller haulers or

23  operators.  And there may be the need for some individual

24  exemptions and so forth.  There may not be technology

25  available to retrofit, as we've seen, with the older


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 1  engines.  And so with these time lines, unless you're just

 2  operating three or fewer, you're going to have an

 3  automatic deferral of reckoning day.  We may be faced with

 4  the cost of replacement.

 5           In any event, I think with the periodic reviews

 6  that we built in -- I see that the latest version of the

 7  15-day notice now does have an annual review until

 8  sometime much later when it kicks in to biennial.  And so

 9  I think that it's about as good as we can do.  It may not

10  be perfect, but we haven't achieved perfection very often.

11  And as I like to think, it's good enough for jazz.  I

12  commend you for your effort.

13           CHAIRPERSON LLOYD:  Mr. Calhoun.

14           BOARD MEMBER CALHOUN:  One comment, I'll admit we

15  heard today in testimony was cost, cost, cost.  And

16  anything that we can do to help out in that regard, I

17  would certainly like to encourage us to do so.

18           The next item, I guess I'd like to remind the

19  staff and the Board that this Board has had one

20  unfortunate experience with the retrofit program I happen

21  to be very aware of.  I would just encourage us to really

22  stay on top of things.  And if there's a problem, we need

23  to try to correct it as soon as possible.

24           CHAIRPERSON LLOYD:  I think that's a good

25  reminder, Joe.  But also I think all of us want to get to


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 1  the situation whereby we can take advantage of some of the

 2  tremendous advances being made with the new engines.  And

 3  so we don't run the same risk that we're doing now and

 4  work our way through that.  And I think all of us are

 5  committed to try to do that.  It's a good reminder.

 6           SUPERVISOR PATRICK:  Thank you, Mr. Chairman.

 7           I, too, would like to say how very much I support

 8  this and how much I support or I appreciate the good work

 9  that staff has done.

10           I think it's safe to say that we have a lot of

11  really nervous people in the audience and understandably

12  so.  Because, you know, you're concerned about cost

13  recovery and about reliability, and I think that you have

14  every right to be.  So I think that, you know, we need to

15  begin immediately starting a dialogue.  And we have a

16  representative from the League of Cities, someone from

17  CSAC can be brought on board to begin immediately to be

18  working with the folks that are going to -- are

19  representing the taxpayers and the folks with whom our

20  disposal companies negotiate so that these costs can be

21  recovered, because I think it's important that they be

22  recovered.  I think when we emphasize how important this

23  is to public health, I think that will certainly help us.

24           I, too, share concerns about some of our smaller

25  disposal companies.  And my concern about accelerating the


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 1  pre-1988 conversions is that many of those small

 2  companies, those are the trucks that those folks are going

 3  to have.  And also those folks may be serving some

 4  communities that are economically challenged as well.  So

 5  I think it's incumbent upon staff to work closely with

 6  them and to bring our elected officials on board as

 7  quickly as we can to make them understand that this is an

 8  important move toward public health, and it's something

 9  that is very necessary and to continue the dialogue with

10  all the stakeholders here today.  Some are happy.  I don't

11  think anybody's really happy -- but some relative degrees

12  of happiness.  But I think the most important thing is

13  that we try to address some really beneficial comments

14  that were made today, and that we move forward with it.

15           But I think as controversial as this has been for

16  probably a year and a half, I would say that today all of

17  the folks who talked to us were very -- gave very

18  passionate feelings about this whole process.  And I think

19  that they all felt they had been listened to.  They may

20  not be happy with the end result, but I know there are

21  folks who worked really hard on this.  So my compliments

22  to staff and all the people who worked on it.  And I don't

23  know that the work is over.  I think it's just begun.  I

24  know that staff is up to that task.

25           CHAIRPERSON LLOYD:  And I think as we were


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 1  reminded earlier, I think the industry is really committed

 2  to working here.  We all live and breathe the same air.  I

 3  think there's a strong commitment to move ahead.

 4           With that, I'd like to call upon my colleagues

 5  starting with Supervisor Patrick to identify any ex parte

 6  communications.

 7           While we may communicate off the record with

 8  outside persons regarding rule making, we must disclose

 9  the names of our contacts and the nature of the contents

10  on the record.  This requirement is specifically to

11  communications which take place after notice the Board

12  hearing has been published.

13           And Supervisor Patrick, anything?

14           SUPERVISOR PATRICK:  No.

15           CHAIRPERSON LLOYD:  Mr. Calhoun.

16           BOARD MEMBER CALHOUN:  On the 15th of July I met

17  with two representatives from the Rainbow Disposal

18  Company, Jerry Maffet and Mike Rumble.  And during the

19  brief session that we had, we had discussed costs.  And

20  nothing I heard from them was different from what I heard

21  today.

22           BOARD MEMBER RIORDAN:  I have none.

23           CHAIRPERSON LLOYD:  On September the 19th I had a

24  conference call with Todd Campbell, Coalition for Clean

25  Air; Bonnie Holmes-Gen, American Lung Association; with


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 1  Diane Bailey and Gail Rudemenfer of NRDC; and Patricia

 2  Monahan, Union of Concerned Scientists.

 3           BOARD MEMBER HUGH FRIEDMAN:  On July 23rd I had a

 4  brief meeting with Gene Erbin with the firm Nielsen,

 5  Merksamer here in Sacramento and his client, Kent Stoddard

 6  of Waste Management.  They basically indicated that they

 7  had some concerns that were discussed here today by them,

 8  but they were generally supportive.

 9           BOARD MEMBER WILLIAM FRIEDMAN:  I have nothing.

10           BOARD MEMBER D'ADAMO:  On Tuesday, September

11  23rd, I participated in a conference call with Todd

12  Campbell, Coalition for Clean Air; Bonnie Holmes-Gen,

13  American Lung Association; Diane Bailey, NRDC; Patricia

14  Monahan, Union for Concerned Scientists; and Don Anair,

15  Union of Concerned Scientists.

16           On Wednesday, September 24th, I met in my Modesto

17  office with Alan Marchant, Turlock Scavenger; and Sean

18  Edgar; California Refuse Removal Council.  And the

19  discussions mirror their testimony today.

20           SUPERVISOR DeSAULNIER:  Mr. Chair, I met on

21  August 25th in my office in Concord with Sean Edgar from

22  the California Refuse Removal Council; and Sheryl

23  Granzella from the Richmond Sanitary Services.  And the

24  discussion was consistent with their testimony today.

25           CHAIRPERSON LLOYD:  With that, I'd like to read


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 1  in the resolution and be willing to entertain a motion.

 2           SUPERVISOR DeSAULNIER:  I'd be happy to attempt a

 3  motion.

 4           CHAIRPERSON LLOYD:  Okay.

 5           SUPERVISOR DeSAULNIER:  I move the Board adopt

 6  Resolution 03-24, and then incorporate in our motion the

 7  issue that Todd Stoddard brought up about -- and ask staff

 8  to -- in regards to pass-through cost to work with all

 9  affected stakeholders as Mr. Stoddard suggested, including

10  the Integrated Waste Management Board and others, to

11  develop an outreach program to help the haulers,

12  particularly the smaller ones, be able to recover their

13  costs and work with CSAC and the League of Cities.  And

14  then also as part of the motion is to move the start-up

15  date from 2007 to 2005 on pre-'88s, and then reiterate one

16  more time our long-term commitment for further NOx

17  reductions.

18           CHAIRPERSON LLOYD:  You were perfect on

19  everything besides the number.  I think it's 03-21.

20           SUPERVISOR DeSAULNIER:  Okay.  We've had so many

21  of these come up here.  I'll move whatever the last one

22  was.

23           CHAIRPERSON LLOYD:  And I would -- do we have a

24  seconder?

25           BOARD MEMBER D'ADAMO:  I have a question.


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 1           CHAIRPERSON LLOYD:  Professor is going to second,

 2  but D.D. has a question.

 3           BOARD MEMBER D'ADAMO:  I have a question about

 4  where we ended up.  I'd be supportive of that, but I need

 5  some clarification of where we ended up on the small

 6  companies.  Are we going to leave that up to staff to come

 7  up with perhaps a number and a waiver?  Because as I read

 8  through the proposal -- I know it's changed quite a bit,

 9  but as I read through the document, I don't see that there

10  is an extension based upon cost.  It's only based upon

11  whether or not the technology is available.

12           EXECUTIVE OFFICER WITHERSPOON:  That's correct.

13  There is no forgiveness for cost, for hardship, or

14  anything of the kind.  I'm glad you pointed that out.

15           And earlier I asked did the Board have a

16  threshold in mind as you were casting about, is the

17  pull-ahead for everybody or just the bigger companies?

18  And Supervisor DeSaulnier answered back, "Well, if we are

19  able to solve the rate problem, then everyone can play."

20           Since you're bringing it up again, Tom and I have

21  been having a sidebar down here that we'd like the

22  opportunity to consider and maybe solicit some comment

23  about a threshold.  We're still toying with the 15-vehicle

24  as taking the littlest of the littles out, or giving them

25  more time is basically what it would do.  They wouldn't


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 1  have to pull-ahead as fast, and they'd have more access to

 2  exemptions perhaps than the biggers.

 3           And also concentrate staff's own efforts as we go

 4  out and do this outreach and working with individual

 5  communities and selling the program, we're not torn in

 6  every direction at once.  Because we have some concern

 7  about our ability to deliver.

 8           SUPERVISOR DeSAULNIER:  I'd be fine to consider

 9  something like that as an amendment to the motion.  My

10  interest was giving it a shot first to see if you can

11  recover it, but be sensitive.  What Barbara said, a lot of

12  these haulers may be in communities that don't have the

13  ability to recover cost just in terms of paying it through

14  the rate payer.

15           BOARD MEMBER RIORDAN:  Exactly.  You're going to

16  have some -- if you move it too fast, you're going to have

17  unintended consequences that I think we need to be

18  sensitive to.  And it seems to me 15 would be the

19  reasonable number.

20           SUPERVISOR DeSAULNIER:  I think that's good.

21           CHAIRPERSON LLOYD:  I think we're putting quite a

22  burden on staff here.  But that's good and bad.  It gives

23  you some flexibility because I think you'll come up with

24  better data than we have.  I think you can read the

25  sentiment of the Board.


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 1           EXECUTIVE OFFICER WITHERSPOON:  Just to be clear,

 2  the way we'll fix it is through finding that magic

 3  threshold and figuring out the right timetable for the

 4  littles, as opposed to constructing a hardship exemption

 5  which would just blow a hole in the side of the

 6  regulation.

 7           BOARD MEMBER WILLIAM FRIEDMAN:  Just a question.

 8  Did we not, with respect to the issue of negotiations

 9  between haulers and municipalities, include some provision

10  so that we could hear back?

11           SUPERVISOR DeSAULNIER:  Yes.

12           CHAIRPERSON LLOYD:  Yes.

13           BOARD MEMBER WILLIAM FRIEDMAN:  Perhaps that can

14  be included.

15           CHAIRPERSON LLOYD:  And also to provide some cost

16  data to some of the municipalities there.  And also,

17  please, when we have the meeting that was suggested by

18  Kent, make sure that the Trucking Association is

19  represented.

20           SUPERVISOR DeSAULNIER:  Given that I was almost

21  perfect, I was fine with all those comments and

22  corrections.

23           CHAIRPERSON LLOYD:  So with that, we have a

24  seconder.  And so all in favor say aye.

25           (Ayes)


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 1           CHAIRPERSON LLOYD:  Any against?

 2           Thank you very much.

 3           And again, thank you, staff, for a great job in

 4  bringing this together.  Unfortunately, the work isn't

 5  finished.  But thank you very much indeed.

 6           With that, we will take a break until 3:00 when

 7  we'll start the item on the small off-road engines.

 8           (Thereupon a recess was taken.)

 9           CHAIRPERSON LLOYD:  Thank you.  After that

10  10-minute break we move on to the next agenda item,

11  03-7-3, proposed exhaust and evaporative standards for

12  small off-road engines.

13           Staff has been working on this regulatory

14  proposal for several years and is now ready for our

15  consideration.  I've witnessed firsthand the incredible

16  number of staff hours devoted to this task; the extensive

17  negotiations that have gone on with the affected industry

18  groups; and, most recently, the strenuous efforts

19  undertaken by staff, California's two senators, the

20  Governor's Washington DC office, environmental groups, and

21  our air quality colleagues throughout the nation to defend

22  states' rights to proceed with these essential emission

23  control measures.

24           I wish I could report that the latter issue was

25  resolved at this time.  Unfortunately, it is not.  And, in


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 1  fact, that's why we had the slight delay because we're

 2  still getting communications coming in on this issue.

 3           But what is absolutely clear in my mind is that

 4  the small off-road engine regulation is one of the most

 5  thoroughly analyzed and most carefully constructed rules

 6  our staff has worked on for some time.  It is not

 7  half-baked, it is not premature, and my colleagues on the

 8  Board should be confident that staff understands this

 9  source category quite well.

10           And I remember several months ago I was asked to

11  take a look at what staff was doing on this issue to make

12  sure that there was communication between the industry and

13  staff.  And, again, I can attest that maybe there was some

14  lack of interest on industry, or at least maybe not taking

15  this too seriously, but since that time I feel that staff

16  has been fully engaged.  We've had many proposals.  We've

17  worked -- the staff was worked especially with many pieces

18  of the industry.  And, again, today while we clearly don't

19  have everybody on board, I'm convinced that those people

20  who are interested in really cleaning up the air have

21  worked with us very carefully and that we are ready to

22  hear this item.

23           Next month the Board will consider a revision to

24  the State Implementation Plan for the South Coast Air

25  basin.  That plan contains several regulatory commitments


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 1  for this Board's consideration.  And we already are

 2  receiving letters that should contain even more.  Two of

 3  the commitments in the proposed South Coast plan relate to

 4  reducing emissions from small off-road engines.  If the

 5  Board approves the proposed SORE rule today, we would be

 6  fulfilling both of those SIP commitments.

 7           And so this is an important rule, it's an

 8  important challenge as we look ahead, as I mentioned, to

 9  next month the challenge we have in the South Coast basin.

10  We need every pound of pollution that we can get from

11  every category that we can get.

12           And, again, I continue in the tradition of

13  looking at making sure we can get the technology that's

14  proven elsewhere into various categories is very, very

15  important.

16           So, Ms. Witherspoon, would you please begin the

17  staff presentation on this important item.

18           EXECUTIVE OFFICER WITHERSPOON:  Thank you,

19  Chairman Lloyd, and members of the Board.

20           Small off-road engines are a major source of

21  emissions in California.  Exhaust standards previously

22  adopted by the Board have stopped the growth of tailpipe

23  emissions in this category.  However, there are no

24  evaporative emission controls in place today.  The

25  proposal you are considering would tighten exhaust


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 1  emission standards by one-third and would establish

 2  evaporative standards for the first time.

 3           As you will hear in the staff presentation, we

 4  have continued to work with the major stakeholders right

 5  up to the eve of this hearing.  As a result of these

 6  discussions, staff will be proposing revised exhaust

 7  emission standards and two new options to comply with the

 8  evaporative emission requirements.

 9           The revised proposal reduces costs, addresses

10  engineering challenges related to using a catalytic

11  converter on these small engines, and provides additional

12  compliance flexibility.  We believe the staff's revised

13  proposal addresses all the major technical issues raised

14  by industry representatives, while achieving nearly the

15  same emission reductions as the original staff proposal.

16           I'd like to emphasize these changes are fully

17  within the scope of our original notice and can be acted

18  upon by the Board today even though staff is still working

19  on the specific regulatory language to accomplish them,

20  which would be circulated for comment during the routine

21  15-day change process.

22           At this time I'd like to turn the presentation

23  over to David Salardino of our Mobile Source Control

24  Division, who will present staff's recommendation on the

25  exhaust side.  Following David's presentation Jim Watson


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 1  of our Monitoring and Laboratory Division will discuss the

 2  evaporative emission portion of the proposal.

 3           (Thereupon an overhead presentation was

 4           Presented as follows.)

 5           MR. SALARDINO:  Thank you, Ms. Witherspoon.

 6           Greetings, Chairman Lloyd, members of the

 7  Board --

 8           CHAIRPERSON LLOYD:  Microphone please.  It's not

 9  on.

10           MR. SALARDINO:  Sorry.  Thank you.

11           Greetings, Chairman Lloyd, members of the Board,

12  ladies and gentlemen.

13           Today staff is proposing for the Board's approval

14  amendments to the current small off-road engine exhaust

15  emissions regulations as well as new regulations to reduce

16  evaporative emissions from small off-road engines and

17  equipment.  This item is a joint effort between staff and

18  the Mobile Source Control Division and the Monitoring and

19  Laboratory Division.

20                            --o0o--

21           MR. SALARDINO:  In this presentation I'll begin

22  by viewing some of the background information regarding

23  the small off-road engine category.  I'll then summarize

24  our proposal to reduce exhaust emissions from small

25  engines, after which I will turn the presentation over to


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 1  Mr. Jim Watson of the Monitoring and Laboratory Division

 2  to summarize the evaporative emission reduction proposal,

 3  the environmental benefits of staff's proposal, as well as

 4  the economic impacts.

 5           Mr. Watson will then conclude the presentation

 6  with a brief summary and a recommendation to the Board.

 7                            --o0o--

 8           MR. SALARDINO:  The small off-road engine

 9  category consists of engines at or below 19 kilowatts.  It

10  includes and consists of both two and four stroke engines,

11  which are used primarily in lawn and garden and small

12  industrial and commercial equipment.  By definition, this

13  category does not include equipment that qualifies under

14  the farm and construction equipment preemption that was

15  contained in the 1990 federal --

16           BOARD MEMBER HUGH FRIEDMAN:  Excuse me.  We're

17  having trouble hearing you.  If you wouldn't mind putting

18  that microphone real close to your chin, I'd really

19  appreciate it.

20           MR. SALARDINO:  Sorry about that.

21           BOARD MEMBER HUGH FRIEDMAN:  Thank you.

22           MR. SALARDINO:  California cannot regulate

23  emissions from new farm and construction equipment less

24  than 175 horsepower that would otherwise be in this

25  category.


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 1                            --o0o--

 2           MR. SALARDINO:  This shows examples of some the

 3  equipment in the small engine powered category.  Small

 4  engines are typically categorized as handheld and

 5  non-handheld.

 6           Handheld engines have small engine displacements

 7  and are typically used in applications in which the

 8  operator supports the equipment, such as a leaf blower or

 9  a string trimmer.

10           Non-handheld engines are larger.  A majority of

11  the non-handheld category consists of walk-behind mowers.

12           Please note that for the remainder of this

13  presentation you will see a drawing of a string trimmer in

14  the lower lefthand corner and/or a drawing of a lawnmower

15  in the lower righthand corner denoting slides specifically

16  pertaining to this equipment.

17                            --o0o--

18           MR. SALARDINO:  Small off-road engines were

19  California's first off-road category subject to emission

20  control regulations.  In 1990 the Board adopted exhaust

21  emission standards for small engines with implementation

22  dates starting in 1995.

23           Manufacturers were able to meet these standards

24  for the most part by modifying engines to run at a leaner

25  air/fuel ratio and improving engine cooling.


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 1           In 1998 the Board amended the small engine

 2  regulations to incorporate more stringent exhaust

 3  standards and included a requirement that manufacturers

 4  show emission compliance over the useful life of the

 5  engine.  These new durability-based standards were

 6  implemented started in 2000.

 7                            --o0o--

 8           MR. SALARDINO:  During this time period the U.S.

 9  EPA finalized its own exhaust emission reduction

10  requirements for small engines, which are similar to

11  California's program.  There currently are no federal or

12  State requirements to control evaporative emissions from

13  small engines.  Staff is now returning to the Board to

14  propose requirements to further reduce small engine

15  emissions.

16                            --o0o--

17           MR. SALARDINO:  The combined exhaust and

18  evaporative emission contribution from small off-road

19  engines is significant, at 152 tons per day in 2000, with

20  evaporative emissions making up about 30 percent of the

21  total.

22           The adopted emission standards will continue to

23  reduce exhaust emissions as older diurnal units get

24  replaced with new cleaner units.  However, after 2010 the

25  small engine emissions are expected to increase as the


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 1  addition of cleaner engines is offset by population

 2  growth.

 3           In addition, with no regulatory requirements

 4  evaporative emissions will continue to increase with

 5  growth and will make up about 40 percent of the total by

 6  2020.

 7                            --o0o--

 8           MR. SALARDINO:  Next month staff is scheduled to

 9  present a new State Implementation Plan that measures --

10  that includes measures to reduce air pollution throughout

11  the state.  Today's proposal is designed to meet the

12  emission reduction commitments outlined in two of the

13  measures.  Those two measures, Small Off-Road 1 and Small

14  Off-Road 2, count on exhaust and evaporative emission

15  reductions from handheld engines and non-handheld engines

16  respectively.

17                            --o0o--

18           MR. SALARDINO:  I will now discuss staff's

19  proposal to reduce exhaust emissions from small engines.

20           As I mentioned earlier, the U.S. EPA has

21  promulgated federal emission standards for small engines.

22  EPA's HC+NOx standard for handheld engines gets

23  increasingly more stringent through 2005, reaching a level

24  of 50 grams per kilowatt hour for engines less than 50 cc,

25  which is more stringent than California's current standard


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 1  of 72 grams per kilowatt hour.

 2           Therefore, staff proposes a third tier standard

 3  equivalent to the federal HC+NOx standard for engines less

 4  than 50 cc.  Implementation would begin with the 2005

 5  model year.  This would be a 30 percent decrease from the

 6  current Tier 2 standards.

 7                            --o0o--

 8           MR. SALARDINO:  Technologies already exist which

 9  enable manufacturers to meet the proposed Tier 3

10  standards.  There are currently 25 engine families

11  certified in California that already meet the Tier 3

12  levels.  These certified engine families include all types

13  of handheld equipment.

14           Manufacturers have used a variety of technologies

15  to comply with the handheld standards, such as replacing

16  two-stroke engines with four-stroke engines, addition of a

17  catalyst to a two-stroke engine, advanced stratified

18  scavaging, and two stroke/four stroke hybrids.

19           In addition, zero emission electric equipment is

20  also available.

21           These technologies have allowed manufacturers to

22  comply with the current emission requirements as well as

23  confirm the feasibility of the proposed emission

24  requirements.

25                            --o0o--


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 1           MR. SALARDINO:  Non-handheld engines are

 2  separated in to two classes:  Engines between 80 and 225

 3  cc are classified as Class 1 engines; and engines 225 cc

 4  are Class 2 engines.

 5           Staff proposes emission standards for these

 6  engines that are consistent with reductions achievable

 7  with the addition of a catalytic converter.  Staff has

 8  taken part in meetings within the last few weeks in which

 9  manufacturers and manufacturer associations have made

10  counterproposals to staff's original proposal as outlined

11  in the staff report.

12           The industry counterproposals suggest additional

13  flexibility to use compliance and/or reduce the cost of

14  compliance.  In response to these discussions, staff is

15  proposing alternative Tier 3 standards for HC+NOx of 10

16  grams per kilowatt hour or engines between 80 and 225 cc

17  and 8 grams per kilowatt hour for engines 225 cc and

18  above.  These standards are an alternative to staff's

19  originally proposed standards of 8 and 6 grams per

20  kilowatt hour.

21           Staff's alternative standards will reduce the

22  amount of heat generated from the catalytic converter that

23  must be managed, reduce costs, and eliminate the chance

24  that major engine redesign may be needed for some older

25  engine designs.  Tailpipe emissions from these engines


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 1  would be reduced by about one-third with the alternative

 2  proposed standards.

 3           In addition, staff proposes to stagger the

 4  implementation date of these standards to allow

 5  manufacturers appropriate lead time for engineering and

 6  development, while providing the earliest start to

 7  achieving the desired emission reductions.  Thus for

 8  engines between 80 and 225 cc's staff proposes an

 9  implementation date of 2007, and 2008 for engines 225 cc

10  and above.

11           As shown in the next few slides these proposed

12  standards were based on test results in which several

13  engines were equipped with catalytic converters.

14                            --o0o--

15           MR. SALARDINO:  ARB funded a catalyst test

16  program designed to show the technical feasibility of new

17  emission standards based on the use of catalysts on

18  non-handheld engines.  Small engine and equipment

19  manufacturers participated with ARB in the test program

20  through monthly meetings and technical assistance.

21           ARB contracted with the Southwest Research

22  Institute to conduct exhaust emission durability testing

23  on six small engines over 80 cc.  The objective of the

24  program was to develop six non-handheld engines and

25  low-emission configurations and then age and test the


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 1  engines throughout their useful life.  The six engines

 2  chosen for the program are shown here.

 3           These engines all meet the current California

 4  Tier 2 emission standards.  Four engines are using

 5  walk-behind mower applications.  One is for a riding

 6  mower.  And one is used in constant-speed generator

 7  applications.

 8           These engines were tested when new, i.e., at zero

 9  hour, and then tested again after running for hundreds of

10  hours over a service-accumulation cycle.

11           Each engine was equipped with a three-way

12  catalytic converter and a relatively simple air induction

13  system to enhance the catalytic reaction.

14           In addition, for the Briggs & Stratton engine No.

15  1 and for the Kawasaki engine, Southwest adjusted the

16  carburetor to lean out the air/fuel mixture.

17                            --o0o--

18           MR. SALARDINO:  Here we see three of the engines

19  that Southwest equipped with catalysts.  The mufflers

20  shown installed on the engines are the developed mufflers

21  with the catalyst.  The original mufflers are shown next

22  to the engines on the left for comparison.

23           As you can see, in some cases the muffler was

24  increased slightly or modified to accommodate the

25  catalyst, as in the case with the Honda No. 2 engine.


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 1  However, in many cases, such as the Briggs engine shown,

 2  the catalyst was fit into the existing muffler housing.

 3                            --o0o--

 4           MR. SALARDINO:  The objective of the test program

 5  was to develop small engines in low-emissions

 6  configurations, with the ultimate goal of reducing

 7  tailpipe HC+NOx emissions by 50 percent or more at the end

 8  of the useful life.

 9           As shown in this table, each developed engine

10  except for the Briggs & Stratton No. 2 met or exceeded the

11  50 percent target level at each of the test points.

12                            --o0o--

13           MR. SALARDINO:  This slide shows the emission

14  levels achieved by engines in the Southwest test program

15  as compared to the revised proposed alternative standards.

16  The testing of Southwest was designed to be a

17  proof-concept project which ultimately demonstrated that

18  small engines can be designed to meet the proposed

19  standards over the useful life of the engine.  While the

20  proposed emission standards are certainly feasible, some

21  engines may require additional development beyond the work

22  completed at Southwest as evidenced by two of the engines

23  in this program.

24           Manufacturers have raised safety concerns related

25  to increased temperatures resulting from the incorporation


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 1  of a catalyst on small engines.  Oxidation of HC and CO

 2  creates heat, and along with any enleanment of the

 3  air/fuel mixture could lead to increased exhaust gas

 4  temperatures and catalyst muffler skin temperatures.

 5           This temperature slide shows that in some cases

 6  the addition of a catalyst resulted in increased muffler

 7  skin temperatures.  While we believe that in some cases

 8  the increase of temperature will be small, on the order of

 9  less than 50 degrees Fahrenheit, in other cases it might

10  be significantly higher.

11           Manufacturers will need to address surface

12  temperature issues when developing a catalyst system to

13  meet the proposed standards.  But as has been done with

14  many two-stroke engines currently equipped with catalysts,

15  these issues can be adequately addressed in the design of

16  the system by, for instance, improving cooling flow and

17  providing additional shielding of the catalyst.

18           As shown in this slide by the purple bar, the

19  catalyst shield temperature on the Honda engine was almost

20  500 degrees lower than the catalyst surface temperature.

21           Staff is certain that the lawn and garden

22  manufacturers will be able to address temperature concerns

23  by using approaches similar to those developed by other

24  manufacturers who have successfully and safely implemented

25  catalyst technology over the last 28 years.  The staff's


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 1  proposal was designed to provide manufacturers with the

 2  lead time necessary to address such design changes.

 3                            --o0o--

 4           MR. SALARDINO:  So to summarize:

 5           Staff is proposing a Tier 3 HC+NOx exhaust

 6  emission standard of 50 grams per kilowatt hour for

 7  engines less than 50 cc, equivalent to the most stringent

 8  federal standard for these engines.

 9           For engines 50 to 80 cc the HC+NOx standard will

10  remain at the current level of 72 grams per kilowatt hour,

11  as it is already equivalent to the most stringent federal

12  standard for these engines.

13                            --o0o--

14           MR. SALARDINO:  The Tier 3 standards for engines

15  above 80 cc will be based on the addition of a catalytic

16  converter and will begin implementation with the 2007

17  model year.

18                            --o0o--

19           MR. SALARDINO:  To encourage the manufacture and

20  use of engines that go beyond mandatory emission

21  standards, the staff proposes voluntary optional low

22  exhaust emission standards for small engines in connection

23  with the proposed Tier 3 standards.

24           An engine found to be certified to the voluntary

25  standards will be classified as a California Blue Sky


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 1  engine.  The Blue Sky standards represent a reduction of

 2  50 percent below the proposed Tier 3 levels for HC+NOx.

 3           The Blue Sky Engine Program provides an

 4  opportunity for these engines to participate in clean

 5  labeling and incentive programs.  The manufacturer must

 6  declare at the time of certification whether it is

 7  certifying an engine family to a Blue Sky series standard.

 8  In order to guarantee that emission credits associated

 9  with the Blue Sky engine are real, engines certified to

10  these voluntary standards would not be eligible to

11  participate in the corporate averaging programs allowed in

12  the small engine exhaust emission regulations.

13           At this time staff is also suggesting amending

14  the Blue Sky Engine Program to include zero emission

15  equipment.

16                            --o0o--

17           MR. SALARDINO:  In addition to new standards,

18  staff also proposes a few other modifications to the

19  existing exhaust emission regulations and test procedures.

20           To more closely align with the federal

21  regulation, staff proposes to adopt the use of kilowatt as

22  the unit of power for small off-road engines.

23           Staff also proposes to include the federal 1,000

24  hour durability option for engines certified at or about

25  225 cc.


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 1           In addition, staff proposes to incorporate the

 2  federal small engine test procedures subparts A, B, D, and

 3  E of CFR Part 90 in to California's test procedures for

 4  2005 and later model year engines.

 5           These changes will further ease the burden on

 6  manufacturers certifying an engine family.

 7           In 1998, the Board adopted a 65 cc displacement

 8  limit on engines subject to the handheld emission

 9  standards.  However, since that time manufacturers have

10  noted increased consumer demand for more power from

11  handheld engines, requiring engine size above the 65 cc

12  limit.

13           Manufacturers requested a higher limit for

14  handheld engines and promised the continued introduction

15  of clean technologies.  Staff, therefore, proposes to

16  increase the handheld category to include engines up to 80

17  cc beginning with the 2005 model year.

18                            --o0o--

19           MR. SALARDINO:  Staff also proposes a requirement

20  that a manufacturer report emission-related defects

21  affecting a given engine family -- a given family of

22  engines.  A manufacturer will be required to file the

23  report with ARB whenever the manufacturer determines that

24  either a safety-related or performance-related defect

25  exists in 25 or more engines of a given family.


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 1           ARB will then require the manufacturer to submit

 2  a plan to resolve the nonconformity of the engines.  A

 3  resolution could be in the form of a recall of those

 4  engines or alternative measures that offset the

 5  noncompliance.

 6           This requirement for defect reporting and recall

 7  is similar to the current federal program and is also

 8  included in staff's proposed evaporative emission

 9  reduction program.

10           Staff also proposes to include additional text in

11  the test procedures that clarify engine clearing

12  requirements for certification emissions testing.  This

13  clarification is necessary in order to ensure that the

14  test conditions are representative of real-world

15  conditions.

16           This concludes staff's proposal for amendments to

17  California's small engine exhaust emission programs.

18           At this point the presentation will show a slide

19  representing evaporative emission sources from small

20  engines.  And I would like to turn the presentation over

21  to Mr. Jim Watson to discuss staff's evaporative emission

22  proposal.

23           (Thereupon an overhead presentation was

24           Presented as follows.)

25           BOARD MEMBER DeSAULNIER:  For those of us who


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 1  need visuals.

 2           MR. WATSON:  Good afternoon, Chairman Lloyd and

 3  members of the Board.

 4           The animated slide David shared with us depicts

 5  the major sources of evaporative emissions from small

 6  off-road engines.  The proposal I will present today

 7  covers staff's proposal -- the proposal I will present

 8  today covers staff's proposal and two alternatives

 9  suggested as 15-day changes that control emissions from

10  these sources.  The addition of these alternatives provide

11  manufacturers some needed flexibility in implementing the

12  proposed standards.

13           The first topic of the presentation will

14  highlight three elements of staff's proposal:

15           The discussion will briefly cover the proposed

16  standards, controlled technologies, test data, and

17  industry issues.

18           The presentation will then focus on ARB

19  alternative options developed as a result of our working

20  with industry after the release of the staff report.

21  These alternatives are proposed as 15-day modifications.

22           I will close the presentation with a discussion

23  of the proposal's overall cost effectiveness, cost,

24  overall controlled emissions comparison, and finally

25  staff's conclusions.


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 1                            --o0o--

 2           MR. WATSON:  The primary elements of the

 3  evaporative proposal are a fuel tank permeation standard

 4  for handheld equipment, three diurnal standards for

 5  non-handheld equipment, and certification.

 6                           --o0o--

 7           MR. WATSON:  This chart summarizes the proposed

 8  permeation standard and implementation date for handheld

 9  equipment.

10           Permeation occurs when a gas or liquid

11  saturates a permeable material and is released on the

12  other side.

13           An example of permeation would be the old

14  helium-filled rubber balloons.  After several hours the

15  helium would permeate through the balloon's walls and the

16  balloon would go flat.  That is why we now have mylar

17  party balloon, to control permeation.

18           For small gasoline engines permeation emissions

19  occur when gasoline saturates permeable materials like

20  high density polyethylene and rubber and evaporates on

21  their outside surfaces.

22           This proposal sets a

23  two-gram-per-square-meter-per-day fuel tank permeation

24  standard.  Since most handheld equipment use sealed

25  systems to control tank and carbon vapors, staff's


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 1  proposal does not include a diurnal evaporative emission

 2  standard for this category.

 3           The next slide discusses the diurnal standards as

 4  they apply to non-handheld equipment.

 5                            --o0o--

 6           MR. WATSON:  This slide summarizes the proposed

 7  diurnal standards and implementation data for non-handheld

 8  equipment.

 9           Diurnal emissions occur as a result of daily

10  temperature variations and include vented and permeation

11  emissions.  This proposal does not include separate

12  permeation standards for non-handheld equipment tanks

13  because permeation is addressed by the proposed diurnal

14  standards and test procedures.

15           The three diurnal standards that apply to

16  non-handheld Class 1 and Class 2 equipment include a

17  one-gram-per-day diurnal standard for Class 1 walk-behind

18  mowers, a diurnal standard based on tank volume for other

19  Class 1 equipment, and a two-gram-per-day diurnal standard

20  for Class 2 equipment.

21                            --o0o--

22           MR. WATSON:  The final element of the evaporative

23  proposal is certification.  Staff's proposal requires all

24  equipment to be certified.  Manufacturers must test at

25  least one worst case engine or fuel tank for non-handheld


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 1  equipment within each evaporative family with the highest

 2  emissions potential.

 3           Handheld tanks and non-handheld equipment are

 4  tested and certified per applicable test procedures as

 5  listed in the slide.  The certification and test

 6  procedures are an integral part of the evaporative

 7  proposal.

 8                            --o0o--

 9           MR. WATSON:  I would now like to discuss

10  technologies for controlling permeation emissions.

11           Controlling permeation emissions is meeting the

12  proposed standards.  There are a number of proven

13  technologies that can be used to control fuel tank

14  permeation emissions, which include metal tanks, nylon

15  tanks, and barrier treatments.

16           Options for controlling permeation emissions from

17  other fuel system components include the use of thermal

18  plastic materials and teflon.

19                            --o0o--

20           MR. WATSON:  Based on experience from the

21  portable fuel container rule, barrier treatments are an

22  option that can be used to control fuel tank permeation

23  emissions when optimized resins and additives are used.

24           Staff validated the effectiveness of applying a

25  barrier treatment by performing permeation testing on


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 1  three untreated and three fluorinated fuel tanks.  The

 2  average test results show that fluorination is quite

 3  effective and to reduce permeation emissions by more than

 4  98 percent when optimized.

 5           I will now go on to a discussion of technology

 6  that controls the portion of the diurnal emission that

 7  arises from vented tanks.

 8                            --o0o--

 9           MR. WATSON:  There are three basic technologies

10  that control vented diurnal emissions.  The technology

11  consists of sealed systems, carbon cannisters, and hybrid

12  systems.

13           Sealed systems are the most effective in reducing

14  emissions, but require fuel tanks designed to withstand

15  pressure.

16           Cannister technology has a proven track record in

17  on-road applications.

18           And the hybrid systems are basically sealed

19  systems that vent to a cannister above a fixed pressure

20  limit.

21                            --o0o--

22           MR. WATSON:  Staff evaluated prototype equipment

23  configured with technology to control permeation and

24  vented emissions in an effort to develop appropriate

25  diurnal standards.  Staff tested six walk-behind mowers


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 1  configured with sealed systems, fluorinated tanks, and

 2  low-permeation fuel lines.  We also tested a generator and

 3  a commercial mower configured with carbon cannisters,

 4  metal fuel tanks, and low-permeation fuel lines.

 5                            --o0o--

 6           MR. WATSON:  In regard to the sealed system

 7  testing, this chart showed the uncontrolled and controlled

 8  test results for six mowers tested by ARB.  The blue and

 9  green columns represent uncontrolled results from mowers

10  tested with fuel containing MTBE and fuel containing

11  ethanol, respectively.  The purple and gray columns

12  represent controlled emissions.

13           The controlled columns clearly show that the

14  proposed standards are feasible when tested with fuel

15  containing ethanol.  However, staff is proposing that all

16  equipment be certification tested only with certification

17  fuel.

18                            --o0o--

19           MR. WATSON:  In regard to the cannister testing,

20  this chart shows the uncontrolled and controlled tests for

21  the generator and commercial mower when tested with

22  certification fuel.  Staff were able to reduce average

23  emissions by 95 and 87 percent for the generator and

24  mower, respectively.  The test results support staff's

25  finding that large non-handheld equipment can meet the


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 1  proposed two-gram-per-day diurnal evaporative emission

 2  standard.

 3           In the last few slides I presented technical data

 4  that supports staff's proposed permeation and diurnal

 5  standards.

 6           I would now like to discuss two additional

 7  changes to the proposal that will be included as 15-day

 8  changes.

 9                            --o0o--

10           MR. WATSON:  Staff suggests lowering the

11  cannister design requirements in Test Procedure 902 from

12  two grams per liter of fuel tank volume to 1.4 grams per

13  liter of fuel tank volume for tanks one gallon and

14  greater, and one gram per liter for tanks less than one

15  gallon.  The change will help solve packaging issues on

16  equipment configured with carbon canisters.

17           Another suggested 15-day change concerns small

18  volume manufacturers.  Staff proposes to require small

19  volume manufacturers to submit a letter of conformance.

20  The change will allow certification staff to track small

21  volume equipment being sold in California.

22           There were many issues raised by industry.  Most

23  of these issues had been resolved by staff's proposal.

24  However, several major issues were not resolved such as

25  stringency of the exhaust and evaporative standards,


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 1  compliance flexibility, and costs.  We invited industry to

 2  come up with alternative proposals that would address

 3  these issues while still achieving equivalent emission

 4  reductions compared to staff's proposal.

 5                            --o0o--

 6           MR. WATSON:  Over the last several weeks Briggs

 7  and Stratton, EMA and OPEI and Honda responded to staff's

 8  invitation by proposing three alternative proposals.

 9  Staff evaluated each proposal with respect to emissions

10  equivalency and enforceability.  Subsequently staff

11  developed two alternatives from industry proposals which I

12  will identify as Alternative No. 1 and Alternative No. 2.

13                            --o0o--

14           MR. WATSON:  Key benefits of the alternatives is

15  that they provide industry with greater flexibility and

16  compliance, while providing additional evaporative

17  emission benefits at a lower cost.

18           The alternatives achieved essentially the same

19  level of benefits of the base proposal and still enables

20  the ARB to meet its SIP commitments.

21                            --o0o--

22           MR. WATSON:  Shown on the graph are the overall

23  exhaust and evaporative emission reductions of staff's

24  proposal in the Alternatives 1 and 2.

25           The alternatives achieve between 91 and 97


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 1  percent of the emission reductions contained in staff's

 2  proposal in 2010.

 3           In 2020 the alternatives achieve between 98 and

 4  99 percent of the reductions in staff's proposal.

 5                            --o0o--

 6           MR. WATSON:  I will now discuss the major

 7  elements of the first alternative.

 8           This alternative provides additional evaporative

 9  emission reductions while equipment is operating, which

10  are defined as running loss emissions.  It also contains a

11  requirement for testing complete engines, implements low

12  permeation fuel hoses one year earlier than staff's

13  proposal, and allows fleet averaging.

14                            --o0o--

15           MR. WATSON:  The first alternative sets a 2006

16  fuel hose standard and less stringent interim diurnal

17  standards based on tank volume for all Class 1 engines.

18  Setting interim standards will allow manufacturers time to

19  control production variability as evaporative technology

20  is adapted to off-road equipment.

21           In 2009, the diurnal standards for Class 1

22  engines are lowered.  Standards that apply to Class 2

23  engines under the first alternative include a 2006

24  implementation of a fuel hose permeation standard and a

25  less stringent diurnal standard based on tank volume


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 1  implemented in 2008.

 2                            --o0o--

 3           MR. WATSON:  I will now discuss the second

 4  alternative.  It also achieves additional running loss

 5  emission reductions.  Other major elements of the second

 6  alternative include a requirement to test Class 1

 7  walk-behind mowers, implementation of a low permeation

 8  fuel hose is two years earlier than staff's proposal, and

 9  reduces compliance testing for equipment certified by

10  design.

11                            --o0o--

12           MR. WATSON:  The second alternative requires

13  diurnal testing of walk-behind mower engines as part of

14  certification.  This requirement ensures that the majority

15  of Class 1 engines meet specific emission targets.

16  Design-based standards apply to non-walk-behind mowers.

17  Beginning in 2005 all Class 1 equipment must meet a

18  post-permeation standard.  For model years 2007 through

19  2011 interim performance and design standards apply to all

20  equipment.  In 2012 the interim standards are lowered to

21  be equal to staff's proposal.

22                            --o0o--

23           MR. WATSON:  In this second alternative,

24  design-based also applies to Class 2 engines.  In 2005,

25  they must meet a fuel hose permeation standard.  In 2008,


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 1  90 percent of a manufacturer's production volume must

 2  comply with the additional interim design standards.  The

 3  following year, 100 percent of a manufacturer's production

 4  volume must be compliant.  In 2010, design standards for

 5  fuel hoses in catalysts apply to small-volume

 6  manufacturers.  In 2013, the interim design standards are

 7  lowered by setting a more stringent tank permeation

 8  standard for 90 percent of a manufacturer's volume.  In

 9  2014, 100 percent of the manufacturer's volume must meet

10  the lower requirements.

11           This concludes staff's discussion of the

12  alternative options.  The remaining portions of the

13  presentation will include both exhaust and evaporative

14  aspects of the proposal.

15                            --o0o--

16           MR. WATSON:  Staff's proposal for exhaust and

17  evaporative emissions is cost effective for both handheld

18  and non-handheld equipment.

19           Staff determined that the cost effectiveness for

20  handheld equipment will range from $1.71 to $6.21 per

21  pound of hydrocarbon reduced.

22           The cost effectiveness for non-handheld equipment

23  will range from a low of 20 cents to a high of $4.30 per

24  pound of hydrocarbon and NOx reduced.

25           For the alternatives under consideration staff


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 1  expects the cost effectiveness will improve.

 2                            --o0o--

 3           MR. WATSON:  The estimated increase in the retail

 4  price of handheld equipment will range from $2.16 to

 5  $4.84, depending on the type of equipment purchased.  The

 6  estimated increase in the retail price of non-handheld

 7  equipment will range from $37 for a walk-behind mower to

 8  $179 for a commercial mower.

 9           As the cost effectiveness improvement for the

10  alternatives under consideration staff expects retail

11  increases to be lower.

12                            --o0o--

13           MR. WATSON:  This chart compares the cost

14  effectiveness of major regulations adopted by the Board.

15  The $4 per pound average cost effectiveness of the

16  proposed handheld standards is lower than recently

17  approved control measures for some consumer products,

18  on-road motorcycles and enhanced vapor recovery.  The

19  average $2.25 per pound cost effectiveness for

20  non-handheld equipment compares favorably with other

21  regulations.

22                            --o0o--

23           MR. WATSON:  The green columns of this chart show

24  the controlled emissions should the Board adopt the

25  proposal, which are significantly lower than the


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 1  uncontrolled columns shown in light blue.

 2           This shows a 22-ton-per-day reduction in 2010 and

 3  a 50-ton-per-day reduction in 2020.  Also shown in this

 4  chart is a maximum change in controlled  emissions for the

 5  alternatives, which are represented by small purple

 6  segments above the controlled emissions column.

 7           As you can see, in 2010 the maximum shortfall of

 8  the alternatives is .8 tons per day.  In 2020, the maximum

 9  shortfall is .9 tons per day.

10                            --o0o--

11           MR. WATSON:  In conclusion, staff has determined

12  that the proposal and alternative provide significant

13  emission reductions and will help to achieve attainment of

14  air quality standards that will benefit the health of all

15  Californians.  Staff has determined that the proposed

16  standards are cost effective and attainable with existing

17  technologies.

18           Staff recommends Board adoption of the staff's

19  proposal including the alternatives.  Adopting staff's

20  proposal and the alternatives will provide industry with a

21  great flexibility while retaining our emission-reduction

22  goals.

23           This completes my presentation.  At this time I

24  would be happy to answer any questions you may have.

25           Thank you.


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 1           CHAIRPERSON LLOYD:  Thank you very much.

 2           On your penultimate slide there, when you talk

 3  about emissions reductions, what emissions reductions are

 4  you talking about?

 5           MR. WATSON:  These are the exhaust and

 6  evaporative emission reductions.

 7           CHAIRPERSON LLOYD:  Hydrocarbon plus NOx?

 8           MR. WATSON:  Hydrocarbon plus NOx or non-handheld

 9  and handheld equipment.

10           CHAIRPERSON LLOYD:  And what's the breakdown?

11           MR. WATSON:  In 2020 there are about 6 tons per

12  day for handheld equipment and 43.5 tons per day for

13  non-handheld equipment.

14           EXECUTIVE OFFICER WITHERSPOON:  There's more ROG

15  than NOx because they're new evaporative standards and

16  strengthened exhaust standards.

17           CHAIRPERSON LLOYD:  So what was that again?

18           MR. WATSON:  In 2020 there are about --

19           CHAIRPERSON LLOYD:  In 2010 what was the

20  breakdown for hydrocarbon?  X hydrocarbon plus Y NOx, what

21  was that?  And the same for 2020.

22           EXECUTIVE OFFICER WITHERSPOON:  He was providing

23  it in handheld and non-handheld, which is why I jumped in

24  and gave it -- told you that the thrust of it is ROG.

25           But they'll get that answer.


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 1           CHAIRPERSON LLOYD:  You see you're talking to a

 2  chemist.

 3           EXECUTIVE OFFICER WITHERSPOON:  It should mostly

 4  be ROG.

 5           CHAIRPERSON LLOYD:  While you're working that

 6  out, again, just for clarification, that the way it was

 7  described, staff came up with their proposal and then

 8  worked with the industry after shipping an earlier

 9  version, tried to get some of the ideas from industry and

10  then tried to incorporate those.  And as a result we've

11  come up with a proposal which incorporates several of the

12  ideas that the industry has.  Is that a fair --

13           EXECUTIVE OFFICER WITHERSPOON:  That's correct.

14  And they came very, very close to our original staff

15  proposal, within less than a ton of what our regulation

16  would provide.

17           CHAIRPERSON LLOYD:  Okay.

18           Professor Friedman.

19           BOARD MEMBER HUGH FRIEDMAN:  I didn't hear you

20  address the safety concern that's been raised in the

21  correspondence we received, the fire specifically.  I

22  guess that has to do with the exhaust controls and the

23  catalytic conversion.

24           CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:  Yes.

25  We did address it partially in the charts that showed the


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 1  testing we did down in Texas where we measured the

 2  increase in exhaust temperatures.  And you saw mixed

 3  results.  The catalyst actually resulted in a slightly

 4  cooler muffler lower and some engines and up to 200

 5  degrees higher in other engines.

 6           One of the points that we've considered is the

 7  fact these are hot exhaust without a catalyst, and they

 8  could catch fire to things.  And for that reason the

 9  engines provide shielding and other protection to protect

10  against fires and to protect against you putting your hand

11  on it.

12           BOARD MEMBER HUGH FRIEDMAN:  Tom, I want to be

13  sure I understand this.  I think it's very important.

14  Would you mind repeating what you're saying.  And I want

15  to -- I want to be sure I'm hearing it.

16           CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:  And

17  I've got about a three-part answer unfortunately here.  So

18  bear with me on -- if the first part doesn't answer all

19  the questions.

20           We were aware of the -- very aware of the safety

21  issue.  We equipped engines -- six different engines with

22  catalytic converters in a test facility down in Texas.

23  And we measured the temperatures of the surface of the

24  catalyst, the temperatures of the exhaust, and so forth.

25  What we found was on some of the mowers the temperature


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 1  didn't go up and some of them it did go up.  And the

 2  temperature of the exhaust and the muffler is very hot

 3  either way.  Adding a catalyst on several engines raised

 4  it by up to 200 degrees.  So it got hotter.

 5           We then looked at, can that be shielded?  Here's

 6  the data here.  Can it be shielded and protected?  The

 7  manufacturers already do that because at, you know 500 to

 8  600 degrees, which is a current muffler temperature, they

 9  don't want you to put your hand on it and they don't want

10  grass to go on it because it could catch on fire.

11           So these are -- there's additional heat.  But we

12  believe that they could manage that heat by shielding and

13  proper design of the exhaust system.

14           Subsequent to that testing and in publishing and

15  in our staff report the industry came back and said, "You

16  know, this does cause a lot of problems for us."  The

17  catalyst, because it's burning up a lot of pollution from

18  these engines, which are fairly high polluting engines --

19  burning them up creates heat.  That's what the process is.

20  And they came back and said, "Look, it still causes us a

21  lot of problems.  When the temperature goes up, there's

22  plastic next to it, we might have to change the plastic.

23  It creates the need for more shielding.  More shielding

24  might catch the grass more and cause a fire hazard."  All

25  these different things.


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 1           We were personally convinced that there were

 2  engineering solutions to that.  The purple bar shows you

 3  one of them.  It shows you how much the temperature can be

 4  dropped by a good heat shield on that Honda.  But, you

 5  know, we were sensitive to the arguments.  So when, as in

 6  the previous discussion, we invited the industries to come

 7  back with alternative proposals, they came back with an

 8  alternative proposal -- two different alternative

 9  proposals that had a less stringent exhaust emissions

10  standard.  And instead of getting a 50 percent reduction

11  in tailpipe emissions, it was about 35 percent.

12           And what they have told us, a number of them, and

13  you'll hear it in testimony I believe today, is that

14  because less pollution is being converted by the catalytic

15  converter, there will be less heat and that the heat that

16  will be there is manageable and does not create a safety

17  hazard.  So we believe that the alternatives that we're

18  offering for your consideration today remove any safety

19  issues that were there at all.  We don't think they were

20  there in the first place.  They could be solved.  But they

21  removed them from the table.  And we hope that you will

22  hear that in testimony today.

23           BOARD MEMBER HUGH FRIEDMAN:  Sufficiently reduces

24  the emission reduction resulting in greater heat by

25  reducing the -- and, therefore, reduces the heat?


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 1           CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:  Yeah.

 2  If there's less -- if the catalyst is less efficient --

 3           BOARD MEMBER HUGH FRIEDMAN:  And, therefore,

 4  reduces the risk of fire.

 5           CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:  Right.

 6  So the tradeoff is the heat comes down, we get less

 7  emission reduction.  But in the proposals we challenged --

 8           BOARD MEMBER HUGH FRIEDMAN:  But you get more

 9  evap?

10           CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:  Right.

11  We challenged the industry to come and take that --

12           BOARD MEMBER HUGH FRIEDMAN:  Which doesn't reduce

13  NOx so much, but it does reduce --

14           CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:  Well,

15  it loses -- the exhaust side loses both NOx and

16  hydrocarbons.  And it's made up with hydrocarbon evap

17  control that goes beyond what we had proposed.

18           BOARD MEMBER HUGH FRIEDMAN:  Has there been any

19  additional communication with any of the fire fighting

20  groups?

21           CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:  Yes, we

22  have talked to a number of them today.  I can't -- you'll

23  have to wait until they testify, but I believe that there

24  will be evidence that they believe this addresses the

25  associations --


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 1           BOARD MEMBER HUGH FRIEDMAN:  So that's why it's

 2  really not listed as an ongoing issue of any --

 3           CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:  Right.

 4  We think it has been solved by this.

 5           BOARD MEMBER HUGH FRIEDMAN:  Okay.  Thank you.

 6           CHAIRPERSON LLOYD:  Go back to the previous

 7  slide, the previous one to this.

 8           Just to clarify there, that -- because black and

 9  white doesn't come through so well.  So what we're saying,

10  if I look at the different engines, that there are a

11  certain number at zero hours and then after 125 hours,

12  depending on the engine, there's a significant

13  degradation.  Am I reading that correctly?

14           CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:  Yes.

15  The ones labeled Briggs and Stratton, we had problems with

16  both of those engines.  It's not related, we don't

17  believe, to the catalyst.  It was related to changes in

18  the engine that resulted in higher emissions.  And as you

19  can see from the other manufacturers, the deterioration

20  was quite minimal.  The purpose of doing this testing in

21  part was to determine if these very inexpensive catalysts

22  would wear out real fast.  And the data suggests that they

23  will not.

24           The conversion efficiency in those tall blue

25  bars, the first two under Briggs and Stratton was still


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 1  very high.  It's just that the engine was putting out a

 2  whole, whole bunch more emissions due to some problem with

 3  the engine.

 4           CHAIRPERSON LLOYD:  So was this typical of Briggs

 5  and Stratton?

 6           CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:  I don't

 7  know.  It's a sample of two, so I don't -- I couldn't tell

 8  you that.

 9           CHAIRPERSON LLOYD:  So two out of two?

10           CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:  I think

11  the staff could comment on whether they figured out what

12  the problem was and resolved it.

13           CHAIRPERSON LLOYD:  Well, one of the -- and what

14  I'm driving at here, if we got some inherently high

15  emitters in this category and if certain varieties are

16  more prone to that, how do we follow up?  I mean we can

17  have these engines, which maybe meet our certification

18  numbers, but they get out in the field and then they

19  become gross polluters.

20           CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:  Well,

21  until --

22           CHAIRPERSON LLOYD:  So what mechanism is there to

23  prevent that?

24           CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:  Well,

25  until -- well, first of all, the regulation is structured


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 1  so that there could be testing of these when they're new.

 2  And if there's a problem, there can be a recall.  We know,

 3  however, that a recall in the traditional sense is not

 4  going to work very well because we're not going to -- you

 5  know, who's going to turn their lawnmower in?  With cars,

 6  you know, we can tie it to registration.  But in this

 7  case, it's harder to do with lawnmowers.  But despite

 8  that, that is a regulatory lever that we have -- or

 9  enforcement lever.

10           Second of all, we are in the stages of completing

11  construction of a test facility down in El Monte where we

12  could test these engines ourselves.  And based on that we

13  can take appropriate action if we find that the emissions

14  are high.

15           CHAIRPERSON LLOYD:  How many lawnmowers have we

16  recalled because of emissions problems?

17           CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:  Well,

18  we've never -- until now we've never been able to test

19  them ourselves.  We've only been able to go to their

20  assembly line and look at an assembly line.  We have had,

21  quote, recalls on the assembly line of several models that

22  were not meeting emissions standards.

23           CHAIRPERSON LLOYD:  But do we have a plan for

24  looking at in-use testing?

25           CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:  Yes.


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 1  We will test them when they're new or, you know, picked up

 2  from the dealership.  And we can also test them in use.

 3           CHAIRPERSON LLOYD:  So maybe we could work with

 4  the districts on that and looking at a mechanism where we

 5  can pull these in and test them.

 6           CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:  Right.

 7           CHAIRPERSON LLOYD:  Unless you're thinking of OBD

 8  for lawnmowers.

 9           CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:  Not

10  yet.

11           CHAIRPERSON LLOYD:  Well, but that's -- again,

12  that's a real cause for concern as we look at that because

13  it can be in doing our best efforts here to get it.  And

14  particularly as we look at the variation in the quality of

15  the different manufacturers.

16           CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:  Right.

17  And this is -- unfortunately this is symptomatic of all of

18  the off-road engine equipment.  It's not registered;

19  therefore, it's harder to enforce through license plates

20  and annual registration.  And, you know, we also don't

21  have the capability of testing much of this stuff.  So we

22  are -- we have a weaker ability on the off-road to enforce

23  it.  But we're trying to address it with the best tools

24  we've got, given --

25           CHAIRPERSON LLOYD:  But if we buy the cleanest


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 1  cars possible and we get in to the P-ZEVs and AT P-ZEVs,

 2  one trip around our lawn -- finish our lawn, we've undone

 3  a lot of the good we've done.

 4           CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:  Yes,

 5  that is absolutely true.

 6           BOARD MEMBER D'ADAMO:  Mr. Chairman?

 7           CHAIRPERSON LLOYD:  Yes, Ms. D'Adamo.

 8           BOARD MEMBER D'ADAMO:  Along those lines, I think

 9  one way to address this issue is with a zero emission

10  requirement.  And I'm a little disappointed that we

11  weren't able to accomplish that in this proposal.  But I'm

12  interested in seeing what this Board can do on that issue

13  perhaps at a future date.

14           So I'd just like to put that out there to other

15  Board members.  And when we wrap things up, I'd be

16  interested in including a component in the resolution that

17  we come back on that issue.

18           BOARD MEMBER RIORDAN:  Mr. Chairman?

19           CHAIRPERSON LLOYD:  Yes, Mrs. Riordan.

20           BOARD MEMBER RIORDAN:  I'm just wondering if

21  staff has completed their work on your original question.

22           MR. WATSON:  Yes, we have.

23           CHAIRPERSON LLOYD:  Thanks for reminding them.

24           MR. WATSON:  Well --

25           CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:  we


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 1  stalled for a long time there so they could get to it.

 2           MONITORING AND LABORATORY CHIEF LOSCUTOFF:  Okay.

 3  The emission reductions in 2010 are roughly 22 tons a day.

 4  And that's split between about 6 tons per day for the

 5  non-handheld, 16 for the -- excuse me.

 6           CHAIRPERSON LLOYD:  Repeat that.

 7           MONITORING AND LABORATORY CHIEF LOSCUTOFF:  Six

 8  tons a day for the handheld.

 9           CHAIRPERSON LLOYD:  Six.  What's the total there?

10           MONITORING AND LABORATORY CHIEF LOSCUTOFF:

11  Twenty-two.

12           CHAIRPERSON LLOYD:  Twenty-two.

13           MONITORING AND LABORATORY CHIEF LOSCUTOFF:  Six

14  for handheld, 16 for non-handheld.  That's roughly 22/78

15  percent split.

16           Then in 2020, we're talking about a

17  50-ton-per-day reduction, which is approximately 43 tons a

18  day for the non-handheld and 7 tons a day for the

19  handheld, which is about a -- I did that in reverse.

20           The NOx/hydrocarbon split.  Okay.

21           CHAIRPERSON LLOYD:  That was the question.

22           CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:  Just of

23  the 22 --

24           MONITORING AND LABORATORY CHIEF LOSCUTOFF:  The

25  NOx/hydrocarbon split for the 22 tons in 2010, 4 tons of


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 1  that are NOx.  The rest of it is hydrocarbon.

 2           In 2020, the NOx is reduced by roughly 8 tons per

 3  day of the 50 tons a day total.

 4           EXECUTIVE OFFICER WITHERSPOON:  And those

 5  calculations are for the base staff proposal where if we

 6  did any of the alternatives, the NOx reduction would be

 7  less, correct?

 8           MONITORING AND LABORATORY CHIEF LOSCUTOFF:  Yes.

 9           EXECUTIVE OFFICER WITHERSPOON:  It would go up in

10  hydrocarbons and down in NOx?

11           CHAIRPERSON LLOYD:  Thank you.

12           Mr. Calhoun.

13           BOARD MEMBER CALHOUN:  Yes.  I want to get back

14  to the question that you asked, Mr. Chairman.  And at

15  least I thought I heard you ask the question about these

16  lawnmowers in use and testing them.  Are you talking about

17  testing my lawnmower or are you --

18           CHAIRPERSON LLOYD:  Well, random sample of how do

19  we find out what the, if you like, the emissions from this

20  category is in use.

21           Well, I know you got an electric lawnmower, so

22  you don't have a problem.

23           (Laughter.)

24           BOARD MEMBER CALHOUN:  Well, I have to talk to

25  Jerry about that.


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 1           CHAIRPERSON LLOYD:  Professor Friedman said --

 2  maybe I misunderstood you -- you were offering yours to be

 3  tested at El Monte?

 4           BOARD MEMBER CALHOUN:  No.

 5           CHAIRPERSON LLOYD:  No.  Okay.

 6           BOARD MEMBER CALHOUN:  I'm just -- there are a

 7  lot of lawnmowers out there, an awful lot of them.  And

 8  there are a lot of hydrocarbon emissions from these

 9  lawnmowers.  But I question whether or not it's practical

10  to get in-use lawnmowers and retrofitting them or just new

11  ones.

12           CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:  No,

13  there's no talk about retrofitting them.  It's just -- the

14  question was, if the lawnmower emits 1 gram per hour,

15  whatever the number is, when we certify it, is it going to

16  be one in use or is it going to be two in use.  And so we

17  can find that out reasonably well with a sample of, I

18  don't know, 50 lawnmowers.  With our new facility we can

19  test those pretty quickly.

20           So, you know, over time we would get an audit of

21  whether or not these engines are complying.

22           BOARD MEMBER CALHOUN:  Well, what happens if you

23  do test it and find that it's exceeding the standard?  It

24  may be exceeding because Bob Cross tampered with it.

25           CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:  Well,


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 1  we'll have to -- we'll find that out from those mowers,

 2  yeah.  I mean that's what we could do.

 3           BOARD MEMBER CALHOUN:  And then what do you do?

 4           CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:  It's no

 5  different than what we've done on cars.  I mean we sort of

 6  found the same thing on the earlier cars.  They were clean

 7  when they were produced.  They were dirty six months

 8  later.  And we had to come up with anti-tampering programs

 9  and various other things to assure that their emissions

10  are low.  And we were successful.

11           We just want to do the same due diligence on

12  lawnmowers.  I don't know the answer, and so I don't know

13  what the solution would be if there is a problem.  But we

14  have to figure it out.  But at least we have the tool now

15  to be able to do it.  We can do it in southern California

16  and --

17           CHAIRPERSON LLOYD:  Bob --

18           CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:  -- give

19  you feedback.

20           MOBILE SOURCE CONTROL DIVISION CHIEF CROSS:

21  Jack, you reminded me that the current proposal stops with

22  new.  In other words, it is defects reporting and assembly

23  line testing type of measures.  So the activity that we're

24  doing with the in-use would be data gathering as opposed

25  to real enforcement at this point.


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 1           We have done some in the past.  And I think we'll

 2  just -- and that's really kind of helped us understand

 3  some in-use -- not in-use test, but at least durability

 4  testing.  That's helped us understand what the mowers do

 5  in the first place.  An we'll just continue that.

 6           So I don't think you have to worry about

 7  lawnmower smog check for a few years.  And I'll probably

 8  still be able to tamper.

 9           That was a joke at the end.

10           CHAIRPERSON LLOYD:  Professor Friedman.

11           BOARD MEMBER HUGH FRIEDMAN:  One other question.

12  It's I guess related, but broader.

13           Is it true that to the extent that these rules

14  would only apply to small engines, under 175 horsepower,

15  or small motors, that they only account for 1 percent of

16  our smog-forming emissions in California overall?  Is that

17  a true statement?

18           CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:  I think

19  the numbers that have been floating around all the press

20  releases get a little mixed up.

21           As I recall, the lawnmowers, which are the ones

22  under 25 horsepower, are on the order of a few percent of

23  our emissions.  The ones that --

24           BOARD MEMBER HUGH FRIEDMAN:  So it's the little

25  lawnmower's 2 percent?  But --


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 1           CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:  Yeah,

 2  lawnmowers and other lawn and garden.  And that's under

 3  25, which is the subject of the proposal.

 4           BOARD MEMBER HUGH FRIEDMAN:  Yeah.  But under

 5  175?

 6           CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:  It was

 7  13 percent of -- the non-preempted engines were 13 percent

 8  of all the mobile source emissions, which is -- for HC and

 9  NOx is probably 60 or some percent of all of the

10  emissions.  So we're probably talking about 7 percent or

11  something, on that order, for the under 175 off-road

12  equipment.

13           BOARD MEMBER HUGH FRIEDMAN:  Seven percent?

14           CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:  Yeah,

15  and of the -- that had a lot of diesels in it.  And they

16  represent the off-road.  Diesels represent about 44

17  percent of the toxic particulate emissions overall.

18           BOARD MEMBER HUGH FRIEDMAN:  Okay.  Thank you.  I

19  just wanted to get the record straight, at least.

20           CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:  My 13

21  was 17 percent.  So it's probably 17 times .6.  So maybe

22  like 10 percent for all of -- of the smog-forming

23  emissions for all of -- all of the under-175, which is

24  gasoline, diesel, way more than this proposal deals with.

25  And this is a few percent.


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 1           CHAIRPERSON LLOYD:  Thank you.

 2           Seeing no other questions, I guess we go to

 3  our -- well, first of all, ask Madam Ombudsman -- pleased

 4  to see you had your wake-up call.

 5           Would you please describe the public

 6  participation process that occurred while this item was

 7  being developed, and share any concerns or other comments

 8  that you may have with the Board at this time.

 9           OMBUDSMAN TSCHOGL:  I was going to apologize for

10  the misbehavior of my device.  But, anyway, I'll just get

11  on with this.

12           Mr. Chairman and members of the Board, this

13  control measure has been developed with input from the

14  Engine Manufacturers Association, Outdoor Power Equipment

15  Institute, Portable Power Equipment Manufacturers

16  Association, Manufacturers of Emission Controls, and

17  several private companies.

18           In 2000, staff began its effort to draft a

19  regulation to control evaporative emissions from small

20  off-road engines.  And on November 9th of that year they

21  held their first public workshop.

22           Subsequent workshops were held in 2002 and 2003.

23  In 2002, staff introduced its exhaust emission reduction

24  proposal for small off-road engines.  During this nearly

25  three-year period, four public workshops were held.


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 1           Staff also had approximately 40 meetings with

 2  trade associations and a significant number of one-on-one

 3  meetings with several companies.

 4           That concludes my comments.  Thank you.

 5           BOARD MEMBER DeSAULNIER:  They're trying to

 6  figure out, is it Bach, Beethoven, Mozart, or was it Howdy

 7  Doody?

 8           (Laughter.)

 9           OMBUDSMAN TSCHOGL:  I have no idea.

10           BOARD MEMBER CALHOUN:  May I ask the staff one

11  question.

12           About how many workshops?  I counted four or

13  five.

14           OMBUDSMAN TSCHOGL:  There were four public

15  workshops.

16           BOARD MEMBER CALHOUN:  Okay.  And the industry, I

17  assume, had adequate time to express its views regarding

18  the feasibility of the technology?

19           OMBUDSMAN TSCHOGL:  I believe so.

20           EXECUTIVE OFFICER WITHERSPOON:  They had years.

21           OMBUDSMAN TSCHOGL:  I believe everyone was quite

22  involved.

23           BOARD MEMBER CALHOUN:  Okay.  Thank you.

24           That's all.

25           CHAIRPERSON LLOYD:  Thank you.


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 1           I'd like to call up our first three witnesses.

 2  Bonnie Holmes-Gen, Jed Mandel, and David Raney.

 3           Bonnie?

 4           I saw her earlier, but maybe she has left.  So I

 5  guess -- we have Bonnie's testimony on behalf of the Lung

 6  Association, the California Electric Transportation

 7  Coalition, Center for Energy Efficiency and Renewable

 8  Technologies, Coalition for Clean Air, Natural Resources

 9  Defense Council, Steven and Michele Kirsch Foundation,

10  Sierra Club, Union of Concerned Scientists.  And this is

11  in support of our regulation.

12           Jed Mandel.

13           MR. MODISETTE:  Excuse me, Mr. Chair.  That

14  was -- I'm going to be presenting the letter that you just

15  read.

16           CHAIRPERSON LLOYD:  Later on?

17           MR. MODISETTE:  Yes.

18           CHAIRPERSON LLOYD:  Okay.  Thanks, Dave.

19           Jed Mandel, David Raney, Bill Guerry.

20           MR. MANDEL:  I know you're excited and pleased to

21  see me so soon again from this morning.  I was actually

22  hoping not to see you so soon again.  I'd asked to testify

23  at the end of this item because there's a lot of new

24  information that has been shared just in the staff report.

25  And it's possible there will be some new information


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 1  shared by subsequent testifiers.

 2           I'm pleased to go now, but if I might be able to

 3  have a couple moments afterwards.

 4           CHAIRPERSON LLOYD:  No, if you'd like to go at

 5  the end, and I respect your desire to do that, if staff

 6  has no problem.

 7           MR. MANDEL:  It would save time in case there's

 8  something else that I need to respond to.

 9           CHAIRPERSON LLOYD:  As long as -- you know, as

10  long as we can assume you're going to move across from

11  left.  As long as you go left.

12           MR. MANDEL:  I promise to cut my hour testimony

13  down to at least 45 minutes.

14           CHAIRPERSON LLOYD:  Thanks.

15           So then we have David Raney and Bill Guerry.

16           MR. RANEY:  Gosh, I wanted to go last.

17           (Laughter.)

18           CHAIRPERSON LLOYD:  Okay.

19           MR. RANEY:  I believe everybody has a written

20  copy of our statement.

21           There's a major change I need to ask you to make,

22  and that's to change "good morning" to "good afternoon."

23  That's the most major change.

24           Good afternoon, ladies and gentlemen of the Board

25  and Chairman Lloyd and Executive Officer Witherspoon and


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 1  staff.

 2           My name is David Raney.  I'm the Senior Manager

 3  of Environmental and Energy Affairs at American Honda

 4  Motor Company headquartered here in California.

 5           I'm pleased to be hear on behalf of my company,

 6  our Power Equipment Division, which is based in

 7  Alpharetta, Georgia, just north of Atlanta, and our Honda

 8  R&D teams both here and in Japan.

 9           I also have with me here Tom Bingham from

10  American Honda, whose desk is actually at our Power

11  Equipment Division office in Georgia, so he has a vested

12  interest in this as well.

13           I'm going to spend a few minutes with you just

14  explaining a little bit about Honda's product line so you

15  can kind of see where we have an interest in this.

16           We do design and produce in the United States a

17  significant portion of small engine products that we sell

18  here.  We have a significant employment presence at our

19  factories and research and development facilities in North

20  Carolina, as well as a broad nationwide dealer network.

21           Our associates in North Carolina produce a

22  diverse product line of walk-behind mowers and engines for

23  countless OEM products.  And we manufacture engines and

24  complete products in all displacement categories covered

25  by the staff proposal.


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 1           In the small engine category we've got engine

 2  models ranging from a four stroke 1 horsepower 25 cc

 3  handheld engine for string trimmers to a 25 horsepower

 4  V-twin engine that is primarily used on construction

 5  equipment.

 6           Honda supplies engines to thousands of equipment

 7  manufacturers nationwide, both directly and through 28

 8  engine distributors.  The three engine distributors in

 9  California supply engines directly to a 200 plus equipment

10  manufacturer network.  The distributors have their own

11  dealer network that supplies engines and service for the

12  California market.  And these folks are very important to

13  our business as well.  Many of the Honda engines sold here

14  in California are used in rental and construction

15  equipment, and they are supported by 600 plus servicing

16  dealers.

17           We also supply engines for walk-behind mowers and

18  other products to several large volume equipment

19  manufacturers that produce product for sale in California.

20  And, finally, we manufacture complete products under the

21  Honda brand such as walk-behind lawnmowers, tillers,

22  generators, trimmers, and water pumps that are retailed

23  directly through a Honda dealer network, with some

24  lawnmowers and a tiller model also available at Home

25  Depot.  There are 400 plus Honda sales and service dealers


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 1  in this state.

 2           Our primary interest is in protecting and growing

 3  our business for these products and supporting our dealers

 4  and customers by providing highly efficient, long lasting,

 5  and quality products branded with the Honda name.  And I

 6  can assure you that we have no intention of reducing

 7  employment or manufacturing capacity as a result of this

 8  regulation.

 9           As a corporation, Honda's philosophy of advancing

10  and applying cost effective low emissions control

11  technology to our products doesn't stop with our

12  light-duty vehicles and light duty trucks.  It also

13  applies to the small engines and products under

14  consideration before you today.

15           We have a significant vested interest in the

16  outcome of this regulatory proposal, both for increased

17  environmental protection as well as in protecting the

18  availability and affordability of our products for our OEM

19  business partners, our dealers, and our retail customers.

20           With that said, I'll say that there are many

21  remaining concerns with the proposal before you today.

22  But that Honda can support the proposal if the Board can

23  direct the staff to resolve these concerns that we'll

24  discuss briefly in a satisfactory manner.

25           We have come a long way with staff during the


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 1  past few months.  And my company believes we have reached

 2  a point today where we're almost there.  I don't want to

 3  give you or our customers or our colleagues in this

 4  industry the idea that we wholeheartedly support the

 5  proposal in its present modified form.  There are several

 6  concerns that must be resolved before we can fully support

 7  the proposal.  But we do not believe these are

 8  insurmountable.  Honda is prepared and very willing to

 9  continue to work with staff on this under whatever the

10  decision the Board makes today.

11           It is important that you understand our remaining

12  concerns though and I want to outline those to you and

13  staff.

14           Before I begin, I would like to especially thank

15  the staff and its management for the open channels of

16  communication that have been maintained with industry

17  while we've deliberated this process.  They have listened

18  and learned and so have we.  I believe we have all

19  benefited from this.  And we look forward to continuing

20  the open communication as we head to a final rule.

21           Now, several months ago, as the content of this

22  regulation and staff's original direction came clearer, we

23  began to express significant concerns about the following

24  issues:

25           We were concerned about the potential performance


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 1  and cost differential between California and 49-state

 2  product that might exist under the original proposal and

 3  absent any new federal regulation that actually harmonized

 4  CARB and EPA regulations.  We expressed concern that our

 5  customers and dealers in California could be penalized if

 6  the products sold here had a significantly higher price

 7  tag caused by the stringency of standards relative to

 8  products sold outside of the state.

 9           And, secondly, we expressed significant concern

10  about the potential impact on safety that the exhaust

11  portion of the original proposal and its level of

12  stringency might pose to our products and customers.

13           Finally, we clearly stated to staff the need for

14  an equitable and fair playing field in the certification

15  process, specifically on test procedure issues and the

16  means by which certain performance aspects could be

17  demonstrated under design-based standards.

18           While it is generally understood that increased

19  cost is usually associated with regulation, we believe

20  that staff has thoroughly addressed in its latest

21  revisions or will and can try to resolve these issues

22  before finalizing the rule, therein mitigating their

23  significant effects that were originally raised on the

24  market.  The modifications to the exhaust and evaporative

25  emissions proposals put forth today have given us


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 1  increased possibility to greatly lessen cross-border cost

 2  differentials.  And we believe staff is listening to our

 3  concerns expressed about the need for a level playing

 4  field in the certification process.

 5           I want to say a few things specific to the issue

 6  of safety.  We have continued throughout this process to

 7  bring this concern to the staff.  It was a significant

 8  concern.  The proposal originally put forth by staff was

 9  not acceptable to Honda because of the potential for

10  exhaust flames resulting from the high conversion rate

11  that you discussed earlier necessary to meet the

12  originally proposed exhaust standards.  We think that the

13  modified exhaust emissions proposal presented today of 10

14  and 8 grams will make it possible to have an exhaust

15  system with a lower risk of being a fire safety hazard.

16  It's manageable today on our current products.  And with

17  this revised proposal it will be manageable on the future

18  engines.

19           The revised proposal will also be significantly

20  more cost effective air quality improvement for

21  California.

22           This modification has been a positive and very

23  helpful change.  While there is always risk, even on

24  today's products, due to their diversity of use or even

25  misuse in their application, we don't believe that the


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 1  staff proposal presented here today for future exhaust

 2  emission standards will have any significant impact on the

 3  safety of our future engines in comparison to current

 4  engines or products.

 5           Now there are several issues that do remain as

 6  concerns to Honda, as I stated earlier.  I have attached a

 7  list of these concerns to our testimony for the record.

 8  And for the sake of preserving time, Chairman Lloyd, I

 9  won't go through them specifically.

10           CHAIRPERSON LLOYD:  We have copies here.

11           MR. RANEY:  Okay.  Again, happy to meet with

12  staff at any time to discuss our concerns there.

13           These are all important issues and we do believe

14  they must be addressed.  But as I said earlier, they are

15  not insurmountable.  We hope that the Board will guide the

16  staff today to work with our industry on these issues.

17  And we look forward to working with staff to address them

18  in the complex regulatory text that will no doubt

19  accompany them as soon as possible.

20           Our engineers need to have some certainty about

21  the timing of the regulation and clarity in the regulatory

22  language in order to continue the development of new

23  products in an efficient and timely manner.  And as you

24  know and have seen this morning, some of the provisions in

25  the current proposal take effect even in the 2005 model


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 1  year.  For our development teams, that's today.

 2           In closing, Chairman Lloyd, we hope that the

 3  Board and staff view these comments as helpful and

 4  constructive.  And I thank you very much for your

 5  attention and for your serious attention that you will

 6  give to them.

 7           CHAIRPERSON LLOYD:  Thank you very much, Mr.

 8  Raney.

 9           Just a couple of questions there.  Can I read

10  into your comments here that you would support us adopting

11  the regulation today provided that staff worked with you

12  to address those concerns in the 15-day period?

13           MR. RANEY:  Yes.

14           CHAIRPERSON LLOYD:  And the other one which you

15  had raised.  And I think I read your statement correctly

16  there that this would be unacceptable because of safety

17  concerns early on.  But given staff's modifications here,

18  you don't feel now that safety will be -- safety would be

19  a concern as a result of this regulation?

20           MR. RANEY:  That's true.

21           CHAIRPERSON LLOYD:  Fire hazard.  Okay.

22           Well, that's very helpful.  And, again, we really

23  appreciate your ability to work with staff on this issue

24  and staff worked with you.  And clearly your pioneering

25  work on the automobile is a -- we're delighted to see that


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 1  you're now turning that to helping us on some of the

 2  smaller sources as well.

 3           Professor Friedman.

 4           BOARD MEMBER HUGH FRIEDMAN:  To me this is

 5  really, if not optimal, it's as close as it can get to the

 6  way this should work, this process.  Staff puts out a

 7  proposal after a dialogue with the sources to be

 8  regulated.  And the regulators -- those to be regulated

 9  respond.  They give their concerns.  Staff responds.  They

10  have more conversation at workshops.  And at least from

11  what I've just heard from Honda, there has been a

12  collaborative resolution, with a number of items yet to be

13  considered and addressed.  But they're not so major in

14  principle that they prevent support from those to be

15  regulated, at least from Honda.

16           So to me, I congratulate you both at this point.

17  I hope we'll hear more of that.  And I hope that -- I mean

18  it's always wonderful when you're presented with a

19  proposal that those who are going to have to bear the

20  cost, and hopefully pass it on to the consuming public,

21  have engaged in the process of working out the solution,

22  creatively and constructively, as you put it.

23           So I thank you, for one.  And, again, I thank the

24  staff for being able to work this way.

25           MR. RANEY:  I'd like to say that you've got a


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 1  good staff and a tough staff as well.  This was not an

 2  easy thing to convince them of.  But we kept bringing

 3  bigger hammers.

 4           (Laughter.)

 5           CHAIRPERSON LLOYD:  Well, of course one of your

 6  biggest assets is one of your biggest problems.  And, that

 7  is, that your ability to meet the toughest standards

 8  possible obviously helps us enormously, but also we

 9  realize that it's a challenge for you.  But you've always

10  come through.

11           Any other questions from the Board?

12           Thank you very much indeed.

13           Thank you, colleagues.

14           MR. RANEY:  Chairman Lloyd, I will do that.  And

15  if I could violate protocol a bit as well and ask for 15

16  more seconds.  I'd like to do the same thing that Jed

17  Mandel said on behalf of our executive team at Honda.

18           You're going to miss Kathleen Walsh.  We really

19  do appreciate the access that she's given to us in the

20  industry, clarifying questions and so forth.  And I really

21  don't envy the person at the California Air Resources

22  Board that's got to make the decision to fill her shoes.

23           CHAIRPERSON LLOYD:  Thank you very much.

24           MR. RANEY:  So thank you, Kathleen.

25           CHAIRPERSON LLOYD:  That's very nice.


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 1           Bill Guerry, Joe Kubsh, and Rick Bell.

 2           MR. GUERRY:  Good afternoon.  My name's Bill

 3  Guerry.  I serve as counsel for the Outdoor Power

 4  Equipment Institute.

 5           OPEI has a broad membership.  We have 78 members.

 6  American Honda is one of our important members.  And we

 7  are very diverse in our membership.  We have sophisticated

 8  world leaders like Honda that produce integrated products.

 9  For the most part though the OPEI membership is comprised

10  of smaller and midsized companies who are non-integrated,

11  meaning that the large group of OPEI members are equipment

12  manufacturers that receive engines from separate

13  independent suppliers.  And it's important to recognize

14  that those non-integrated equipment manufacturers,

15  particularly the small ones, are in a very, very different

16  place in terms of companies such as Honda.

17           And in that regard, it's the small members of

18  OPEI, many who are mom and pop operations with less than

19  50 employees, that critically rely on the association to

20  represent their interests.  And they critically rely on

21  the CARB Board to ensure their procedural due process

22  rights are adequately represented.

23           In this regard, over the last 15 years OPEI takes

24  great pride in working proactively with CARB staff in the

25  development of numerous regulatory proceedings that


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 1  resulted in success in providing cost effective and

 2  practical emission reductions.

 3           In this vein, OPEI has succeeded resolving the

 4  most significant compliance issues for our separate and

 5  distinct handheld members.  And there is a separate

 6  statement in the record for the OPEI handheld membership

 7  that have come very close to working out to an acceptable

 8  solution in this proceeding.

 9           OPEI also recently submitted earlier this month

10  an industry counterproposal along with the Engine

11  Manufacturers Association.  And as the staff presentation

12  showed, the industry counterproposal will achieve

13  California's air quality goals in a much more cost

14  effective and practical manner.

15           During the last few months OPEI has expressed and

16  shared its concerns -- and you heard Honda raise some of

17  the concerns -- on safety and cost effectiveness with CARB

18  staff.  And we share the safety problems that have been

19  raised -- and I know that Mr. Friedman raised -- from

20  various safety organizations, particularly with regard to

21  pressurization of fuel systems and with regard to very

22  large, very hot catalyst systems; which given the

23  non-integrated nature of our industry and the fact that we

24  have many small equipment manufacturers who are relatively

25  unsophisticated, those safety issues take on added and, I


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 1  think, unique dimensions that perhaps California and CARB

 2  have not dealt with in other scenarios.

 3           OPEI very much appreciates CARB staff's recent

 4  recognition to basically -- you know, fundamentally

 5  restructure the August 8th proposal and to work to develop

 6  a framework for more cost effective regulations.

 7           Unfortunately, we did not receive, in the OPEI

 8  the framework on the evap program until late Monday night

 9  of this week.  It will take additional time for OPEI to

10  receive meaningful input and questions back from its 78

11  members who are located around the world.

12           At this time, we strongly feel that neither the

13  Board nor the public nor all these small OEMs have had

14  enough information about the new fundamentally different

15  approach that's been set forth in the three or four page

16  concept piece to determine how that document would be

17  implemented.  For this reason, to ensure a meaningful

18  notice and comment process and to ensure a meaningful

19  Board review, OPEI urges the CARB Board to reschedule this

20  matter for final adoption at a future public board

21  hearing.

22           We also ask that the Board specifically instruct

23  CARB staff to work very closely with the independent

24  safety and fire stakeholders who have submitted

25  correspondence in this matter in drafting a new regulatory


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 1  package that would be subject to the required 45-day

 2  notice and comment period.

 3           Finally -- and this is set forth in Section 6 of

 4  the written comments that OPEI has submitted -- because of

 5  the inherent production, distribution, and cost

 6  limitations associated with relatively inexpensive lawn

 7  garden products, most lawn and garden manufacturers simply

 8  could not produce for the national market the very

 9  expensive CARB-compliant products with catalysts and

10  carbon canisters.

11           I think you saw staff numbers that are exceeding

12  a hundred dollars a unit.  And we've submitted a cost

13  study from that indicates much higher numbers, even

14  associated with the -- with basically all the alternatives

15  before the Board.

16           Consequently, OPEI requests the Board to limit

17  the Tier 3 new program at a final Board hearing to

18  products sold in California.  CARB has effectively done

19  this and structured several other programs to focus on the

20  California market and not to create the likelihood of de

21  facto national standards.  In fact, the current Tier 2

22  exhaust standards for lawn and garden industry products

23  are on the wheel-product side limited to the California

24  market.

25           In summary, OPEI remains committed to working


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 1  with the CARB staff to expeditiously bring back to this

 2  Board a comprehensive cost effective, safe, and practical

 3  regulatory package.

 4           I'm happy to answer any questions.

 5           CHAIRPERSON LLOYD:  Thank you very much.

 6           Professor Friedman.

 7           BOARD MEMBER HUGH FRIEDMAN:  I don't know so

 8  much, Mr. Guerry, whether my question is to you or to

 9  staff or both.  But I understood that staff was in large

10  measure responding to or adopting the industry proposals

11  in modifying the original proposal of the staff and giving

12  us what we have before us today, whatever the time line.

13           And is that correct?  Was -- is OPEI part of

14  the --

15           CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:  Yes,

16  that's correct.  We received two different alternatives in

17  the process here.  And the -- or two different proposals.

18  And the two alternatives that you saw on our proposal to

19  you today reflect those -- in large sense reflect those

20  two industry proposals.

21           BOARD MEMBER HUGH FRIEDMAN:  And is OPEI part of

22  the industry?

23           CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:  Yes.

24  One of them was EMA, OPEI, Briggs and Stratton proposal.

25           MR. GUERRY:  If you look at Exhibit 8 to my --


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 1  the OPEI written statement, that is the OPEI/EMA

 2  counterproposal that was submitted on September 9th.  If

 3  you look on the first page of that, the bottom bullet says

 4  that a core element of the counterproposal, quote, "limit

 5  the scope of the program to California only."

 6           So we've been very clear throughout this process

 7  of one of the fundamental core elements because of the

 8  problems with infrastructure, production, distribution has

 9  been a California program.  I know the Board, at least

10  looking at the public staff report, that information and

11  that -- and the importance of that program of course we

12  don't believe has been adequately fleshed out for you guys

13  to make a decision today.  And that's one of the critical

14  reasons we feel this is an important Board decision with

15  significant policy implications, and that -- that you need

16  more time and you need clear options presented to evaluate

17  how to structure and how it could be structured in various

18  ways.

19           EXECUTIVE OFFICER WITHERSPOON:  If I might

20  respond to the travel issue head on, because Mr. Cackette

21  responded to the technical aspects of the

22  counterproposals.  Travel is a fundamental policy issue.

23           Whether or not this Board wishes to deny other

24  states the benefits of our work -- we do collaborate with

25  other states, most notably Texas and New York, and other


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 1  states on the eastern seaboard, who join with us on motor

 2  vehicle regulations, for heavy duty -- for example, the

 3  NTE issue we worked on together.  We've had states adopt

 4  our low-emission vehicle regulations.  And so as a policy

 5  matter, we try not to draw a moat -- or create a moat

 6  around California and say, "Well, we're figuring out our

 7  problem, but you're stuck alone with yours."  We like to

 8  export our knowledge around the world.

 9           But since the time that the question was first

10  raised to us and rebuffed it at a policy level, of course

11  to ultimately your decision, we have been engaged in a

12  fight in Congress with -- brought by one of the members of

13  OPEI, Briggs and Stratton, through an amendment introduced

14  by Senator Kit Bond to the VA HUD appropriation, which

15  would take away all states' ability to regulate this

16  category and other categories of off-road engines.  And

17  states throughout the nation have rallied to our side to

18  defend the importance of these regulations.

19           And so at this time, given all that has gone on,

20  it would be most improper in our view to turn our back on

21  our allies in that fight and say, "We're going to

22  construct a measure that California and California alone

23  can implement," even if in return for doing that, Briggs

24  and Stratton agreed to drop the Kit Bond amendment.  It's

25  just simply not a possibility anymore because of the


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 1  battle that's been joined and the way that the lines were

 2  drawn.

 3           So it's correct to say we've made that

 4  distinction before.  We've created optional compliance

 5  paths that don't export.  We've done memorandas of

 6  understanding that don't export.  But generally we wish to

 7  work with our colleagues in air pollution control around

 8  the world and share our expertise and experience rather

 9  than only look out for our own interest.

10           MR. GUERRY:  Can I address that?  Because my

11  client, the Outdoor Power Equipment Institute, has not

12  been a sponsor of the rider she mentioned.

13           However, having said that -- and I've had this

14  conversation with Tom and others -- it seems to me that

15  the objective and purpose of the CARB Board should be to

16  focus on the air quality for the breathers in California.

17  And to the extent that you create the likelihood of a de

18  facto national standard, you raise the bar significantly

19  in terms of scrutiny of national interest groups,

20  including national safety interest groups and other

21  stakeholders.

22           And it makes it a much harder pill for industry

23  to swallow because you're -- I think a lot of my members

24  would be willing to provide extremely clean, extremely

25  expensive -- the testing ground in California have serious


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 1  reservations if you multiply that by a national market for

 2  a product such as this.  And, therefore, you create a much

 3  greater burden and much greater difficulty for industry

 4  and staff to reach a solution that would be in the best

 5  interests of the public of California.

 6           So by --

 7           CHAIRPERSON LLOYD:  Is Briggs and Stratton a

 8  member of your --

 9           MR. GUERRY:  Briggs and Stratton is a member of

10  ours, as is --

11           CHAIRPERSON LLOYD:  Well, let me also add to what

12  Ms. Witherspoon said, because I was also approached.

13  Because, as she said, this is a policy issue on travel.

14  And the feedback I gave was that I'm not high on travel.

15  But I don't know where my colleagues stand, and I would

16  entertain what was going on.

17           Before anything proceeded, then in fact one of

18  your members went to Washington.  And the whole complexity

19  of the game changed.  And I stand 100 percent behind staff

20  on this issue.  Because talking about good faith, we were

21  operating in good faith.  The rules were changed, not by

22  us.  Staff continued to work in spite of that, continued

23  to work to bring a proposal before us.

24           And to say that we -- our obligation here is --

25  that we are somehow doing something wrong, I think it


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 1  really relates to the facts and it skews the facts.  When

 2  I see one of the members, as you saw earlier, providing

 3  products to us, and when I see another member coming

 4  forward and saying they can live with this, and that their

 5  products clearly are cleaner, our obligation to clean air

 6  in California is very clear.

 7           We didn't start the game in California -- in

 8  Washington.  We would not wish to do that.  We would like

 9  to work with you.  We've demonstrated we have by a hundred

10  percent.  We cannot turn our backs on our allies and the

11  rest of this country and our representatives in

12  Washington.  We cannot do that.

13           So then let's make it clear.  Our obligation is

14  to the citizens of California, to protect air quality.

15  We've done that throughout the years, no matter what the

16  administration.

17           And in fact we can go out and drive cars today --

18  we've seen the results of that.  And we have a very proud

19  record.  And we're not going to go down and play the game

20  that's being played.

21           So it's very clear to us the message you're

22  getting.  We may lose, but we will lose with honor.  And

23  we will lose trying to protect the rights of the citizens

24  of California and every other state.

25           That's all to be said on this issue.  I would


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 1  like to move on.

 2           And I sympathize with you, by the way, because

 3  all of us would not like to be in this place.

 4           Professor Friedman.

 5           BOARD MEMBER HUGH FRIEDMAN:  So I guess except

 6  for the travel issue, which you've raised, the proposals

 7  that are in -- you also said you needed more time --

 8           MR. GUERRY:  Well, I --

 9           BOARD MEMBER HUGH FRIEDMAN:  -- to evaluate the

10  cost elements.

11           MR. GUERRY:  No, no.  Let me be very clear.

12           Travel was one of the core elements in the

13  counterproposal that I wanted -- I was responding to your

14  question that has not been addressed.

15           There are, we believe, numerous Board policy-type

16  issues that have also not been addressed in the four-page

17  outline that we got for the first time shortly before this

18  meeting and that we saw in, I guess, a two-page outline

19  late Monday night.  And we believe that there are major

20  significant issues --

21           BOARD MEMBER HUGH FRIEDMAN:  What are they,

22  please, besides travel and cost?

23           MR. GUERRY:  I mean some of it has to do with the

24  framework of the new alternatives that have been added

25  that have not been part of any discussion with the


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 1  associations and CARB staff, including there appears --

 2  there apparently is now an entirely new alternative with

 3  an averaging program that I'm not in a position to even be

 4  able to get approval from my membership as to what that

 5  even means and how that will come unfold.

 6           There are also significant issues in terms of

 7  executive office approval of some sort of equivalent

 8  running loss controls.  And that's something that's a

 9  promising option, but it's something that needs to have

10  greater clarity and Board review.  And I guess we see --

11  and I think talking to some of the CARB staff, I think

12  every -- I think CARB staff is in an untenable position

13  that in the time that we've made this progress, they're

14  put with having to not get the ultimate Board approval

15  that I would certainly want if I was in their shoes.

16           And I think you guys need to stay involved in

17  overseeing the process.  And I don't see a downside in

18  doing that.  And all we're asking for is to have -- let us

19  continue to work this out, get it to a more refined clear

20  notion, fill in some of the big holes, and have greater

21  comfort that at the Board level there's been a review and

22  approval, as I think it was intended for the CARB to

23  operate in a meaningful review role.

24           CHAIRPERSON LLOYD:  Well, I think we can do this.

25  We have the 15-day comment period.  We could do this.


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 1           EXECUTIVE OFFICER WITHERSPOON:  We do believe

 2  except for travel that the issues are mostly ministerial.

 3  If we're wrong about that and something major were to

 4  arise, we would of course return to the Board.  But we

 5  don't think you need to make a presumption today that

 6  that's going to occur.  You can trust us to bring it back

 7  and seek your policy direction if in fact a major policy

 8  issues erupts.

 9           CHAIRPERSON LLOYD:  And we have checked with our

10  legal staff.  And we feel confident about going ahead.

11           But, again, I wish we were not in this position.

12  But that's where we find ourselves.

13           MR. GUERRY:  Thank you very much.

14           CHAIRPERSON LLOYD:  Thank you.

15           Joe, Rick Bell, Don Anair.

16           MR. KUBSH:  Good afternoon again, Chairman Lloyd

17  and members of the Board.  Joe Kubsh, Deputy Director of

18  the Manufacturers of Emission Controls Association.

19           I'm proud to stand here to strongly support the

20  proposal as put forward, even with the modifications as

21  presented by staff this afternoon.

22           We commend the Board for its continuing efforts

23  to develop and implement effective control programs for

24  major sources of air pollution, including small off-road

25  engines.  We believe that the proposed amendments are an


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 1  important step forward in further reducing emissions from

 2  small off-road engines.

 3           We also commend the ARB staff for its technical

 4  report that reflects a comprehensive and balanced analysis

 5  of the issues presented by this proposed rulemaking and

 6  for staff's willingness to work cooperatively with all

 7  interested stakeholders.

 8           I'd like to specifically talk about the issue of

 9  applying catalysts to non-handheld applications as covered

10  by the staff presentation.

11           MECA strongly concurs with the staff analysis and

12  conclusion that the proposed hydrocarbon and NOx emission

13  standards for these engines are technologically feasible.

14  In fact, we were ready to stand here and say that they

15  were technologically feasible even with the proposal that

16  was contained in the original staff report at the 8 and 6

17  grams.

18           And I think the test results that were generated

19  at Southwest Research Institute also indicate that even

20  those lower levels are technologically feasible and can be

21  reached with the application of catalyst technology to

22  non-handheld engines.

23           I'd also like to take a minute to talk about the

24  issue of thermal management or the safety issues around

25  dealing with high exhaust temperatures.  This issue of


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 1  heat management that has been raised by the industry is,

 2  as Mr. Cackette indicated in his remarks, a

 3  straightforward engineering challenge that is well

 4  understood and can be readily addressed.  These types of

 5  issues have been raised virtually every time the use of a

 6  catalyst technology has been proposed for use on a

 7  spark-ignited engine, whether it be 30 years ago when

 8  catalysts were first talked about on cars or more recently

 9  with catalysts on applications such as motor cycles or

10  mopeds or forklift trucks or small handheld engines.

11           In each case, all of these issues were

12  successfully addressed for each application.  The

13  situation we feel is no different here for these

14  non-handheld engines.

15           Indeed, 30 years of catalyst experience in

16  general and over 10 years experience with applying

17  catalysts to small engines provide an experience base that

18  has enabled catalyst technology to continue to be improved

19  and has provided an increasing understanding of how to

20  optimize the engine catalyst exhaust system to work

21  effectively in these situations.

22           Two striking examples of this type of success in

23  dealing with thermal issues can be gleaned from the fact

24  that more than 15 million two-stroke motorcycles and

25  mopeds worldwide have been successfully equipped with


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 1  catalysts and dealt with thermal management issues.  As

 2  well as more than a million small handheld pieces of

 3  equipment using two-stroke engines, that again have been

 4  successfully integrated with catalysts without causing any

 5  safety-related issues.

 6           So, again, I'd just like to commend the staff for

 7  the fine work they've done here.  I'd also like to commend

 8  the engineers at Southwest Research Institute for the fine

 9  job that they did in completing this test program.

10           And in closing, again I would like to commend the

11  Board for its leadership in reducing emissions from these

12  small engines.

13           CHAIRPERSON LLOYD:  Thanks very much.

14           No questions?

15           Thank you.

16           Rick Bell, Don Anair, Jeff Arnold.

17           MR. BELL:  If it's acceptable for the Board, I

18  have approximately six slides I'd like to present to help

19  substantiate some of the information I'll be discussing.

20           (Thereupon an overhead presentation was

21           Presented as follows.)

22           MR. BELL:  My name is Rick Bell.  I'm a

23  development manager with the Dupont Company.

24           Dupont is a polymer and elastomer supplier.  We

25  supply a lot of the -- excuse me just a second.


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 1           (Thereupon a discussion was held off

 2           the record.)

 3           MR. BELL:  Should I take a -- should I let the

 4  next person go ahead of me, and then I'll --

 5           CHAIRPERSON LLOYD:  How long, Victoria, is this

 6  going to be?

 7           Does anybody not have overheads here?  What about

 8  Don?

 9           Yeah, maybe Don can fill in while --

10           MR. BELL:  I was considering it more for the

11  audience rather than the staff, because some of these

12  technologies --

13           CHAIRPERSON LLOYD:  Then let's hold on then.

14           Maybe Don can come up and -- yeah.  And when we

15  get this fixed, we'll --

16           MR. ANAIR:  Good afternoon.

17           CHAIRPERSON LLOYD:  Good afternoon.

18           MR. ANAIR:  My name is Don Anair and I'm with the

19  Union of Concerned Scientists.  And I'd like to express

20  our support of the rule proposed by the staff.

21           Off-road engines in California are becoming a

22  significant source of air pollution, as on-road cars and

23  trucks are required to meet tighter emission standards.

24  With existing regulations, off-road hydrocarbon and

25  nitrogen oxide emissions in California are expected to


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 1  become 60 percent of total California mobile source

 2  emissions by 2020, compared to 37 percent in the year

 3  2000.

 4           Cleaning up smaller engines that have high

 5  emissions is critical to meeting California clean air

 6  goals and SIP commitments.  The potential savings from

 7  this rule are quite significant.  According to the staff's

 8  estimates -- original estimates, the reductions of

 9  hydrocarbons and nitrogen oxide achieved by 2020 would be

10  equivalent to removing 1.8 million cars from California's

11  roads.  These are the pollutants that are directly

12  responsible for producing urban ozone.  Nine out of ten

13  Californians live in areas that do not obtain the national

14  ambient air quality standards for ozone.

15           California has the authority to clean up small

16  off-road engines and should do so for the health of all

17  Californians.

18           While we support this rule as proposed by the ARB

19  staff and agree that it will achieve significant emissions

20  reductions, zero-emissions equipment should be more

21  strongly encouraged.  Electrical equipment in this

22  category can be and is used in many applications and

23  offers clear emissions benefits over combustion engine

24  equipment.  A strong zero emission component will achieve

25  emissions benefits above and beyond the proposed


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 1  regulation.

 2           We urge the Board to adopt the proposed

 3  strengthened emissions requirements proposed today by the

 4  staff for small off-road engines to benefit the health of

 5  all Californians.  We also urge the Board to direct ARB

 6  staff to investigate and propose a future amendment to the

 7  regulation that strongly promotes the manufacture and use

 8  of zero-emissions equipment.

 9           I'd like to thank the Board for the great job

10  they've done in proposing the original and the amended

11  proposal.

12           Thank you.

13           CHAIRPERSON LLOYD:  Thanks very much.

14           We're still out of action, I guess.

15           We're not.  Okay.

16           So maybe, Rick, you could come back.

17           And then we'll have Jeff Arnold and Tom Addison.

18           (Thereupon an overhead presentation was

19           Presented as follows.)

20           MR. BELL:  I guess sometimes new technology

21  doesn't always work well.

22           But, again, I'm Rick Bell.  I'm a development

23  manager with Dupont.  And Dupont is a polymer and

24  elastomer supplier for this supply chain, small off-road

25  engines.  We supply materials that are commercially used


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 1  today.  We also supply materials and technology that could

 2  be part of a solution to meet the new proposed

 3  recommendations.

 4           Really my testimony here today is to help

 5  validate a lot of the information that Jim Watson

 6  presented.  But what I'd like to do is to add a few more

 7  comments to some of that, addressing some of the concerns

 8  that have come up in past workshops around some of these

 9  new materials or ways of meeting lower evap limits.

10                            --o0o--

11           MR. BELL:  The area where Dupont has expertise is

12  in fuel tanks -- plastic fuel tanks, excluding the

13  diurnal.  Although when you look at the diurnal, Dupont

14  does also supply nylon for the canisters, fuel lines, and

15  engine seals.  So I'm specifically going to discuss these

16  components.  I am not going to talk about exhaust

17  emissions.

18                            --o0o--

19           MR. BELL:  One of the potential solutions we see

20  for blow molded polyethylene fuel tanks is a technology

21  called Selar RB.  It's a very simple solution to make a

22  low permeable polyethylene fuel tank.

23           Basically Selar is an additive which is added to

24  polyethylene.  It's used extensively today in the

25  automotive industry and for packaging industry, for things


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 1  like hazardous chemicals.  It's approved also by CARB as a

 2  low-perm technology barrier resin for portable or jerry

 3  can plastic fuel tanks.

 4                            --o0o--

 5           MR. BELL:  Again, this is -- it's patented

 6  technology.  But basically it involves just adding 7

 7  percent of a barrier resin to your polyethylene and you

 8  would blend it in-line.  And it can reduce permeation over

 9  the straight polyethylene by a factor of 95 percent.  It

10  requires very little capital investment.  Basically a new

11  screw is required in your blow molding machine, but that's

12  all the investment requires.

13           We're looking at the upcharge for this type of

14  technology as being less than 75 cents per tank for a tank

15  on the size of approximately one and a half liters, which

16  is roughly one and a half quartz.  So this is very easy

17  technology to implement.

18           Some of the concerns raised at past workshops

19  have been that this technology will reduce the impact

20  strength of a polyethylene fuel tank.  And while, in fact,

21  that is true, when you look at the other applications

22  where this is used, such as automotive fuel tanks and

23  hazardous chemicals, these applications require an impact

24  test where you drop a tank from six meters at minus 40

25  degrees C filled with water and glycol, and these


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 1  polyethylene tanks will bounce off concrete at those

 2  conditions.  So while there is a small reduction in impact

 3  strength, that reduction can be managed by a modification

 4  of the pinch off.  Again, these are relatively simple

 5  things that can be done to be in compliance.

 6                            --o0o--

 7           CHAIRPERSON LLOYD:  That's it?

 8           MR. BELL:  No.

 9           And this just shows here a comparison of Selar

10  versus other alternatives to reduce permeation.  Again,

11  what this is highlighting is Selar is one solution.  You

12  also have a solution using fluorination or sulfonation or

13  core extrusion.  These are all viable technologies.

14           We believe though that one area we don't directly

15  address here is rotomolded polyethylene fuel tanks.  For

16  that specific application we believe a fluorination or a

17  sulfonation process would be a very practical solution.

18                            --o0o--

19           MR. BELL:  And I don't think I'm pointing the

20  clicker at the right machine to get it to -- just point up

21  here?

22           Okay.  The other solution for plastic fuel tanks

23  is to simply look at a different base resin.  CARB has

24  done a lot of testing with nylon.  And that's because

25  nylon plastic fuel tanks for small off-road engines are


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 1  used today.  So, again, this is commercial technology that

 2  already is in compliance with low evap requirements.

 3           In addition to nylon, you could also look at

 4  acetone as an alternative material.

 5           Again, these products will tend to have lower

 6  impact strength versus polyethylene.  But they will also

 7  tend to strengthen and stiffen the tank.  So if you're

 8  looking at situations where you might have slight

 9  pressurization, a change of material will help in

10  preventing too much ballooning of the tank.

11           There could be some questions with shrinkages.

12  You may need some new tooling.  But, again, we look at

13  this for a one and a half liter tank as the upcharge being

14  less than $2.25 to have a low-perm solution.

15                            --o0o--

16           MR. BELL:  Another area I'd like to address is

17  low-perm plastic fuel lines.  We --

18           CHAIRPERSON LLOYD:  How long are you going to go

19  on?

20           MR. BELL:  Five minutes.

21           CHAIRPERSON LLOYD:  You mean -- you've already

22  had ten.

23           MR. BELL:  Okay.

24           CHAIRPERSON LLOYD:  I think -- let's cut it.

25           MR. BELL:  Okay.  Again, I don't think there's


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 1  any question around low-perm plastic fuel lines.  One

 2  point I would like to add is the new proposal looked at a

 3  15-gram-per-square-meter limit.  There are technologies

 4  out there such as F-200 from Moldex which can actually

 5  reduce that below 5.  So there are even lower perm

 6  alternatives commercially used today.

 7                            --o0o--

 8           MR. BELL:  Again, engine seals, there are

 9  low-cost solutions.  This is commercial technology which

10  is used in other applications today, easily appliable to

11  this market.

12                            --o0o--

13           MR. BELL:  So that is in brief I guess all we

14  wanted to present.  Again, just substantiating the numbers

15  we see that CARB has presented, we do believe those are

16  valid numbers and this is technology easily implemented.

17           CHAIRPERSON LLOYD:  Oh, that's the measure.

18  That's excellent.  Again, thank you very much.

19           Any questions from the Board?

20           Thank you very much.

21           We're going to take a five-minute break for the

22  court reporter before we get to the home stretch here.

23           So let's get back at 5:15 by that clock there.

24           (Thereupon a recess was taken.)

25           CHAIRPERSON LLOYD:  We commence with Jeff Arnold,


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 1  Tom Addison, Todd Campbell.

 2           MR. ARNOLD:  Good afternoon.

 3           Chairman Lloyd and Board members, thank you for

 4  giving me the opportunity to speak to this group.  My name

 5  is --

 6           CHAIRPERSON LLOYD:  Yeah, we've got a couple of

 7  Board members listening in the back, by the way.  There

 8  are -- you can hear them back there -- they can hear you.

 9           MR. ARNOLD:  Thank you.

10           CHAIRPERSON LLOYD:  There's speakers back there.

11           MR. ARNOLD:  So I don't have to talk real loud

12  then, right?

13           CHAIRPERSON LLOYD:  Well, you still have to talk

14  loud.  No, not loud though.

15           BOARD MEMBER DeSAULNIER:  Just don't have your

16  cell phone go off.

17           (Laughter.)

18           MR. ARNOLD:  No, it plays a different tune, I

19  play, than hers, so we're okay.

20           (Laughter.)

21           MR. ARNOLD:  My name is Jeff Arnold, and I am the

22  Executive Director and CEO of the Association of

23  Rotational Molders International, which is based in Oak

24  Brook, Illinois, outside suburban Chicago.  Our

25  association represents over 350 rotomolders and


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 1  rotomolding material and equipment suppliers in 60

 2  countries around the world, with 15 rotomolders in

 3  California alone.

 4           The vast majority, around 90 percent, of U.S.

 5  rotomolders are small, privately-held companies with a

 6  single plant and four to five rotational molding machines.

 7  Most of our members fall in to the Category 2 or 225 cc

 8  greater category.

 9           I'd like to address my comments briefly to two

10  issues that arise in connection with CARB's proposed

11  regulation, keeping them specifically to limiting

12  evaporative emissions from small off-road equipment fuel

13  tanks.

14           The exhaust issue is not applicable to our

15  industry.  We are in the plastics field.

16           One is CARB's contention that rotomolded fuel

17  tanks on SORE can be cost effectively and safely replaced

18  with units made from metal or alternative plastic

19  processing methods.  And, two, the damage to the U.S.

20  rotomolding industry on their material and equipment

21  suppliers if this important market were to be limited or

22  lost due to these proposed regulations.

23           The study, conversion from steel to plastic fuel

24  tanks over the recent past, satisfies a number of economic

25  mandates from the marketplace as well as the environmental


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 1  mandates coming from federal and state agencies, to wit:

 2  Longer life expectancy, enhanced safety, enhanced

 3  flammability resistance, parts consolidation, greater

 4  design freedom, weight savings, corrosion resistance, and

 5  sound dampening.

 6           The reason why rotomolding is preferred in small

 7  scale SORE fuel tanks relates to rotomoldable plastic

 8  material options, the nature of the process, and the total

 9  cost burden of the process.

10           Rotomolders can utilize cross-linked

11  polyethylene, which as a thermal setting plastic, is quite

12  rigid and its mechanical properties are not heat

13  sensitive.

14           Second, rotomolding yields a part with uniform

15  thickness.  Third, machine and cast rotomolds and

16  rotomolding machines are lower in cost.  And, fourth,

17  rotomolding is the ideal process for low-volume hollow

18  part production, and has a significant presence in SORE

19  fuel tank businesses.

20           In closing, since 2000 the U.S. economy has

21  suffered through economic conditions.  Here in 2003 there

22  are signs of economic recovery, yet it is turning out to

23  be a jobless recovery.  It would be both untimely and

24  unfortunate if these proposed regulations impact adversely

25  on a sector of the plastics industry that provides jobs


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 1  and plants here in California, especially southern

 2  California.

 3           Rather than contemplating the replacement of

 4  rotomolded SORE fuel tanks, we feel that CARB should

 5  consider providing incentives to regional rotomolders to

 6  explore technological changes in material, machinery, and

 7  processing methods, would make a highly cost-effective

 8  product even better.

 9           And I'd like to add just at the very end of the

10  comments that historically -- our association is 28 years

11  old this year.  And historically we have been -- our main

12  mission is to promote the industry in the process.  So we

13  are not typically involved in this type of process.  And

14  we would be happy to work, you know, with the CARB Board.

15  This came to our attention from a couple of our members

16  just within the last 30 days.  And that is why we have not

17  been here previously.

18           So thank you very much.

19           CHAIRPERSON LLOYD:  Thank you for coming.  And

20  I'm sure staff will work with you on these issues.

21           MR. ARNOLD:  All right.  Thank you.

22           CHAIRPERSON LLOYD:  Thank you very much.

23           Tom Addison.

24           I didn't see Tom.  That's okay.

25           Todd Campbell.


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 1           No Todd.

 2           Jim Medich.

 3           BOARD MEMBER DeSAULNIER:  For Tom Addison.  After

 4  five Bay Area Air Districts, the employees don't work.

 5  So --

 6           (Laughter.)

 7           BOARD MEMBER DeSAULNIER:  -- he'll be happy to

 8  hear that.  They're out watching the sunset in the hot tub

 9  or something.

10           (Laughter.)

11           MR. MEDICH:  Chairman Lloyd, members of the

12  Board.  I'm Jim Medich.  I'm a fire division chief with

13  the West Sacramento Fire Department.

14           I'm here today representing the California Fire

15  Chief's Association.  That organization is comprised of

16  fire Chiefs from over 1,100 fire departments in

17  California.

18           The California Fire Chiefs Association is

19  concerned that the California Air Resources Board's plan

20  to require installation of high efficiency, hot catalytic

21  exhaust systems on lawn and garden equipment could

22  increase the risk and severity of operator burns and wild

23  land fires.  Also, they could have associated problems

24  with refueling fires and fires in garages after the hot

25  equipment is stored after use.


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 1           It appears that most of our concerns from the

 2  July 2nd meeting that I attended have been addressed in

 3  the alternative standards that were presented today.  Cal

 4  Chiefs would like more time to study the new changes to

 5  see how their impacts would affect fire safety.

 6           As we have stated before, the California Fire

 7  Chiefs Association would welcome the opportunity to work

 8  with other safety experts to address the unresolved safety

 9  issues to ensure that the citizens of California are

10  getting not only the best environmental policy, but also

11  the best safety policy we can give them.

12           I'd be glad to answer any questions.

13           CHAIRPERSON LLOYD:  Professor Friedman.

14           BOARD MEMBER HUGH FRIEDMAN:  We -- I don't know

15  if you're familiar with our process.  But if we adopt this

16  proposal today, with some modifications, there's still a

17  15-day period in which we receive additional information

18  and comment.  And I'm wondering if you can't give us

19  further input if there is any additional concern or

20  further concern in that period of time.

21           MR. MEDICH:  I think that'd be reasonable.

22           BOARD MEMBER HUGH FRIEDMAN:  Am I correct on

23  that?

24           EXECUTIVE OFFICER WITHERSPOON:  You're quite

25  right.  It also takes as an amount of time to put together


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 1  the package for 15-day changes.  So there is a month or so

 2  of time even before that goes out where we can be talking

 3  and meeting and the fire chiefs can do their evaluation.

 4  And then we'll have actual regulatory language for them to

 5  look at.

 6           BOARD MEMBER HUGH FRIEDMAN:  Yeah, these rules

 7  don't go into effect themselves by their own terms for a

 8  while.  So there's a lead time.  But we don't want to

 9  unduly delay.  On the other hand, I for one want to be

10  sure that we have got the full benefit of the

11  professionals on this safety question.

12           CHAIRPERSON LLOYD:  Thank you.  And, again, your

13  comments are very helpful.  And I think staff has looked

14  through and addressed the safety issue as far as we could

15  see very well.  And the fact that Honda indicated they

16  don't see a major issue there, also that's very helpful.

17           But we really appreciate your comments.  Look

18  forward to working with you to make sure that we do

19  everything we can to mitigate that.

20           MR. MEDICH:  Thank you, sir.

21           CHAIRPERSON LLOYD:  Thanks very much for coming.

22           Dave Modisette and Jed Mandel.

23           MR. MODISETTE:  Yes, thank you, Chairman Lloyd,

24  members of the Board.  I'm Dave Modisette.  I represent

25  the California Electric Transportation Coalition.


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 1  Although I'm here to present a position statement that

 2  includes seven other organizations:  The American Lung

 3  Association of California, the Center for Energy

 4  Efficiency and Renewable Technologies, the Coalition for

 5  Clean Air, the Natural Resources Defense Council, the

 6  Steven and Michele Kirsch Foundation, the Sierra Club, and

 7  the Union of Concerned Scientists.

 8           We strongly support CARB's proposed rulemaking to

 9  strengthen exhaust and evaporative emission control

10  requirements for small off-road equipment and engines.

11  The proposed measure, if adopted, would be a significant

12  step towards achieving California's clean air goals and

13  would provide essential public health benefits for all

14  Californians.  In addition to supporting the adoption of

15  the regulation, we urge the Board to commit to a future

16  rulemaking that would encourage the sale of zero emission

17  equipment in this category.

18           Off-road engines in California are responsible

19  for a significant amount of air pollutants and

20  traditionally have not been held to the same emission

21  standards as on-road engines.

22           Under the current regulations, off-road engines

23  are expected to account for more than 60 percent of

24  California's total mobile source hydrocarbon and nitrogen

25  oxide emissions by 2020, compared to only 37 percent in


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 1  the year 2000.

 2           There is a clear need to address the increasing

 3  significance of off-road engine pollution in California.

 4  The proposed regulation for reducing exhaust and

 5  evaporative emissions from small off-road engines and

 6  equipment is the necessary step in reducing air pollution

 7  from these engines.

 8           While we support the adoption of the rule as

 9  proposed by the staff, we would also like a commitment by

10  the Board to promote the adoption of zero emission

11  equipment in a future rulemaking.  The current regulation

12  has no provision for either encouraging the use or sale of

13  electric powered zero emission equipment.  And maybe just

14  as a footnote I should say that this is based on the

15  August 8th staff proposal.  It does not include any

16  changes that were presented today.  I did see a reference

17  to zero emission equipment in the staff presentation

18  today, and I think we'd like to learn more about that.

19           The August 8th, 2003, CARB staff report describes

20  the benefits of zero emission technology in this category.

21  I won't repeat that here.  The staff report also states

22  that electric powered handheld equipment was readily

23  available for the residential user market.  This equipment

24  includes both cordless and corded models of line trimmers,

25  hedge trimmers, leaf blowers, chain saws, tillers, and


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 1  lawnmowers.

 2           Markets for much of this electrical equipment are

 3  already well established.  For example, electric mowers

 4  are estimated to be about 10 percent of the California

 5  market according to the staff report.

 6           Manufacturers should be encouraged and rewarded

 7  for increasing their proportionate sales of zero emission

 8  equipment in California.  This could be accomplished in

 9  several ways.  But the use of a manufacturer's fleet

10  average standard that includes zero emission equipment

11  sold by manufacturers in California may provide the best

12  combination of additional emissions reductions and

13  compliance flexibility.

14           This fleet average concept is not included in the

15  rulemaking that is before you today, and will take

16  additional work to develop.  Further, the fleet average

17  concept is not incompatible with the minimum ICE standards

18  proposed by staff in the rulemaking before you.

19           We urge the Board to direct staff to begin work

20  to develop a fleet average construct or other mechanism

21  that includes and encourages zero emission equipment in

22  these small off-road categories.  This construct would be

23  subject to the rulemaking process and should have an

24  appropriate implementation lag to provide compliance

25  flexibility.


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 1           In order to develop the fleet average construct,

 2  staff needs to have information on the annual sales of

 3  zero emission equipment and on the existing inventory of

 4  the equipment.  We do not know if staff has this

 5  information or has a current means of getting it.  It may

 6  be that a reporting requirement is needed whereby

 7  manufacturers report their annual sales of zero emission

 8  and other equipment within the small off-road category.

 9  The Board should consider this issue today.

10           In conclusion, the proposed rules are

11  technologically feasible, as shown by the staff, and will

12  achieve cost effective emissions reductions from small

13  off-road equipment.  We urge the Board to adopt the rules

14  as proposed for the benefit of all Californians.  We also

15  urge the Board to direct staff to begin work to include

16  zero emission equipment in the regulatory framework for

17  small off-road equipment in a way that encourages and

18  rewards manufacturers for increasing their proportionate

19  sales of this equipment and reducing emissions even

20  further than required by the currently proposed

21  regulations.

22           Thank you.

23           CHAIRPERSON LLOYD:  Thank you, Dave.  And I think

24  we would support that.  Maybe staff can look at the zero

25  emission.  And that would include push mowers, too.


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 1           EXECUTIVE OFFICER WITHERSPOON:  We did evaluate

 2  the issue of electric power equipment to as much as we

 3  could during the process of this rulemaking.  And we were

 4  unable to arrive at either a regulatory approach -- well,

 5  we were unable to arrive at a regulatory approach that we

 6  believed would work.

 7           And the fleet average, which sounds so

 8  compellingly simple, does not work easily in this market

 9  where there's both integrated and non-integrated equipment

10  and against whom is the fleet average levied and who's

11  held responsible for that.

12           So we also encountered a barrier with the

13  difference between residential and commercial users going

14  to the same retail site, and could not think of a way to

15  prevent a residential user from walking away from that

16  site with a fuel-power piece of equipment that when they

17  arrive there they're only allowed to purchase an electric.

18           So our tentative conclusion is that an

19  incentive-based strategy on electric is ultimately going

20  to be more successful.  And to the extent the Board wants

21  us to keep endeavoring in this area, we would hope you

22  would say not to come back certainly with a regulation

23  because we're still not sure that's feasible, but instead

24  to come back with recommendations on how it is we should

25  increase the penetration of electric equipment.  It's just


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 1  a very complicated issue.

 2           And we support completely the goal of doing it.

 3  But we couldn't figure out how in this regulation, and

 4  that's why it isn't here.  And it wasn't just a matter of

 5  time.  Give us six more months and we'll tell you how we

 6  think there's some fundamental issues about trying to do

 7  it through a regulatory method.

 8           CHAIRPERSON LLOYD:  Professor Friedman.

 9           BOARD MEMBER HUGH FRIEDMAN:  Well, Ms. D'Adamo

10  mentioned it earlier.  And I whispered to her, "I like the

11  idea."  I wonder if it wouldn't be productive for Mr.

12  Modisette to meet with staff and, as staff continues, to

13  see what could incentivize zero emission equipment of this

14  sort, and whatever else you can come up with.

15           I don't know that it should be then part of this

16  rulemaking.  But it could always be a separate but related

17  proposal later.

18           EXECUTIVE OFFICER WITHERSPOON:  We'd be happy to

19  talk to him about it.  Maybe he's got some --

20           BOARD MEMBER HUGH FRIEDMAN:  Could we put some

21  time on it?  Six months?

22           EXECUTIVE OFFICER WITHERSPOON:  Sure, for a

23  report back.  I just didn't want to promise you we could

24  get back here with a regulation.

25           BOARD MEMBER HUGH FRIEDMAN:  No, I understand.


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 1  But a concept and a recommendation that --

 2           EXECUTIVE OFFICER WITHERSPOON:  Sure.

 3           BOARD MEMBER DeSAULNIER:  We have a model.

 4           Go ahead, Didi.

 5           BOARD MEMBER HUGH FRIEDMAN:  So do we keep it on

 6  our agenda?

 7           BOARD MEMBER DeSAULNIER:  No, no.  We were

 8  thinking about maybe an MOU that would just be required.

 9  They'd agree to sell, say, 10 percent, 20 percent of

10  their --

11           (Laughter.)

12           CHAIRPERSON LLOYD:  Well, I think Dave has

13  been --

14           BOARD MEMBER DeSAULNIER:  Worked so well last

15  time.

16           (Laughter.)

17           CHAIRPERSON LLOYD:  Dave has been very helpful, I

18  think, in creative -- in bringing stuff before the Board.

19  So that would be very good.

20           And, Didi, you've got a better suggestion?

21           BOARD MEMBER D'ADAMO:  Well, no, not that I have

22  a better one.  But I just think -- you know, we push so

23  hard on cars, which was so much more difficult.  The

24  technology is definitely there.  We know it.  And I can

25  see why there would be issues with a fleet average


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 1  concept.  But I'm kind of thinking that the

 2  incentive-based program is not, you know, far enough.

 3           So we'd just be hopeful that staff could remain

 4  open to some of these other concepts, and flexible.  And,

 5  again, I suggest that you work with Dave's groups.  I'd be

 6  happy to join in the effort as well.  I feel pretty

 7  strongly about this.

 8           EXECUTIVE OFFICER WITHERSPOON:  In terms of

 9  timing -- I just chatted with Mr. Cackette -- six months

10  seems like about the right amount of time to report back

11  to you on where that stands, if that's amenable to you

12  all.

13           CHAIRPERSON LLOYD:  Can we offer any incentives

14  to shorten that?

15           (Laughter.)

16           CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:  Three

17  more staff.

18           (Laughter.)

19           CHAIRPERSON LLOYD:  Good call.

20           And, by the way, I realize how tough it's been

21  and how much there is on the staff's plate.  So I respect

22  that.  And I was only kidding.

23           CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:  And I

24  didn't mean to be -- adjust either.  But, you know,

25  there's quite a bit of work following up on this Board


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 1  meeting should you approve this regulation.  And they have

 2  to do that work first to make sure we get through the

 3  process, so --

 4           CHAIRPERSON LLOYD:  I agree.

 5           Thanks very much, Dave.

 6           MR. MODISETTE:  That sounds very good.  I've

 7  already had -- you know, Tom and I and Bob Cross have

 8  already had some discussions on this.  So, yes, I'd very

 9  much like to work with staff on this.

10           CHAIRPERSON LLOYD:  Great.  We really appreciate

11  your offer to help there.

12           Jed is now so much smarter than he was earlier

13  on.  So we've got the benefit of that wisdom.

14           MR. MANDEL:  Of course that's not saying very

15  much.

16           BOARD MEMBER HUGH FRIEDMAN:  Clean-up batter.

17           MR. MANDEL:  What I was going to say is the real

18  reason why I wanted to go last was for once you'd be

19  pleased to see me come up here.

20           CHAIRPERSON LLOYD:  By the way, I didn't like

21  your suggestion to address this safety issue a little more

22  is that in fact we require your operators to provide

23  asbestos gloves for the operation of the equipment.

24           MR. MANDEL:  Well, I'm investing my stock --

25  maiden stock in that asbestos company right now.


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 1           Good afternoon, almost good evening.

 2           Again, my name is Jed Mandel.  I'm here today on

 3  behalf of the Engine Manufacturers Association.  And as I

 4  think you know, EMA's members include the principal

 5  manufacturers of the Class 1 and Class 2 non-handheld

 6  spark-ignited engines for the subject of today's proposal.

 7           We believe that further exhaust and evaporative

 8  emission reductions can and should be implemented in

 9  California.  And we are committed to do so.  But we cannot

10  support the original staff proposal that was incorporated

11  in the mail-out.

12           Instead, we developed an alternate proposal that

13  would provide California the same benefits as it would

14  have achieved under the staff's proposal at a far lesser

15  cost, with substantially less burden and disruption to the

16  industry, in a manner that is practical, realistic, and

17  enforceable.

18           Two days ago the staff provided us with the

19  outline of an alternative program that is similar but not

20  identical to what we proposed.  In fact, it proposes some

21  programs that go beyond what we asked for.  And I might

22  add, it is completely different from and not within the

23  scope of the original staff proposal that was part of the

24  mail-out package.

25           No details have yet been developed on how the


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 1  staff's alternate program would work and no draft

 2  regulatory language has yet been developed.

 3           There are complex, innovative, and challenging

 4  aspects of the staff's proposal that cannot fully or

 5  properly be assessed without a modest amount of additional

 6  time.  Based on the staff's representations, we think we

 7  might be close.  But we do not yet have enough of the

 8  critical details to know whether we can reach an agreement

 9  for sure.

10           The failure to reach an agreement today, that we

11  can stand up here and represent we already have, is simply

12  the result of running out of time.  Admittedly, the

13  industry originally advocated regulatory concepts quite

14  different from that which we proposed to the staff.  And

15  the staff only had a few weeks to assess our recent

16  proposal.

17           Now, we only have really a couple of days, and in

18  some detail only a couple of hours, to assess the staff's

19  outline of its proposal, and without knowing the critical

20  details.

21           I know Professor Friedman asked earlier -- and

22  I'm going to try and anticipate your question -- as what

23  some of the examples are of where they're not necessarily

24  aligning up.

25           I represented to you that in one case the staff's


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 1  proposal provides more than what the industry asked for.

 2  And when I say the industry, I'm talking about the

 3  EMA/OPEI proposal.  And the area of concern there is the

 4  fleet averaging program.  As many of you know, and I know

 5  as the staff knows, because we've worked on these programs

 6  over the years, EMA and its members historically are

 7  advocates of averaging programs.  And, in fact, we're

 8  interested in exploring this averaging program.

 9           But one of the things that we've always found

10  interesting in our internal discussions and interesting in

11  some of our discussions with regulators is that averaging

12  programs have the potential for creating an unlevel

13  playing field if they're not very carefully developed.

14  This is an averaging program, or at least a concept, that

15  developed without any input from any of the Engine

16  Manufacturers Association's members or obviously from the

17  Association itself.  And, candidly, we're a little

18  concerned that it doesn't play out in a way that creates

19  an unlevel playing field between competitors.

20           I'm also -- was mindful of the comment about the

21  interest in electric mowers and in push mowers.  And it

22  strikes me that it would not be in the Board's best

23  interests if at the end of the day the fleet averaging

24  program would allow an engine manufacturer and equipment

25  manufacturer to package up a relatively inexpensive push


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 1  mower in with their regular spark-ignited internal

 2  combustion engine and claim on average it was not having

 3  very many exhaust or evaporative emissions.

 4           So I think averaging programs, while they're

 5  interesting, have a lot of, as the classic phrase goes,

 6  "Devil in the Details" that we're very concerned about,

 7  and we think you as a Board ought to be concerned about.

 8           Another area that was new to us is the compliance

 9  validation plan that's just referenced again at the end of

10  the staff's proposal.  We don't know what that means.  We

11  don't know how it will work.  Obviously, we have an

12  opportunity through the 15-day notice process to work out

13  those issues.  But we are very concerned that in fact when

14  the staff represents to us that their proposal is exactly

15  what we've asked for, then in fact we may be talking past

16  each other since that program starts to look like an

17  individual manufacturer's year-by-year, sort of zero -- of

18  summing to zero individual compliance program as opposed

19  to an alternate industry-wide program not requiring

20  individual engine manufacturer demonstrations of

21  compliance for the manufacturer as opposed to the

22  industry.  Again, we may be talking past each other.  I

23  don't know.

24           There's also a very important requested-for

25  requirement of demonstrating equivalents on the running


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 1  loss cannister issue.  We totally support that.  We're

 2  very appreciative of the staff's proposal.  We just don't

 3  know how it's going to work.  And, again, a very, very

 4  important detail.

 5           There are also other areas that provide some

 6  uncertainty or where it doesn't appear yet that what the

 7  staff has represented as their alternative proposal is

 8  exactly what the industry asked for.  You've already heard

 9  about the issue of defining the program in such a way that

10  its limits are only for the benefit of the State of

11  California.  I'm not going to raise that up early, except

12  it is a point of some difference.

13           There's also a very important difference on the

14  enforcement side of the program.  We very carefully

15  suggested to the staff, as I think the staff acknowledged

16  earlier in their own report, that the practicality of a

17  mandatory recall for a consumer product like lawnmowers,

18  unregistered in many cases at least in the high volume

19  cases, considered a throwaway product, it's just not a

20  very practical way to enforce the program.

21           Right now that's the only authority that's

22  provided in the package.  And we have suggested that

23  EPA -- excuse me -- that ARB align itself more in the way

24  EPA does the enforcement program, which does suggest a

25  whole realm of enforcement options, with recall being


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 1  recognized as one that is not practical.

 2           I'm also frankly a little concerned in terms of

 3  the staff proposal, in understanding it, in that there's

 4  an exhaust component -- which, by the way, we support.

 5  Those are the numbers that we asked for.  And, by the way,

 6  a perfect example of changes that would be easily handled

 7  in a 15-day notice.  They're not very complex, very

 8  understandable, and ones that we support.

 9           As I understand the way it's being proposed

10  though, those exhaust numbers would now be paired with

11  three options for compliance with the evaporative side:

12  The original staff proposal, Alternate 1, and Alternate 2;

13  with Alternate 1 and Alternate 2 being evaporative

14  proposals specifically designed to provide

15  over-achievements on the hydrocarbon evaporative emission

16  side to balance out some of the shortfall on the exhaust

17  side.

18           But the original staff proposal doesn't have any

19  over-exceedance on the evaporative emission program.  And

20  I believe that the August 8th mail-out, that evaporative

21  emission program, paired with the exhaust proposal that we

22  heard from the staff today, in fact would result in a

23  significant ton shortfall for California.  And I believe

24  if you adopt that today, that becomes the law, and

25  manufacturers could choose that route.  I don't think


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 1  that's what the Board intends.

 2           We are committed to working with you and the

 3  staff to assure that real emission reductions are achieved

 4  in a cost-effective and timely manner.  I am requesting

 5  that we have modest additional time that would be required

 6  for us to address these issues that I've noted today,

 7  issues that, by the way, I'm very optimistic can be

 8  addressed.  And we'd like to do so in a process that

 9  assures openness in a board hearing so that we're not

10  surprised as part of a final 15-day rule -- the rule

11  finalized as a result of the 15-day process, that other

12  new issues have surfaced that we never really had a chance

13  to comment on or report back to you on.

14           I do know because I've had a chance to talk to

15  staff throughout the course of the day, and I've had a

16  chance to talk briefly with Dr. Lloyd today, that there is

17  a great deal of obvious interest on the part of the Board

18  of adopting a rule today.  I understand that.

19           I do think that the process issues and the real

20  issues that I've noted today do suggest that, again,

21  putting this over to December -- I might add, by the way,

22  that this industry has a history of having rulemakings at

23  Christmas time with the Board.  We'd love to come back out

24  here when it's cold in the midwest.  But putting this off

25  to December we don't think will put any delay in terms of


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 1  implementation of the rules.

 2           And the only other thing I'd say, in anticipation

 3  perhaps of the Board's, as I said, reluctance to do

 4  that -- although that is what we're asking for -- is

 5  perhaps as an alternative to think about, first of all,

 6  providing more than 15 days.  The 15-day process, as I

 7  understand California law, only says 15 days minimum.  You

 8  can provide more time.  And also to put on your calendar

 9  for December this item so that if it turns out that there

10  is difficulty in trying to get this rule resolved through

11  a staff process, that we have an opportunity in a timely

12  fashion without delay and without turning to any

13  acrimonious process to come back to the Board so we can

14  get closure on this and start producing product to the

15  clean standards that you will have adopted.

16           Thank you very much for your time.

17           CHAIRPERSON LLOYD:  Thank you very much, Jed.

18  You raised a number of issues there.

19           Professor Friedman.

20           BOARD MEMBER HUGH FRIEDMAN:  I think I heard

21  earlier the need for certainty.  And I'm wondering if this

22  isn't -- to me it sounds very familiar, the list of open

23  questions about how it would work, precisely what the

24  details are, which is typically what we have our 15-day

25  notice for as long as the basic principles and concepts


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 1  are the policy, as opposed to all the procedures.  And I

 2  know that the Devil is in the details sometimes.  But we

 3  rarely have ever adopted a rulemaking that is finished

 4  with every comma and every period when we act, as opposed

 5  to under the 15-day notice.  And that allows some time,

 6  weeks, for such as the interested parties to work with

 7  staff and thrash all this out without our having to do

 8  that.  And then they report back to us.  And if amendments

 9  are needed or something, that's a different matter.

10           But is 15 days notice adequate?

11           EXECUTIVE OFFICER WITHERSPOON:  We're happy to

12  give them 30.  We just did that on the 15-day process for

13  the ZEV regulatory changes, the full 30, recognizing the

14  complexity and how the pieces of the reg interacted with

15  one another.  So there's no problem doing that.

16           We would not like to notice this again for

17  December though because it implies that it's coming back

18  to the Board.  And I think you can let us determine if the

19  issues are sufficient enough to bring them back.

20           BOARD MEMBER RIORDAN:  Mr. Chairman?

21           CHAIRPERSON LLOYD:  Yes.  Ms. Riordan.

22           BOARD MEMBER RIORDAN:  If I heard the staff a

23  little bit earlier, you actually have usually a lead time

24  to the 15- or 30-day period.  So you're actually, Jed,

25  getting many more days than the 30 days.  And hopefully


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 1  that would accommodate your organization and others that,

 2  you know, want to work with the staff through the details.

 3  So it seems to me a 30-day period is a very realistic

 4  period because we know it's actually many more days than

 5  appears.

 6           MR. MANDEL:  If I could, I certainly want to

 7  acknowledge that -- both with Mrs. Riordan's comment about

 8  how the process really works and with the possibility of

 9  that 15-day notice in fact being extended.  It addresses a

10  significant part of my concerns, which is just having the

11  time to address complex issues.

12           But in response to Professor Friedman's comment,

13  I also want to remind you one of my concerns isn't just

14  having the time to respond to it, but having an

15  understanding of what this really means in an open process

16  that ultimately has everyone coming before a public

17  hearing and airing the issues.

18           The two proposals that came to the Board today

19  really did not spring out of the original staff proposal.

20  They were quite different.  And I have particular concern,

21  as I said, about an averaging program, which may be the

22  solution to the world's problems, but we have not had the

23  chance to work it out.  And it's very different than --

24  and I should interrupt myself and say we've done I can't

25  remember how many 15-day notice issues with this Board and


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 1  with this staff very successfully.  It's a process that

 2  works.

 3           My concern is that we have not even begun to

 4  think about it.  This isn't like changing a 10 to an 8.

 5  This is in developing a whole new program, that I think in

 6  fairness should come back to all stakeholders to hear what

 7  it is and comment on it to you.

 8           CHAIRPERSON LLOYD:  Short of that, what would be

 9  optimum?

10           MR. MANDEL:  Well, I thought the optimum sort of

11  middle ground, besides the additional time, would be to

12  have a real opportunity, if necessary, to avail ourselves

13  of the Board's hearing in December.  And, again, I

14  understand -- I saw Catherine's head move and I heard her

15  loudly before -- but I understand it's not the staff's

16  goal.  But I'm concerned that if the staff unilaterally

17  should decide it needs to come back to you, it takes a

18  while to get back on your agenda.  We can always pull it

19  off easily.

20           CHAIRPERSON LLOYD:  All right.  But the other

21  thing, I think if you come back as an information item to

22  see whether we want to go ahead, that's one thing.  But I

23  also share staff's concern that we've got to bring this to

24  some closure.  And I think we're trying to meet you the

25  way -- and I have a lot of faith, and also as long as I'm


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 1  here working with staff to monitor what's going on and sit

 2  in on some of these meetings, and my colleagues would be

 3  happy to do that also, to make sure that if these are real

 4  issues, then we will address them.

 5           BOARD MEMBER RIORDAN:  Mr. Chairman, if I might,

 6  and Mr. Mandel.

 7           It seems to me you always have access to our

 8  Chairman.  And I'm certainly willing to defer to him and

 9  his good judgment, that if at the end of all of this

10  period that there are some remaining issues, at some time

11  in the very near future we could maybe undertake some of

12  those.  But I trust his judgment, and I think it would be

13  very appropriate for him to hear the issues if you feel

14  there are some left.  You may be able to resolve all of

15  them in this almost 60-day period.

16           MR. MANDEL:  Well, we hope that.  And obviously,

17  not only with all the Board members, but in particular

18  with Dr. Lloyd, we do know that we have access and we

19  would take advantage of that.

20           CHAIRPERSON LLOYD:  And, again, I think it's our

21  obligation.  And I think, as I said before, we've been

22  trying to work in good faith with the industry.  And staff

23  has worked, I know, very hard and diligently.  And as you

24  say, it seems a little bit ironic today when staff has

25  tried to incorporate some of those, people saying, well,


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 1  we haven't got -- and I understand the details.  But I

 2  think you've got to also recognize the tremendous effort

 3  that's gone on, to recognize the concerns to ameliorate

 4  those, to come from where I understood we were just

 5  several months ago, to come this close and then have one

 6  of the major manufacturers also say that they can live

 7  with this provided some of those issues are addressed in

 8  that time period.  And, again, that's the same thing we'll

 9  hold there as we work together.  I think that's a

10  tremendous accomplishment and I think staff has done a

11  really excellent job.

12           MR. MANDEL:  And obviously you should say that,

13  and I think I should take the time as well.  Because in

14  the heat of trying to focus our concerns to the Board's

15  attention, sometimes we neglect to remind ourselves of how

16  far the staff has come.

17           And also the industry.  The industry proposal

18  moved substantially from where we were.  But I do want to

19  acknowledge the staff's hard work in working with us.  I

20  wish we had had more time.  I blame some of that on

21  ourselves in terms of working it.  I'm hoping that we can

22  get closure and get closure quickly.

23           CHAIRPERSON LLOYD:  And you understand, Jed, the

24  same as we were talking this morning or earlier this

25  afternoon, about the item we have next month going to


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 1  South Coast and seeing all the pressures down there to do

 2  something.  I think we would be neglecting our duty to try

 3  to keep these on track.  But if there is again -- those

 4  concerns are not being worked out, then we will surely

 5  take those in to account.

 6           EXECUTIVE OFFICER WITHERSPOON:  There will also

 7  be a vote on the Senate floor as to whether the bond

 8  amendment in the VA HUD measure should pass.  And I think

 9  it's important for Congress to understand what the nature

10  of the rule adopted by the Air Resources Board is when

11  they're considering the necessity or not of overruling it

12  through that amendment.

13           CHAIRPERSON LLOYD:  Thank you.

14           Thank you very much, Jed.  And, again, as always,

15  we appreciate your wisdom and comments there.  And we look

16  forward to working with you and your colleagues.

17           MR. MANDEL:  Thank you, Doctor, very much.  Thank

18  you, Board members.

19           CHAIRPERSON LLOYD:  Okay.  With that, I guess

20  it's the end of the public testimony.

21           Maybe here we'll have some discussion, and before

22  we go in to ex parte.

23           Yeah.  Well, maybe I'll take ex partes.

24           First of all -- well, first of all, I'd like to

25  close the record on this agenda item.  However, the record


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 1  will be reopened when the 15-day notice of public

 2  availability is issued.

 3           And will that be 30 days?

 4           Is that right?

 5           GENERAL COUNSEL WALSH:  Yes.

 6           CHAIRPERSON LLOYD:  Thirty days.

 7           So when the 30-day notice of public availability

 8  is issued.  Written or oral comments received after this

 9  hearing date but before the 30-day notices are issued will

10  not be accepted as part of the official record on this

11  agenda item.

12           When the record is reopened for a 30-day comment

13  period, the public may submit written comments on the

14  proposed changes, which will be considered and responded

15  to in the final statement of reasons for the regulation.

16           And, again, just a reminder to my colleagues

17  about policy concerning ex parte communications.  While we

18  may communicate off the record with an outside person

19  regarding Board rulemaking, we must disclose the names of

20  our contacts and the nature of contents on the record.

21  This requirement applies specifically to communications

22  which take place after notice of the Board hearing has

23  been published.

24           And, therefore, are there any communications we

25  need to disclose?


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 1           Supervisor DeSaulnier.

 2           BOARD MEMBER DeSAULNIER:  I had one.  Tim

 3  Flannegan representing the Outdoor Power Equipment

 4  Institute met with me yesterday at my office in Concord,

 5  California.  The discussion was largely consistent with

 6  the testimony from Mr. Guerry today.  But it was related

 7  specifically to the issues of safety.

 8           That was it.

 9           CHAIRPERSON LLOYD:  Ms. D'Adamo, while you're --

10  oh, okay.

11           BOARD MEMBER D'ADAMO:  Yes, on September 23rd I

12  had a conference call with Todd Campbell, Coalition for

13  Clean Air; Bonnie Holmes-Gen, American Lung Association;

14  Diane Bailey, NRDC; Patricia Monahan, Union for Concerned

15  Scientists.

16           And the testimony was consistent with the

17  testimony by Dave Modisette this afternoon.

18           CHAIRPERSON LLOYD:  Thank you.

19           Mrs. Riordan.

20           BOARD MEMBER RIORDAN:  Mr. Chairman, I also had a

21  meeting with Tim Flannegan representing the Outdoor Power

22  Equipment Institute in mid-September.  And the discussion

23  revolved around the safety issues and their submittal of a

24  plan to staff.  I did not see that plan, nor was it

25  discussed.  It was just simply mentioned.  And he provided


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 1  me with two letters, one from the National Association of

 2  Fire Marshals, which we have today, and also a letter from

 3  the California Fire Chiefs Association.

 4           CHAIRPERSON LLOYD:  Mr. Calhoun.

 5           On September 27th -- September 22nd and September

 6  23rd I had discussions -- telephone discussions with John

 7  Dunlap, who was assisting Tim Flannegan on behalf of the

 8  Outdoor Power Equipment Institute.

 9           And August 25th, 28th, and September 4th, I had a

10  meeting with Kirk Markwald with the California

11  Environmental Associates representing Briggs and Stratton

12  to discuss this issue along the lines we had today,

13  discussing the desire of the industry to look at a

14  counterproposal and also to look at some of the -- address

15  the travel issues.

16           And on September the 8th I had a meeting with

17  Kirk Markwald and Bob Wyman, Attorney at Law with Latham &

18  Watkins, representing Briggs and Stratton.  And that was

19  also to address the issue of a counterproposal to address

20  the issue of travel.  And it was after the introduction of

21  the bond amendment.

22           So with that, let's throw it open for discussion.

23           BOARD MEMBER RIORDAN:  Mr. Chairman, if I might.

24  It seems to me that we had staff accommodate many of the

25  issues that were in the plan.  Obviously details need to


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 1  be worked out.  I certainly would support the 30-day

 2  review period in recognition of those items that need to

 3  be discussed in final detail; and then certainly allow you

 4  the discretion if you think this Board should ever be

 5  involved with any of the issues following that

 6  approximately 60-day period.

 7           CHAIRPERSON LLOYD:  Okay.  Other comments?

 8           Ms. D'Adamo.

 9           BOARD MEMBER D'ADAMO:  Oh, I'm sorry.  I took it

10  to mean it was a motion.  I was just going to add to it.

11           No comments.

12           CHAIRPERSON LLOYD:  Okay.  Please do.

13           BOARD MEMBER D'ADAMO:  If that could be offered

14  as a motion --

15           BOARD MEMBER RIORDAN:  I'll put that in the form

16  of a motion.

17           BOARD MEMBER D'ADAMO:  -- for the resolution

18  that's before us with that addition.

19           Then in addition, I'd like to make certain that

20  the zero emission component is reviewed by staff with

21  regard to a number of different options, incentive or a

22  fleet concept or other mechanisms, and that staff report

23  back to the Board.  I don't recall if we --

24           CHAIRPERSON LLOYD:  Six months.

25           BOARD MEMBER D'ADAMO:  Six months?


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 1           All right.  Within six months.

 2           With that, I'd second it.

 3           CHAIRPERSON LLOYD:  Sounds good.

 4           So if there's no other discussion, again I --

 5  Professor Friedman.

 6           BOARD MEMBER HUGH FRIEDMAN:  Just to make the

 7  record clear.  I don't think that -- we're acting on this

 8  proposal and resolution, and then as a follow-on we're

 9  asking the staff to look in to this other.  I don't want

10  to -- this is not part of this action.

11           BOARD MEMBER D'ADAMO:  No.

12           CHAIRPERSON LLOYD:  No, no, no, no.

13           BOARD MEMBER HUGH FRIEDMAN:  It's related

14  obviously.

15           CHAIRPERSON LLOYD:  Yeah, that's right.

16           BOARD MEMBER HUGH FRIEDMAN:  It's not dependent

17  on it and it's not part of it so that --

18           EXECUTIVE OFFICER WITHERSPOON:  Thank you for

19  clarifying that.

20           CHAIRPERSON LLOYD:  And, again, I think it's --

21  you know, as I said earlier, this puts us in a somewhat

22  uncomfortable position.  But I feel we have to bring this

23  to conclusion and send a signal.

24           BOARD MEMBER HUGH FRIEDMAN:  I just wanted to add

25  that I think we are scrambling desperately to find every


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 1  pound, every ounce, every ton of emission reduction in

 2  this state.  We're seeing that we're losing ground in

 3  South Coast and elsewhere.  We have a federal mandate.  We

 4  have our own needs for the health of people.  And we have

 5  obviously a direct legitimate and important interest in

 6  reducing emissions.  And this is another area where we can

 7  reduce them, and we've known that for a long time.  And

 8  we've tried to work out a reasonable, rational plan for

 9  it.

10           The original proposal met with opposition from

11  those who would be regulated, and they responded.  And

12  they proposed alternatives, which I understand we have

13  pretty much accepted as alternatives, which appear to me

14  to respond to and adequately address and take care of the

15  principal concerns that were raised in terms of safety on

16  the temperature issue, the exhaust reductions.

17           And at the same time we get a bigger -- as much a

18  bang or bigger bang through increasing the evaporative

19  emissions, which was part of the industry's proposal as I

20  understand it, including Briggs and Stratton and others.

21           So, again, I think this is a collaborative

22  effort.  And there are details to be ironed out,

23  clarifications to be made that are sought by industry.

24  And that's the reason we have this 15- or now 30-day

25  process for notice.  And I feel we're doing what we need


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 1  to do.  It's important that we do it for a lot of reasons.

 2           And so I -- if it was seconded, I third it.  If

 3  not, I'm ready to vote.

 4           CHAIRPERSON LLOYD:  Thank you.

 5           And Supervisor DeSaulnier.

 6           BOARD MEMBER DeSAULNIER:  Just briefly.  I do

 7  think it's important, although it's separate, to reiterate

 8  going after the zero.  There's lots of potential there.

 9  And all kidding aside, I think staff can come up with

10  something.

11           I also wanted to, in terms of something -- in

12  regards to Jed's comments.  I remember last time the

13  Board, and some of us who were here, dealt with this

14  source and it was very contentious.  And I remember a

15  quote in the Wall Street Journal about that directed at

16  the manufacturers.  And unfortunately those -- and some of

17  my colleagues remember -- unfortunately broke in to the

18  Japanese manufacturers and the American manufacturers.

19           And the quote in the Journal story was critical

20  of the American manufacturers -- and I can't remember who

21  said it, it wasn't me, I wish I had -- was that Japanese

22  companies had spent more time on research and development

23  and the American companies, unfortunately, spent too much

24  time on lawyers and lobbyists.  And I think that's changed

25  dramatically this time.  We obviously have one unfortunate


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 1  situation.  But I did want to acknowledge to Jed that I

 2  think the industry has come a long way and hopefully we

 3  can close those last remaining obstacles.

 4           And then, lastly, I can't help but make a comment

 5  about how many times I've heard the word "recall" in the

 6  last couple hours.  And it's nice to hear it in a

 7  different context.  Although I can't help but say it may

 8  be harder to recall one lawnmower than it is to recall the

 9  Governor of California.

10           Thank you, Mr. Chairman.

11           CHAIRPERSON LLOYD:  Well, I think we need to fix

12  that.  And so I will definitely --

13           BOARD MEMBER DeSAULNIER:  Do we have the

14  authority?

15           CHAIRPERSON LLOYD:  No, I would definitely like

16  on the lawnmower side -- I think included in our

17  resolution I would like to follow up my earlier comments

18  about looking at an effective program to monitor end-use

19  emissions.  And that's enough said.  So we may have

20  opportunities there.

21           So with that I think -- no more comments.  I'd

22  ask for a vote.  We've got the resolution seconder.

23           All in favor say aye.

24           (Ayes.)

25           CHAIRPERSON LLOYD:  Anyone against?


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 1           No.

 2           Thank you.

 3           And, again, thank you very much, staff, for a

 4  great job as usual there.  And I really appreciate it very

 5  much.

 6           And thank you for coming -- for the industry

 7  coming to testify.  Hopefully we can get to a better spot.

 8  But I think we've come a long way to answer that.

 9           And, Jed, we can assure you you will have -- we

10  can keep you busy between now and Christmas.

11           BOARD MEMBER RIORDAN:  All right, Jed.  We've got

12  a -- you know, so 60 days from today, figure that all out.

13  You'll be here at the right time.

14           CHAIRPERSON LLOYD:  We'll take just a five-minute

15  break.  And then we'll go in to the last item for the day.

16           (Thereupon a recess was taken.)

17           CHAIRPERSON LLOYD:  Final item on today's agenda

18  is 03-7-4, informational report on supplementary

19  activities related to the zero emission vehicle Program.

20           When we adopted modifications to the ZEV program

21  in April of this year, we made difficult decisions about

22  the direction and structure of the regulation.  By the end

23  of the hearing I believe this Board crafted a delicate

24  balance that takes advantage of the strides made by

25  extremely clean gasoline vehicles and the full potential


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 1  of the rapidly growing hybrid vehicle market.

 2           Most importantly, the revised regulation allows

 3  for the continued development of zero emission vehicles on

 4  a technically sound pace.

 5           Our goals throughout the years remained the same:

 6  Improved emissions from motor vehicles with a long-term

 7  vision of commercializing zero emission vehicles.

 8           We've learned in the course of the ZEV Program

 9  that commercialization of pure ZEVs continues to be

10  challenging and many ideas and possibilities continue to

11  develop.  As a consequence, the Board directed staff to

12  evaluate whether it was appropriate and beneficial to the

13  overall ZEV Program to provide incentives for stationary

14  fuel cells and hydrogen infrastructure, as well as

15  increasing incentives for transportation systems.  I look

16  forward to the results of that assessment.

17           Ms. Witherspoon, I turn it over to you.

18           EXECUTIVE OFFICER WITHERSPOON:  Thank you,

19  Chairman Lloyd and members of the Board.

20           At the March and April Board meetings, there were

21  some intriguing ideas for ZEV credits on the table.  We

22  did not have a full chance to evaluate given the pressures

23  of time and the complexity of the larger issues the Board

24  was debating at those hearings.

25           Consequently, you asked us to come back with a


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 1  more detailed evaluation and specific recommendations on

 2  three things:

 3           Should stationary applications of motor vehicle

 4  fuel cells receive ZEV credits?  If yes, how should those

 5  credits be structured?

 6           Should ZEV credits be used to foster the

 7  development of hydrogen infrastructure?

 8           And should transportation system credits be

 9  enhanced or expanded?

10           The informational report before you is staff's

11  attempt to describe what's at stake, to identify the pros

12  and cons; and when we've reached the conclusions, to give

13  you our advice about which, if any, credits should be

14  added to the ZEV Regulation you approved in April.

15           If you like anything that you see here and wanted

16  to pursue it further, staff will turn those ideas in to

17  actual regulatory language and run it through our normal

18  workshop and hearing process.  That would bring us back

19  before the Board with a narrow proposal sometime next

20  spring.

21           Alternatively, if you conclude that no additional

22  ZEV credits are needed or warranted at this time, we'll

23  leave the existing credits in place until the next time

24  the Board revisits the overall ZEV Regulation, most likely

25  in the 2006 to 2007 timeframe.


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 1           Mr. Gerhard Achtelik of the Mobile Source Control

 2  Division will now make the staff presentation.

 3           (Thereupon an overhead presentation was

 4           Presented as follows.)

 5           MR. ACHTELIK:  Good evening, Chairman Lloyd and

 6  members of the Board.  I will begin the staff presentation

 7  with a brief background on why we are coming to you with

 8  this informational report, and some activities related to

 9  the zero emission vehicle Program.  I will also summarize

10  staff's findings and recommendations.

11                            --o0o--

12           MR. ACHTELIK:  At the April 2003 public hearing

13  the Board considered and adopted amendments to the zero

14  emission vehicle regulations.  At that time, the Board

15  directed staff to evaluate whether it was appropriate and

16  beneficial to the ZEV Program to provide incentives for

17  stationary fuel cells and hydrogen infrastructure, as well

18  as increase incentives for transportation systems.

19           The staff conducted their evaluation, and for

20  each topic identified the relevant parameters:  That if

21  incentives would be beneficial to the zero emission

22  vehicle development and if zero emission vehicle credits

23  would be an appropriate incentive.

24           I will present the topics in the order listed.

25                            --o0o--


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 1           MR. ACHTELIK:  For the first topic, staff

 2  investigated if the use of vehicle fuel cells in

 3  stationary applications could foster zero emission vehicle

 4  development.

 5           At this time, fuel cells are at an early stage of

 6  commercial development.  Only a limited number of

 7  commercial products are available.  Providing incentives

 8  for the placement of stationary fuel cells could increase

 9  production of fuel cells above the number anticipated

10  through the ZEV regulations.

11           The table on this slide identifies parameters

12  that could be affected through increased fuel cell

13  production.

14           The increased production of fuel cells have the

15  potential to positively influence manufacturing experience

16  and the component supplier base.  This could provide

17  modest cost reductions.

18           In addition, the use of stationary fuel cells

19  could also provide accelerated service life information.

20  Within seven months of full-time operations a stationary

21  fuel cell could achieve the rough equivalent of 100,000

22  miles.  However, a stationary application is very

23  different from a motor vehicle application and would not

24  address all issues facing fuel cell vehicles.

25           Staff research leads to the conclusion there


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 1  would be neutral impacts on the automation of fuel cell

 2  assembly, vehicle integration, service condition

 3  information, infrastructure, and codes and standards

 4  development.

 5           There are three areas of concern where the use of

 6  ZEV credit incentives could create a negative or

 7  unintended impact.

 8           First, the fuel cell industry is still emerging

 9  without a clearly established market.  And staff

10  considered whether providing ZEV credits could create

11  disadvantages.  It is important to note that there is only

12  one fuel cell type, the proton exchange membrane, or PEM

13  fuel cell, that is used in both the stationary and

14  vehicular markets.  There are other types of fuel cells

15  that have advantages in specific applications, but are not

16  used in vehicles.

17           Through our research staff was unable to reach a

18  definitive conclusion on ZEV credits to vehicle PEM

19  manufacturers would disadvantage the competing fuel cell

20  manufacturers.

21           Second, when providing ZEV credits for any new

22  type of activity such as stationary fuel cells, the

23  tradeoff is fewer ZEV vehicles on the road.

24           And, third, although we think there is some

25  technical merit to providing ZEV credits for stationary


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 1  fuel cells, we are concerned about the precedent that

 2  would be set by providing mobile source credits for a

 3  stationary application.  To date, the California vehicle

 4  regulations require direct compliance and have not allowed

 5  stationary credit of any kind.  This approach has been

 6  successful.  We specifically seek policy direction from

 7  the Board on this issue.

 8                            --o0o--

 9           MR. ACHTELIK:  Given these findings, staff is

10  hesitant to recommend ZEV credit for stationary fuel

11  cells.  If the Board chooses to award credits, staff

12  recommends the credits be limited as follows:

13           Provide silver credits.  The use of vehicle fuel

14  cells in a stationary application is zero emission vehicle

15  engagement.  It does not produce a vehicle, but

16  potentially fosters the development of technology that is

17  used in a vehicle.

18           Credits should be limited to fuel cell technology

19  with demonstrated use in motor vehicles.

20           Credits should be limited to California

21  placement.

22           Credits need to be capped so they do not

23  overwhelm the ZEV Program.

24           Credits should sunset after 2008, which is the

25  end of the initial phase of the alternative compliance


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 1  path.

 2           And any credit continuation should be reviewed by

 3  an independent expert review panel.

 4                            --o0o--

 5           MR. ACHTELIK:  For the second topic, staff

 6  investigated the role of incentives for developing

 7  hydrogen infrastructure.  Staff recognizes that the

 8  availability of hydrogen refueling stations will be

 9  critical to the success of fuel cell vehicles.  However,

10  the fundamental question for this review is:  What is the

11  role of government in specifically the ZEV Regulation in

12  developing hydrogen infrastructure?

13           Since ZEV credit is needed by automakers, not

14  energy suppliers, providing ZEV credits for fueling

15  infrastructure could send a confusing signal about who the

16  State is expecting to step forward.  Staff finds that

17  energy providers are the best fit for infrastructure

18  development.  Therefore, staff recommends that ZEV credits

19  not be used to develop fueling infrastructure.

20           A strong factor in staff's recommendation is the

21  existence of the Clean Fuels Outlet Program.  The Clean

22  Fuels Outlet Program requires owners or lessors of a large

23  number of retail stations to provide a certain number of

24  clean fuel outlets on approximately 20,000 vehicles using

25  the same fuel that are in use statewide.


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 1           Although the program was not developed with

 2  hydrogen in mind, it is sufficiently broad to apply to

 3  hydrogen.

 4           Additionally, the California Fuel Cell

 5  Partnership has proven to be an effective way to achieving

 6  the early milestones needed to create hydrogen

 7  infrastructure.  The fuel cell partnership has

 8  successfully placed seven hydrogen fueling stations in

 9  California.  The partnership is also a guiding contributor

10  to the development of vehicle and infrastructure-related

11  codes and standards, and ARB remains committed to being an

12  active member in this partnership.

13                            --o0o--

14           MR. ACHTELIK:  Concerns over providing ZEV credit

15  for hydrogen infrastructure are the same as those

16  expressed for stationary fuel cells.  They include the

17  impact on the ZEV production requirements and the

18  precedent that would be set by providing mobile source

19  credits for stationary applications.

20           While staff does not recommend providing the ZEV

21  credits for hydrogen stations, we did identify several

22  areas for some type of incentive which help achieve

23  specific important infrastructure development goals.  As

24  the number of hydrogen fuel vehicles increases,

25  specifically incentives could be used to focus on hydrogen


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 1  production through clean or removable means, development

 2  of fuel infrastructure at targeted locations, and to

 3  assure a sufficient quantity of stations.

 4           For the third topic staff was asked to determine

 5  if incentives for car sharing, station car projects, or

 6  transit-related projects should be implemented.  Such

 7  projects are valuable to ARB's efforts to improve air

 8  quality, not only through their emission reduction

 9  benefits, but also through their support of

10  commercialization of ZEVs.

11                            --o0o--

12           MR. ACHTELIK:  Staff reviewed the existing

13  regulation and found that the current incentives are

14  appropriately generous to encourage these projects.

15  Therefore, staff recommends do not change the credit

16  value.  However, staff did find that it would be

17  appropriate to allow Neighborhood Electric Vehicles, or

18  NEVs, to earn transportation system credits if their value

19  is limited.  The current regulations specifically exclude

20  NEVs from earning such credit.

21           The use of NEVs in transportation projects

22  provides a relatively lower cost, clean vehicle option;

23  increases the number of miles traveled in clean vehicles;

24  and provides a vehicle appropriate for short trips.

25           An additional means to expand incentives to car


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 1  sharing or station car projects is to allow transportation

 2  system credits to be applied to the goal ZEV is requiring

 3  for manufacturers on the alternative compliance path.

 4  While this could encourage more ZEVs to be used in car

 5  sharing or station car projects, it could decrease the

 6  number of ZEVs produced.  Therefore, staff recommends that

 7  these credits be included in the BEV substitution cap in

 8  the alternative compliance path.

 9           In determining appropriate credit ratios staff

10  could consider comparable costs for compliance options.

11           Another means of encouraging the use of ZEVs is

12  to provide credit for taxi or shuttle services that have

13  links to the transit systems and use ZEVs.  Taxis and

14  shuttles typically are used in highly populated areas with

15  poor air quality and travel a significant number of miles.

16  In addition to the air quality benefit, the use of ZEVs

17  for taxis and shuttles would provide additional public

18  exposure to ZEV technologies.

19           While the availability of additional credits for

20  transportation system related activities can provide

21  benefit to the development of ZEVs, the use of credits

22  will decrease the overall number of vehicles required to

23  be produced.

24           Finally, staff will continue to work through an

25  agreement with the California Energy Commission and the


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 1  California Department of Transportation to foster

 2  non-regulatory projects that facilitate car sharing and

 3  station car projects.

 4                            --o0o--

 5           MR. ACHTELIK:  To conclude my presentation for

 6  the three topic areas that the Board directed us to

 7  review, I'll provide a brief summary of possible next

 8  steps.

 9           For the use of vehicle fuel cells in stationary

10  application, the staff was hesitant to recommend along the

11  ZEV credits because of the policy concerns described; and

12  recommend that if credits are allowed, that the credits be

13  limited.

14           For hydrogen infrastructure, staff recommends

15  against the use of ZEV credits.

16           And for transportation system, staff recommends

17  expanding the availability of credits to allowing the

18  restricted use of transportation credits in the

19  alternative compliance path.

20           If the Board decides additional ZEV credits are

21  appropriate, staff will begin a series of workshops and

22  meetings to develop a regulatory proposal.  The regulatory

23  proposal would be brought to the Board for consideration

24  in spring of 2004.

25           In addition, staff will continue to work with


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 1  partners such as the California Energy Commission,

 2  California Department of Transportation, and the

 3  California Fuel Cell Partnership.

 4           This concludes my presentation.  And thank you

 5  for your time.  We would be happy to answer further

 6  questions.

 7           CHAIRPERSON LLOYD:  Thank you very much.

 8           Professor Friedman.

 9           BOARD MEMBER HUGH FRIEDMAN:  A couple quick

10  questions.

11           On the stationary fuel cells, am I correct in

12  assuming that they would replace otherwise emitting --

13  pollution emitting motors?  And unless they're on battery.

14  I mean wouldn't there be emission reductions as a positive

15  predictable from --

16           EXECUTIVE OFFICER WITHERSPOON:  That depends

17  where the hydrogens come from, I suppose.  Because you

18  would have to consider stationary fuel cells of hydrogen

19  against the electricity that otherwise would have been

20  provided to that stationary facility.

21           Also, whether it's used in a backup context or

22  for a fullpower load, that's --

23           BOARD MEMBER HUGH FRIEDMAN:  So there are not

24  necessarily emission reductions using fuel cells --

25  stationary fuel cells as compared to not using them?


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 1           EXECUTIVE OFFICER WITHERSPOON:  Well, we'll need

 2  the Chairman because he's as knowledgeable about this as

 3  anyone.  I mean I do think it's -- I do think it's a life

 4  cycle analysis sort of a thing, and it does depend where

 5  the hydrogen came from and how it was produced in this

 6  state, from what fuel stock.  It's going to come in a

 7  bottle is the thing.  And so I -- you can analyze it in

 8  terms of a large deployment theoretically.  But in the

 9  practical application of, you know, a handful of

10  stationary fuel cells, I don't know if it's a meaningful

11  analysis.

12           CHAIRPERSON LLOYD:  I think it can have a

13  significant emission benefit or it could be neutral.

14           BOARD MEMBER HUGH FRIEDMAN:  I mean if it's a

15  diesel -- a dirty diesel, that's --

16           CHAIRPERSON LLOYD:  And I think on a case-by-case

17  basis.

18           BOARD MEMBER HUGH FRIEDMAN:  Okay.  Well, I was

19  just wondering in an attempt here to relate positives and

20  negatives.

21           Also sunseting after 2008.  There was something

22  elsewhere that said after 2009.

23           Is it 8?  Is that the year that the staff was

24  suggesting?  Assuming --

25           EXECUTIVE OFFICER WITHERSPOON:  Yes, it will run


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 1  through the first phase, the '05 through '08 deployment of

 2  the fuel cell vehicles, the 250 fuel cell vehicles.  And

 3  then to be revisited later.  And the question is:  Is it

 4  still vehicle enabling?  Or are we now on to other

 5  questions about the vehicles that cannot be addressed and

 6  very helpful by the stationary fuel cells.

 7           BOARD MEMBER HUGH FRIEDMAN:  We have some I guess

 8  people that --

 9           CHAIRPERSON LLOYD:  -- that will be testifying,

10  yes.

11           Supervisor DeSaulnier.

12           BOARD MEMBER DeSAULNIER:  Just briefly, Mr.

13  Chairman.

14           BOARD MEMBER CALHOUN:  I guess I don't

15  necessarily agree with the -- if you have -- a previous

16  comment relative to the use of a fuel cell.  If you have a

17  fuel cell that -- if there aren't -- one stationary --

18  stationary source and another one in a fuel cell, you're

19  trying to -- assume that you're trying to really develop

20  this technology, maybe it isn't completely fully

21  developed.

22           Wouldn't there be an advantage to use -- if

23  you've used the same fuel cell, wouldn't there be an

24  advantage to get the information from the fuel cell that's

25  been used in the stationary source?


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 1           EXECUTIVE OFFICER WITHERSPOON:  Well, you're

 2  comparing the stationary fuel cell to putting it in a

 3  vehicle and how many hours it might be driven and how much

 4  fuel it might consume.  And that's one comparison.  I

 5  understood Professor Friedman's question to be about

 6  additional benefits that might happen by displacing

 7  electricity sources --

 8           BOARD MEMBER CALHOUN:  I'm just comparing two

 9  fuel cells.  I'm not displacing --

10           EXECUTIVE OFFICER WITHERSPOON:  Right.  And

11  whether the hydrogen would be the same or not, I don't

12  know.  But, again, we're talking about so few units.

13           CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:  I think

14  the differentiation we see in terms of the technology

15  we're seeing is that the stationary fuel cell is largely

16  "the fuel cell," and in a vehicle it's a complete system,

17  which includes the drive and all that stuff.

18           BOARD MEMBER CALHOUN:  I understand.  But the

19  staff concludes they're identical, are they not?

20           CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:  Well,

21  they are.  But the reason that we're saying that if you

22  were to do this -- which we're actually not

23  recommending -- but if you were to do this, that it fits

24  better in AT PZEV.  Because AT PZEV's job, that we set it

25  up in the silver category, is to bring the components


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 1  along so later on you can build a real ZEV, fuel cell or

 2  battery or whatever.  And because the stationary thing

 3  only deals with one piece, it's sort of enabling, but it's

 4  not a substitute.  So that's why we say it would be better

 5  to fit it in the AT PZEV category.

 6           And whether it creates emission reduction or

 7  benefits, it's kind of hard to figure out.  Yes, if you

 8  put a fuel cell in place of a diesel generator, clearly

 9  it's cleaner, right?  But if you give it credits, it

10  depends on what those credits are used for.  If you give

11  it gold credits, then those credits mean we're going to

12  get fewer fuel cell cars.  And that might -- won't have

13  much of a direct impact on emissions, but it might stop

14  the technological movement and the stepping stones to what

15  is commercialization.  If you give it AT PZEV credits, it

16  means there will be fewer AT PZEVs produced, which means

17  there will be more non-AT PZEVs or non-higher emitting

18  vehicles produced because you're using credits instead.

19  And that will have a negative impact on emissions.

20           How those actually trade off is -- you know, I

21  don't know what we can calculate because it depends on how

22  the fuel cell's used.

23           BOARD MEMBER CALHOUN:  I disagree with that.  So

24  we'll move on to the next question.

25           Why would it be necessary for an expert review


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 1  panel to review whether or not fuel cell stacked and used

 2  in the stationary source be used in a vehicle?  To me

 3  that's strictly a policy issue.  I don't see where the

 4  expert panel comes in to this.

 5           EXECUTIVE OFFICER WITHERSPOON:  We were simply

 6  saying that if the Board chose to give stationary credits,

 7  which Tom points out the staff's not recommending, that if

 8  you did it, you should have a sunset and not do it in

 9  perpetuity, and that you should ask the question of

10  yourselves, of us -- and we could bring the outside review

11  panel in or not -- but ask the question:  Is this enabling

12  to the vehicles?  If we keep giving this credit past 2008,

13  are we helping anything or are we just giving cars away?

14  Because every time you grant credit you get fewer cars

15  because you're going to get stationary fuel cells instead.

16           CHAIRPERSON LLOYD:  Well, I agree with Joe.  I

17  don't think we need an expert panel on that.  It's one of

18  the benefits of working through a partnership.  We're all

19  working together and sharing in that experience.  And

20  we're going to see as a partner whether that's still the

21  case.

22           EXECUTIVE OFFICER WITHERSPOON:  We would still

23  suggest a sunset so it gets --

24           CHAIRPERSON LLOYD:  Oh, that's a separate issue,

25  a separate issue.


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 1           What I'd like to do is call the first witness

 2  here, because we've been speculating.  But now I'd like to

 3  call up Tim Vail from GM, who's actually the experts on

 4  this.

 5           Tim, you really scared the Board when I heard

 6  that you were on the wrong presentation.  Can you cut it

 7  down to five and hit the highlights?

 8           MR. VAIL:  Yeah, well, I brought 110 slides.

 9           CHAIRPERSON LLOYD:  Well, I figured that.

10           MR. VAIL:  So, you know, I would not want to go

11  through all of them.

12           But, no.  I can shorten it up.

13           CHAIRPERSON LLOYD:  You increase your chances of

14  the Board directing staff, you know, if you --

15           MR. VAIL:  Yeah, I understand the time.

16  Hopefully I'll be able to get through it in the time

17  period.  And the first few slides are what's important.

18  And, you know, if we get through the rest, it's not -- you

19  know, we can move them along.

20           (Thereupon an overhead presentation was

21           Presented as follows.)

22           MR. VAIL:  But I am -- I'm Tim Vail.  I'm the

23  Director of our Fuel Cell Commercialization Activities at

24  GM.  I'm based in Detroit.  And my job is to try to figure

25  out a way so that we can get these fuel cells into the


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 1  market before we actually have them available for cars.

 2           DG is a big component of my work, and I think a

 3  very, very important aspect of advancing fuel cell

 4  technology.

 5                            --o0o--

 6           MR. VAIL:  Why we're here today is we really

 7  believe that stationary fuel cells are key to the

 8  development path for automotive fuel cell placement.  But

 9  we have a challenge in that today the DG market with PEM

10  fuel cells is not supportable from an economics basis.

11  And what we need is we need other things to help us kind

12  of over that hill in the business case.  And if we could

13  get some form of credit in California for our stationary

14  full cells, this would certainly make a compelling case

15  for us.

16           And so what we're asking today is that the Board

17  reaffirm its support for limited AT PZEV credits for DG

18  applications.

19                            --o0o--

20           MR. VAIL:  And we actually have many areas of

21  agreement with the staff report.

22           We agree that AT PZEV credits are appropriate.

23  This does advance a component of a ZEV vehicle.  It's an

24  important component, the fuel cell stack itself, but it

25  doesn't advance the entire system.  So we think that the


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 1  PZEV credits are appropriate.

 2           We agree that there should be a limited term on

 3  the -- excuse me.  We agree that the full cell credit

 4  should only go to vehicles.  We also agree that there

 5  should be a cap on the number of credits.

 6           We agree that there should be a sunset provision,

 7  and the 2008 sunset provision is acceptable.

 8           And we agree that the fuel -- the credits should

 9  be limited to just the LEVs.  And what we really see this

10  as is not a replacement of ZEV vehicles, but we really see

11  this as a short-term measure in order for us to jump start

12  our long-term vision of commercial retail fuel cell

13  vehicles.

14                            --o0o--

15           MR. VAIL:  Well, I just want to recap here.  What

16  we're talking about is the technology is exactly the same

17  in the DG unit that we'd be putting in the vehicles.  We

18  are very focused on producing what we call the fuel cell

19  power module.  And that power module is what's key.  We

20  know how to build cars.  What we need to learn how to

21  build and what we need to build a supplier base around is

22  that module.  And so the more modules we can produce, the

23  more it advances our program.  What we'd like to do is put

24  a larger quantity in to stationary applications and limit

25  the number that go into cars.  And there's a lot of


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 1  reasons around that, but primarily it's cost and

 2  supportability of the vehicles.

 3                            --o0o--

 4           MR. VAIL:  And so today there really is no fuel

 5  cell industry.  I mean there's a lot of fuel cell

 6  development activities.  But one of the challenges we have

 7  as the automotive maker is -- the supply place development

 8  is incredibly important for us to be successful with the

 9  vehicles.  And today all they see is these runoffs that

10  are a limited number of demonstration applications.

11           And what we -- in discussions with them, what we

12  really find is that a real true commercial opportunity is

13  what really turns them on and gets them excited.  And it

14  really is a -- it's really two reasons why:  1) When you

15  put them into a DG application, you really lower the --

16  not only the support cost, but also the legacy risk of

17  those units, in the sense that if we got a technology

18  problem and we have something wrong with one of our

19  stacks, we can just go down there and replace it with

20  another one in the power unit.  But if it's in a vehicle,

21  we have to actually strap the vehicle.  You can't just do

22  an easy replacement.

23           Also when we have a -- had them in a DG

24  environment, we're much better at controlling the

25  environment.  So when we really look for real-world


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 1  testing, we can do many more tests and many more cycles in

 2  a stationary environment than we can in a car.

 3           And I want to address a common misconception

 4  about the stationary duty cycle and the automotive duty

 5  cycle.  They're very different.  But what we intend to do

 6  is operate our fuel cells in the majority of the time on

 7  what we call the Rosso automotive duty cycle.

 8           So, for example, in Dow Chemical one of the deals

 9  we announced this summer, we're actually going to put

10  those fuel cells down there and run them like they're in a

11  car.  We're going to cycle them up and down, start them

12  and stop them.  And then when we have enough of them in

13  one location, we can balance -- and still produce power,

14  yet balance the needs of that testing.

15           So what's really important to us in our supplier

16  base is that we can start to build volume in these

17  modules, and we can do it now as opposed to waiting till

18  later.  And what this really means is that we can bring

19  cars -- real volumes of cars to market much sooner when we

20  have this avenue.

21                            --o0o--

22           MR. VAIL:  And a graphical depiction of that

23  is -- we have -- today we're in this kind of demo phase.

24  And demos are going to get us to a limited number.  We're

25  also going to build some engineering vehicles, and that


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 1  will certainly help.  But the industrial power in

 2  distributed generation is where we really capture most of

 3  our early-term volume.  And it's -- you know, frankly I

 4  don't know how we're going to be able to get over that

 5  hump without some distributed generation market

 6  penetration, because we just can't build enough cars that

 7  make a difference in this interim period to be able to

 8  engage the supplier base and get us there.  And DG and

 9  industrial power is clearly the way for us to do that.

10           But we can't make the business case for it today

11  without some sort of alternative value driver.  And that's

12  why the credits are so important to us.  And I think if we

13  were able to get AT PZEV credits -- granted, for just a

14  short time, we don't need it forever, we just need it for

15  this kind of introductory period -- that's going to give

16  our board at GM the real impetus to "Hey, let's start

17  building this DG market."

18           And we agree that we don't need to -- we're not

19  looking for the credits to replace those in states that

20  aren't part of the -- you know, the -- I guess the

21  traveling, you know, piece of it.  And so we're looking to

22  put DG units in California in a quantity that will help us

23  get through the stair step.

24           Now, Alan, I have, you know, six more slides that

25  kind of go through the points one by one.  You have our


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 1  written comments as well as this deck.  And feel free to

 2  look at it.  But, yeah, I think that's, you know, the real

 3  core of our position is that we need this early volume.

 4           CHAIRPERSON LLOYD:  I think you've hit the high

 5  points as far as I'm concerned.

 6           MR. VAIL:  Any questions?

 7           CHAIRPERSON LLOYD:  Thank you.

 8           MR. VAIL:  Thank you.

 9           CHAIRPERSON LLOYD:  You can see the Board is

10  pretty stressed out here, I guess.  But we made the key

11  points, which --

12           BOARD MEMBER RIORDAN:  Mr. Chairman, he made a

13  very good presentation.  He covered it all.  Look at it

14  that way, positive.

15           CHAIRPERSON LLOYD:  Now, Tom, if you could do

16  likewise.

17           MR. FULKS:  Mr. Chairman, Board members.  My name

18  is Tom Fulks.  I am the Executive Vice President of the

19  Green Car Marketing communications and a researcher for

20  the Green Car Institute.

21           (Thereupon an overhead presentation was

22           Presented as follows.)

23           MR. FULKS:  We're working with DaimlerChrysler on

24  the NEV as a class of vehicle.  And it's always my

25  pleasure to speak to your Board when I'm extremely rushed


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 1  for time, which seems to be the case every time I stand up

 2  here.  So I'm used to it.  I'm prepared.  So if you don't

 3  mind, I'm just going to blast through.

 4                            --o0o--

 5           MR. FULKS:  I'm here to talk about two things in

 6  particular:

 7           One is the station car concept, the systems

 8  concept.  Just to give you a brief update, we and Daimler

 9  are in support of the staff recommendation to allow

10  credits for NEVs for station car programs and systems

11  programs obviously.

12           A quick update.  We're doing a program now, a

13  demonstration program, data collection program with

14  Sacramento Regional Transit.  Originally, the concept was

15  to place 20 NEVs in Natomas -- in the Natomas area because

16  it's a master planned community, which in our research is

17  the most promising area for the increased use of NEVs as a

18  class of vehicle.

19           Regional Transit's kind of pushing back, saying,

20  "Well, you know, we have actually some applications for

21  the NEV as a station car that may be better, in fact it

22  may bring you better data when you're tracking the use of

23  these vehicles."  And the data we're collecting from these

24  users will be:  Does it increase transit ridership?  Does

25  it -- do we have higher occupancy in the NEV cars


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 1  themselves?  And do we do a number of other things?  Does

 2  it encourage transit ridership as an incentive in any way?

 3  We'll be tracking that information and bringing it back to

 4  you at some point probably in the spring.

 5           We expect a launch program by the end of this

 6  year.  We're in the implementation discussion phase right

 7  now with Regional Transit.  So that's where we are on that

 8  one.

 9           And the next issue I'd like to talk to you about

10  is the ZEV credit issue itself with NEVs.  And if

11  you'll -- as you'll see, the staff report up here

12  basically said, "We'll come back and visit this when we

13  have more data."  And so we actually have more data.  And

14  that's what I wanted to talk to you about on my next

15  slide.

16           And obviously I'm not working this thing

17  correctly.

18           Thank you.

19           Is this working or are you doing it manually?

20                            --o0o--

21           MR. FULKS:  Okay.  We went in in July of this

22  year in -- oh, I'm going backwards.  Excuse me.  Sorry.

23  User error.

24           We went in in July of this year and did a study

25  of NEV users in California.  We used the GEM database of


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 1  10,000 NEV users.  We know for our own research in the

 2  industry that there about 15,000 NEVs in California.  I

 3  think I testified to this effect several months ago.

 4  While at that time staff -- and we have been talking to

 5  staff about this -- basically said, "Well, let's go find

 6  out more about this."  And so that's what we did.

 7                            --o0o--

 8           MR. FULKS:  So we used the GEM database because

 9  it's really the only database of NEV users available in

10  California.  The volume of NEV sales is smaller for

11  everybody else, so it was a reliable database.  Although

12  we do know that as a result of forward thinking favors,

13  the club car and pathway, and of course they were given

14  away by another company, plus any others, there are about

15  15,000 in service right now.  Which of course it does

16  represent the largest single concentration of pure Battery

17  Electric Vehicles anywhere in the world.  And that's sort

18  of an assertion that we're making based on the data.

19                            --o0o--

20           MR. FULKS:  If I could just get this doggone

21  thing to work for me, I'd be a lot happier.

22           So we interviewed 260 NEV users.  One hundred

23  sixty of them were individual household users, buyers of

24  the vehicle; 98 were small fleet operators of four NEVs or

25  less.  We interviewed them on the phone for 15 to 25


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 1  minutes.  Margin of error was 6.8 percent.  The numbers

 2  were crunched by the Institute for Transportation Studies

 3  over at UC Davis, Ken Coronni, who's a good statistician.

 4  And we used that data to extrapolate out to the 10,000

 5  user database -- 10,000 user number, meaning all the

 6  numbers that we're representing are based on a 10,000 NEV

 7  user baseline as opposed to 15,000.  So we wanted to be

 8  conservative.

 9                            --o0o--

10           MR. FULKS:  We found, interestingly, of all the

11  trips that NEV users took, they use their NEVs two out of

12  three times.  When they were given a choice between an

13  internal combustion engine and a NEV, they chose the NEV

14  two out of three times.  And so this is the type of mode

15  that they replaced when they did this.  And so I'm trying

16  to make it quick.

17           But it's a really important point, that they

18  chose the NEV two out of three times.  It's the only

19  technology we're aware of that actually not only provides

20  automobile drivers a choice, but makes them think about

21  how they travel about their communities.

22           Some quick statistics here.  The average number

23  of trips a day in a NEV is 3 point -- whatever it is --

24  3.3.  Small fleets were 14.5.  The average number of trips

25  for a NEV as it is every day is 7.5.


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 1           Next slide, please.  I'm just going to give up

 2  with this thing.

 3                            --o0o--

 4           MR. FULKS:  Most NEVs' trips are short.

 5  Seventy-five percent of NEV trips are three miles or less.

 6  So it's not the NEV making the trip, by the way.  It's the

 7  human being making the trip.  So the behavior of an

 8  automobile user is such that most of the trips are less

 9  than three miles.

10           Within that category, we found out that half of

11  those small trips are actually less than one mile.  So

12  that was a pretty interesting statistic.

13           So the point being, most people travel most of

14  the time on very short distance trips.  It's their own

15  personal behavior.  It's not the behavior of the car.

16  It's the behavior of the human being.

17           Next slide.

18                            --o0o--

19           MR. FULKS:  And I'm just going to blow right

20  through this one.

21           Basically most of these trips were trips of

22  necessity, as we call them.  They were going somewhere to

23  do something very specific.  They weren't joyriding

24  around.  One out of five trips was for fun.

25                            --o0o--


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 1           MR. FULKS:  But what really -- what we found

 2  quite astonishing was how these trips added up.  And you

 3  can see the statistics.  They'll speak for themselves.

 4  But what we found is the NEV users would account for --

 5  they do account for basically 8 million cold starts

 6  eliminated every day.  And we've got an area within our

 7  study that discusses the methodology of measuring cold

 8  starts.  And I won't get in to it right now.

 9           But to us, it was a very interesting statistic.

10  Although we know -- oh, great.  Everybody in L.A. doesn't

11  start their car one time.  You know, that's not that

12  significant overall.  But it's a start.  And it's

13  interesting.

14           Next slide, please.

15                            --o0o--

16           MR. FULKS:  Now, this is one of the things that

17  we found really interesting.  It's the land use categories

18  of where people live when they own a NEV.  It defied the

19  common perception that this is just a golf community

20  vehicle.  It's not.  If you could take a look -- the

21  biggest category was "other," because we weren't right

22  enough to understand exactly where people live in their

23  own words.

24           The "other" category includes apartment complexes

25  and condominium complexes and places like that.  The


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 1  largest identifiable area was a gated golf community of 16

 2  percent.  But then when you get down into the small town,

 3  big town, urban center, rural, it's fairly evenly

 4  distributed, meaning NEVs are used all over the place.

 5           Next slide, please.

 6                            --o0o--

 7           MR. FULKS:  In summary, the California NEV

 8  user -- I'm not going to bother with that one.  But the

 9  biggest statistic that jumped out at us was that

10  two-thirds of the NEV trips are replacing an internal

11  combustion engine; and of the NEV trips that are taken, 75

12  percent are more than two people -- are more than one

13  driver.  Seventy-five percent of high-occupancy rates.  It

14  reverses the occupancy rates of the traditional automobile

15  in California of 70 percent drive alone.

16           Next slide.

17                            --o0o--

18           MR. FULKS:  Now, what we did to quantify what the

19  benefit is --

20           CHAIRPERSON LLOYD:  How many slides have you got

21  here?

22           MR. FULKS:  I've just got two more.  I'm just

23  really hustling to get you guys out of here to go to

24  dinner.

25           What we did -- we went back and asked our


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 1  household users, "What kind of car are you leaving in the

 2  driveway or the garage?"  And what we found was it was

 3  almost identical to the overall sales split of vehicle

 4  types in California and the United States, which is 45.6

 5  percent drive sedans and 54.3 percent drive SUVs, light

 6  trucks, and vans.  This is not published material.  It's

 7  not part of our study that we have on the website and

 8  we've distributed to your staff and I believe to many of

 9  the Board members.

10           But when we asked them, "All right.  When you use

11  your NEV to replace these vehicles that you own, which one

12  do you replace?" they replace cars 43.6 percent and they

13  replace SUVs, trucks, and vans 47.6 percent.

14           Then we asked the SUV and van drivers, "Okay.

15  What specifically are you leaving in the driveway?"  SUVs

16  were 50 percent -- 51 percent; light trucks, 27.1;

17  minivans; and then full-size vans.  I thought that was an

18  interesting statistic.

19           Next slide, please.

20                            --o0o--

21           MR. FULKS:  The future -- what this all means for

22  the future is that there are -- we have another study that

23  identifies about 31 master-planned communities that are

24  being built in California during the next 10 years with a

25  minimum number of homes of 1,000.  So all together just


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 1  based on what's on the books for either in the entitlement

 2  process or already approved, in the next 10 years

 3  master-planned communities will account for 167,896 new

 4  single-family homes in California.  That's where the NEV

 5  industry's probably going to be targeted over the next

 6  couple of years in terms of volume of sales.

 7           Next slide, please.

 8                            --o0o--

 9           MR. FULKS:  So based on that, we do recommend

10  that you adopt staff recommendations on the transportation

11  systems.

12           And I'd also like to recommend that you direct

13  staff to open up a dialogue about the worth of a NEV in

14  this larger mix of California mobility, because we believe

15  the data proves the worthiness of the NEV as a class of

16  vehicle.  It is deserving of a chance to at least make its

17  case in this overall discussion of NEV credit.  And that's

18  pretty much what we're asking.  We don't want to get in to

19  the numbers right now.  Just give the NEV owners a chance

20  to make their case.  And so that's what we would be

21  requesting today.

22           Thank you.

23           CHAIRPERSON LLOYD:  Thank you.

24           Comments from staff?

25           EXECUTIVE OFFICER WITHERSPOON:  We did have an


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 1  opportunity to hear a two-hour version of this

 2  presentation or -- a two-hour meeting talking about it, I

 3  think it was.  And so it's intriguing data.  But we did

 4  not think in the context of what you asked us to report

 5  back on we should be bringing up the fundamental issues of

 6  NEV credits.  And we did point out to the Green Car

 7  Institute that NEV credits are very controversial with the

 8  environmental community.  And this is a request to change

 9  the base credit, not just how they work in transportation

10  systems, which is what staff's proposal spoke to.

11           That being said, you know, I think we can

12  continue -- if we're going to be coming back on NEVs at

13  all, keep talking about the NEV issue and what role they

14  play and how much they're worth and showed the credit had

15  no jump at all from .15, which it is now.  It used to be

16  .6.  And we discussed in our meeting were there

17  intermediate values that anyone could accept, be that us,

18  you, the environmental community, or anybody else who

19  cared to express an opinion on the issue.  But we most

20  wanted to report back to you about transportation systems,

21  which we did today, and did not entertain yet whether we

22  should change the base credit for NEVs themselves.

23           BOARD MEMBER CALHOUN:  Did we not have the

24  proposed credit for NEVs in the meeting we had a couple

25  months ago -- two or three months ago?  Wasn't ZEV -- NEV


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 1  included in that?

 2           EXECUTIVE OFFICER WITHERSPOON:  Yes.  Part of the

 3  regulation you adopted reaffirmed the declining value of

 4  NEVs, which dropped from .6 to .15 as we phase in, you

 5  know, to these cleaner vehicles.  And before that hearing,

 6  after that hearing, here today proponents are coming

 7  forward -- DaimlerChrysler's come to see us about this

 8  too -- and said, "We really want that to change.  We

 9  really want higher base credits for NEVs."

10           And we've said, "Well, the Board decided it's

11  .15."  That isn't on the table at the moment.  But we're

12  listening and learning about how the NEVs are being used

13  today.  And I'm not saying we won't ever consider it or

14  ever make a recommendation, but it wasn't part of what we

15  brought in in this staff report.

16           CHAIRPERSON LLOYD:  Move on to Robert Kittell and

17  then Kathryn Phillips.

18           BOARD MEMBER CALHOUN:  Let me mention one thing.

19           You may want to take another look at it.  And you

20  may come out to the same spot -- the same place where you

21  did before.

22           CHAIRPERSON LLOYD:  I think that's going to be

23  part of it.

24           Robert Kittell and Kathryn Phillips.

25           MR. KITTELL:   Mr. Chairman, I have a two-minute


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 1  prepared comment.

 2           CHAIRPERSON LLOYD:  Great.

 3           MR. KITTELL:   Dr. Lloyd, members of the Board,

 4  my name is Robert Kittell and I'm Chairman of Electricab

 5  Energy, owner and operator of the Electricab Taxi Company

 6  here in Sacramento.

 7           Our company supports the recommendations in the

 8  staff report on supplemental ZEV credits.

 9           CHAIRPERSON LLOYD:  You know, I really didn't

10  know you operated a fleet of electric cars here as taxis.

11           MR. KITTELL:   Yes.  And I'll expand with a

12  little bit of detail.

13           CHAIRPERSON LLOYD:  I never knew that.

14           How many staff knew that?

15           ON-ROADS CONTROLS BRANCH CHIEF KITOWSKI:  Our

16  staff have been coordinating with him.

17           CHAIRPERSON LLOYD:  So you knew all about it?

18           BOARD MEMBER DeSAULNIER:  How many staff people

19  have used the service?

20           CHAIRPERSON LLOYD:  Well, that's -- no, we should

21  be supporting that.  And, as I said, I didn't know.

22           MR. KITTELL:   Our company supports the

23  recommendations in the staff report on supplemental ZEV

24  credits:

25           "No" on ZEV credits for stationary fuel cells.


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 1           "No" on ZEV credits for hydrogen infrastructure.

 2           A qualified "yes" to expanding ZEV credits for

 3  transportation systems.

 4           And "yes" to transportation system credits in the

 5  alternative compliance pack.

 6           Our company fully supports extending the

 7  transportation system ZEV credits to zero emission taxicab

 8  and shuttle services that exhibit links to transit such as

 9  airports and rail stations.

10           The Electricab Taxi Company has already

11  demonstrated such service here in Sacramento, including

12  real-world paid fares to Amtrak via our neighborhood

13  electric taxi.

14           Furthermore, our full-size, five-passenger,

15  freeway-capable electric minivan conversion taxicab has

16  demonstrated similar service to Sacramento International

17  Airport during our field testing.  This vehicle, which is

18  parked out in front of the entrance to this building

19  today, has been calibrated and certified by Sacramento

20  County and only awaits a final inspection by the City of

21  Sacramento before officially going in to service.

22           Electricab would like the Board to go one step

23  further and recognize additional ZEV credits for such taxi

24  service that demonstrates integration of advanced

25  technologies in the operation of their vehicles.


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 1           Electricab has been awarded a patent for

 2  aggregate range optimation -- I'm sorry -- for aggregate

 3  range optimization for battery electric and fuel cell

 4  vehicles, which would be prominently demonstrated in the

 5  Electricab fleet.

 6           Such realtime wireless advanced out-driven

 7  technology can only serve to maximize the impact of zero

 8  emission vehicles and improve their commercial viability.

 9  As such, incentives to support this type of innovation are

10  warranted.

11           Our company believes that extending car-sharing

12  and station-car-transportation-system ZEV credits to

13  factory NEVs is unwarranted.  Unlike our company's fleet

14  of NEVs with advanced nickel-zinc battery pack upgrades

15  and 50-mile-per-charge and 300-mile-per-day capability,

16  factory NEVs offer limited range in battery life.  These

17  factors combine to result in diminished real-world impact.

18           Unfortunately it is also clear that manufacturers

19  have gained ARB in the past with NEVs.  And, in principle,

20  such additional opportunities should not be made available

21  to them again.

22           I thank you for your time and consideration, and

23  truly appreciate the opportunity to speak before the

24  Board.

25           CHAIRPERSON LLOYD:  Well, thank you very much for


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 1  coming.

 2           And maybe we can encourage staff here.  I can see

 3  how difficult a job you've got to advertise when in fact

 4  our staff is reluctant to tell the Board of what was out

 5  there.

 6           (Laughter.)

 7           CHAIRPERSON LLOYD:  But thank you very much

 8  indeed.

 9           Unfortunately you're out there, but we've not had

10  a chance to get behind this -- from behind this dais

11  today.  So please come back another time so we can

12  actually come out.  And maybe staff would set something up

13  and we can take a look.

14           MS. PHILLIPS:   I'm Kathryn Phillips with the

15  Center for Energy Efficiency and Renewable Technologies.

16  And today I'm representing a number of my colleagues with

17  the American Lung Association of California and the

18  California Electric Transportation Coalition, the

19  Coalition for Clean Air, Environment Now, Natural

20  Resources Defense Council, Sierra Club, Steven and Michele

21  Kirsch Foundation, Union of Concerned Scientists.

22           We appreciate the Air Resources Board staff's

23  efforts to analyze the pros and cons of affording zero

24  emission vehicle credits for stationary fuel cells in the

25  infrastructure and in the mass transit system.


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 1           We agree with staff on the stationary fuel cell

 2  issue that awarding stationary fuel cell ZEV credits

 3  raises several areas of concern.  And some of the groups

 4  signing or that I'm representing have sent comments in the

 5  past and raised these concerns in previous letters and

 6  comments.

 7           Staff's conclusions about whether to give ZEV

 8  credits to stationary fuel cells might be best described

 9  as suggesting a soft "no."  And we think a really strong

10  "no" is warranted.  We urge the Board to reject the idea

11  of providing ZEV program credits to stationary fuel cells.

12  And I'll just give you a few reasons why.

13           A few months ago when the ZEV mandate reiteration

14  was being -- was going through its process, the Sierra

15  Club commented in a letter that this proposal is

16  essentially to promote -- is promoted by General Motors.

17  And we've had discussions with General Motors about the

18  company's ideas.  We worry that this push for ZEV credits

19  for stationary fuel cells will essentially result in one

20  more loophole for an automaker to avoid complying with the

21  spirit and intent of the ZEV Program.

22           Additionally --

23           CHAIRPERSON LLOYD:  We've been assured though

24  that GM is now reforming -- being reformed.  And so --

25           MS. PHILLIPS:   Well, you know, it almost pains


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 1  me to have to say this because -- we've had multiple

 2  conversations with Mr. Vail.  And he's very genuine and we

 3  wish him well in his division.  But we have a harder time

 4  with the company that's overseeing the whole process.

 5           CARB established the ZEV Program in 1990 with the

 6  specific goals of advancing vehicle technology and putting

 7  zero emission vehicles on California's roads.  And we're

 8  concerned that the link between the stationary fuel cell

 9  production and getting real fuel cell vehicles on the road

10  is not strong.

11           Additionally, historically the mobile sources and

12  the stationary sources have been regulated by separate

13  divisions within CARB, and in many cases separate agencies

14  within the State.  And credits have not been traded

15  between mobile and stationary categories in general.  We

16  don't see any compelling reason to change the arrangement

17  now with this particular program.  And, indeed, as the

18  staff's report suggests, offering the stationary fuel cell

19  credits opens the threat of general deterioration of the

20  integrity of CARB's vehicle regulations.

21           Finally, the stationary fuel cell industry is in

22  its infancy.  It offers a range of environmental benefits

23  that deserve incentives.  And there are other programs

24  that exist in California to provide these incentives.  And

25  in fact CARB has -- in its stationary program has produced


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 1  some regulations and worked in other ways to try to help

 2  increase those incentives.

 3           On the hydrogen infrastructure issue, the staff

 4  report rejects the idea of providing ZEV credits, and we

 5  support that.

 6           The organizations that have signed this letter,

 7  these comments, we participated for a number of years to

 8  try to encourage hydrogen fuel cell vehicles, and we do

 9  understand that there is going to be a need for

10  infrastructure.  But we think the time isn't right.  And

11  certainly for the Board to adopt the ZEV credit system for

12  any refueling infrastructure, there are relatively few

13  hydrogen fuel cells on the road now or anticipated in the

14  next few years.

15           And providing credits for infrastructure at this

16  point would likely reduce those numbers further.  And I

17  understand that right now there isn't any automaker coming

18  forth saying that they want to be able to provide

19  infrastructure with a certainty, which is another

20  indication that maybe it's premature to be developing

21  credits --

22           CHAIRPERSON LLOYD:  It's not quite true.

23           MS. PHILLIPS:   It's getting more certain?

24           CHAIRPERSON LLOYD:  Well, we have heard

25  something.


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 1           MS. PHILLIPS:   Okay.  We're concerned though

 2  that mixing ZEV credits with stationary source activities

 3  will offer opportunities for ZEV credit gain in this

 4  category.  So if you do do something, you're going to have

 5  to very clearly define what qualifies as infrastructure.

 6  In my wildest imagination I can see refineries -- rather,

 7  chemical companies that produce hydrogen as a byproduct

 8  saying that they should be getting some kind of -- or be

 9  open to receiving some kind of credit.

10           On transit system credits, in theory we support

11  staff's recommendations to include NEVs in its

12  transportation credit system and to expand incentives for

13  car sharing and station car projects.  However, we're

14  anxious about past gaining of the credit system,

15  especially with NEVs, and uncertain about the staff

16  proposal's effects on the placement in California and of

17  new zero emission vehicles, including fuel cell vehicles.

18  Therefore, we urge that before the Board makes a final

19  decision on this issue, that if the Board is inclined to

20  offer these credits, that it ask the staff for more

21  analysis on credit scaling, the effects that the proposed

22  credits would have on the ZEV Program's goal track and the

23  need to sunset the credits.

24           And, finally, for CERT alone, not for my

25  colleagues at the other organizations, I'd like to make


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 1  one more comment about the stationary fuel cells.

 2           CERT is the Coalition of Environmental

 3  Organizations Renewable Technology Companies and other

 4  companies.  And we include a couple of fuel cell --

 5  stationary fuel cell companies among our numbers.

 6           I talked to one about this when this proposal or

 7  this staff report first came out.  And I have been

 8  concerned that there might -- that somehow this might, as

 9  the staff report suggests, might offer some kind of

10  competitive advantage to PEM fuel cell makers, but

11  especially to GM's stationary fuel cell.  And before

12  revealing my concern to him, he immediately said that he

13  could see that this would have a competitive advantage --

14  it would present a competitive advantage.

15           And while CARB has worked to help increase clean

16  DG, including fuel cells, I worry that if you offer this

17  hydrogen -- this stationary fuel cell advantage with the

18  ZEV Program, really only one fuel cell company will be

19  getting that advantage, and that would be GM.  And it

20  would disadvantage the other fuel cell companies that

21  don't make PEM cells.  And the industry itself is in such

22  an infancy.

23           And it's really sort of a

24  hang-on-by-your-fingernails sort of effort.  And that's

25  why I understand why Mr. Vail is so anxious to make any


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 1  kind of effort to encourage his parent company to keep

 2  plodding along with these fuel cells -- stationary fuel

 3  cells.  But I do think this isn't the proper approach.

 4           Thank you.

 5           CHAIRPERSON LLOYD:  Thank you very much, Kathryn.

 6           I guess since this is not a regulatory item, it's

 7  not necessary to officially close the record.  But I look

 8  up to my colleagues on the Board for any discussion or

 9  questions.

10           BOARD MEMBER DeSAULNIER:  Thank you, Mr.

11  Chairman.  But I was trying to get your attention awhile

12  ago.

13           CHAIRPERSON LLOYD:  Sorry.

14           BOARD MEMBER DeSAULNIER:  It goes back to that

15  debate last night where nobody -- if you were quiet, you

16  couldn't get the floor.

17           (Laughter.)

18           BOARD MEMBER DeSAULNIER:  Yeah, I hear what

19  Kathryn's saying.  And when I first talked to staff, I

20  must say when I got the briefing I was a little cranky

21  because when I was trying to explain my vision three

22  months ago and year ago, I was trying to do all things to

23  all people.  I do think -- and I can see right now --

24  certainly it's not my intention.  I would hope my friends

25  in the environmental movement didn't think my


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 1  participation in these kind of initiatives was to

 2  encourage opening large loopholes large enough for large

 3  people to drive their Hummer through.  So I agree with

 4  staff's recommendation.  But I think there's still a lot

 5  of opportunities here, but they have to be very focused

 6  and very directed.

 7           And in terms of using it within the ZEV mandate,

 8  I just saw it as an opportunity to use one currency,

 9  meaning the credits, very few of them, within the mandate

10  to try to incentivize multiple opportunities.

11           And it's so difficult, you know.  When I saw

12  General Motors -- I remember supporting something last

13  week that the Howard Jarvis Committee supported.  And I

14  thought, "What's happening to me," you know.  General

15  Motors -- similarly, my conditioned response is "Oh, my

16  God, I'm agreeing with General Motors.  Maybe there is a

17  future for stationary."  But I believe in redemption,

18  having had eight years of Jesuit training.  So I believe

19  your marketing slogan.

20           So what my suggestion would be and I would like

21  to see, Mr. Chairman -- and given your help with the

22  interagency agreement with the Energy Commission and

23  Caltrans, which also involves the UC system -- there's

24  still some opportunities to refine this.  There may be no

25  credits out of it, but I think there's an opportunity to


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 1  look at -- transportation systems are where my interests

 2  are.  But also hydrogen infrastructure and fuel cells on a

 3  very limited possibility may be within transportation

 4  systems.

 5           So without giving you the whole -- I'll just give

 6  you the cliff notes.  And my nirvana would be a few pilot

 7  projects in the next five years or so that were transit

 8  stations, that were running heavy rail on electricity,

 9  that had distributed generation, stationary fuel cells

10  providing power for the transit station, like a ZEV NEV,

11  and for the development around it.  And that hydrogen was

12  coming from renewables.  So it's from wells to wheels.

13  The whole process is clean.

14           Then you have maybe stationary cars -- station

15  cars in there that are electric or electric cars or

16  potentially fuel cell cars.  So they're zero, they're

17  gold.  And then you have the smart mobility, smart

18  infrastructure capacity.  So someone who's going to the

19  train station can use their wireless.  Or if the Bay Area,

20  we now have a 5.1 connected.  You can find out realtime

21  with the transportation systems.  Like if you're at your

22  console at home, you can bring up cameras and see what the

23  transportation system looks like.  So you can use those

24  smart ability concepts.  You can see realtime parking

25  information.


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 1           So that's sort of the nirvana, is combining the

 2  transportation systems and from well to wheel distributed

 3  generation stationary source at their -- that also

 4  incentivizes the placements of, potentially NEVs, but also

 5  city cars within a system.  But it would be very narrowly

 6  focused.  And the credits, if there were credits, would

 7  just be a small currency to encourage people to

 8  participate in that kind of model.

 9           So I think we can keep working on this for the

10  next three to six months with -- in the MOU between the

11  interagency agreement and the fuel cell partnership is

12  what I heard you say, Alan.  And maybe at some point at

13  the appropriate time convene all the stakeholders and see

14  if we can narrow it down.  If we can't, we come back to

15  close the book and move on to other things.

16           So that's what I hope comes out of this.

17           CHAIRPERSON LLOYD:  Yeah.  I would support that,

18  Mark.  Again, splitting it down a little bit more, I would

19  like staff to come back on each of the areas that we've

20  talked about and explore that and see if you can come back

21  with some regulatory language.

22           I hear the concerns expressed and I understand

23  those concerns.  But I think -- in this industry, I think

24  it is important to explore all those issues there.  And,

25  again, I hear the concern about the stationary, about the


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 1  competitive side.  I'm not sure that's true because there

 2  are other people out there who will do both stationary and

 3  mobile.

 4           And, again, I appreciate General Motors

 5  recognizing some of the concerns and the constraints that

 6  are there so they're not talking about having carte

 7  blanche here.  But, again, a very limited piece.

 8           And the other part on the hydrogen

 9  infrastructure, some companies have not been interested in

10  that.  Others have.  I think with the DOE program going

11  on, with the efforts in California, with the continued

12  talk about broadening hydrogen in California, I think it's

13  important to look at this.  But I do agree with Kathryn's

14  comment, her colleagues, that we also have to look at this

15  in a realistic context of where we stand on that.  So do

16  we need that?  Where do we need it?  And I think fall in

17  to the other one.  So -- and recognize basically what

18  we're doing today is saying they -- giving staff the green

19  light to move ahead with some additional work and coming

20  back to us, or do we put a stoplight.  And I think -- I'm

21  not prepared to put a stoplight because I think each of

22  these have got some exciting opportunities.

23           BOARD MEMBER RIORDAN:  Mr. Chairman, I think

24  there's potential here.  We just have to look at it and

25  see where it might lead us.  And so I would agree with


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 1  your position.

 2           CHAIRPERSON LLOYD:  Any other comments?

 3           With that, I guess we'd -- anybody against --

 4  everybody all in favor, so unanimous --

 5           GENERAL COUNSEL WALSH:  You don't have an

 6  official action that you're taking.

 7           CHAIRPERSON LLOYD:  We don't have to have one.

 8  Okay.

 9           GENERAL COUNSEL WALSH:  You do not.

10           BOARD MEMBER DeSAULNIER:  How appropriate for

11  your last action.  It's a non-action.

12           (Laughter.)

13           BOARD MEMBER RIORDAN:  See, she's still trying to

14  keep us on the straight and narrow.

15           BOARD MEMBER DeSAULNIER:  By the way, are there

16  other CARB staff who would like to come to the Bay Area to

17  live and work?  We have all kind of benefits, like you

18  don't work after 5, from 5 to 6 is yoga and zen, from 6 to

19  7 is hot tubs and pinot, and you get paid better.

20           CHAIRPERSON LLOYD:  Thank you.

21           Thank you very much.

22           And thank you, staff, again.  And I realize this

23  is more work for you, but I think it's a just cause.

24           And seeing no other items, I officially bring the

25  September 25th meeting of the Air Resources Board to a


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 1  close.

 2           And, again, thank you.

 3           And I wish Tom and Kathryn a safe trip.

 4           (Thereupon the California Air Resources

 5           Board meeting adjourned at 7:15 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 Resouces 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 8th day of October, 2003.

15

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21                             JAMES F. PETERS, CSR, RPR

22                             Certified Shorthand Reporter

23                             License No. 10063

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 1                    CERTIFICATE OF REPORTER

 2           I, TIFFANY C. KRAFT, 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 hearing was reported in shorthand by me,

 7  Tiffany C. Kraft, a Certified Shorthand Reporter of the

 8  State of California, and thereafter transcribed into

 9  typewriting.

10           I further certify that I am not of counsel or

11  attorney for any of the parties to said hearing nor in any

12  way interested in the outcome of said hearing.

13           IN WITNESS WHEREOF, I have hereunto set my hand

14  this 8th day of October, 2003.

15

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23                             TIFFANY C. KRAFT, CSR, RPR

24                             Certified Shorthand Reporter

25                             License No. 12277


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