MEETING BEFORE THE CALIFORNIA AIR RESOURCES BOARD BOARD HEARING ROOM 2020 L STREET SACRAMENTO, CALIFORNIA THURSDAY, MARCH 26, 1998 9:30 A.M. Vicki L. Medeiros, C.S.R. License No. 7871 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 ii MEMBERS PRESENT John D. Dunlap, III, Chairman Joseph C. Calhoun Mark deSaulnier Dr. William Friedman Lynne T. Edgerton Jack C. Parnell Barbara Patrick Sally Rakow Barbara Riordan Ron Roberts James W. Silva Staff: Michael Kenny, Executive Director Tom Cackette, Chief Deputy Executive Officer Mike Scheible, Deputy Executive Officer Kathleen Walsh, General Counsel Jim Schoning, Ombudsman PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 iii I N D E X --o0o-- Page Proceedings 1 Call to Order 1 Pledge of Allegiance 1 Roll Call 1 Opening remarks by Chairman Dunlap 1 AGENDA ITEMS: 98-3-1 Public Meeting to Consider an Overview of the Office of Legislative and Intergovernmental Affairs Introductory remarks by Chairman Dunlap 2 Staff Presentation: Rob Oglesby 3 98-3-6 Public Meeting to Consider a Resolution Directed to USEPA Introductory remarks by Chairman Dunlap 16 Staff Presentation: Mike Kenny 18 Kathleen Walsh 23 Mike Kenny 27 98-3-2 Public Meeting to Consider a Draft Resource Document which Identifies Achievable Performance Standards and Emerging Technologies for Stationary Sources Introductory remarks by Chairman Dunlap 33 Staff Presentation: Mike Kenny 35 Ms. Taricco 37 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 iv I N D E X (Continued) Page 98-3-3 Public Meeting to Consider Research Proposals Introductory remarks by Chairman Dunlap 47 Staff Presentation: Dr. Holmes 48 Mike Scheible 49 Mr. Barham 50 Public Comment: Joe Carrancho 60 Steve Butler 63 Charles Hoppin 65 Paul Knepprath 72 98-3-4 Public Meeting to Consider Approving California's 1990 Small Off-Road Engine Emission Inventory Introductory remarks by Chairman Dunlap 92 Staff Presentation: Mike Kenny 93 Mark Carlock 95 Public Comment: Jim Lyons 106 Mac Dunaway 117 Afternoon Session 120 98-3-5 Public Hearing to Consider Amendments to the Small Off-Road Engine Regulations Opening remarks by Chairman Dunlap 131 Staff Presentation: Mike Kenny 131 Scott Rowland 133 Tom Cackette 161 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 v I N D E X (Continued) Page Jim Schoning 167 Nancy Steel 168 Public Comment: Kim Liechty 174 Larry Will 191 Tom Griswold 202 Mac Dunaway 217 Jim Lyons 221 Mac Dunaway 228 Larry Rohlfes 234 Robert Falconer 239 Larry Otto 245 Jim White 251 Jim Cotton 270 Randy Haslam 278 Frank Coots 284 Singh Suchdev 288 Edward L. Strohbehn, Jr. 292 Tim Carmichael 296 Julie Kelts 308 Jed Mandel 311 Bob Wyman 316 Peter Hotz 331 Andrew Frasier 332 Kenneth Zeltner 341 Paul Maurer 345 Jed Mandel 348 Paul Maurer 350 Bruce Bertelsen 350 Open Session to Provide an Opportunity for Members of the Public to Address the Board on Subject Matters within the Jurisdiction of the Board 385 Adjournment 385 Certificate of Reporter 386 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 1 1 P R O C E E D I N G S 2 --o0o-- 3 CHAIRMAN DUNLAP: Will this, the March meeting of 4 the California Air Resources Board come to order. 5 Supervisor Silva, would you honor the Board by 6 leading the Pledge. 7 (Thereupon the Pledge of Allegiance was recited.) 8 CHAIRMAN DUNLAP: Ms. Hutchens, would you please 9 call the roll. 10 MS. HUTCHENS: Calhoun. 11 BOARD MEMBER CALHOUN: Here. 12 MS. HUTCHENS: DeSaulnier. 13 BOARD MEMBER DESAULNIER: Here. 14 MS. HUTCHENS: Edgerton. 15 BOARD MEMBER EDGERTON: Here. 16 MS. HUTCHENS: Friedman. 17 BOARD MEMBER FRIEDMAN: Here. 18 MS. HUTCHENS: Parnell. 19 BOARD MEMBER PARNELL: Here. 20 MS. HUTCHENS: Patrick. 21 BOARD MEMBER PATRICK: Here. 22 MS. HUTCHENS: Rakow. 23 BOARD MEMBER RAKOW: Here. 24 MS. HUTCHENS: Riordan. 25 BOARD MEMBER RIORDAN: Here. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 2 1 MS. HUTCHENS: Roberts. 2 Silva. 3 BOARD MEMBER SILVA: Here. 4 MS. HUTCHENS: Chairman Dunlap. 5 CHAIRMAN DUNLAP: Here. 6 Supervisor Roberts is in the back. He'll be out in 7 just a moment. 8 Good morning. Before we begin today's Agenda, I 9 would like to take just a moment to let those in the audience 10 that have come to testify before the Board to know a bit 11 about how one would present testimony to our Board. 12 There are requests to present comment cards 13 available on the table outside of the hearing room, and staff 14 is there to assist you, and so, I would ask you to please 15 fill out the card completely, giving all the requested 16 information, and return them to the staff seated outside, not 17 the Clerk of the Board, as is usually the case. 18 We will then put you on the list and make sure you 19 get an opportunity to comment and to testimony. This process 20 today will facilitate the sign-up of the many people wishing 21 to testify, so I want to thank you in advance for your 22 cooperation. 23 The first item on the Agenda today is 98-3-1, which 24 is a public meeting to consider an overview of the Office of 25 Legislative and Intergovernmental Affairs. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 3 1 I believe that all of you may have met our next 2 presenter already, but if you haven't, let me just say how 3 pleased I am to include our new Legislative Director, Rob 4 Oglesby on to our team. 5 Rob returns to the Board following a stint as 6 Deputy Chief of the Bureau of Automotive Repair, a sister 7 agency of ours. We worked very closely with them on the Smog 8 Check Program. 9 He has had a significant Legislative career thus 10 far. He's been involved in the process some two decades, and 11 at least six or seven of those years was here at the Air 12 Resources Board, and he had an opportunity to work very 13 closely with our previous Legislative Director, Chris 14 Reynolds, who has moved on, as most of you know, to CalEPA. 15 So, we are indeed fortunate to have him take charge 16 of the Program. I'm sure that we are all looking forward to 17 what he has to say. 18 Good morning, Rob. 19 MR. OGLESBY: Good morning, Mr. Chairman. 20 Mr. Chairman, Members of the Board, thank you for 21 the opportunity to formally introduce myself. 22 First, I would like you to know that I am very 23 pleased to again be a part of this world class organization, 24 and I note that several new Members have joined the Board 25 during my sabbatical in the Bureau of Automotive Repair. I PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 4 1 also see many familiar faces, or I saw them before the lights 2 went down, and I look forward to working with all of you. 3 In addition to introducing myself, my purpose today 4 is to provide an overview of the Legislative and 5 Intergovernmental Affairs Office, which I hope will be of 6 particular interest to the newer Board Members. 7 I will also give an update on the Office's recent 8 activities. The mission of the Office of Legislative and 9 Intergovernmental Affairs is to maintain continuous 10 communication with policy makers of all levels of Government. 11 The bulk of our efforts focus on the State 12 Legislature, whose members introduce hundreds of bills each 13 Legislative session that affect air quality programs at both 14 the State and local level. 15 We advise the Administration on air quality 16 legislation and serve as the Administration spokespersons to 17 the Legislature and other stakeholders. 18 This is a large and complex task. The Office of 19 Legislative and Intergovernmental Affairs strength is derived 20 from the exceptional breadth and depth of expertise held by 21 staff. 22 This Office is staffed by professionals with a 23 total of 70 years experience dealing with the Legislature. 24 The staff is well versed in air quality programs. 25 It has strong technical backgrounds. We have a wide breadth PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 5 1 in private sector experience, including aerospace, food 2 manufacturing, lobbying and the Capital press corps, and 3 there are two engineers on the staff. 4 Sheila Marsee is the Chief of the Office of 5 Legislative Affairs. Sheila has a 20-year career in 6 Legislative work for State Government, most of that at the 7 Air Resources Board. 8 She came to State service following a stint on the 9 Capital press corps as a syndicated correspondent covering 10 the State, Senate and Administration. Her journalistic 11 style, extensive experience and institutional knowledge 12 combined with her management skills, made the Legislative 13 Office what it is and continued to keep it running smoothly. 14 Kurt Karperos is the Chief of Intergovernmental 15 Affairs. Before he took on that assignment, he was one of 16 our Legislative representatives. 17 His extensive experience at the Board with local 18 district issues makes him a natural to head up our 19 Intergovernmental Affairs activities. Kurt couples his 20 strong background with an impressive technical resume. 21 He's a Registered Professional Engineer, who spent 22 the 1980's designing the next generation of military space 23 craft. He has the ability to analyze issues like an engineer 24 and communicate them like a TV news anchor. 25 Carol Boehme came to the Legislative Office via PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 6 1 ARB's Office of Air Quality Transportation and Planning. 2 Originally, Carol came to the ARB from U.S. EPA Headquarters 3 in Washington, where she consulted on water quality issues. 4 She has an MBA and private industry experience that 5 makes her uniquely qualified to work on economic analysis and 6 business assistance bills. She's our point person on 7 regulatory procedures Legislation and local transportation 8 control measures. 9 Taryl Ferrera came to the Office of 10 Intergovernmental Affairs from ARB Stationary Source 11 Division. There she worked on a number of high profile 12 issues, including cleaner burning gasoline, and she also was 13 lead on the Diesel Fuel Reimbursement Program. 14 Taryl is a mechanical engineer and also worked in 15 the Aerospace industry prior to joining ARB. As part of the 16 Intergovernmental Affairs Office, Taryl's charge is local, 17 State and Federal issues. 18 Most recently she has been handling prescribed 19 burning. 20 Olie Owallo is our Legislative secretary, who has a 21 total of 17 years experience in Legislative work at the ARB, 22 and the Legislature, and in a private lobbying firm. 23 Her ability to locate and track Legislative items 24 ensures that the Legislative unit never misses a beat, always 25 the person who knows where it is, what it is and who is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 7 1 offering it, she is that vital link in the process that 2 allows us to manage and respond to many things at once. 3 Lynn Pendleton serves as my assistant. You may 4 know her from her previous position in the Office of Board 5 Administration and from her assistance at Board hearings. 6 In addition to keeping me organized and directed, 7 she is pursuing a Bachelor's Degree in Communications. She 8 is particularly interested in language, speech and hearing, 9 and is a sign-language interpreter. 10 Erin Weaver is our student assistant. She is a 11 junior at Sacramento State University, where she majors in 12 Environment studies and minors in Chemistry and Geology. 13 Erin performs invaluable services for us, doing 14 background research on emerging issues and Legislation. 15 Also, for the next several weeks, David Shukein is 16 on loan to the Legislative Office from ARB's Mobile Source 17 Control Division, ZEV, Implementation Section. 18 We don't have a picture for him yet, because he has 19 just joined us on a temporary basis. Dave is a mechanical 20 engineer, who originally came to ARB from CalTrans, and we 21 are happy to have Dave with us during this busy season in the 22 Legislature. 23 Finally, I recently returned from a stint, as John 24 mentioned, with the Bureau of Automotive Repair as Deputy 25 Chief. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 8 1 Prior to that I was Chief of ARB's 2 Intergovernmental Affairs Office and served in the 3 Legislative Office here at the ARB for six years as the 4 Mobile Source and Fuels Specialist. 5 I, too, have been in the private sector, where I 6 spent nearly a decade as a Legislative advocate for a 7 national law firm specializing in environmental law, public 8 finance and economic development. 9 I am honored to be at the helm of such a staff 10 that has such talent, depth and technical expertise. 11 Now that you know who we are, I would like to 12 provide an overview of what we do. 13 As you are all aware, air quality is highly 14 technical. With chemistry and physics as its parents, 15 describing the chemical reactions that occur to create smog 16 can be a college course in itself. 17 Few people understand the science, and even fewer 18 have the intestinal fortitude, or the time, to wade through 19 the piles of technical studies, reports and complex models, 20 which guide air quality policies. 21 This is only compounded by the fact that the 22 Board's actions affect all Californians. We often operate in 23 an environment that is filled with suspicion, speculation and 24 conjecture from the media, the public, the Legislature, and 25 even by other Governmental agencies. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 9 1 It is our job to fill this information vacuum. The 2 challenge in the Legislature has been magnified by the advent 3 of term limits. Term limits bring new members, and with new 4 members come new staff. Term limits also mean new 5 leadership, as we have seen this year with changes in both 6 the Senate and the Assembly. 7 In pursuing our programs, we recognize that our 8 partnerships and our relationships with our sister agencies, 9 especially those at the local and Federal level, are vital to 10 our mission. 11 In 1996, we institutionalized this priority by 12 dedicating specific resources to Intergovernmental Affairs 13 with a mission to enhance opportunities to achieve clean air 14 through local partnerships. 15 The partnership is two-way. We, the Air Resources 16 Board, must have a deeper and broader understanding of the 17 issues our stakeholders confront. 18 At the same time, the success of ARB initiatives 19 depends on the buy-in of the same stakeholders. Our goal is 20 common, and so must be our strategy. 21 The tool that the Intergovernmental Affairs staff 22 Office applies to this task is the development of strong and 23 open relationships through communications and ongoing real 24 time communication. 25 More specifically, Intergovernmental Affairs PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 10 1 undertakes a number of activities targeted at local issues. 2 Staff are available to brief local officials on emerging air 3 quality issues. The Office publishes a newsletter covering 4 ARB actions and Legislation with a local impact. 5 The Office also works in concert with the ARB 6 Legislative staff on bills with a local flavor. 7 Finally, the staff provide a link between the 8 Chairman and local officials on emerging air quality issues. 9 Now, I would like to turn your attention to the 10 activities of the State Legislature. Every ARB authority and 11 responsibility is in some way derived from State law, and 12 State lawmakers can profoundly and directly influence air 13 quality and its administration. 14 The Air Resources Board's Legislative unit is the 15 principal resource for the Administration and for the 16 Legislature on air quality related issues. 17 Our job is to educate and communicate with the 18 Legislature regarding air quality programs and their impacts 19 on the air we breathe and the way Californian's manage their 20 lives. 21 As we communicate and educate, we are also 22 advocates for the State's Air Quality Agenda. The Governor's 23 Office looks to us to foster support for the Administration 24 perspective on air quality Legislation. 25 Meanwhile, back at the ARB, the technical staff PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 11 1 looks to us to provide them with a Legislative perspective. 2 It is not my intention to describe a Legislative 3 process to you in great detail. This slide outlines the 4 steps that a bill must go through and the deadlines that it 5 must meet. 6 The bottom portion of the slide illustrates the 7 nine month's schedule that comprises the Legislative year. 8 As the chart describes, the Legislature convenes in 9 early January, and there are deadlines for bills to be heard 10 in Policy Committees, Fiscal Committees and deadlines for 11 bills to leave the House that they were originated in. 12 As you can see, the process accelerates as the year 13 progresses. This slide illustrates the number of bill 14 analyses that were prepared last year. 15 There were approximately 3,000 bills introduced in 16 1997. The first task was to determine which of these 3,000 17 bills has an impact on air quality policy, be it local, State 18 or Federal. 19 The Office tracked 98 of those bills and prepared a 20 total of 200 analyses. This number does not include the 30 21 to 40 general Government bills that were researched or 22 analyzed in some fashion because of the Administration's 23 request. 24 By looking at this illustration, you also get a 25 feeling for the pace of the Legislative year. The analyses PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 12 1 the Office prepares have quite a process to go through 2 themselves, and ultimately, the Governor's Office must 3 approve or disapprove by recommended positions before the 4 Legislative Office can take action. 5 As the deadlines near, the turn-around time for 6 these analyses can get rather short. In 1997, 34 bills that 7 affected air quality were signed into law for chapter. 8 Those bills affected such policy areas as Smog 9 Check II, fuels and MTBE, motor vehicle issues, budget and 10 oversight of ARB's processes, air district procedures, 11 consumer products and rice straw burning. 12 This workload is only half the story. What these 13 charts did not show you are the other duties performed by the 14 Legislative unit concurrent with this workload. 15 They are budget change proposals resulting from 16 Legislation, interim hearings on air quality related issues, 17 informational requests from Legislators' constituents and the 18 confirmation process for newly appointed Board Members, and 19 all the regulatory activities that the Board undertakes that 20 may generate Legislative interests. 21 As a side note, I would like to mention that we 22 have identified over 50 bills that we will follow this year. 23 There are 16 motor vehicles bills covering such 24 diverse issues as heavy-duty diesel incentives and 25 smoke-meter certification, Smog Check II, low and zero PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 13 1 emission vehicles, scrap and all-terrain vehicles and 2 two-stroke motorcycles. 3 Five of these bills are in the form of tax credits 4 or incentives. There are eight bills that affect our fuels 5 programs, and there are 11 bills that affect air districts or 6 local governments. Two bills address rice straw and general 7 agricultural burn issues, and other bills address greenhouse 8 gases, toxic air contaminants, children health standards, 9 particulate matter, environmental self-audits, rideshare 10 programs and bio-mass power facilities, and the list goes on, 11 actually. 12 One more important duty of the Legislative Office 13 is Budget Process. This slide outlines the membership of the 14 two Budget Subcommittees that hear ARB's budget. 15 The Subcommittees begin meeting in March and 16 generally report their proposed budgets to the full 17 Committees in late May. 18 The ARB's Budget Subcommittee hearings are 19 currently set in April, in both the Senate and the Assembly. 20 The whole budget process must be completed by the 21 time the Legislature recesses for the summer in early July. 22 Before I close, I would like to direct your 23 attention to the summary of air quality Legislation that you 24 have been given. 25 The Office of Legislative and Intergovernmental PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 14 1 Affairs prepares a summary of Legislation that affects air 2 quality policy each year. 3 This document outlines the Legislative process in 4 more detail and gives you a very good picture of what we 5 dealt with last year. 6 For those of you in the audience, several copies of 7 this summary are available at the sign-in table where you 8 entered this hearing room. 9 In closing, I appreciate the Board's interest and 10 the efforts of the Office of Legislative and 11 Intergovernmental Affairs, and if the Board Members have any 12 questions, I will be happy to answer them now. 13 CHAIRMAN DUNLAP: Thank you, Rob. 14 Any questions from the Board? 15 BOARD MEMBER PATRICK: Mr. Chairman, I don't have a 16 question, but I do have a compliment to pass along. 17 Mr. Oglesby and his staff were most helpful in my 18 confirmation process, and I really do appreciate all of their 19 work in getting me ready for that. 20 BOARD MEMBER RAKOW: I would like to second that. 21 CHAIRMAN DUNLAP: Thank you. 22 BOARD MEMBER EDGERTON: I would like to welcome Rob 23 back. It's great to have you here again. 24 You did an excellent job before, and I'm sure 25 you'll do an excellent job as Director. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 15 1 CHAIRMAN DUNLAP: I also want to commend the staff, 2 and I think Rob, by taking the time to put together the 3 slides and tell a bit about the background of his staff, I 4 think flushed out for us the level of competence and 5 diversity that we have in experience, both professionally and 6 personally with that staff, and I think that helps us as we 7 do advocacy in and around Sacramento. 8 So, good job. We're happy to have you on the team. 9 Sheila, good to see you and Kurt. 10 Well, with that, we have no one signed up to 11 testify or comment on this. I don't believe there were any 12 written comments on this thing, Rob, on this item. 13 Mr. Kenny, do you want to add anything to that? 14 MR. KENNY: I would just actually add the same 15 things that the other Board Members added, that it was great 16 to have Rob here in the past, and it was sad when he left, 17 and it's great to have him back again. 18 CHAIRMAN DUNLAP: Great. Thank you. 19 I would like to just take a second and recognize 20 Chairman Boughton. 21 Is he here, is Larry here, from the Mojave Air 22 District? 23 Yeah, there you are, Larry. Good to see you today. 24 He's come down with a delegation from that Board, 25 of staff, and I had a chance to see them yesterday. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 16 1 Also, I think that is Jim Boyden in back, isn't it? 2 Hello, Jim. Jim is doing some significant work for 3 the Department of Fish and Game, it must be something 4 interesting to bring him here today. 5 Mike, is there anything that I'm missing? 6 MR. KENNY: Not that I know of. 7 CHAIRMAN DUNLAP: All right. Then let's go on to 8 the second item, which is a resolution, if I can find it 9 here, we will move forward. 10 The next item is 98-3-6, a public meeting to 11 consider a Resolution directed to U.S. EPA. It concerns a 12 proposed Board Resolution outlining some concerns that we 13 have regarding implementation of the Federal Clean Air Act in 14 our State, in California. 15 Over the past several years, we have been working 16 closely with EPA to resolve various issues that would allow 17 us to implement the new Federal requirements in a way that 18 would not impede our ability to continue the implementation 19 of our own successful State program. 20 It now appears that EPA is unwilling to provide 21 California with the needed flexibility and support. As a 22 result, the staff is proposing that the Board consider 23 adopting a Resolution that would be sent to EPA encouraging 24 them to take specific actions that would help California 25 implement the Federal Clean Air Act. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 17 1 At this point, I would like to ask Mr. Kenny to 2 introduce the item and begin the staff's presentation. 3 I should give a context for my Board Member 4 colleagues, we, some of you predated me on this Board and 5 lived through it as we developed our State Implementation 6 Plan back in the 1993-1994 time period. 7 We made it a very strong priority for us to work 8 with the Federal Government. We have very much appreciated 9 the times, and there have been significant situations where 10 they have been a true partner with us and have worked with us 11 and helped resolve issues that were important to our State. 12 However, we have found, particularly in the last 13 year or so, where they have been an unwilling participant in 14 resolving some things that we believe very strongly that they 15 have the administrative ability to deal with. 16 So, this Resolution is aimed at focusing their 17 attention on those things that are truly important to us 18 here. 19 So, I don't want you to think there is any move for 20 us to look for problems with EPA, because we're not, but we 21 do need them to take seriously their role and responsibility 22 to help us have control over a clean air strategy that we 23 think has been very successful. 24 So, with that, Mike, why don't you tell us a little 25 about what you have in mind here? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 18 1 MR. KENNY: Thank you, Mr. Chairman and Members of 2 the Board. As you know, California has really the preeminent 3 program in the world with regard to air quality. 4 If you look at what California has achieved over 5 the years, what you now see today is that we have the 6 cleanest cars, we have the cleanest fuels, we have the 7 cleanest stationary sources, and we even have the cleanest 8 consumer products of anyplace in the entire world. 9 At the same time that we have these particular 10 programs, what we are trying to do is work with U.S. EPA to 11 ensure that, in fact, we can maintain our forward approach 12 that really does allow for us to rely upon the innovation and 13 the creativity of the staff here at the Air Resources Board 14 in conjunction with the public, as we work toward, 15 essentially, achieving even further progress in the future. 16 There are four places where, in particular, we have 17 had a significant amount of difficulty with U.S. EPA. We 18 have tried to address the four areas very specifically with 19 them, but we have really reached a point where we have been 20 unsuccessful. 21 Those four areas are rules that are submitted to 22 U.S. EPA after either being adopted by the local districts 23 and approved by this Board are not being reviewed and either 24 approved or disapproved by U.S. EPA within the statutorily 25 specified timeframe, which is 180 days. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 19 1 Specifically, there are about 1400 rules that have 2 been adopted by the districts and approved by this Board over 3 the last six years. 4 Of those 1400 rules, approximately 740 rules are 5 still pending review and approval or disapproval by U.S. EPA. 6 That creates a fairly substantial amount of uncertainty for 7 compliance. 8 Secondly, we have an Operating Permit Program in 9 California which has been in effect for over 25 years. That 10 Operating Permit Program takes into account the realities and 11 practicalities of doing business in California, which is that 12 if you have got a facility, and it is mechanical in nature, 13 it is likely that there will be at some point in the future, 14 a problem with that particular mechanical facility. 15 It could also be a situation in which there are 16 administrative requirements that may or may not be able to be 17 complied with at any particular point in time. 18 California law recognizes that and it provides 19 specific criteria that have to be addressed if people want to 20 receive a variance from the operating permit for a specified 21 period of time, which is usually less than 90 days. 22 Under Federal law, and there are Federal operating 23 permits in effect now in California, there is no such 24 variance process. The consequence is, is that if a source 25 has a problem, and problems are always going to occur, there PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 20 1 is not a pathway that can be pursued by that source to keep 2 it within a compliance track as it tries to correct that 3 problem. 4 We think that is a mistake. We think there should 5 be some kind of compliance path. 6 Thirdly, operating permits, as I mentioned, have 7 been in place in California for a very long period of time. 8 Congress recognized the benefits of operating 9 permits and required operating permits for facilities 10 throughout the nation. 11 Really, what they did was they copied the 12 California program. In copying the California program 13 though, what has happened is EPA has implemented operating 14 permits in California, is that we have had a substantial 15 amount of duplication and redundancy. 16 We have worked with U.S. EPA over the last seven 17 years trying to minimize that, to ensure that the programs 18 could be integrated cleanly together and to therefore not 19 have unnecessary activities occurring, obviously, at a waste 20 of money. 21 At this point in time, we see that agreement that 22 we had reached with U.S. EPA as to how we would integrate the 23 two programs not really being implemented in the manner in 24 which we had thought it would be implemented, and so, 25 therefore, we have concerns there with regard to how EPA is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 21 1 actually implementing their agreements on Title V. 2 The last item that we really have significant 3 concerns about is the Toxics Program. California has had a 4 Toxics Program in place for over 15 years. 5 That Program is one that both provides for the 6 identification and control of air toxics. It also provides 7 for hot spots notifications and risk assessments. 8 In addition to that, because of the best smog 9 program in the world, we also get very large ancillary 10 benefits with regard to toxics emission reductions from the 11 VOC controls that are in place and the NOx controls that are 12 in place. 13 The result of all that is that on a per capita 14 basis, Californians are exposed to less toxics emissions than 15 any other state in the nation, with the possible exception of 16 one other state. 17 So, it is an obvious and substantial success. The 18 Congress also recognized the need for a toxics program, so 19 what Congress did is it provided for Title III, and Title III 20 is now being implemented by U.S. EPA in California, but the 21 consequence of that implementation is that our Toxics Program 22 is being placed in some jeopardy because you cannot have a 23 situation in which two toxics programs, which really do not 24 blend together perfectly well, can be allowed to operate. 25 So, what it really boils down to is one of those PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 22 1 toxics programs is probably going to be unable to be 2 continued. 3 We think that the California Toxics Program has 4 been very successful, and we want to maintain and continue 5 that success. 6 So, we have been trying to work with the U.S. EPA 7 to get them to recognize the successes that have occurred in 8 California with regard to toxics here and to integrate the 9 Title III requirements with the California Toxics Program in 10 a way that makes sure that we achieve all the emission 11 reduction benefits that are required under Federal law, but 12 does so in a manner that is effective and efficient. 13 The basic message that we are trying to convey with 14 each of these four items is that we have been very 15 successful, and we have a proven track record that we can 16 point to. 17 What we really are looking for from EPA is not any 18 kind of a change in the overall emission reduction strategy, 19 because we do agree that EPA can set the emission -- can set 20 the emission reductions that we need to achieve, and we have 21 to achieve them. 22 We think that we can actually achieve them plus 23 going a step further. So we would concede that, in fact, 24 they can tell us what we need to do. Federal law does 25 provide that. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 23 1 Federal law also does provide that they can tell us 2 when we need to do it by, but what we are really asking from 3 U.S. EPA is that they acknowledge and recognize what 4 California success has meant to the nation as a whole, not 5 only to just California, and allow us to continue to do it 6 our way, to basically allow us to determine how we can 7 achieve those emission reductions. 8 That is kind of the basic background. I will turn 9 it over to Kathleen Walsh. 10 MS. WALSH: Thank you, Mike, Chairman Dunlap, 11 Members of the Board. 12 The Resolution that is before you today for 13 consideration does two things. 14 First, it outlines California's long-standing and 15 ongoing commitment to protect public health and air quality 16 in California. It calls on EPA to work with California to 17 achieve clean air. 18 Second, it details the four program areas that Mike 19 just described for you. It calls on EPA to undertake certain 20 actions to remedy our concerns. 21 We believe that public agencies at the local, State 22 and Federal level must work together in a partnership to 23 implement effective clean air programs. 24 We are not the only folks who believe that. 25 Congress recognized the importance of a workable Federal, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 24 1 State and local partnership in implementing, excuse me, in 2 enacting the Federal Clean Air Act, and in particular, the 3 amendments in the 1990 Act continue to call for a 4 partnership. 5 The Clinton Administration Regulatory Reform 6 Initiative, the Reinventing Environmental Regulation, also 7 calls for flexibility in achieving environment goals in 8 avoiding a one-size-fits-all approach to environmental 9 regulation. 10 Unfortunately, we are at a point where U.S. EPA's 11 current policies and their inflexibility in implementing 12 those policies are not in synch with fundamental principles 13 of cooperative Federalism. 14 As Mr. Kenny noted, they're jeopardizing the 15 success of California's mature and effective Stationary 16 Source Control Program, as well as other programs that this 17 Board has been responsible for adopting for the State of 18 California. 19 As Mr. Kenny indicated, there are four program 20 areas that are of specific concern to us at this point in 21 time. 22 We have spent a considerable amount of time and 23 effort working with EPA to try to find ways to come to 24 agreement on how we are going to deal with these problems, 25 and we, frankly, are at a point where we have reached an PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 25 1 impasse. 2 Staff is coming to you this morning with the 3 Resolution, because we believe it is an important step to 4 call for a response from U.S. EPA to the concerns that we 5 have raised. 6 As Mr. Kenny detailed, and I am not going to go 7 through this again for you, the four programs areas that are 8 of concern to us are large program areas. 9 We have put a lot of resources and efforts into 10 them, not only at the State level, but also the local 11 districts in California. 12 The Title III Toxics Program, the Title V Program, 13 and in connection with both of those programs, the SIP gap 14 that is the significant number, almost 700 rules that have 15 been adopted in accordance with the procedures that are set 16 out at the State and local level, including public comment 17 and participation, those rules have been adopted. 18 They are in effect here, but we are in the 19 untenable position of having no Federal recognition of that 20 State and local action. 21 Finally, in addition to that, the U.S. EPA's 22 refusal to recognize the fairly carefully crafted variance 23 procedures set out in California law that recognizes the need 24 to provide some flexibility in a program that calls for a lot 25 from the regulated sources and recognizes that there may be PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 26 1 some instances where due to circumstances beyond the sources' 2 control, they are not going to be able to be in compliance 3 with a regulation, but provides for a very limited mechanism 4 to address that situation without causing the business 5 unnecessary economic harm. 6 The Resolution notes the concerns that we have 7 regarding each of these four programs and calls on EPA to 8 make some very specific changes in their policies and 9 guidance, calls on EPA to follow the guidance that they have 10 issued, calls on EPA to develop and issue and implement 11 guidance in a way that is proper and consistent with Federal 12 law. 13 As you know, here we work and are subject to a 14 significant number of requirements related to how we propose 15 regulations, adopt them, justify them, put together the 16 information and involve the public in that process. 17 This is important at the Federal level, as it is 18 here, obviously. 19 So, the Resolution before you calls on U.S. EPA to 20 adopt an approach that identifies what must be accomplished 21 and by when, provides some meaningful guidance about how we 22 go about doing that, and then leaves the states and local 23 governments free to determine what is the best way to meet 24 those goals and those requirements in light of local 25 conditions and local needs that we, obviously, are better PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 27 1 able to gauge and meet. 2 We are also calling on U.S. EPA to honor agreements 3 and understandings that have been made with the states to 4 ensure the effective implementation of Title V Programs and 5 Title III Programs, and to refrain from attempting to 6 implement requirements that go beyond what's required by 7 Federal law. 8 We are also calling on EPA to meet the requirements 9 of Federal law in the form of timeframes that tell them how 10 long they have to respond to rules that have been submitted. 11 The 18-month period that's provided for in Federal 12 law is a lengthy period of time in and of itself, but the 13 fact that EPA then fails to meet that timeframe extends that 14 untenable situation far longer than is necessary. 15 California's overall objective here is to harmonize 16 the State and Federal programs. We think that that is an 17 appropriate approach here, that it will make for strong air 18 quality programs in the State, that it will protect public 19 health and assure for ongoing compliance with those programs. 20 As Mike indicated in coming to you and requesting 21 that you approve this Resolution for transmittal to U.S. EPA, 22 we are not suggesting that it would be necessary, or 23 appropriate, to roll back clean air laws, or reopen the 24 Federal Clean Air Act, rather what we are advocating here is 25 a call for EPA to engage in a true partnership with PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 28 1 California and the local districts, and that they do this 2 consistent with the Federal Clean Air Act and Federal 3 regulatory reform efforts. 4 If you have any questions, I would be happy to 5 answer them. 6 MR. KENNY: If I might, I really would like to 7 emphasize the last two points. 8 We really do not see the need here for any kind of 9 opening of the Act. We do think the EPA has the 10 administrative authority to do the kinds of things that we 11 are asking for, and what we really are asking for is simply 12 that we can engage in them with a true partnership to achieve 13 the goals of both the California Clean Air Act and the 14 Federal Clean Air Act. 15 CHAIRMAN DUNLAP: All right. 16 Ms. Rakow. 17 BOARD MEMBER RAKOW: I have two questions. 18 Is there a timeframe where EPA must respond to this 19 Resolution? 20 I know the 18 months is implementation, but can 21 they take 18 months to respond to it? 22 MS. WALSH: There is no legal deadline for the 23 response to this. 24 This is an informal process that we are engaging 25 in, but by making these requests public, as the Resolution PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 29 1 that we are asking you to approve today does, it really puts 2 EPA on the line to take some response to these issues, and I 3 think that as a matter of policy and politics, it would favor 4 them to wait. 5 BOARD MEMBER RAKOW: My other question is, I don't 6 know whether it's appropriate or not, it's to the Board, but 7 would it be, in pursuing the course of making the objectives 8 of the ARB public in sending this, would it be appropriate to 9 have a cover letter to the Congressional Delegation and send 10 a copy to each of the California Congressmen? 11 CHAIRMAN DUNLAP: I think what our intent would be 12 if we take action to approve this today to get it up to the 13 Governor's Office and then figure out how best to get this 14 out there, where we could put the right kind of focus and 15 attention on it, and I think that would probably involve -- 16 BOARD MEMBER RAKOW: Pressure. 17 CHAIRMAN DUNLAP: Yeah. Well, I'm trying to be a 18 little more diplomatic, but one thing, Sally, that I want to 19 emphasize, too, this is not kind of a first resort. 20 It's kind of a last resort for us. 21 Mike Kenny and Kathleen, in particular, have been 22 out front in working with not just industry and trade groups 23 but with all stakeholders to make sure that we have some 24 measure of control and predictability over State and local 25 programs. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 30 1 I think this effort is important for us to really 2 push them and let them know that we are serious about it, 3 because for some reason they haven't dealt with these things. 4 We believe that they are relatively easy to deal 5 with, as Mike has outlined, the leadership role that we have 6 played, and I am not patting this Board on the back. We are 7 ahead of other states, other regions in the country and the 8 world, and there is no need for the kind of Federal 9 involvement, intrusive involvement that they have on these 10 things. 11 BOARD MEMBER RAKOW: After, if the Board passes 12 this and it does go to the Governor's Office, there could be 13 a conversation on whether it would benefit California to have 14 each of the Congressional Delegation know what all is 15 involved and what we are trying to do and why. 16 CHAIRMAN DUNLAP: I will be the first one to send 17 it over there and see what we can coordinate on. 18 BOARD MEMBER RAKOW: Thank you. 19 CHAIRMAN DUNLAP: Okay. Unless there are other 20 comments, I would entertain a motion -- 21 Yes, Ms. Edgerton. 22 BOARD MEMBER EDGERTON: I support this Resolution. 23 I see it as an opportunity for the EPA and Air 24 Board to focus anew on these issues. 25 I think there is tremendous opportunity for these PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 31 1 matters to be resolved. I compliment the staff and Chairman 2 for bringing them together in a very orderly and clear way so 3 that, hopefully, our concerns cannot be mistakenly 4 interpreted or mistakenly misunderstood. 5 I think it is important to try to keep the dialog 6 as understandable as possible. So, I think there is an 7 opportunity here, and I think that is the spirit in which it 8 is being offered. 9 Thank you. 10 CHAIRMAN DUNLAP: I want to note Kathleen's 11 comment about opening of the Act, or relaxation of any rules, 12 that isn't what this is about. 13 So, I think it is important if people, if we take 14 this action and people try to misrepresent the action today, 15 we all need to be vigilant about what occurred and what did 16 not. 17 MR. KENNY: If I might add, I mean, I agree with 18 you, Ms. Edgerton, I mean we can look at this as an 19 opportunity. 20 We think it is unfortunate that we had to get to 21 this point where we are asking the Board for this Resolution. 22 What we really want to do is to reopen the dialogue 23 and have a dialogue in which there is truly a recognition of 24 the successes that have occurred in California, and through 25 that recognition have at least some acknowledgment through PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 32 1 EPA implementation of programs in California that works to 2 both the benefit of air quality and recognizes the success 3 that has occurred here. 4 BOARD MEMBER EDGERTON: Well, this opportunity to 5 me is also to respond to the calls for sustainable 6 development in California, which means that we will seriously 7 take into account both the public health and the air quality 8 needs and the economic needs of our State. 9 If you are serious about that, that means that you 10 work closely with industry and with the others. 11 CHAIRMAN DUNLAP: The idea of certainty, too, and 12 control. 13 I mean, one of the things that I'll argue until the 14 cows come home is that we are providing with our air plan 15 certainty, deadlines, dates and a framework that folks can 16 point to and say, this is real. 17 With the Federal process, in so many ways, you 18 can't do that, and that is the difference between our 19 philosophy and the Feds. 20 What I would like to do, we have a full Agenda, I 21 appreciate the comments, but I would like to get a motion on 22 the Resolution. 23 Dr. Friedman and Supervisor Patrick made the motion 24 and a second. Jack is distressed, he wanted do it, but -- 25 BOARD MEMBER PARNELL: With enthusiasm. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 33 1 CHAIRMAN DUNLAP: With enthusiasm, if the maker of 2 the motion would allow the enthusiasm part, I think -- 3 Is there any questions, or comments, or discussion 4 that we need to have? 5 Then we will proceed with a voice vote. 6 All those in favor of adopting Resolution 98-16, 7 say aye. 8 Any opposed? 9 Very good. Motion carries unanimously. 10 Thank you, Mr. Kenny. Ms. Walsh, thank you, very 11 much. 12 I should mention we did not have any folks in the 13 audience wishing to testify, so don't think that I shut 14 anybody off. We just didn't have anybody that signed up. 15 The next item, 98-3-2, a public meeting to consider 16 a draft resource document in which identifies achievable 17 performance standards and emerging technologies for 18 stationary sources. 19 This item is a presentation on the efforts of the 20 staff to assist local Air Pollution Control Districts and Air 21 Quality Management Districts in identifying opportunities for 22 additional emission reductions from stationary sources. 23 Efforts to move forward with improved technologies 24 are essential if we are to continue progress towards meeting 25 the California Ambient Air Quality Standards in light of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 34 1 California's continued economic and population growth. 2 The California Clean Air Act requires districts to 3 develop plans to attain the State Ambient Air Quality 4 Standards by the earliest practicable date. 5 To ensure steady progress, district plans must 6 reduce emission of nonattainment pollutants of at least five 7 percent annually. 8 If a district cannot achieve these reductions, its 9 plan must provide for the implementation of "every feasible 10 measure" on an expeditious schedule. 11 Districts are required to revisit these plans every 12 three years beginning in 1994. The districts are currently 13 updating their plans. 14 To assist these districts in keeping track of the 15 new emissions control technologies, the ARB staff has 16 initiated a process to compile a comprehensive listing of 17 achievable performance and work practice standards for a 18 number of significant source categories. 19 Through this effort, we are able to identify 20 emerging technologies which hold promise for further 21 emissions reductions in these categories. 22 This listing will provide a valuable tool for the 23 districts when updating their "every feasible measures" 24 commitment in their plans. 25 I know from having spent a few years working in a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 35 1 local district how important this guidance is. 2 So, with that, Mr. Kenny, would you introduce the 3 item, please? 4 MR. KENNY: Thank you, Mr. Chairman and Members of 5 the Board. 6 I would like to take just a moment to expand on the 7 "every feasible measurement" requirement and how the ARB 8 interprets the California Clean Air Act in this matter. 9 As you have mentioned, the California Clean Air Act 10 allows districts to use an alternative emission reduction 11 strategy which achieves a less than five percent if they 12 commit to implementing every feasible measure. 13 The Act does not define every feasible measure. 14 However, when the plans were first developed, we found a 15 definition within the California Environmental Quality Act 16 for feasible if it has been applied. 17 Feasible is defined as capable of being 18 accomplished in a successful manner but within a reasonable 19 period of time, taking into account economic, environmental, 20 legal, social and technological factors. 21 We interpret this to mean that what constitutes 22 every feasible measure can vary from district to district and 23 must take into consideration economic, environmental, social 24 and legal factors which prevail in that individual district. 25 We at the ARB can assist the districts with the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 36 1 technology factor by identifying what measures are in 2 practice and available, as well as identifying emerging 3 technologies that provide for further reductions in the 4 future. 5 Before I introduce the item, I would like to simply 6 say that just relevant back into the Resolution that the 7 Board just adopted, what we are trying to do here is to 8 provide for a level of guidance to the districts as they go 9 forward with their "all feasible measures" approach. 10 We are not trying to prescribe that there is only 11 one answer, which is the precise criticism that we have with 12 regard to U.S. EPA. We are trying to set performance 13 standards that do establish where the emission reductions can 14 be achieved and recognizing the benefits and the expertise 15 and the talents at the local level to implement those 16 performance standards. 17 At this time, I would like to introduce Ms. Peggy 18 Taricco, of the Office of Air Quality and Transportation 19 Planning, who will tell us about the staff's reports. 20 Ms. Taricco is part of a multi-division team in 21 charge of this task. This team has really, really carried 22 out a yeoman's work. 23 The material before you is extraordinary and with 24 that, Ms. Taricco. 25 MS. TARICCO: Thank you, Mr. Kenny. Good morning, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 37 1 Chairman Dunlap and Members of the Board. 2 Today we would like to provide you with some 3 information about an effort that we have underway to identify 4 potential areas of additional emission reductions from 5 stationary sources. 6 We are hopeful that this information will prove 7 useful to the local districts as they continue their efforts 8 to provide clean air for California. 9 In my presentation I will provide you with 10 background information regarding the California Clean Air 11 Act, specifically those that pertain to the "every feasible 12 measure" requirement. 13 I will then discuss the development of the draft 14 resource document before you, how we envision the information 15 to be used, and the steps that we will take to work with the 16 local districts, as well as the affected stakeholders, to 17 finalize the information. 18 The California Clean Air Act, or the Act, requires 19 that the local districts develop plans to attain the State's 20 Ambient Air Quality Standard for ozone by the earliest 21 practicable date. 22 The Act also requires these plans demonstrate 23 emission reductions of nonattainment pollutants, or their 24 precursors, of at least five percent per year averaged over 25 three years. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 38 1 If a district cannot achieve these reductions, the 2 Act provides that districts can develop approvable plans, 3 provided the plans commit to the implementation of "every 4 feasible measure." 5 To date, all the districts with plans have 6 committed to the implementation of "every feasible measure." 7 This is a critical component of the planning process as it is 8 the means by which we ensure steady and expeditious progress 9 towards meeting the more health protective State standards. 10 What does feasible mean? 11 As Mr. Kenny mentioned, the Act did not define 12 feasible for us, so when the initial plans were being 13 prepared in the early 90's, we found that the guidance 14 document issued to implement CEQA offered the most relevant 15 definition, and the definition that we still use today. 16 As shown here, feasible is defined as capable of 17 being accomplished in a successful manner within a reasonable 18 period of time taking into account economic, environmental, 19 legal, social and technological factors. 20 We interpret this to mean that the adoption of 21 "every feasible measure" means that a district consider 22 regulations that have been successfully implemented 23 elsewhere. 24 Furthermore, districts need to consider not only 25 technological factors but also the factors that I just PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 39 1 mentioned when developing their plans. 2 This also means that there will not be a 3 one-size-fits-all approach that will work for all of the 4 districts, as these factors will undoubtedly vary from 5 district to district, so shall what constitutes the "every 6 feasible measure." 7 That brings us back to the California Clean Air Act 8 requirement for the adoption of "every feasible measure." 9 As I mentioned, each district with plans has 10 committed to "every feasible measure." As you all know, 11 planning is a dynamic process and one that needs to be 12 revised and refined as times and circumstances change. 13 This is reflected in the Act, as there is a 14 requirement for districts to update their plans every three 15 years beginning in 1994. 16 As part of this effort, the districts are to ensure 17 that their plans still continue to meet the "every feasible 18 measure" requirement. 19 Currently, the districts have either recently 20 completed or are in the process of preparing updates to their 21 plans. 22 To assist them in this plan update, as well as 23 future efforts to reduce emissions, we have undertaken a 24 project to develop a tool that they can use to help identify 25 potential areas of additional emission reductions. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 40 1 Now I would like to spend some time talking about 2 the project that we have underway. The ultimate goal of our 3 effort is to identify areas of additional emission reductions 4 for stationary sources which can then be used to provide a 5 useful reference document for use by the districts when 6 updating their plans and rules and to give ARB staff a 7 resource to use when reviewing those plans and rules. 8 Shown here are the steps that we took in our 9 assessment. 10 First, we selected 25 stationary source categories 11 for review. These categories were those believed to offer 12 the greatest potential for emission reductions and those that 13 we thought would be of interest to the local districts. 14 After the categories were identified, 23 15 professional staff and managers from the Stationary Source 16 Division began the challenging review of all of the available 17 rules and guidance documents pertaining to each of the source 18 categories. 19 During this review, the staff identified and 20 summarized into draft tables the most effective performance 21 and work practice standards of the rules and identified any 22 emerging technologies that may provide additional emission 23 reductions in the future. 24 The 25 source categories chosen for review can be 25 grouped into 15 broad source categories, which are shown here PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 41 1 on this slide. 2 As you can see, we reviewed a wide variety of 3 source categories, including both NOx and VOC sources. 4 A complete listing of the 25 categories is provided 5 in the draft resource document that we provided you today. 6 Once the regulations or guidance documents for each 7 of the categories were gathered, the review process began. 8 During this review, the staff selected the most 9 effective performance standard that would result in the 10 highest level of control that had been achieved in practice, 11 and indicated this by marking an X by the performance 12 standard in the tables that we prepared. 13 This slide shows a simplified version of the tables 14 used in the side by side comparison for automotive 15 refinishing. 16 In this case, two district rules and an ARB best 17 available retrofit control technology guidance document were 18 compared. 19 As you can see, in some cases more than one rule 20 had the most effective performance standard. For example, in 21 the automotive top coat category, both district rules and the 22 ARB guidance document had the best performance limit at 420 23 grams of VOC per liter of coating. 24 However, for the top coats that are used on buses, 25 District 2's rule had the best performance standard. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 42 1 I want to emphasize that this process was not 2 designed to select the most appropriate rule in its entirety 3 for a given category, nor was it designed to try to pick the 4 district with the best rules. 5 We were only identifying the most effective 6 performance standard that has been applied to a regulated 7 component within a given source category. 8 We also reviewed available information to identify 9 technologies that are available but not widely used in 10 practice. 11 These are technologies that may offer emission 12 benefits in the future. We think it is appropriate for 13 districts and ARB alike to track and follow these 14 technologies and determine if they can be applied more widely 15 in the future. 16 On this slide we have an example of an emerging 17 technology that can be used in the aerospace industry in lieu 18 of liquid organic paint strippers. 19 These plastic beads are actually the button holes 20 that are punched out of buttons. This is a good example of 21 how alternative processes can be used to reduce or eliminate 22 emissions. 23 Some other examples of emerging technologies that 24 we identified were low NOx burners for boilers and ultra low 25 VOC coatings for the metal parts and products coatings PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 43 1 industries. 2 What are our expectations for using this 3 information? 4 We believe this information can be used by the 5 districts to review their plans and rule books to see if 6 there are ways that they can strengthen them to achieve more 7 emission reductions. 8 In the near term, the districts may decide to 9 include identified performance standards into their plan 10 updates as far as their as "every feasible measure" 11 commitment. 12 As I mentioned earlier, several districts have 13 completed their updates and submitted them to us for 14 approval, while others are still in the process of preparing 15 them. 16 While the ARB has taken formal action on the 1997 17 South Coast Plan update, the other district updates will not 18 be considered by you until later this year. 19 Here at the ARB, we will use this resource document 20 as a guide when reviewing plans and rules. We think that 21 this resource document will provide consistency to our 22 reviews and also give the districts a better understanding of 23 what our expectations are. 24 As we work to finalize this information, it's 25 important that we work with the districts and all of the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 44 1 affected stakeholders. 2 We have been keeping district staffs apprised of 3 our activities through updates to the CAPCOA planning 4 managers and Board of Directors, as well as informal contact 5 at the staff level. 6 We will continue to coordinate with CAPCOA to 7 finalize this information. It is our plan that once we have 8 received the districts input on this document to conduct 9 public workshops to allow the affected stakeholders to 10 comment as well. 11 In conclusion, while we have made significant 12 progress in attaining our air quality goals, there is still a 13 ways to go. 14 We must continue to search for new technologies to 15 achieve additional emission reductions. The requirement to 16 include "every feasible measure" in our California Clean Act 17 Air Act Plans is one important vehicle that helps us to 18 continue this progress. 19 We believe that the information that we have 20 gathered will be a useful tool for both the ARB and 21 districts' staff to help us identify steps that can be taken 22 now and steps that can be taken in the future to realize 23 additional emission reductions, and with the Board's 24 endorsement of this effort, we will continue to work with the 25 districts and the affected stakeholders to finalize the draft PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 45 1 document. 2 That concludes my presentation. Thank you. 3 CHAIRMAN DUNLAP: Any of the Board Members have 4 questions? 5 Mike, do you want to add anything? 6 MR. KENNY: I really just simply want to emphasize 7 again how much work was involved with this project. 8 As you can see from the Board package, which is 9 before you, the package on this item is about two inches 10 thick, and it really did involve incredible work by the team 11 led by Ms. Peggy Taricco. 12 I think that the work that they came up with is 13 something that is very, very valuable, and it really allows 14 us to go forward with the districts and work as partners 15 toward achieving additional emission reductions. 16 CHAIRMAN DUNLAP: Okay. Thank you. 17 Yes, Mr. Calhoun. 18 BOARD MEMBER CALHOUN: Were all the districts 19 involved in the development of this? 20 MR. VENTURINI: Mr. Calhoun, we put this initial 21 document together and apprised the districts of the document. 22 They now have it, and our next step is to consult 23 with the districts to gain their input on that, so that's the 24 next phase on this process. 25 BOARD MEMBER CALHOUN: It's going to be interesting PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 46 1 to see what kind of comments you get back. 2 CHAIRMAN DUNLAP: Yes. Okay. 3 Well, Mike I think made the central point, at least 4 for me, which is, you know, we are not looking to prescribe, 5 we are looking to provide information and guidance to people, 6 and I think that is important, less we be accused of 7 hypocrisy in our dealings, particularly with the Federal 8 Government. 9 Okay. There seems to be no witnesses. 10 Staff, could I get you to summarize any written 11 comments that you have received on this one, Peter? 12 MR. VENTURINI: No comments, Mr. Chairman. 13 CHAIRMAN DUNLAP: Okay. 14 Mike, I don't think you have anything else? 15 MR. KENNY: No, I don't. 16 CHAIRMAN DUNLAP: I would like to thank you all 17 for the work. 18 Peggy, I appreciate you, and Bob, and others work 19 on this thing. 20 So, this is not a regulatory item, so it isn't 21 necessary to close the record, and we have no resolution, or 22 do we, Mike? 23 Okay. No resolution. 24 Okay. So, I would look for a motion to support the 25 staff work on this. Is there a second? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 47 1 Okay. Supervisor Silva. 2 Any discussion that we need to have? 3 With that, all those in favor, say aye. 4 Any opposed? 5 Very good. Thank you, again. 6 Okay. Research proposals. 7 Dr. Holmes and Mr. Barham. The next item of 8 business before the Board today are three research proposals. 9 Have the Board Members had an opportunity to review 10 them? 11 All right. Okay. 12 We have witnesses that have signed up. The list 13 will be here in just a minute. 14 Why don't we determine, Ms. Hutchens, which 15 research items do not have folks that want to comment on 16 them, and we will take them separately, if we can determine 17 that. 18 MS. HUTCHENS: I don't have the list. 19 CHAIRMAN DUNLAP: Okay. All right. 20 Well, then what I will do is I'll try to determine 21 myself. 22 Is there anyone that wishes to speak on the first 23 item, which is development and validation of databases for 24 modeling biogenic hydrocarbons in California's airsheds. 25 Did anyone sign up for that one? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 48 1 All right. 2 Did anyone sign up to speak on the second item, 3 which is adapting biological fingerprinting methods to source 4 apportionment for fugitive dust? 5 All right. Then we will take up those two first. 6 Kathleen, is that all right to do it this way? 7 MS. WALSH: Yes. 8 BOARD MEMBER RIORDAN: Do you want some motions? 9 CHAIRMAN DUNLAP: Yeah, but just -- I am going to 10 ask staff a question, though, Supervisor. 11 Dr. Holmes, Mr. Barham, anything that you want to 12 say about these two items? 13 Don't feel compelled to do so. The Board has had a 14 chance to look at it. I'm just asking you. 15 DR. HOLMES: I think that the staff writeups are 16 fairly explicit, and unless there are questions, I don't 17 think we have anything to add at this point. 18 CHAIRMAN DUNLAP: All right. Very good. 19 I will entertain a motion to move the first two 20 items. 21 BOARD MEMBER PATRICK: So moved. 22 BOARD MEMBER RIORDAN: Second. 23 CHAIRMAN DUNLAP: A motion by Supervisor Patrick 24 and seconded by Ms. Riordan. 25 Any discussion we need to have on these two PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 49 1 research items? 2 Hearing none, we will proceed with a voice vote. 3 All those in favor of approving Resolution 98-12 as 4 it relates to those first two items, say aye. 5 Any opposed? 6 All right. Very good. 7 MS. WALSH: Chairman Dunlap, just a point of 8 clarification, there are separate Resolutions for each of the 9 three items, so, that would be Resolution 98-12 and 98-13. 10 CHAIRMAN DUNLAP: All right. So, what, we'll do 11 this again. My apologies. 12 All those in favor of adopting Resolution 98-12 and 13 Resolution 98-13, say aye. 14 Any opposed? 15 Very good. Those two items are moved. 16 The third item, which is an item involving the 17 effects of smoke, why don't we ask Mr. Scheible to introduce 18 this research issue and say a little bit about it, and then 19 we will get into the witnesses and we will hear from them. 20 MR. SCHEIBLE: Okay. Thank you, Chairman Dunlap. 21 Over the last week or so, we have become aware that 22 certain segments in the rice industry have some substantial 23 concerns about this process. 24 I am going to turn it over to Bob Barham, of the 25 Research staff, to kind of go over the history, address the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 50 1 issues and then give you the staff's point of view before the 2 witnesses come. 3 CHAIRMAN DUNLAP: All right. Thank you, 4 Mr. Scheible. 5 MR. BARHAM: Good morning, Members of the Board. 6 My name is Bob Barham and I am Assistant Chief of Research in 7 the California Air Resources Board. 8 This particular project was one of the projects 9 that the Board reviewed in last year's research plan. If you 10 recall, that was the first year that we opened the planning 11 process up to ideas from the outside. 12 This particular project was submitted to us as one 13 of those outside ideas. It made it through the various 14 review processes that we have here at the Board. 15 It was ultimately reviewed by the Research 16 Screening Committee in June of 1997, and then approved by the 17 Board in July of that same year. 18 The project has also been discussed at numerous 19 workshops relating to the Rice Straw Burning Report that the 20 Board approved, I believe, in September of 1997. 21 The proposal that you have in front of you today 22 was reviewed again by the Research Screening Committee, this 23 specific proposal, was reviewed by the Research Screening 24 Committee back in February of this year. 25 As Mike said, there have been a number of issues PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 51 1 related to this particular project that have recently come to 2 our attention. 3 Despite the project's long history, the staff 4 became aware over the last week that at least some portion of 5 the rice industry were very concerned about the basic premise 6 of this project, that there needs to be more health 7 information on the effects of breathing smoke from burning 8 the vegetative matter and that it makes sense to study rice 9 initially. 10 The major concern is that by investigating rice 11 smoke effects first, the ARB will be indicating that the 12 major cause of the region's air pollution problem is from 13 rice. 14 They also believe that this could lead to further 15 rice burning being singled out, further efforts in that 16 direction, and subjected to disproportionate regulation. 17 The groups would like to see the proposal 18 significantly expanded to include other materials, other 19 vegetative materials, including forest material burning and 20 fireplace smoke, and that would also include woodstoves. 21 CHAIRMAN DUNLAP: All right. 22 Which is my understanding that is part -- Bob, this 23 is essentially a three-phase research effort anyway, so these 24 other two phases are things that you are planning to do, that 25 you wish to do? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 52 1 MR. BARHAM: Yes. 2 That what we anticipate to do in the future, and in 3 fact, can I have the overhead? 4 CHAIRMAN DUNLAP: Okay. So, what we are really 5 talking about is your early phase, or phases of a three part 6 focused research effort, right? 7 MR. BARHAM: That is our plan. 8 As you see, this project that is being proposed 9 today would look at rice smoke, and it's funded at 10 approximately $375,000. 11 Again, we would plan to do, but we don't have the 12 funding for projects to look at residential wood burning and 13 forest products. 14 We received cost estimates that these two, 15 depending on the timing, provided we do it sequentially, 16 would cost us in the range of $350,000 to $375,000 each, not 17 individually, but for each fuel. 18 Staff concurs that our goal is to establish an 19 effort that will study far more than rice smoke, and we think 20 it is appropriate to retitle this effort to reflect that. 21 CHAIRMAN DUNLAP: Bob, if I might just ask a 22 question or two about that? 23 So, this effort would be, let's see, $350,000, 24 about $1.1 million, or thereabouts, to do all three elements? 25 MR. BARHAM: In that kind of range, as long as we PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 53 1 did them sequentially. 2 CHAIRMAN DUNLAP: All right. And the question for 3 the two Mikes, the barrier to this, from accomplishing all 4 three, are really resources, I mean you are trying to manage 5 a budget, what you come to the Board with, and also you've 6 got a research relationship with someone at the UC System is 7 planning on doing this in sequential order? 8 MR. SCHEIBLE: That's correct. 9 We don't have the money allocated in order to fund 10 the full project, nor have we done the kind of work that it 11 takes to design the entire project. 12 We had figured we would be doing that at a later 13 date. 14 CHAIRMAN DUNLAP: All right. If you had the 15 resources to be able to expand it, to bite off all three of 16 these things simultaneous, or close to that, you know, would 17 that be something that you guys would welcome, be able to 18 accomplish? 19 MR. SCHEIBLE: Well, the impacts of smoke from 20 forest burning, or from residential, are issues that clearly 21 are important in terms of public health, and, yes, we would 22 like to have more information on those, as resources permit. 23 CHAIRMAN DUNLAP: Yeah. Okay. 24 Resources, you are concerned, as I understand it, 25 you guys have allocated this research cycle, $375,000, if you PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 54 1 had the $1.1 million at your disposal, you guys would be 2 willing to do all you could, all that the research team would 3 be allowed to be done, correct, relative to time and how many 4 hours are in a day, or a week, or a quarter to do this work, 5 right? 6 MR. SCHEIBLE: That's correct. 7 CHAIRMAN DUNLAP: Okay. All right. 8 Mr. Barham, please, go ahead. 9 MR. BARHAM: A couple of other things that have 10 occurred to us as well, would be to expand the summary of the 11 project to make it clear that we intend to establish a 12 facility that can study these projects, just as we have 13 discussed, but again, as we have discussed, within this 14 budget, it's not feasible. 15 We also want to clarify that this research is not 16 connected to any expanded regulatory program. The research 17 is directed, merely, it's understanding the health effects 18 and this relates back to numerous questions we have received 19 in Research Division, and I am sure in other parts of the 20 organization as well, it's related to specifically the 21 effects of rice and other materials when they are burned. 22 We also appreciate the sensitivity of the rice 23 industry and the public to this study and propose to 24 establish a mechanism to keep interested parties informed 25 about and involved in the effort. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 55 1 What we would suggest there would be periodic 2 meetings with interested parties on progress and issues 3 related to the project, introduction of quarterly reports, 4 distribution of those reports to others involved in PM 5 research efforts, such as the efforts in the central 6 California PM study. 7 With these changes, however, staff continues to 8 recommend that the Board approve the project. We should move 9 ahead with the current project as the first phase of a larger 10 study. 11 We believe that technically this is the best way to 12 assess the issues related to these materials. 13 That concludes my presentation. If the Board has 14 any questions, I would be happy to answer them. 15 CHAIRMAN DUNLAP: Okay. What I am seeing so far, I 16 would be happy to maybe ask one or two of my colleagues to 17 defer to me to make sure I understood a couple of points that 18 you made there, Bob. 19 Staff is recommending a quarterly update on the 20 research, you know, a mail-out, letting people know what is 21 going on. This is a two-year effort? 22 MR. SCHEIBLE: I believe it runs over three years, 23 through 2000 or 2001, three calendar years, or three total 24 years. 25 CHAIRMAN DUNLAP: Well, somebody find out. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 56 1 Three years? 2 Okay. 3 This Advisory Committee, you know, or what did you 4 call it, work group, or whatever, what is your thinking, Mike 5 Scheible, about who would participate on this? 6 MR. SCHEIBLE: Well, it would have to be an open 7 invite, and I imagine that growers or grower organizations 8 would want to follow it. 9 I imagine that representatives of the public, such 10 as the American Lung Association, or health groups would want 11 to follow it, and then if we are lucky, we will get one or 12 two knowledgeable scientists that would also follow it. 13 This is to keep people informed, just to advise 14 them how progress is going, so that as the project winds 15 along, they feel like it is being done right and then they 16 are not surprised. 17 CHAIRMAN DUNLAP: Yeah. Okay. 18 All right. Okay. 19 Yes, Supervisor Silva. 20 BOARD MEMBER SILVA: I know we have talked about it 21 over the years, is there a target date that is actually 22 supposed to be phased out, the rice burning? 23 MR. SCHEIBLE: Yeah. 24 Let me explain the current law. The current law 25 phases down through the amendments, through a little bit PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 57 1 beyond the year 2000, rice straw burning, but it contains a 2 provision that says up to 25 percent of the acres, which can 3 be as many as 125,000 acres, a year can be burned for disease 4 control. 5 Currently, it's the belief of the industry that 6 they will continue to need to be allowed to burn that much 7 for disease control, that we they don't see, at least 8 currently, feasible alternatives that will manage disease. 9 So, I think we are studying something that may well 10 be with us for some period of time, even though the law 11 phases down the burning, it doesn't have a date by which it 12 cannot be allowed and the industry will need to continue to 13 burn. 14 BOARD MEMBER SILVA: So, the 25 percent would be 15 the 125,000 acres? 16 MR. SCHEIBLE: That's correct. 17 Which is far less than the 400,000, 500,000 acres 18 that occurred in 1990, or so. 19 BOARD MEMBER SILVA: But then there can always, you 20 know, be some improvement in that area. 21 CHAIRMAN DUNLAP: Yeah, well, there are some 22 alternatives, there are some dollars, you might remember 23 this, Jim, from last year, there is some dollars that the 24 Legislature and the Governor appropriated to look at 25 alternatives to rice burning, of which our staff is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 58 1 administering, you know, a grant program and projects, as a 2 matter of fact, it came before us, I think, this item came 3 before us a quarter or so ago, didn't it, Mike? 4 MR. SCHEIBLE: Yes, it did. 5 CHAIRMAN DUNLAP: So, this is, you know, an issue 6 that is going to be with us for a while. 7 I appreciated the staff comment about, you know, as 8 far as regulation, this research is aimed at getting 9 information not at developing a regulatory framework beyond 10 what what's already provided for in the law. 11 I think it's an important point for people, 12 particularly those that are in that business that are here in 13 the audience to understand. 14 Yeah. Go ahead, Jack. 15 BOARD MEMBER PARNELL: I don't, I think that the 16 rice industry, and I don't want to misstate, I guess they 17 will talk for themselves, but it seems to me that this is a 18 situation of optics. 19 I mean, they have gone through seven kinds of hell 20 of late on a number of issues which relates to burning, and 21 they have, I think, stipulated to the fact that, number one, 22 they think at some point in time, and under some conditions, 23 rice straw smoke should be studied, but the optics of the way 24 initially this was proposed, it seemed to be focusing on 25 rice, and I think there is a significant concern there, and I PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 59 1 understand that. 2 As to the other Legislative Program that we passed, 3 or was passed in the Legislature, and that we voted approval 4 on, is a program to phase down the burning, or to look for 5 alternative sources of use for rice straw so that that should 6 preclude the burning of substantial amounts of rice straw. 7 So, one might question the priority, when you look 8 at the entire spectrum of things that should be studied, that 9 create PM 10 or PM.25, and one might argue that the 10 priorities are skewed. 11 Now, there may be reasons and you might want to 12 allude to some those reasons why rice straw was first out of 13 the box. 14 I, for one, am very sensitive to the rice industry 15 and what they were asking for is some time, as I understand 16 it, to really more fully explore what was about to be done 17 and for them to be able to rise to the occasion in terms of 18 their examination and due diligence and their input on the 19 process as it goes forward. 20 I am anxious to hear their testimony, but I would 21 also like to hear the staff's reasoning for the priority as 22 it stands, because I can understand their concerns as to the 23 optics here. 24 CHAIRMAN DUNLAP: Yeah. What I would like to do, 25 and staff why don't you noodle that and be ready to respond PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 60 1 to it in a minute, but we have four witnesses, and if my 2 colleagues are okay with it, I will ask the witnesses to come 3 forward, and we will hear from them directly. 4 Joe Carrancho, Steve Butler, Charlie Hoppin and 5 Paul Knepprath have all signed up. If I could ask you 6 gentlemen to come to the front row, if you would. 7 Joe Carrancho is with the Rice Producers of 8 California group. Steve Butler is a rice grower, and Charlie 9 Hoppin is with CRIA, is also a grower as I understand it, and 10 Paul is with the American Lung Association. 11 So, gentlemen, Joe, you are welcome to come 12 forward, if you would like. 13 MR. CARRANCHO: Good morning. Thank you, Chairman 14 Dunlap and Members of the Board. I want to thank you for 15 giving us this opportunity. 16 I realize when this started was when we had our 17 stakeholders meeting, probably about a year, year and a half 18 ago. 19 One of the things that the farmers have always said 20 is that we want this done with good science. I think if we 21 had used good science we probably wouldn't have been here 22 today. 23 In good science, it doesn't mean that, well, what 24 I'm trying to say, is we don't not want this driven by 25 political correctness, or emotion. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 61 1 Good science is the way to go. Now, it has long 2 been known that when we started burning rice straw and we 3 started getting regulated, we were two percent of the 4 problem. 5 We are now down to 40 percent burning, and Jack 6 Parnell is entirely right, right now we have the diseases and 7 all of the problems that 1378 has put upon us. 8 The farmer is leveraged to a point where he is 9 almost not able to handle it. We will need to burn that 10 125,000 acres, unless we find some alternatives, and the 11 farmers are working on it very diligently. 12 I think you probably have got a little calendar 13 there, and some stuff that our group kind of put out together 14 with the Farm Bureau, and we gave it to the Fish and Game. 15 Every farmer that you see out here, there are quite 16 a few of us out here, are environmentalists. We are 17 environmentalists. 18 The land is our life. The creatures on that land 19 are basically our children, and we do not want to lose our 20 Pacific flyway, we do not want to lose a lot of the habitat 21 that we have. 22 This burning issue has really hurt that. Now, as 23 far as this study, our group is not necessarily against it, I 24 welcome it, with reservations. 25 If we are one percent of the problem, then why are PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 62 1 we thrown up in front like we are 99 percent of the problem? 2 If you are going to do it, either do it in unison, 3 everything together, publish the result all together, or do 4 it in accordance to importance. 5 If your wood stove is 20 percent and we are one 6 percent, why are you doing the rice first? 7 We just want to be put in balance with what our 8 portion of the problem is. I also have a little bit of a 9 problem with using San Francisco, we would rather see 10 UC Davis do it. 11 Now, if you want to use a certain doctor out of San 12 Francisco, or something like that, who is a specialist in 13 asthmatic, we want someone who understands our problems, has 14 some vague idea of what we are going through. 15 It's not a matter with the farmers of being against 16 this. We welcome it. We want to definitely be a part of it. 17 Anything that is done, we would like to have input 18 into it. But if you can't get the million one to do it all 19 at once, then put us in line. 20 The thing is, you put us up front first, the 21 Administration has changed, the first study is done and the 22 Administration changes, the next two studies are not done and 23 so the only culprit that we have is the rice industry. 24 That is our fear. Thank you. 25 CHAIRMAN DUNLAP: Any questions of Mr. Carrancho? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 63 1 Thanks, Joe. I appreciate that. 2 Steve Butler, rice grower. 3 Mr. Butler, what county do you farm in? 4 MR. BUTLER: Sutter County, Mr. Chairman. Thank 5 you for the opportunity to speak, Mr. Chairman and Members of 6 the Board. 7 What I would like to do, and I can understand the 8 general publics's desire to get some additional data on rice 9 straw burning, but my concern is that the study as it is now 10 funded will not do that. 11 What we will get is a unique protocol that will 12 give us an unique set of data, the numbers from which won't 13 be related or correlated to other sources of pollution that 14 people here in the valley are exposed to in any given day. 15 I would urge the Board to ask staff to take a long 16 look at this study as it now is funded and see if after the 17 initial protocols are developed, perhaps some savings could 18 be realized to study other field sources so that the data 19 when it is released is a complete set of data and not some 20 isolated number that really has very little bearing on what 21 the average citizen might be exposed to here in the Central 22 Valley, or elsewhere. 23 If that is done, I think the rice industry would 24 support this study. 25 CHAIRMAN DUNLAP: Could I ask you a question, you PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 64 1 heard staff about the quarterly reports and, you know, an 2 Advisory Committee process and all of that, does that provide 3 some comfort to you? 4 MR. BUTLER: Until the study is funded, our concern 5 is that the other fuel sources may not ever be studied, or 6 they would be done so at a much later date and the public 7 will have to look for a retraction on page nine, instead of 8 the headlines on page one. 9 CHAIRMAN DUNLAP: Yeah. So, you're, I don't want 10 to put words in your mouth, but you like the idea of the 11 quarterly reports, you like the idea of the Advisory 12 Committee process, you just want to see this done in total 13 with the other things, you would like timing to be similar if 14 you could, so that you guys would be looked at as part and 15 parcel to some other issues; is that correct? 16 MR. BUTLER: Yeah, I think that the breathing 17 public deserves as much. 18 CHAIRMAN DUNLAP: Okay. 19 Did you have the same position as Mr. Carrancho, 20 that you think this research is valuable in comparison to 21 other things? 22 MR. BUTLER: Only if it can be looked at relative 23 to the other pollutants that are out there. 24 CHAIRMAN DUNLAP: Okay. All right. 25 Any questions of the witness, anyone? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 65 1 Thank you. 2 Mr. Hoppin. 3 Charlie, you are a grower, too, as I understand it, 4 and a CRIA member, right? 5 MR. HOPPIN: That's correct, Mr. Chairman. 6 CHAIRMAN DUNLAP: And where do you farm, Charlie? 7 MR. HOPPIN: I farm in Sutter County, also. 8 Before I make my plea to yourself and the Board, I 9 would like to apologize for coming to you at this late date. 10 I realize this information and this process has 11 been in the hopper for the last six months or twelve months, 12 and quite frankly, I think our industry has dropped the ball 13 in coming to you at this late date, and I can only sincerely 14 apologize to you about that, and I realize it causes an 15 inconvenience. 16 I would like to ask, Mr. Chairman, that we have a 17 motion from your Board to delay the process for 30 days, and 18 I realize that also causes you problems, and I realize that 19 it is also not a common request. 20 The only reason that I am asking you that is 21 because I feel that our industry has possibly identified a 22 commitment for enough funds to conduct this research 23 concurrently, to echo the words of both Mr. Carrancho and 24 Mr. Butler, and I think that's important to our industry. 25 I do not want to elaborate on the past comments, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 66 1 but we don't want to be singled out, but we do have concerns 2 also on the protocol in the studying that a breathing 3 chambers study of rice smoke inhalation will correlate to the 4 real-life world of rice straw that a person in Sacramento, or 5 Sutter County, or the Bay Area actually breathes. 6 As long as the data is relevant, we think we would 7 encourage it, and I don't think you will, the rice industry 8 standing up and saying that we are not a source of pollution 9 and we resent being included in the study, we just would like 10 to have the study be in perspective, so that as the other 11 witnesses have echoed, we don't want to be singled out or be 12 on the front page first. 13 We don't mind being a composite of a vegetative 14 burn study. We have no resentment about that whatsoever, but 15 we would like to be considered as a portion of the whole. 16 CHAIRMAN DUNLAP: Charlie, on that point, you know, 17 one of the things that, one of the great challenges of State 18 government these days is securing enough resources to do 19 everything that you would like to do. 20 We, you know, we put forward a budget and the 21 Governor and his fiscal team look at it very closely and, you 22 know, give us the right kind of feedback, and then it goes 23 forward and there is a Legislative oversight process. 24 At this point, and I am hearing very clearly from 25 the staff that we have budgeted $375,000, or close to that, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 67 1 for this first element of it, and we don't have the 2 discretionary resources to be able to fund all three parts 3 right now, for example. 4 Would you guys be willing to stand up and perhaps 5 work with us in the Legislative process to try to amend or 6 secure some additional resources? 7 MR. HOPPIN: That's my point. We definitely would, 8 and we have been working on that process in the past 24 9 hours. 10 We feel comfortable that we have a potential 11 commitment, and I realize that potential commitment may be a 12 vague phrase, and I don't intend to be vague, but I don't 13 want to commit to something that I can't produce. 14 CHAIRMAN DUNLAP: Right. I understood, but you are 15 willing to work shoulder to shoulder with our research team 16 to make those arguments in our Legislative process? 17 MR. HOPPIN: It is our understanding in talking to 18 staff that a 30-day delay would not really interrupt your 19 interlude project. 20 Like I said, I realize that a 30-day delay is not a 21 usual request, that it doesn't happen every day. 22 CHAIRMAN DUNLAP: Tell me about this 30 days. I'm 23 just picking on you because you happen to be up there now, 24 tell me what all you are going to do with 30 days? 25 I understand you are going to weigh in with Members PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 68 1 of the Legislature that you may have a relationship with and 2 the like for resources, but what are you going to do with it? 3 MR. HOPPIN: I can tell you before that what we are 4 not going to do, and that is if we have 30 days, we are not 5 going to try and wiggle out of being included in the study. 6 I can assure you of that, and I think you got the 7 same indication from the previous two witnesses. We would 8 like to be able to secure a commitment for the funding, 9 working, as you said, hand in hand with this agency so that 10 the study can be conducted simultaneously. 11 I think the equity of the study would be if it was 12 conducted simultaneously. We realize that we are a small 13 portion of the pollution in the State of California, and we 14 also realize that our industry probably is before you more 15 than many others. 16 We are not here to try and cause you grief. We 17 just would like to be put on a level playing field. 18 Did I answer your question? 19 CHAIRMAN DUNLAP: I think you did, yes. 20 MR. KENNY: I have one question, if I could ask, 21 and that would be, to the extent that a 30-day delay is being 22 requested in the anticipation that money may be available to 23 expand the study, I guess I'm curious as to what the response 24 would be if the money is not available? 25 MR. HOPPIN: It was explained to us by staff, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 69 1 obviously our first reaction was to feel that we have been 2 unfairly singled out in the lead position, and it was 3 explained to us by staff, and I tend to believe the answers 4 that we were given, that the study of rice straw smoke, 5 because it was of a more consistent quality, would be a 6 simpler study and therefore, would be a logical place to 7 initiate protocol. 8 I can't say that under any circumstances that I 9 like to be first. I don't think anyone in our industry 10 would, but if we are unable to secure commitment for the 11 funding for the simultaneous study, it is also our 12 understanding that the results of the study cannot be held up 13 until all of the components of the study have been completed, 14 so that if we were first, our results would be released 15 first. 16 Is that not correct? 17 MR. KENNY: I'm just trying to understand, I think 18 I hear you saying that to the extent that a 30-day request 19 was honored by the Board, what you would do is you would try 20 to achieve the additional funds in order to expand the study, 21 but if you were unsuccessful in doing that then you believe 22 that the Board should go forward, you would basically accept 23 the Board going forward with this study, and then you would 24 continue to try to pursue money to expand it at a later time? 25 MR. HOPPIN: I would say that at that point we PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 70 1 continue to make sure that the data was released in 2 perspective. 3 I can use the example of a study coming out that 4 says 200,000 people were killed in GM cars in the United 5 Sates in a year, when the complete study indicated that there 6 were 1,200,000 people killed in all cars in the United 7 States, we just want to be sure that the results of this 8 study are in perspective, and we're not singled out, that is 9 our only request. 10 MR. KENNY: I understood that. I'm just, I'm not 11 sure I followed you completely though, I mean, to the extent 12 that the timing didn't result in additional money, I was 13 trying to understand what your position would be a month from 14 today? 15 MR. HOPPIN: We realize the study will go forward. 16 CHAIRMAN DUNLAP: Okay. Dr. Friedman. 17 BOARD MEMBER FRIEDMAN: Well, there is a 18 presumption that you all know the results of the experiments 19 before they are done, and there is good reason for that. 20 You build a box, put a person in the box, blow 21 smoke into the box, something is going to happen. You draw 22 blood, you stick a tube down someone's lungs, you are going 23 to have findings. 24 I don't care what the source of the smoke is, so, 25 the presumption is not incorrect. That's really the alarm, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 71 1 you know there are going to be positive findings, 2 irrespective of the source of smoke. 3 The issue of this study and its particulars, there 4 are some problems with the study. First of all, there is no 5 guarantee in my mind that human subject protection permission 6 would be granted to do this study. 7 I mean, you know, you are using invasive procedures 8 of people sitting in a box breathing smoke. I don't know 9 yet, and apparently we don't yet have human subject 10 protection and permission to do this study at U.C. 11 More importantly, I misspoke before about this, 12 this is a two versus a three year study, this study should 13 never take three years. 14 You have 15 people in each of three groups, with 15 between three and five exposures, and unless you only work on 16 Saturdays, this study should take a year and a half, or maybe 17 two at the very outside, so, if you are thinking about 18 dollars, then let's factor in an amount, which is an 19 appropriate amount, for the study. 20 I am very surprised. I saw the time lines. 21 I mean you have got 24, 26 months of studying 22 patients, that is one every fourth day. I mean, you know, 23 you want to get the study done, you do three patients a day 24 and it is over. 25 So I have some concerns in that regard. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 72 1 One other comment, Joe wanted the study done at UC 2 Davis. Joe, science is science. 3 It is data. It has nothing to do with where it is 4 done or whether people are sympathetic, because if you are 5 sympathetic you should have recused yourself from doing the 6 science. 7 What you really want is good data, but I can really 8 resonate as to why there is a presupposition that the results 9 are going to be in some way disadvantageous to the industry. 10 I mean, if you burn twigs, something is going to 11 happen. I think this kind of information can be useful, but 12 we have already accepted the premise that this smoke is not 13 helpful, and they are trying very hard to conform to 14 suggestions from the Board with respect to their practices. 15 It becomes circular. 16 CHAIRMAN DUNLAP: Right. Okay. 17 We have got one more witness. I am going to ask 18 this witness, I would like you to direct it at the witness 19 and then when the witnesses are done, Jack, we can come back 20 to the staff and have them go back and forth. 21 Any more questions for the witness? 22 Okay. Charlie, stay close, we might call you up 23 here again. 24 Paul Knepprath from ALA. I will say a word about 25 Paul and ALA's activities in this process. I was heartened PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 73 1 to learn a year, year and a half ago, ALA actually had a 2 press event and some kind of a meeting where they had the 3 rice growers with them talking about alternatives, and I 4 think it had to do with the Sacramento Bee, remember, being 5 published with the rice paper, so I know you guys have been 6 actively tracking this. 7 MR. KNEPPRATH: Right. Yes. 8 Mr. Chairman and Board Members, Paul Knepprath of 9 the American Lung Association of California. You are 10 absolutely right. 11 The Lung Association for 25 years has been working 12 and raising the issue about the health effects of rice straw 13 burning in the Sacramento Valley. 14 We have actually worked with the growing community 15 to try to solve some of the problems. Some of the witnesses 16 that you have already heard from teamed up with the Lung 17 Association to provide rice straw to make paper for the 18 Sacramento Bee and the San Jose Mercury News and some other 19 publications to demonstrate how we can take this resource and 20 turn it into an economically viable product and to reduce 21 burning through an incentive and a market-based approach 22 rather than always a command and control. 23 So, I think the American Lung Association is very 24 familiar with that and very flexible in how we deal with this 25 kind of situation. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 74 1 We also appreciate that the Board did go outside 2 its internal confines to ask people in the community what 3 kind of research projects would be helpful. 4 We were one of the organizations that responded and 5 we did put in a letter that requested a study similar to what 6 you have on your Agenda today. 7 We asked that it look at fine particulate matter, 8 at a minimum, rice smoke, wood combustion and diesel. 9 We felt that it was important to have fine 10 particles as we move into the newer era of the Federal 11 standards. 12 We really looked at to understand more about the 13 health effects. I don't think that we ever felt that we 14 wanted to single out rice straw burning, per se. 15 We believe that there is a lot of anecdotal 16 information. In our offices in both Chico and Sacramento, 17 get phone calls off the hook in the fall when rice straw 18 burning is occurring. 19 We have people who have asthma, COPV, emphysema, 20 and others who are particularly affected by the rice smoke. 21 So, we felt, as an organization, that it was 22 important that we approach the Board and see if we might be 23 able to move the Agenda down this road from a scientific 24 standpoint. 25 I'm actually quite confused why this is an issue PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 75 1 today. The rice industry, I don't know, collectively, or the 2 bits and pieces, and for many of the growers, have been 3 asking for a health effect study of rice smoke for many 4 years. 5 It was always in the negotiations over the 6 phase-down, an issue, whether or not there was really an 7 impact on people's health from rice smoke. 8 The American Lung Association, of course, has 9 always been calling for more health effect studies, but I 10 think the rice industry themselves has publicly stated that 11 they think that we need more information, so I find it quite 12 amusing, in some regard, if they weren't making such a strong 13 case on this, that they are standing before you now and 14 telling you not to move forward with this study. 15 I think that they are being a little bit defensive 16 in this nature, and I think that the science will bear out 17 what the science will bear out. 18 Mr. Carrancho doesn't want politics to run this. 19 He wants it to be science, but he wants the research to take 20 place in Davis where there is somebody who is familiar with 21 their problems in the industry and would be sympathetic to 22 them. 23 I don't think that that is science. I think that 24 is politics. There is a real need for critical research in 25 the Sacramento Valley and the Central Valley about the unique PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 76 1 health effects of fine particulates and rice smoke in 2 particular. 3 It is critical that you move forward with this 4 first phase. To the extent that there is funding for future 5 phases, we would encourage you to move forward with those. 6 As I said at the top of my presentation, our 7 request for the research was a broader request than just rice 8 smoke, but I don't think that we need to shy away from 9 looking at rice smoke, but we should shy away from looking at 10 what the health effects data will show to us. 11 And to Mr. Parnell's concern, I think that even if 12 we were going to get ourselves to a phase-down of only 25 13 percent and only by conditional burn permit only, rice 14 burning, I think that this issue is going to be with us much 15 further than that. 16 125,000 acres burned in the Sacramento Valley is 17 still a significant amount of rice being burned. There were 18 a couple of other points that I wanted to make -- 19 CHAIRMAN DUNLAP: Paul, can I interrupt you? 20 On the point about the research dollars, would you, 21 you know, there has been some suggestion that we would work 22 with the growers and others to try to secure some resources 23 through the Legislative process, would you help us with that, 24 is that something that you would see of value for you to work 25 on? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 77 1 MR. KNEPPRATH: We would always be willing to work 2 with the Board, to work with the rice industry, anybody to 3 get more funding. 4 It's the Lung Association who with some of the 5 other groups got the two and a half million dollars for the 6 Rice Demonstration Project, which is now in the budget again 7 for next year, so we are going to have a total of $5 million 8 to hopefully deal with this problem on a market-based 9 approach, so certainly we are there. 10 We would urge you not to delay this for 30 days. 11 I'm not certain that there is a lot of new evidence, new 12 information that you are going to get in 30 days. 13 If you feel a need to do that, certainly we are not 14 going to oppose whatever new information might come forward, 15 but we certainly think we need to move forward with this now. 16 CHAIRMAN DUNLAP: Dr. Friedman and then 17 Ms. Edgerton. 18 BOARD MEMBER FRIEDMAN: I understand exactly where 19 you are coming from, and I certainly agree with most 20 everything. 21 The issue though, for me is, is the issue the 22 influence of small particulates, or is the issue rice straw? 23 MR. KNEPPRATH: I think it is both. 24 BOARD MEMBER FRIEDMAN: If you were funding science 25 to answer the imperative question of the biological effects PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 78 1 of small particulates, where would rice straw burning be in 2 the priority list of more important things to study? 3 MR. KNEPPRATH: Dr. Friedman, I think that is the 4 exact reason that this study needs to go forward. 5 I am not a scientist. I can't answer that question 6 about where it falls in terms of the health effects of 7 various fine particulates. 8 BOARD MEMBER FRIEDMAN: If it is twentieth on the 9 list instead of first, you wonder why in the world would you 10 start at that spot on the list. 11 If there are substantial contributions from road 12 dust that outnumber rice straw by a factor of 2,000, then you 13 go where the money is. 14 Something is wrong. 15 MR. KNEPPRATH: I think the answer also is that 16 because this issue has been so public, and been debated at 17 this Board and in the Legislature for so long, that there is 18 a need to have some real science, some real data on what the 19 health effects are for rice straw so we can get beyond sort 20 of the politics. 21 BOARD MEMBER FRIEDMAN: I wasn't here when the rice 22 people thought that science was needed, because it is very 23 clear now that the study is impending that they have 24 presumed, correctly, I think, that the finding will be 25 perjorative. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 79 1 MR. KNEPPRATH: They are presuming the science 2 before it is collected. 3 BOARD MEMBER FRIEDMAN: They have, or at least 4 their representatives have already backed down from their 5 former position just by their comments today. 6 You know, I don't care about history. I think as 7 of this day these concerns exist because they are foretelling 8 what the results are going to be, and because of that I don't 9 have a concern about it. I really think that we ought to 10 start studying small particulates because that's an immensely 11 important issue. 12 This kind of money should be spent for a -- you get 13 a bigger bang for your buck by studying the most important 14 breathing issue with respect to particulates. 15 CHAIRMAN DUNLAP: Broader, is what you are 16 suggesting, Bill, with that comment. 17 BOARD MEMBER RIORDAN: Mr. Chairman. 18 CHAIRMAN DUNLAP: Just a second. Ms. Edgerton has 19 been waiting, and then Ms. Rakow, then Ms. Riordan and then 20 Mr. Parnell. 21 BOARD MEMBER EDGERTON: Mr. Knepprath, if we went 22 forward and funded this project today, would you then be 23 prepared to go along with the Air Resources Board and the 24 rice growers to try to accelerate funding availability for 25 the other studies? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 80 1 In that way we could both move on this, which is 2 part of our obligation, I believe, under California law, and 3 also we could try to accelerate the money. 4 It seems to me that there's not a -- or would you 5 support, would you work with us on that? 6 MR. KNEPPRATH: I can't see a reason why we 7 wouldn't. I think, yeah, we would. 8 This is the first, today, or the last couple of 9 days is the first time that I have heard that there was a 10 need to have these others combined with the rice to make sure 11 that everything is okay. So, I mean, we would certainly look 12 at that. 13 We are moving forward to ask for a million and a 14 half for a new monitoring for particulates, so we are over 15 there definitely working this issue. 16 BOARD MEMBER EDGERTON: Because if I understand 17 this correctly, the issue is that, the fundamental issue is 18 that there is a desire to have the other vegetative burning 19 proposals accelerated. 20 So, maybe that is what we should try to solve as 21 opposed to stopping this one. Thank you. 22 BOARD MEMBER RAKOW: You referred to a letter that 23 you had submitted to the ARB and you were talking about the 24 broader aspects of the fine particulate matter. 25 I wonder if you could elaborate on what all you PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 81 1 included, though, should be in the study? 2 MR. KNEPPRATH: Actually, it was not a very long 3 letter. It did not go into a great amount of detail. 4 What it said is that we thought there should a 5 health effect study of fine particulates, at a minimum, rice 6 smoke, wood combustion and diesel. 7 BOARD MEMBER RAKOW: So, that goes along with 8 what Dr. Friedman was suggesting, to approach this problem in 9 a broader context. 10 MR. KNEPPRATH: I think we think there is a need to 11 approach it in a broader context, but I think that we also 12 believe that it's not necessary to hold up the rice straw 13 research on this to afford the others to come with it. 14 BOARD MEMBER PARNELL: My microphone is falling 15 down and that may be a signal to someone else. 16 CHAIRMAN DUNLAP: It probably means you have been 17 talking too much. 18 BOARD MEMBER PARNELL: That could be. 19 Paul, thanks for your comments. 20 I would like to narrow without regard to 21 Dr. Friedman legitimate concerns, the rice industry's request 22 is to delay this for 30 days, even though you may not 23 understand what the results of that 30-day delay may be, I 24 also understood that you are not opposed to it if it serves 25 any purpose. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 82 1 MR. KNEPPRATH: I don't know what you are going to 2 get in 30 days. 3 I think that the Executive Officer should try to 4 get that information out. 5 I am saying, I think we need to move forward with 6 this study. I don't think that 30 days is going to make a 7 lot of difference. 8 I don't think you are going to get a lot of 9 information from it. I think that what they are bringing to 10 you today are issues that should have been brought to you a 11 year ago when this study was first proposed, and should have 12 been brought to you at the various public workshops that have 13 been held on this issue. 14 BOARD MEMBER PARNELL: I don't wish to be 15 argumentative. 16 I think they stipulated up front that they 17 apologized for asking for such a delay and apologized 18 profusely for not being on top of this issue as it went 19 along. 20 You also heard people testify to the fact that they 21 think this study needs to be done. This is an issue of, in 22 what context, I really believe, that if you believe while you 23 question the result, that if a 30 day won't impair the Lung 24 Association's Agenda in any way, shape or form, then in my 25 view, Mr. Chairman, I would support a 30-day delay, and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 83 1 incidentally, while I have the microphone, because I won't 2 come back to it, the Chairman has spent a significant amount 3 of time dealing up front on a day-to-day basis with the rice 4 industry on this issue, and he so seldom gets compliments, I 5 would like to compliment him for, at least, at this late 6 date, bringing this back to the Board and really trying to 7 make some sense. 8 So, I am prepared to make a motion, if you wish a 9 motion. 10 CHAIRMAN DUNLAP: Well, I, Paul, I know, we are 11 kind of putting you on the spot, just, if you could respond 12 to Jack's last comment, then I think we can move on this 13 item, but I want to hear from you about that. 14 If the 30 days doesn't trouble you, you have the 15 industry on record saying that they'll stand shoulder to 16 shoulder with us and with you to work on some funding 17 mechanisms to broaden it so they don't feel singled solely. 18 If that doesn't trouble you, I think we can 19 probably go along with that, but I am interested in hearing 20 your views. 21 MR. KNEPPRATH: Well, I think you've heard, I mean, 22 I am troubled by the fact that we are where we are at, and 23 understandably that has been said. 24 I don't think that, you know, it's going to hurt 25 the long-term of this project, and I don't think our Agenda PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 84 1 is going to be thwarted by it, and we are willing to work 2 with all the parties to accomplish what we need to 3 accomplish. 4 CHAIRMAN DUNLAP: Okay. Thank you for that. 5 BOARD MEMBER RIORDAN: Mr. Chairman, it occurs to 6 me, and this is not directed with the current speaker, but we 7 may be able to make this a win-win situation, in that the 8 request for delay would allow us, perhaps, to improve upon 9 the methodology that Dr. Friedman alluded to. 10 I have a little more concern about that. I don't 11 have enough in front of me. 12 I don't purport to be somebody who understands the 13 science and the methods that are necessary to achieve 14 accurate results, but I have a more serious concern about 15 that being done correctly and in a timely manner, which would 16 allow us the additional time that is going to, perhaps, be 17 given to the rice industry to look for additional funds with 18 the rest of us. 19 So, two things may be accomplished at the same 20 time. I don't know, Dr. Friedman, if you would have some 21 time to work with us to understand what ought to be done and 22 that can be done, I assume, later in this intervening 30 23 days, but I want this to be a good study. 24 This is an expensive study, we need to do it right. 25 BOARD MEMBER FRIEDMAN: I just mentioned to John, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 85 1 30 days is easy, because I will not vote on this until I know 2 they have experimentation approval to do this study. 3 I sit on a lot of review boards for science, and 4 unless it's in my hand, I don't know that the study is going 5 to get done, and it's going to take them at least another 30 6 days to show us that, in fact, it's been approved. 7 The issue of tripling the study by adding two more 8 vegetative sources in this proposal is the equivalent of nine 9 years worth of research, or a laboratory, which is a very 10 good one, doing nothing but these studies. 11 I'm not sure that you are going find another 12 laboratory with comparable quality. So, this is a little pie 13 in the sky, the notion that this will all be done 14 simultaneously is not very realistic. 15 We are certainly not going to -- this is a growth 16 industry, and you know, they have dollars for science in a 17 specific area. 18 It might encourage other laboratories to change the 19 focus of their work, but I doubt it. So, there is a bit of 20 unreality that everything can be done all at once. 21 I mean, what will happen is there will be a 22 sequential study. What you really want to know is that it's 23 done all at once, but that other things will be studied. 24 You can't mandate they will all be done as part of 25 one monster effort. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 86 1 CHAIRMAN DUNLAP: Yeah. Mr. Scheible and then I 2 think we are going to have a final discussion with the Board 3 and then we are going to do something here. 4 MR. SCHEIBLE: I just want to make sure we don't 5 have a misconception here about the place in the ARB's 6 Research Program and other efforts that we're doing that 7 results to fine particles. 8 We are doing a vast amount of work in the fine 9 particle area, working with the Central Valley Study, and 10 basically in the teens of millions of dollars, we're working 11 with the South Coast, we have other research efforts going 12 on, so this is not in first place, it's not the first study 13 out of the gate dealing with fine particles. 14 It happens to be one that deals with a California 15 issue, which is smoke from rice, which is more our issue than 16 other people's, so I just wanted to leave that clarification 17 with the Board, and if you like, we could get you some sort 18 of an assessment of the breadth of the research that we are 19 doing. 20 BOARD MEMBER FRIEDMAN: But, Mike, this is the only 21 nonepidemiologic study, this is direct human experimentation. 22 MR. SCHEIBLE: Staff, can you comment on that? 23 DR. HOLMES: I'm not sure what the question was, 24 Dr. Friedman, but we have done over the years, many, many 25 controlled human exposure experiments. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 87 1 BOARD MEMBER FRIEDMAN: I understand that, but we 2 are talking about with the new fine particulate limits. 3 DR. HOLMES: With PM 2.5, you are correct there, we 4 have not done the PM 2.5 particle studies. 5 BOARD MEMBER FRIEDMAN: But we're on the same page 6 with regard to our understanding. 7 DR. HOLMES: And they are coming up in this year's 8 research plan and coordinate it with a much bigger Federal 9 effort. 10 CHAIRMAN DUNLAP: Okay. A couple of things that I 11 would like to direct staff to do, and then we will talk about 12 what we do with this item. 13 One would be, I would like you to get the overview 14 for Dr. Friedman and the rest of us, Mike, about the PM 15 research, historically, and what is going on currently, you 16 know, that we're funding, or that's looming. 17 I also know that Supervisor Patrick's integral to 18 some of this work through her San Joaquin leadership over 19 there, so, we will make sure that you look at that and it 20 fairly represents what you know to be going on, too, 21 Supervisor. 22 All right. What is the Board's pleasure? 23 BOARD MEMBER PARNELL: I would make a motion to put 24 this over for 30 days and allow the rice industry to do their 25 due diligence, whatever that might be. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 88 1 BOARD MEMBER RAKOW: I second the motion. 2 CHAIRMAN DUNLAP: And that due diligence would be 3 that the rice industry would get together, fast, with our 4 staff, Mr. Scheible's team and with our colleagues from the 5 Lung Association, and talk about attacking a resource 6 augmentation scenario, and that scenario is not for me to 7 trot over to the Governor and say, geez, I need another $1.1 8 million, Boss, how about finding a way to add it? 9 It's going to be broader than that, and it's going 10 to be primarily driven by the Legislature, okay? 11 BOARD MEMBER RIORDAN: At the same time, do we want 12 to add any direction to staff on the actual research project? 13 CHAIRMAN DUNLAP: Yes. 14 Dr. Friedman's point, Dr. Holmes, I know that you 15 can work through that human experimentation approval issue 16 that he has, I think that is just about talking to the 17 researchers and getting some information that Dr. Friedman 18 can then examine and make sure it is done consistent with 19 what his experience has been. 20 BOARD MEMBER PARNELL: Included it the motion. 21 CHAIRMAN DUNLAP: Include that in the motion, okay. 22 John, did you -- 23 DR. HOLMES: We tried to do that this week. 24 As Dr. Friedman knows, I think, it is a bit of a 25 Catch 22, because the Human Experimentation Committee of the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 89 1 faculty is not inclined to approve these things up until the 2 award has actually been made, but I think we can get around 3 this. 4 BOARD MEMBER FRIEDMAN: Excuse me, John, any grant 5 request, any Federal funding source, never mind State, 6 requires in advance that you have permission to do human 7 experimentation. 8 So this business of, show me the money and then 9 I'll get permission is ass backwards. 10 I am very concerned about that. 11 DR. HOLMES: I was surprised, too, Dr. Friedman. 12 BOARD MEMBER FRIEDMAN: Well, it won't work. It is 13 not right. 14 BOARD MEMBER EDGERTON: Point of information. 15 CHAIRMAN DUNLAP: Yes. 16 BOARD MEMBER EDGERTON: If this motion were to 17 pass, does it mean that after 30 days the research project 18 gets rescheduled on next month's Agenda to be voted, or does 19 it mean that it's immediately passed? 20 CHAIRMAN DUNLAP: The report will be given by 21 staff, and we will have these same witnesses requested to 22 come forward and report on progress, and then we will have 23 that new input, and we will listen to it and then we will 24 consider the item again. 25 That's what the intent will be. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 90 1 BOARD MEMBER EDGERTON: So, it will be rescheduled 2 for the April Board meeting? 3 CHAIRMAN DUNLAP: I'll direct it to be rescheduled 4 for April. 5 BOARD MEMBER PATRICK: I would like to second the 6 motion. 7 CHAIRMAN DUNLAP: There is a motion and a second. 8 BOARD MEMBER RAKOW: Third and fourth. 9 MR. KENNY: Mr. Chairman, if I might, we do want to 10 address all of the Board's concerns here, and we do want to 11 bring this back as quickly as possible. 12 One caveat that I have is that it is possible that 13 we may not be able to address all of these issues within a 14 one month timeframe. So with that in mind, we will 15 reschedule it as soon as possible. 16 CHAIRMAN DUNLAP: Well, I want a request to be put 17 on the Agenda no matter what, Mike, and if there are problems 18 then we will deal with them then. 19 But I don't want anybody to think that the Board 20 has lost its commitment or will to deal with this issue as 21 indicated and inconsistent with what the folks have said, the 22 witnesses. 23 Okay. So, help me with the motion here, Jack, the 24 motion is to reschedule it in 30 days, that we will have 25 these issues worked through, the human experimentation PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 91 1 matter, the funding matter for the broader scope, and I think 2 that's it. 3 BOARD MEMBER PARNELL: That's it. 4 CHAIRMAN DUNLAP: So, with that, if there is no 5 other discussion, I will take a voice vote on this item. 6 BOARD MEMBER EDGERTON: Go ahead. 7 CHAIRMAN DUNLAP: Would you prefer to do it 8 individually, or is voice vote okay? 9 BOARD MEMBER EDGERTON: It's all right. 10 I'm voting no. 11 CHAIRMAN DUNLAP: All those in favor, say aye. 12 Any opposed? 13 All right. Very good. 14 Thank you, staff. 15 Thanks. Dr. Holmes, a comment to you, and I want 16 you to know how much I personally appreciate you working this 17 issue the last couple of days. 18 I know it's unusual to have an item singled out for 19 this much discussion. That is not a reflection, in my view, 20 upon the commitment of team to put forward thoughtful, 21 coordinated research proposals, and you're paid for your take 22 on science, not to be attuned to the politics, and I'm 23 grateful for that, and I just wanted to acknowledge that. 24 DR. HOLMES: I want to thank you, Mr. Chairman, 25 because you have been supportive all through. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 92 1 CHAIRMAN DUNLAP: Okay. Thank you. 2 All right. Very good. 3 Let's move to the next item, before folks get too 4 hungry. All right. 5 Anybody on industry confused with this action? 6 The folks that participated? 7 All right. That brings us to item five, which is 8 98-3-4, a public meeting to consider approving California's 9 1990 small off-road engine emissions inventory. 10 The 1988 California Clean Air Act directs the ARB 11 to consider emissions standards for off-road mobile sources. 12 In 1990, the Board approved the first off-road 13 mobile source regulation, which instituted two tiers of 14 standards for engines below 25 horsepower. 15 The first tier went into effect in 1995. The 16 second is scheduled to be implemented in 1999. The staff 17 presented a status report in January of 1996, following which 18 the Board directed the staff to continue its discussions with 19 industry and identify any areas in which the regulations 20 could be improved. 21 Additionally, in December of 1997, the Board 22 approved the emissions inventory for a criteria of pollutants 23 from on-road to off-road, stationary and area sources. 24 At that meeting, staff committed to return to the 25 Board for approval of an update to the off-road inventory. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 93 1 So, staff has prepared the following two, closely 2 knit, items to fulfill their promises and commitments to the 3 Board. 4 Again, just a brief comment, this inventory work 5 remains extremely important. I know that, Mike, you and your 6 team pride themselves on doing it right. 7 I know this particular issue has been a little more 8 fluid than some in the past, but I know how hard you have 9 been working on them. 10 So, with that, please introduce the item, would 11 you, Mike. 12 MR. KENNY: All right. Thank you. 13 Mr. Chairman, and Members of the Board, the staff 14 will be presenting for your consideration today two items 15 regarding off-road engines below 25 horsepower. 16 The items are linked in that the basis for the 17 regulatory item, which will be presented to you this 18 afternoon, relies upon the update of the emissions inventory 19 which is being presented now. 20 The Air Resources Board has for many years been 21 required to inventory emissions from on and off-road mobile 22 sources. 23 The emission reductions achieved from on-road motor 24 vehicles, due in no small part to the actions of the Board, 25 have resulted in an increase in importance of the off-road PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 94 1 mobile source contribution to the air quality problems of the 2 State. 3 In response to this trend, staff undertook the task 4 of updating the statistical models which underlie the 5 off-road inventory estimates but unfortunately were unable to 6 complete the job prior the Board's presentation of inventory 7 last November and December. 8 Staff has now completed a portion of this 9 comprehensive update, the inventory for small off-road 10 engines below 25 horsepower. 11 In preparing this update to the inventory, staff 12 has gathered the latest information regarding the emissions 13 and usage of these equipment and has conducted a number of 14 workshops and held numerous meetings with industry to resolve 15 any areas of disagreement. 16 This was a process which we believe results in the 17 most accurate inventory available based on sound scientific 18 principles. 19 Upon completion of the staff presentation, I will 20 ask for your approval of the updated inventory and its use in 21 the upcoming regulatory item. 22 I would now like to turn the presentation over to 23 Mr. Mark Carlock of the Mobile Source Control Division, who 24 will provide you with an overview of the staff's findings and 25 present the staff's recommendations. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 95 1 MR. CARLOCK: As stated earlier, the Board approved 2 the Statewide inventory under the Senate Bill 2174 process in 3 December of last year. 4 However, at that time staff had not completed its 5 update of the inventory for off-road mobile sources. Staff 6 has instead asked for approval of existing inventory with a 7 commitment to bring the improved off-road inventory to the 8 Board in its entirety prior to the end of this year. 9 Given the timing of the regulatory issue to be 10 considered today, staff concentrated its efforts on the 11 update to the small off-road engine emissions inventory, and 12 it is this portion of the off-road inventory that the Board 13 is asked to consider and approve today. 14 As illustrated in this slide, the importance of the 15 off-road inventory is expected to grow as the emissions from 16 the on-road decreases. 17 By the year 2010, the on and off-road mobile source 18 inventories are expected to contribute almost equally to 19 California's air quality problems. 20 The inventory for small off-road engines is a 21 subset of the off-road inventory, encompassing equipment 22 which utilizes engines which are rated at less than 25 23 horsepower. 24 The emissions from this group of engines 25 constitutes about two percent of the overall mobile source PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 96 1 emissions inventory. 2 The inventory is comprised of millions of pieces of 3 equipment used in various applications, including lawn and 4 garden, construction, agricultural and logging. 5 Realizing the growing importance of the off-road 6 inventory as a whole, staff set about revising the off-road 7 inventory model to bring it up to par with those tools 8 available for estimating on-road emissions. 9 As a result of these efforts, staff is suggesting 10 that the inventory for small off-road engines be revised, 11 essentially doubling their contribution of hydrocarbons and 12 oxides of nitrogen to about 75 tons per day to about 140 tons 13 per day, Statewide, for 1990. 14 It is this revised inventory which the staff is 15 seeking Board approval. There are many reasons for increase 16 in emissions associated with the off-road engines, including 17 an increase in the population of equipment in this category, 18 increased estimates of the life of certain equipment types, 19 modification to the activity estimates and attrition rates, 20 as well as changes to the average horsepower assumptions and 21 emission rates. 22 Given the magnitude of the change in the inventory 23 and the importance of the accuracy of the inventory as it 24 relates to the proposed regulatory change, staff underwent an 25 extensive process of public review. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 97 1 Three separate workshops were held to discuss the 2 proposed changes to the off-road inventory, the last held in 3 December to specifically address the small off-road engine 4 emissions inventory. 5 In addition to the workshops, draft copies of the 6 off-road inventory model were provided to members of the 7 public and industry, including representatives of the Engine 8 Manufacturers Association and the Portable Power Equipment 9 Manufacturers Association, so that modification proposed by 10 staff could be duplicated and confirmed. 11 Since the December workshop, several meetings have 12 been held between the Air Resources Board and emissions 13 inventory staff and technical representatives of EMA and 14 PPEMA to resolve any remaining technological issues regarding 15 the accuracy of the underlying data or methodologies used by 16 the staff to update the inventory. 17 As it is with the on-road inventory, the inventory 18 for off-road equipment is calculated as a process rate, or an 19 emission factor, multiplied by a population of equipment and 20 an activity factor for hours of use to derive a ton per day 21 estimate of emissions. 22 Unlike the on-road inventory, however, several 23 other issues, including preemption versus nonpreemption 24 status, hand-held versus nonhand-held equipment and 25 commercial versus residential usage must be considered when PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 98 1 estimating the emissions from small off-road engines. 2 Staff relied upon both the available information, 3 both current and historic in performing this update to the 4 inventory. 5 These sources include the Buse, Allan and Hamilton 6 Report, which served as the basis for the SIP inventory, but 7 also include more recent analyses performed by EEA, data 8 supplied by PSR, input from local air quality management 9 districts, updated equipment growth factors from Cal State 10 Fullerton and emissions data supplied by the manufacturers. 11 As I mentioned earlier, there are several inventory 12 issues which are unique to small off-road engines, including 13 classification of equipment, hand-held versus nonhand-held, 14 commercial versus residential population and usage and 15 preemption versus nonpreemption status. 16 Approximately 30 percent of the off-road engine 17 equipment population is classified as hand-held. These are 18 the smaller, lighter pieces of equipment, such as 19 string-trimmers and chain saws, which primarily use gasoline 20 power two-stroke engines. 21 The remaining 70 percent of the population is 22 comprised of nonhand-held equipment, such as lawnmowers. 23 Because weight is not as much of a concern, this 24 equipment can be powered by gasoline, diesel, compressed 25 natural gas and liquid petroleum gas. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 99 1 Some nonhand-held equipment also use two-stroke 2 engines. This is important to note in that some nonhand-held 3 two-stroke equipment is assumed to migrate to four-stroke 4 engines in response to adopted standards. 5 Commercial and residential use of equipment is an 6 important issue. Although 90 percent of the equipment is in 7 residential use, about 50 percent of the emissions are 8 attributable to commercial applications. 9 In constructing the new off-road model, it was not 10 anticipated that regulations might be considered separately 11 from commercial versus residential equipment, therefore, the 12 modeled weights, the emissions and activity of commercial and 13 residential equipment to derive at a composite inventory. 14 The method used to perform this weighting remains 15 an issue. The Air Resources Board is preempted from 16 regulating the emissions of certain equipment. 17 Preempted equipment comprises about 11 percent of 18 the small off-read engine population. Almost all of the 19 equipment used in agricultural and construction is preempted 20 from California regulation. 21 Accurate accounting of preemption status is 22 important in projecting future emission inventories, as the 23 fleet response to either ARB or U.S. EPA standards. 24 One of the most significant changes to the 25 inventory for small off-road engines was the inclusion of the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 100 1 equipment previously omitted from the SIP inventory. 2 The seven percent increase in the population of 3 equipment translated to over a 30 percent increase in the 4 emissions of HC plus NOx. 5 The estimation of activity includes useful life of 6 equipment, the number of hours the equipment is used per day, 7 the attrition rate, or how fast a fleet turns over, and as 8 mentioned before, commercial versus residential use 9 weightings. 10 Changes in these estimates contributed 11 significantly to the increase in the small off-road 12 inventory. 13 However, the most significant change to the 14 inventory is the modification of emission rates. The SIP 15 inventory used average emission factors by equipment type and 16 assumed no deterioration, that is, emissions were assumed to 17 remain constant. 18 The revised inventory utilizes horsepower specific 19 emission factors and has deterioration rates derived from 20 testing of engines. 21 This modification to the methodology more 22 accurately reflects how engines perform in use and provides 23 insight as to how they may perform in response to more 24 stringent emission standards. 25 A number of comments were received from the public PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 101 1 and industry regarding several aspects of the revised 2 inventory. 3 These comments were directed towards the staff's 4 treatment of equipment population, growth, preemption status, 5 useful life assumptions, commercial versus residential usage 6 and emission factor weightings and the basic emission factors 7 themselves. 8 In response to these comments, staff made several 9 modifications to the inventory, which was presented at the 10 December 1997 workshop. 11 These modifications included refinements to the 12 hand-held versus nonhand-held classifications, acknowledgment 13 that chainsaws using engines over 45 cubic centimeters should 14 be preempted from the ARB regulation, modifications to the 15 uncontrolled emission rates for hand-held two-stroke gasoline 16 engines and a reduction in the assumed population of edgers 17 and trimmers by approximately 30 percent. 18 In the aggregate, changes made in response to 19 comments received by the public and industry lowered the 20 December 1997 inventory by about 20 tons per day of 21 hydrocarbons. This reduction is reflected in the inventory 22 presented to you today. 23 On this slide are listed two remaining issues, 24 however, I'd like to say that there is only one remaining 25 issue now. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 102 1 One of the remaining issues was assumed useful life 2 for small nonhand-held equipment that was brought up by EMA. 3 I received a letter yesterday from Kay Jaraicho of 4 EMA, and staff is in general agreement with modifications 5 suggested by EMA, and I don't believe this to be an issue. 6 I would also like to say that the modifications 7 suggested by EMA effect less than two percent of the total 8 small off-road engine population, and therefore, have very 9 little bearing on the staff's presentation today. 10 So, the final remaining issue is PPEMA continues to 11 question staff's treatment of chainsaws in the inventory. 12 These criticisms include the commercial versus 13 residential population estimates and usage, and PPEMA has 14 also expressed a concern regarding errors related to 15 weighting activity in emissions rather than deriving separate 16 estimates for commercial versus residential and summing the 17 results. 18 Since the December 1997 workshop, staff has 19 requested PPEMA provide written input regarding these 20 remaining issues. 21 Although none has been forthcoming, staff remained 22 dedicated to resolve this issue. In the evaluation of the 23 effects of the proposed changes on the inventory, it suggests 24 that the magnitude of the possible change in the inventory is 25 not significant with respect to the Board's approval of the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 103 1 inventory as it stands. 2 In this slide, the step-wise analysis of the 3 incremental changes in the SIP inventory as a result of 4 modification to the methodology are presented in this slide. 5 Beginning with the SIP inventory, at the left of 6 the graph, the cumulative change in the inventory as a result 7 of improvements to the estimates of population, activity, 8 load factors, average horsepower and emissions are shown, 9 resulting in the updated inventory for small off-road 10 engines, displayed at the extreme right of the graph. 11 In summary, the staff believe that the 12 modifications made to the small off-road engine emissions 13 inventory significantly improved its accuracy. 14 An excessive public review process was performed 15 prior to the presentation of the revised inventory to the 16 Board, and staff has made several changes to the inventory in 17 response to input by both public and industry. 18 It is our assertion that the update to the small 19 off-road emissions inventory incorporates the best available 20 data and is based upon sound scientific evaluation of that 21 data. 22 Staff, therefore, seeks the approval of the Board 23 for the 1990 Statewide inventory and projections for small 24 off-road engines. 25 I will be glad to answer any questions. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 104 1 CHAIRMAN DUNLAP: Mark, say a work or two about 2 what issues are being contended, in your view, with PPEMA, 3 who we will hear from in a moment, two percent of the total 4 inventory is what they are worried about or concerned with? 5 MR. CARLOCK: No. Actually, that was EMA. 6 PPEMA is concerned about the treatment of 7 chainsaws, both in the residential versus commercial split, 8 how many chainsaws are used for residential versus 9 commercial. 10 CHAIRMAN DUNLAP: Can you give me a percentage of 11 what that is of the total inventory make-up? 12 MR. CARLOCK: Well, we don't know. That's what the 13 problem is now. 14 I think saws are about a third of the hand-held 15 inventory. In other words, saws are roughly -- this is for 16 California -- 17 CHAIRMAN DUNLAP: I don't want to make this more 18 complicated. 19 I just want to get a flavor for, of this whole 20 inventory update. 21 What percentage of that inventory amount is a point 22 of contention for the industry folks? 23 I just want to get a flavor for it, that's all. 24 MR. CROSS: Well, okay, saws are roughly a third, 25 so it's got to be less than a third of it, and then the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 105 1 commercial and residential split in that is probably half and 2 half, so it's got to be less than half of a third. 3 CHAIRMAN DUNLAP: All right. Less than a sixth. 4 I got it. I just wanted to get a flavor for it. 5 Yes, Dr. Friedman. 6 BOARD MEMBER FRIEDMAN: Could someone tell me, 7 instead of all of these fractions and percentages, I would 8 like to know what we are talking about in terms of tons per 9 year for all, and it must be here, but I must have glossed 10 over it. 11 I couldn't find it. 12 What I would like to know, in each of the areas 13 what we are really talking about in reasonably absolute 14 terms. 15 MR. CARLOCK: I'm sure that PPEMA will correct me 16 if I misrepresent this, but what's in contention is two tons 17 either way. 18 BOARD MEMBER FRIEDMAN: Two tons per day, per year? 19 MR. CARLOCK: Per day. 20 CHAIRMAN DUNLAP: Out of a total of how much per 21 day? 22 MR. CARLOCK: Out of a total inventory of 140 tons 23 per day. 24 CHAIRMAN DUNLAP: All right. We have two 25 witnesses on this item, and granted, this is the warm-up for PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 106 1 the second half, so I would ask PPEMA to come forward, Mac 2 Dunaway and Jim Lyons. 3 They are both with PPEMA, but Mr. Lyons works with 4 Sierra. He is known to us. 5 Is Mac here, by chance? 6 MR. DUNAWAY: I am Mr. Chairman, but I am letting 7 Mr. Lyons go first. 8 CHAIRMAN DUNLAP: So, you are going to yield to 9 your consultant there. 10 Okay. Jim, again, this is a warm-up issue, so, 11 don't mix them, because you might confuse us. 12 Jim, if you can avoid it, we would be grateful. 13 MR. LYONS: Thank you. 14 I guess I can still say good morning to everyone? 15 As it has been pointed out, my name is Jim Lyons of 16 Sierra Research. I'm here today to present comments 17 regarding the 1990 small off-road engine emission inventory 18 on behalf of the Portable Power Equipment Manufacturers 19 Association, also known as PPEMA. 20 My remarks will be limited to the hand-held 21 equipment component of the small engine inventory. 22 Hand-held equipment, as has been pointed out, is 23 mainly trimmers, blowers and vacuums and chainsaws. 24 On behalf of PPEMA, Sierra Research has followed 25 the development over the last year of the small off-road PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 107 1 engine emission inventory component of the off-road model. 2 We have also worked cooperatively with staff to 3 improve the small engine inventory for hand-held equipment 4 relative to what has been referred to staff as the BAH 5 inventory, which is a previous generation of the inventory. 6 Overall, this has been a generally satisfactory 7 process, but two areas of concern have not been resolved, and 8 while that may differ from the one area that Mark pointed 9 out, I think they are probably just a different way of 10 looking at it, he was pretty much right on in terms of the 11 topics. 12 However, addressing these additional areas, we 13 think, will require additional effort to approving the 14 inventory. 15 One of our concerns has to do with hand-held 16 equipment used by others, the residential applications being 17 grouped with that used by gardeners, landscapers and loggers 18 and commercial applications. 19 The other area of concern to us would be estimates 20 of the performance and use parameters assumed in small engine 21 inventory for chainsaws. 22 Turn to the first area of the combination of 23 residential and commercial equipment into a single combined 24 category, let me point out that the BAH inventory, the old 25 inventory, didn't do this. It treated commercial and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 108 1 residential equipment separately. 2 On behalf of PPEMA, I recommended at the 3 December 16, 1997 workshop that the framework of the BAH 4 inventory that allowed this separation of commercial and 5 residential equipment should be retained in the small engine 6 inventory. 7 Let me explain that the performance and use 8 patterns of residential equipment differ fundamentally from 9 those of commercial equipment. 10 Commercial equipment accounts for a small 11 percentage of the population, or number of pieces of 12 equipment, on the order of 10 percent. 13 However, in the hand-held inventory, it accounts 14 for a large portion of the inventory, about 80 to 90 percent. 15 The reason for this is simply the commercial 16 equipment gets used far more frequently and far more often 17 than equipment purchased for residential use. 18 It's because of this fundamental difference between 19 residential and commercial equipment that combining both of 20 them into a single category is a concern with respect to the 21 small engine inventory. 22 The combination tends to obscure the fact that 23 residential engines account for most of the equipment that 24 are in the population, but only a small portion of the 25 emissions. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 109 1 However, from an emissions inventory point of view, 2 this combination of residential and commercial equipment 3 becomes important only if it is assumed that the emissions 4 from hand-held equipment engines will increase over time. 5 This effect of increasing emissions over time is 6 well known to you. It's called emission deterioration. You 7 have heard about it many times before with respect to 8 vehicles and other sources. 9 In the hand-held portion of the small engine 10 inventory, deterioration is expected by CARB's staff to occur 11 only on engines certified to the Tier II emission levels. 12 In this case, the combination of residential and 13 commercial equipment results in effect of deterioration being 14 underestimated, therefore, total emissions are also 15 underestimated. 16 The fact is not large, but it is significant, 17 particularly with respect to the regulatory item that will be 18 addressed next by the Board. 19 The detailed explanation of this issue is presented 20 in a report we have just recently completed for PPEMA, copies 21 of which have been presented to CARB's staff, and I believe, 22 to the Board. 23 The other issue that I mentioned has to deal with 24 the characterization of the performance and use of chain saws 25 in the small hand-held engine component of the off-road PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 110 1 model. 2 The data in the off-road model were correlated on 3 by CARB's staff from two different sources, at least the 4 activity data. 5 The BAH inventory had a proprietary database done 6 by Power Systems Research. As a result of the use of data 7 from these two sources, the value of a parameter for chain 8 saws in the small engine inventory, which I will refer to as 9 activity, it's basically how much they are used and it's 10 weighed to take into account the horsepower ratings of the 11 actions and lead factors and a number of other things, is now 12 50 percent higher than it was in the pre-existing BAH 13 inventory. 14 In contrast, the basic activity parameters in the 15 small engine inventory for trimmers and blowers are 16 consistent with what was in the BAH inventory. 17 The basis for this discrepancy hasn't been 18 explained in CARB mail-out MSC 98-04, which is the staff 19 report for this item. 20 It appears that this difference in activity may be 21 due to incompatibility of the data from the BAH inventory 22 when used with data from the Power Systems Research database. 23 We believe this appears to be an area where further 24 work on small engine inventory is warranted to clarify this 25 issue, and until that work is complete, we would recommend PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 111 1 that only the data from the BAH inventory be used for chain 2 saw activity. 3 Impact of making the two changes I recommended to 4 the Statewide 2010 hand-held small engine HC plus NOx 5 inventory, and I'll only talk about HC plus NOx, because that 6 is by far the largest pollutant emitted from these small 7 engines, is shown in figure 1. 8 Okay. The bar on the left-hand side that says, 9 25.21 on top and revised below is what I estimate for the 10 hand-held emission inventory, making the two changes that I 11 talked about, the separation of commercial and residential 12 equipment and the modification to the chain saw activity. 13 The 29.85 is what I estimate using the assumptions, 14 data and emission factors that are contained in the CARB 15 mail-out 98.04, so the difference is about four and a half, 16 five and a half tons per day out of a total of 30, so, I 17 think Bob Cross was pretty close when he said it was about 18 six that was in dispute here. 19 In conclusion, well, actually, before I conclude, 20 there is one other thing I did want to point out. The top 21 two segments of the bars on both sides there represent the 22 chain saws. 23 You can see that the chain saws account for more 24 like two-thirds, rather than one-third of the total hand-held 25 inventory. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 112 1 In conclusion, overall, the hand-held portion of 2 the small engine inventory has been improved relative to the 3 BAH inventory. However, the two issues that I've raised 4 today need to be addressed for inventory purposes in the 5 future. 6 They will be featured prominently with testimony I 7 will present on the regulatory item, and in addition, I think 8 they highlight the uncertainties that are present in the 9 absolute values of the numbers that make up the estimates 10 generated by all the emission inventories. 11 As I was shown, the two changes in assumptions are 12 sufficient to change the values of emissions for hand-held 13 engines by approximately five tons per day, or about 15 to 20 14 percent. 15 Thank you for the opportunity to present this 16 information. 17 CHAIRMAN DUNLAP: Thank you. 18 Any questions of the witness from the Board? 19 BOARD MEMBER CALHOUN: Mr. Chairman, I would like 20 staff's response to the concern expressed by PPEMA, combining 21 the residential and the commercial. 22 MR. CROSS: I am going to start, and then I'm going 23 to hand the microphone to the real expert. 24 I think that the change was made to reflect 25 evolving databases as opposed to any other agenda, and as far PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 113 1 as I can tell, on the methodology side, it shouldn't make any 2 difference in the results, and I guess Mark can speak to that 3 a little bit more, and then I wanted to say a couple more 4 things. 5 MR. CARLOCK: We did undertake the exercise of 6 modeling residential separate from commercial and adding 7 rather than weighting and didn't find significant differences 8 in the total, definitely not on the order of a ton or more. 9 BOARD MEMBER CALHOUN: What do you attribute the 10 difference to? 11 Maybe I should have asked Jim. 12 MR. LYONS: The difference in the chain saw 13 activities I pointed out, they are the biggest portion in the 14 inventory, and the activity is changing by 50 percent, and 15 that swamps out this other difference, however, as I pointed 16 out, which wasn't large, it also, however, becomes important 17 when you look at the regulatory item given the differences in 18 emissions under a couple of regulatory scenarios. 19 Our estimates were that the residential and 20 commercial split by itself was something on the order of a 21 ton per day or so. So I don't think we are way off. 22 MR. CROSS: In response to Dr. Friedman's earlier 23 question on chain saws, the 2010 controlled inventory as we 24 have it, that would be under the staff proposal, is six for 25 the nonpreempt saws and eight for the preempt saws. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 114 1 So, what we are debating is what happens to that 2 six, whether it stays the same or goes down, as Mr. Lyons is 3 suggesting. 4 MR. LYONS: Well, actually, the activity estimates 5 for the chain saws affect both the preempt and the 6 nonpreempt, because that's the total chain saw activity in 7 the inventory. 8 MR. CROSS: Okay. So we are arguing about two, 9 one, two tons then? 10 I'm sorry. 11 MR. LYONS: I haven't seen the staff's latest 12 estimates, but it's something on that order. 13 I mean, I had 4 tons out of 30. 14 So, our numbers are a little higher for some 15 reason. 16 MR. CROSS: Also, on the comment that you made on 17 the two-thirds versus one-third, the reason that that is 18 different is because I excluded preempt saws. 19 I was splitting up the control, the stuff that we 20 actually could control, so I didn't even count it in the 21 total. 22 It's a matter of perspective on the same set of 23 numbers. 24 MR. LYONS: That explains it. 25 BOARD MEMBER CALHOUN: So, would it be correct to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 115 1 say that the differences could possibly be attributed to the 2 assumption that you made versus the assumption that the staff 3 made? 4 MR. LYONS: Oh, yeah, that's exactly it. 5 BOARD MEMBER CALHOUN: So, are we going to continue 6 to add up value, or as we go down the road, we keep changing 7 and updating the inventory, and the inventory is certainly a 8 major driving force for the action by this Board, but there 9 will always be some minor differences, would you not agree 10 with that? 11 MR. LYONS: I'd agree with that, but I'd also point 12 out that when you are comparing regulatory alternatives and 13 you are dealing with models that will give you estimates to 14 tenths or hundreds of a ton per day, that you need to realize 15 the uncertainty inherent in these assumptions, and when you 16 say, get the equivalent tons, you need to define what that 17 means. 18 But I agree with you, the assumptions will continue 19 to evolve, and as new data is available, the inventory models 20 will continue to be updated and will improve. 21 CHAIRMAN DUNLAP: Jim, just give a, kind of a 22 perspective to you, and I am certain that you are aware of 23 it, but maybe you haven't heard it from me, inventories in 24 and of themselves are inherently imperfect, and the 25 frustration that we have, and we've been through this, I can PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 116 1 remember in the recent past, we had a similar issue or two 2 from folks, like the folks that you represent here that feel 3 very strongly about getting it right and have invested a lot 4 of resources and time to making sure that we are aware of 5 those points. 6 Unfortunately, we don't have the ability to kind of 7 stop everything and not do things until we get it 100 percent 8 right. 9 So, this imperfection we learn to live with, but I 10 want to assure you, we're not comforted by that. Just the 11 opposite. 12 We are concerned, and that's why the Board has 13 consistently directed the staff to stay up on these items, 14 because the numbers are really what we are talking about here 15 with everything that we do. 16 What is the impact of action that we take? 17 So, for my part, I appreciate the time and effort 18 that you've put in, and I am certain it goes on beyond your, 19 you know, sense of duty to a client. I know you believe in 20 this, and I appreciate getting to know you a little bit on 21 this effort. 22 So, unless there are any other questions for the 23 witness, I want to have a give-and-take back with the staff, 24 if that is okay. 25 All right. Thank you. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 117 1 Mac, did you want to add anything to that? 2 You are hiding over there behind the pole, because 3 you signed up, and I don't want to --and I can assure the 4 audience, he wasn't hiding behind the pole. He just happened 5 to be sitting there. 6 MR. DUNAWAY: Thank you, very much. Good morning. 7 I think we need to put in context that although 8 there has been communication between the industry and staff 9 on these issues, we only got the proposal on March eleventh. 10 CHAIRMAN DUNLAP: March 11, so you haven't had as 11 much time as you would have liked? 12 MR. DUNAWAY: That's precisely right, Mr. Chairman. 13 There's one other point, we just don't feel like we 14 have had an adequate opportunity at this point. 15 There's another, as the overheads demonstrated, the 16 inventory makes some predictions about where we are going to 17 be in 2010, and in order to do that there has to be certain 18 assumptions about emission rates which are input. 19 Because this issue is so closely tied to the 20 regulatory issue that is coming up this afternoon, you need 21 to look at the difference between the emission rates that are 22 input for the inventory and those that are used for the 23 regulatory proposal to look at benefits. 24 You will find that the emission rate used for the 25 inventory is close to twice what it is for the regulatory PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 118 1 proposal. In other words, they've cut the emission benefits, 2 cut the emission rate input factor for determining the 3 benefits under the regulatory proposal essentially in half. 4 That essentially is going to give you or make you think or at 5 least believe that you're going to get twice the benefits. 6 So, we have some real concerns. These things are 7 extremely closely linked together, and we just have some 8 major, major problems with where we find ourselves today. 9 CHAIRMAN DUNLAP: Okay. One thing, Mac, and I am 10 fishing for a compliment, I'll acknowledge that at the 11 outset, on behalf of staff, because you have been working 12 with us on fluid numbers, and there has been some back and 13 forth, I mean, you've been satisfied with the access and the 14 dialogue. 15 MR. DUNAWAY: I have. 16 I want to thank not only you but other Members of 17 the Board in taking the time to visit with us. We really 18 have appreciated the opportunity, and staff has also been 19 responsive, although not agreeable, responsive to concerns 20 that we have expressed, and I certainly want to thank you, 21 Mr. Chairman. 22 CHAIRMAN DUNLAP: Okay. Thank you. 23 One thing, and I am willing to let others speak, 24 but our court reporter has not had a break, and I'm certain 25 she may have to use the bathroom, and I would propose that we PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 119 1 take a lunch break now, if that's okay, and we'll come back, 2 and then that way, Mac, we won't lose the momentum on what 3 you consider to be the first core issue here, and we'll come 4 back and get into this in more detail. 5 Mike, is that acceptable to you? 6 Okay. We're going to take a break. 7 Kathleen, what, an hour? 8 We'll come back at 1:15. Okay. 9 Thank you. 10 (Thereupon the lunch recess was taken.) 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 120 1 A F T E R N O O N S E S S I O N 2 --o0o-- 3 CHAIRMAN DUNLAP: While the Board is taking their 4 seats, Mr. Kenny, I am going to come to you and your staff in 5 just a minute. 6 Mac, are you still here? 7 We're done with you, Mac. You don't need to run up 8 there yet. 9 Was there anything else that you were going to add? 10 MR. DUNAWAY: I just wanted to say one other thing, 11 I thought I would have a chance before we broke. 12 CHAIRMAN DUNLAP: Okay. I'm getting tired of 13 calling you up here, but I just want to make sure that I hear 14 from you. 15 MR. DUNAWAY: I know you are. Whatever you do with 16 the inventory here, we believe it is incumbent upon you not 17 to let staff change the inventory in their analysis of the 18 regulatory benefits. 19 CHAIRMAN DUNLAP: Right. I got that point, that 20 they're linked. 21 MR. DUNAWAY: We found out about this new 22 unpublished emission rate on Monday. 23 CHAIRMAN DUNLAP: Mr. Calhoun. 24 Don't leave, Mac. He's got a question. 25 BOARD MEMBER CALHOUN: It relates to the statement PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 121 1 that you just made. 2 I guess that I would like to get the staff response 3 to, I thought what I heard you say is that as one emission 4 rate used to calculate the benefit, different emission rates 5 used to calculate the inventory, I guess I would like to get 6 the staff's response to that and the significance of that. 7 MR. CROSS: Well, I would like to make a more 8 global comment, very quickly, first, which is that the, Mac 9 is representing that the inventory has been a work in 10 progress that has sort of eluded him and caused them a great 11 deal of uncertainty and stress during the comment period. 12 I guess I would like to note that the inventory 13 process started last summer, and Mr. Lyons has had a copy of 14 the draft model since then. 15 The first set of draft numbers from the model, 16 which are actually linked to the staff proposal, was released 17 in December, and then there has been continuous interaction 18 between Mr. Lyons and Mr. Carlock. 19 Mr. Lyons is an ex-ARB employee, and they work very 20 well together, and they've had a lot of dialogue on the 21 inventory since its release, since we gave out the draft in 22 December. 23 Sierra has the same model that Mark has, and they 24 have been exchanging notes and communicating on this. 25 In fact, one of the main reasons for the lateness PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 122 1 of the mail-out of the inventory document was due to 2 exchanges between PPEMA, Mr. Lyons and Mr. Carlock, and we 3 basically were trying to make sure that what was mailed to 4 the public represented our best shot of taking PPEMA's 5 accounts or concerns and issues into account. 6 CHAIRMAN DUNLAP: If I could, on that point, Bob, 7 maybe give the Board some comfort in this area, and I think 8 Mac, you, or one of your advocates, Mr. Carpenter heard this 9 yesterday, I think, from Tom Cackette and I, the fluid nature 10 of the back and forth of this inventory development process 11 is in part due to the responsiveness, I believe it to be 12 responsiveness, of our staff in trying to accommodate the new 13 data and information that guys brought to the table. 14 So, we're not talking about a static number or 15 inventory since last fall. You know, Mac, I have expressed 16 some concern about how fluid that thing was, but I think that 17 where you can feel good, and your membership should be feel 18 good, is that there was some accommodations made in the 19 staff's thinking that translated into the inventory, 20 positively for you and positively for the breathers. 21 So, I'm willing, Joe, to, not so much forgive, but 22 certainly to understand the nature of, the fluid nature of 23 this process. 24 So, while it has been unusual, I think it's 25 benefitted both the State staff as well as the industry in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 123 1 this case. 2 Tom, did I characterize that fairly? 3 MR. CACKETTE: That is fair. 4 CHAIRMAN DUNLAP: Okay. So, what I'd like to do, 5 Joe, unless you had anything else for Mac. 6 BOARD MEMBER CALHOUN: I wanted to hear from him 7 what he thought was the significance of this. 8 MR. DUNAWAY: Well, the two numbers, Mr. Calhoun, 9 that are different, in the inventory report they actually use 10 two input factors for emission rates, one of which is 39 11 grams per horsepower hour to determine the 2010 inventory. 12 We learned, I think, it was on Monday, that the 13 benefit side of the calculation from the regulatory proposal 14 inserted the number 22 grams per horsepower hour into the 15 model instead of the one that was published on the eleventh 16 of March. 17 CHAIRMAN DUNLAP: Okay. All right. 18 Bob, you went on. 19 MR. DUNAWAY: Am I excused? 20 CHAIRMAN DUNLAP: Yeah, you are excused to the 21 front row there, Mac. Don't go far away. 22 Bob, you know, I just kind of wanted a direct 23 response to Joe's, the context question. 24 MR. CROSS: There are two. 25 Let me give the general one. Mark can add some PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 124 1 specifics, but one of the things that has been happening as 2 this process evolved is our understanding of what technology 3 would be used to meet the emission standards that staff is 4 proposing. 5 In 1990, we, the staff report was predicated on an 6 assumption that Tier I engines would be equipped with 7 catalytic converters to achieve the additional emission 8 reductions, and catalytic converters are a known 9 deteriorating device, and so we included in the analysis the 10 level of deterioration which we thought made sense for 11 catalytic converters. 12 The new understanding of the technology which will 13 be used is that there will be engines like you saw on the 14 table there, there will be four-cycle engines, which don't 15 have the same kinds of deterioration problems that catalytic 16 converters do, and there will be stratified charge engines, 17 which also don't, and so there have been as the process 18 evolved, corrections to reflect our understanding of the 19 evolving technology, but they are technically the right thing 20 to do, in other words, the staff's analysis should reflect 21 our understanding of what is really going to happen 22 technically, it shouldn't be bound by, well, the number used 23 to be, so you shouldn't change it. 24 So, I guess what we have been trying to do in this 25 process is be as technically honest and accurate as we PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 125 1 possibly can in a terribly fluid environment where we have 2 been getting input on a daily basis, both from the 3 associations and from the engine manufacturers who are saying 4 they are going to supply product. 5 So, what we have been doing is, yes, it's been 6 evolving, but we've been, I think it has been evolving for 7 all the right reasons. 8 CHAIRMAN DUNLAP: Okay. All right. 9 Any other questions on the inventory element? 10 Mark, you are smiling. Is there something that you 11 wanted to add? 12 MR. CARLOCK: I was reflecting on your sigh. 13 CHAIRMAN DUNLAP: Yeah, I have been told that I 14 have been doing that a little bit more pronounced lately. 15 BOARD MEMBER EDGERTON: Mr. Cross, I want to ask 16 you to take what you said just a little bit farther and 17 address this 24 versus the 39. 18 Thank you. 19 MR. CROSS: I am going to turn that to Mark. 20 MR. CARLOCK: The Board has adopted Tier I and Tier 21 II standards for small off-road engines, and that was 1990. 22 The staff report that you are going to hear today 23 proposes a different set of standards, a revised Tier II and 24 Tier III for control. 25 What is reflected in the inventory was the emission PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 126 1 factor in response to those standards adopted in 1990. 2 What is being proposed is a different emission 3 factor because it is a different standard. That is the whole 4 basis for the difference in the numbers. 5 MR. CROSS: Which is the same thing I said a moment 6 ago, I think, except from an inventory analyst's view as 7 opposed to an engineer's view. 8 CHAIRMAN DUNLAP: Okay. 9 Any other questions of staff? 10 Mike, do you want to add anything? 11 MR. KENNY: I think the real dispute here is 12 essentially one in which we have been trying to work with 13 both of the associations, and particularly PPEMA, very 14 extensively. 15 As you have heard from the staff, what we tried to 16 do over the last several months was work with them, really, 17 almost on a daily basis. 18 We put our proposal out there. We gave them the 19 opportunity to look at what we are proposing. We have given 20 them the opportunity to provide us with input information, as 21 Mark said, on a daily basis. 22 We've been trying to respond to that, and I think 23 what we have really been trying to do is be as responsive as 24 we possibly can to the information that PPEMA has provided to 25 us. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 127 1 Given all that, we still have proposed to you today 2 an inventory that we think is accurate. We think it's the 3 best possible inventory that we can provide to you at this 4 point in time. 5 PPEMA still has some disagreements with that. We 6 would anticipate PPEMA will continue to provide us with 7 information, and we will be happy to continue to look at that 8 information, but today what we need to do is propose to you 9 an inventory that we believe is accurate so that we can look 10 at the regulatory item, and that is what we have tried to do. 11 CHAIRMAN DUNLAP: Okay. All right. 12 If the Board doesn't have any other questions, I 13 would like to have the staff summarize the written comments 14 that we have received on this item. 15 MR. CARLOCK: We received one letter from the 16 Academy of Model Aeronautics. It's a consortium of model 17 airplane and car and boat enthusiasts, and basically, they 18 are asking that since this source of emissions has not been 19 inventoried that the Board forego any action which would 20 effect them at this time. 21 I had no idea there were so many model airplanes in 22 Southern California. 23 CHAIRMAN DUNLAP: Okay. All right. 24 Yes, Mr. Parnell. 25 BOARD MEMBER PARNELL: Pardon my ignorance, but do PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 128 1 we set a precedence today by ratifying inventory numbers and 2 immediately followed by, in the same day, a regulatory action 3 pursuant to those, or has this been done in the past? 4 Haven't we normally in the past given considerable 5 time in the interim? 6 MR. KENNY: Mr. Parnell, you are correct. 7 Generally what we have tried to do in the past is 8 to provide the inventory numbers both to you and to the 9 public substantially before we actually went forward with the 10 regulatory approach. 11 The difference here today is that we have a 12 regulatory requirement on the books, and it goes into effect 13 in January of 1999, and we are trying to relax that. 14 What we are proposing to you is to relax that, and 15 so, what we have tried to do is put these things together and 16 move them as quickly as possible as a way of providing some 17 relief to the industry. 18 They could not meet the January 1999 timeframes. 19 CHAIRMAN DUNLAP: So, you would characterize the 20 subsequent action to this as what, Mike? 21 MR. KENNY: The subsequent action to the approval 22 of the inventory would be that we would look at, we would 23 actually propose to you a regulatory relaxation to the 24 existing Tier II standards which go into effect in 25 January of 1999. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 129 1 CHAIRMAN DUNLAP: I know that pains you to say 2 the "R" word there. 3 MR. KENNY: It does pain me to say the "R" word. 4 CHAIRMAN DUNLAP: I wanted to ask anyway. 5 Okay. Thank you. 6 The Chair would entertain a motion. 7 BOARD MEMBER RIORDAN: I would so move, 8 Mr. Chairman, that we accept the inventory. 9 BOARD MEMBER PATRICK: Second. 10 CHAIRMAN DUNLAP: All right. Very good. 11 Supervisor Patrick, thank you. We got that second 12 in on this item. 13 Any other comments that we have to make on it? 14 I would offer something, maybe some comfort to Mac 15 and Don and others from the industry group. I know that this 16 process, again, was a fluid one, and it is my belief in 17 looking at it in toto that there was some benefit, and I mean 18 it in its purest form, but there was consideration, there was 19 some integration of your concerns into this inventory. 20 I know not all of it was incorporated, but I 21 believe you were heard, well heard, and so that is why I am 22 okay with supporting this inventory. 23 So, with that, I would call for a voice vote. 24 All those in favor of approving the Statewide 1990 25 Emissions Inventory for Small Off-Road Engines, say aye. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 130 1 Any opposed? 2 All right. Very good. 3 Thank you. The motion is carried unanimously. 4 Thank you, staff. 5 BOARD MEMBER RAKOW: Mr. Chairman. 6 CHAIRMAN DUNLAP: Yes, Ms. Rakow. 7 BOARD MEMBER RAKOW: Now that we have approved it, 8 I would assume the staff, Mike had mentioned that they would 9 be receptive and open to working with the manufacturers group 10 as they maybe, perhaps, produced more information on the 11 inventory numbers and so forth, and so, that would happen, 12 and then if there was anything very different that you would 13 bring that to the Board, of course? 14 MR. KENNY: We would. 15 What we try to normally do is continually work the 16 inventory, because as you would expect, you know, things 17 change, and what we want to do is we want to always have as 18 accurate and as precise an inventory as we can get. 19 Recognizing that what we are still doing is we are 20 really trying to take into account the projections and the 21 assumptions that go into activity and to the emissions that 22 come from the particular types of equipment. 23 So, it is very fluid and continually evolving 24 process. 25 CHAIRMAN DUNLAP: Okay. Very good. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 131 1 Thank you. Thank you, Mark, and for your team that 2 worked on this. 3 Let's move into the item that many people have 4 gathered for today, and that is 98-3-5, a Public Hearing to 5 Consider Amendments to the Small Off-Road Engine Regulations. 6 As noted earlier, the California Clean Air Act, the 7 1988 Act, directs the Board to consider emission standards 8 for off-road mobile sources. 9 In 1990, the Board approved the first off-road 10 mobile source reg, which instituted two tiers of standards 11 for engines below 25 horsepower. 12 The first tier went into effect in 1995. The 13 second is scheduled to be implemented in 1999. The Board 14 also asks that the staff evaluate industry's progress toward 15 Tier II compliance prior to its 1999 implementation date. 16 The staff presented a status report in January of 17 1996, following which the Board directed the staff to 18 continue its discussions with industry and identify any areas 19 in which the regulations could be improved. 20 The proposal before the Board today has been 21 developed in response to that directive, and at this point, I 22 would like to ask Mr. Kenny to introduce the item and begin 23 the staff's presentation. 24 Mike. 25 MR. KENNY: Thank you, Chairman Dunlap and Members PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 132 1 of the Board. 2 This second small off-road engine item serves as a 3 sequel of sorts to that January 1996 status report. 4 In addition to the inventory efforts detailed in 5 the previous presentation, the staff has done continuous 6 investigation over the past two years. 7 Numerous discussions with industry have resulted in 8 this proposal to modify the Tier II standards and other 9 requirements to better reflect the capabilities of the 10 industry and to better align with the U.S. EPA's programs, 11 while at the same time serving California air quality needs. 12 The Tier I regulations, the first ever control of 13 these engines, asked manufacturers to reduce emissions from 14 brand new engines. 15 The staff's proposal will take the logical next 16 step and ask industry to develop engines that exhibit 17 emissions durability and reduce the emissions resulting from 18 emissions deterioration. 19 The proposal will also simplify much of the 20 compliance programs and provide greater consistency with the 21 Federal program, which will reduce the compliance burden 22 manufacturers currently face. 23 I would now like to turn the presentation over to 24 Mr. Scott Rowland, of Mobile Source Control Division, who 25 will provide you with an overview of the staff's findings and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 133 1 present the staff's recommendation. 2 Before I do that though, two quick comments that I 3 did want to make. The first is this is a relaxation. 4 As I mentioned previously, the regulations 5 currently on the books do go into effect in January of 1999, 6 and the staff is proposing not only a change in some of the 7 standards but also a change in the timeframe with which 8 compliance would occur. 9 Secondly, we have had a number of conversations and 10 discussions with the nonhand-held industry, and we will be 11 proposing to you some modifications from what was originally 12 proposed in the staff report. 13 The modifications that we have been able to work 14 out with the nonhand-held manufacturers are such that they do 15 provide for some level of flexibility that is greater than 16 the staff originally proposed, and yet at the same time, they 17 retain all the emission reductions that we had originally 18 proposed in the staff report. 19 Scott. 20 MR. ROWLAND: Thank you. 21 My name is Scott Rowland. I'm with the Off-road 22 Control Section. 23 In this presentation, I will review some of the 24 background information regarding the small off-road engine 25 category and the regulations that the Board approved in 1990. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 134 1 I'll then summarize our proposal and the 2 environmental and economic effects that would result from 3 adoption of that proposal. 4 Finally, I will discuss some of the issues that are 5 involved in the proposal and the alternatives that we have 6 evaluated. 7 The small off-road engine category consists of 8 engines below 25 horsepower. These include two and 9 four-stroke engines, and the equipment that these engines are 10 used in include lawnmowers, weedwhips, blowers, generators 11 and a multitude of others. 12 The category does not include equipment that 13 qualifies under the construction and farm equipment 14 preemption that was contained in the 1990 Clean Air Act. 15 California cannot regulate construction and farm 16 equipment that would otherwise would be in the category. 17 All else being equal, this removes approximately 25 18 percent of the emissions from California's control. 19 The significance of the preemption will figure into 20 the environmental effects of the proposal, as discussed 21 later. 22 In 1990, the Air Resources Board approved the first 23 regulations to control emissions from small off-road engines. 24 The regulations provided for two tiers of emissions 25 controls. The initial, or Tier I, standards went into effect PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 135 1 in 1995. 2 The Tier II standards are scheduled to go into 3 effect in 1999. The Tier I 1995 standards were based on the 4 implementation of leaner engines and improved production 5 practices. 6 Engines that meet the Tier I 1995 standards show a 7 reduction of 35 percent from an average uncontrolled engine, 8 for hand-held equipment such as weedwhips, new lawnmowers and 9 other nonhand-held engines show a reduction of up to 70 10 percent of the HC plus NOx from the average uncontrolled 11 engine used in those same applications. 12 The Tier II 1999 standards were premised on the use 13 of Tier I 1995 engines equipped with catalytic converters. 14 However, the Board recognized that the previously 15 unregulated industry may encounter some stumbling blocks as 16 they work to comply with those regulations. 17 To provide an opportunity for mid-course 18 corrections, the Board asked the staff to present a status 19 report prior to the implementation of the 1999 standards. 20 In January of 1996, the staff presented its status 21 report. Following the report and some discussion of the 22 item, the Board directed the staff to continue working with 23 industry and to return to the Board with recommendations for 24 any changes that may be needed. 25 This item addresses the needed regulatory changes. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 136 1 In this presentation I will first describe some general 2 changes that affect the entire category of small off-road 3 engines. 4 Then I will discuss the technology and emissions 5 standards available for hand-held engines, such as weedwhips, 6 before moving on to the technology and emissions standards 7 available for nonhand-held engines, such as lawnmowers. 8 This will be followed by brief summaries of the 9 diesel engine standards and proposed provisions to the 10 compliance requirements. 11 Please note that the weedwhip icon and the 12 lawnmower icon in the corner of the slides will be used to 13 identify whether that slide refers to hand-held equipment, 14 such as weedwhips, nonhand-held equipment, such as lawnmowers 15 or both. 16 The staff plans on making some general changes to 17 the regulations that would affect the entire category, both 18 hand-held and nonhand-held equipment. 19 The first change involves which engines are subject 20 to the regulation. The staff proposes to revise the 21 regulations to include all engines less than 25 horsepower 22 that are used in mobile applications, including specialty 23 vehicle and golf cart engines below 25 horsepower. 24 Specialty vehicle engines are currently regulated 25 as off-highway recreational vehicles, although they are PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 137 1 required to meet the same standards as other small off-road 2 engines. 3 This is because the engines in both categories are 4 substantially similar. The staff believes that the 5 consolidation of the category will improve the 6 administration, implementation and enforcement of the 7 regulations. 8 Similarly, the staff proposes that the regulations 9 will explicitly apply to golf carts. New golf carts that 10 will be used in areas that meet the Federal Ozone Standards 11 will be required to use certified engines. 12 New golf carts for use in areas that do not meet 13 the Federal Ozone Standards will continue to be subject to a 14 zero emission requirement. 15 The staff also proposes to specifically exclude 16 engines used to propel marine vessels. Later this year, the 17 staff plans to propose separate regulations for those 18 vessels, which will address their unique operating 19 characteristics. 20 As noted in the inventory presentation, the 21 emissions due to engine deterioration was underestimated in 22 the original 1990 rulemaking. 23 We have since learned that engine deterioration can 24 contribute a substantial amount of the overall emissions 25 output of an engine. Therefore, we propose to set our PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 138 1 standards based on compliance at a given number of hours, 2 which we are referring to as an emissions durability period. 3 Under the staff proposal, manufacturers would 4 conduct a durability demonstration for each engine family. 5 We have structured the program so that if a 6 manufacturer has, for example, an engine that does not 7 deteriorate, that that manufacturer would not need to expend 8 its resources reaching an extremely low additional level. 9 The emission durability periods would be selected 10 by the manufacturer from several options, which are listed 11 here. 12 Those periods are compatible with similar periods 13 under consideration by the U.S. EPA as part of the proposed 14 rule. 15 As you can see here, the emissions durability 16 periods are broken into two subsets: One for engines 65 17 cubic centimeters and below; and another for engines above 65 18 cubic centimeters. 19 The emissions durability periods are divided that 20 way because the staff proposal would substitute a 21 differentiation based on engine displacement for the current 22 distinction between hand-held equipment applications, for 23 example, weedwhips, and nonhand-held equipment applications, 24 such as lawnmowers. 25 The historical reason for this division was to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 139 1 ensure that multi-positional equipment, supported solely by 2 the operator, could continue to use two-stroke engines. 3 Two-stroke engines, although intrinsically about 10 4 times more polluting than typical four-stroke engines, are 5 light-weight in comparison to the power they generate and can 6 be used in any position. 7 Upon review of certification data for nonpreempted 8 engines, the staff has determined that there is a natural 9 break between engines used in most hand-held applications 10 than engines used in most nonhand-held applications, and 11 about 65 cubic centimeters. 12 Although commercial type chain saws may have 13 displacements greater than 65 cubic centimeters, chain saws 14 greater than 45 cubic centimeters are preempted and would not 15 be effected by this proposal. 16 Please note that the 65 cubic centimeter cut point 17 is a change from the proposal as published in the staff 18 report. 19 We recommend this change because one manufacturer 20 has identified a 62 cubic centimeter blower engine that it 21 has already certified. 22 Additionally, another manufacturer has asked that 23 this change be effective immediately after approval. 24 Since the modifications would not cause any 25 currently certified engines to lose certification, the staff PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 140 1 agrees. 2 As noted, engines 65 centimeters or below are used 3 in hand-held applications, such as chain saws, blowers and 4 weedwhips. 5 Equipment with two-stroke engines in this category 6 are produced by companies such as Echo, Frigidaire, which 7 includes the Weedeater brand, and Ryobi, as well as many 8 others. 9 Additionally, Ryobi and Honda both currently offer 10 equipment that use four-stroke engines. As mentioned 11 previously, two-stroke engines do typically emit much more 12 than four-stroke engines. 13 This example compares the hydrocarbons plus oxides 14 of nitrogen, or HC plus NOx, from a base two-stroke engine 15 and a four-stroke engine produced by the same company, both 16 of which are available today. 17 Although the changes needed to give a four-stroke 18 engine multi-positional capability and reduced weight can 19 result in higher emissions than much larger four-stroke 20 engines, there is still a significant difference compared to 21 a basic two-stroke engine. 22 The data shown here from two engines certified to 23 Tier I 1995 standards indicate that the four-stroke engine is 24 below 50 grams per horsepower hour, while the two-stroke is 25 almost three times as dirty. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 141 1 The staff proposes the addition of a durability 2 requirement and a one-year delay for the Tier II regulations 3 for these hand-held engines. 4 Note that the staff also proposes the combination 5 of hydrocarbons and oxides of nitrogen levels. The carbon 6 monoxide in particulate standards would be relaxed from the 7 adopted Tier II standards but would be capped at levels that 8 will allow manufacturers the greatest number of technological 9 options to meet the HC plus NOx standards. 10 As shown by the pair of bars on the left of this 11 slide, the stringency of standards from the ozone precursors, 12 HC plus NOx is retained, while carbon monoxide and 13 particulate standards are being relaxed, indicated by the 14 bars in the center and right-hand side of the slide. 15 The addition of the durability requirement provides 16 greater certainty that the standards will be met throughout 17 the engines use. 18 A one-year delay is proposed to provide 19 manufacturers additional time to incorporate the durability 20 requirement into their production plans. 21 The particulate standard now in place for 1999, 22 .25 grams per horsepower hour, was originally set in 1990 to 23 require control equivalent to diesel engine particulate 24 levels. 25 At that time very little data were available and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 142 1 measurement procedures were not well established. Since that 2 time more data have been collected and testing expertise has 3 increased. 4 The data indicate that the standard now in place 5 would require control particulates that is much more 6 stringent than for any other pollutant. 7 The proposed standard, 1.5 grams per horsepower 8 hour, is consistent with the hydrocarbon plus NOx level of 54 9 grams per horsepower hour and ensures reasonable reduction 10 from current levels. 11 Particulate testing can be very costly. However, 12 the connection between the hydrocarbon emissions and the 13 particulate emissions provides a way to reduce those testing 14 costs. 15 Therefore, the staff proposes that manufacturers 16 show compliance by calculation rather than actual 17 measurement, because particulate matter is proportional to 18 the hydrocarbon emissions and inversely proportional to the 19 fuel to oil ratio. 20 Interesting, several companies took different paths 21 to meet the standards currently in place for 1999. 22 Several manufacturers have made an effort to attain 23 the 1999 HC plus NOx standards and succeeded. 24 Ryobi was the first company to announce the 25 technology designed specifically to meet our 1999 standards. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 143 1 They unveiled their four-stroke hand-held engines 2 several years ago and have been producing it ever since. 3 This innovation in hand-held equipment has been 4 applauded by Popular Science magazine, whose latest issue has 5 an article on the topic. 6 Ryobi has continued their efforts to develop even 7 better four-stroke products, including reducing the weight to 8 that of a comparable two-stroke engine. 9 They have also developed a commercial use 10 four-stroke engine in conjunction with Komatsu Zenoah. 11 Here we have a Ryobi four-stroke weedwhip and the 12 two-stroke weedwhip with equivalent features. 13 In case you are wondering, in the slide, the 14 four-stroke engine is on the right. We purchased both of 15 these at Home Depot. 16 The four-stroke is much cleaner than the current 17 standards required and could meet the proposed Tier II 1999 18 standards. 19 It is currently produced in relatively low volume 20 and costs forty dollars more than the two-stroke model, which 21 would not be able to meet the 1999 standards. 22 Their weights are similar, but as this slide of 23 current certification values show, the four-stroke is three 24 times cleaner. 25 Honda has also developed hand-held four-stroke PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 144 1 engines. Honda had not previously made hand-held equipment 2 but evidently perceived the 1999 regulations as offering 3 opportunity for expansion. 4 Honda has certified two versions of its engines so 5 far and has indicated plans to expand the number of models. 6 On the left is the 31 cubic centimeter engine on a 7 blade equipped trimmer, while on the right is the 22 cubic 8 centimeter engine on a weedwhip. 9 As with the Ryobi four-stroke, Honda's four-stroke 10 engines have also received a fair amount of press coverage. 11 Not only does the Popular Science article discuss 12 Honda's design in some detail, but the Wall Street Journal, 13 on Wednesday, March 11, quoted a Honda representative as 14 saying that its engine would be suitable for use in a chain 15 saw. 16 Komatsu Zenoah in addition to developing the 17 commercial grade four-stroke engine in partnership with Ryobi 18 has developed a two-stroke engine that used stratified 19 scavenging to cut down on the 25 to 35 percent of the fuel 20 that would normally simply exit the engine unburned. 21 A weedwhip with that engine was on display outside 22 this morning. In essence, the design puts a wall of air 23 between the fresh fuel entering the cylinder and the exhaust. 24 The stratification of the exhaust followed by fresh 25 air, followed by fresh fuel, reduces the amount of fresh fuel PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 145 1 that would otherwise immediately go out through the exhaust 2 port. 3 Tanaka is another company that developed a 4 stratified scavenging two-stroke engine independently of 5 Komatsu Zenoah's efforts. 6 The Tanaka engine also uses a catalytic converter, 7 which was considered virtually impossible to much of industry 8 only a few years ago. 9 In addition, Tanaka has participated in a 10 consortium that has developed a fuel injected two-stroke 11 engine partly funded by ARB through the consortium Program to 12 support innovative clean air technologies. 13 Finally, it must be recognized that electric 14 equipment for residential use forms approximately one-half of 15 the overall hand-held power equipment market. 16 Electrics are available today in both corded and 17 cordless configurations and are offered by many of the same 18 companies that produce engine powered equipment. 19 There are also manufacturers that offer only 20 electric equipment, such as Black and Decker. 21 To summarize, these four technologies, four-stroke 22 engines, stratified scavenging two-stroke engines, 23 fuel-injected two-stroke engines and electric equipment have 24 been identified as technologies which can meet the standard. 25 This chart shows the current HC plus NOx levels of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 146 1 those technologies. The bright red line at the top indicates 2 the 54 grams per horsepower hours standard. 3 Please note that the emissions levels for the Ryobi 4 four-stroke engine is from the engine certified several years 5 ago to the Tier I standard of 180 grams per horsepower hour. 6 Although some of these technologies could be 7 offered in 1999, the original date for Tier II compliance, 8 the staff believes that some extra time is warranted to allow 9 the diffusion of all of the successful technologies into the 10 market and to provide manufacturers some lead time to adjust 11 to the additional durability requirement. 12 Considering that there are four manufacturers who 13 can comply now, in addition to all the manufacturers of 14 electric equipment, the staff proposes implementation of the 15 revised standards in 2000, which would grant a one-year 16 extension of lead time for those who cannot yet comply. 17 Now I will shift from hand-held engines to 18 nonhand-held engines. Engines greater than 65 cubic 19 centimeters are generally four-stroke engines and are used in 20 applications such as lawnmowers, generators, lawn tractors 21 and other small equipment that is not typically hand-held. 22 The regulations currently draw a distinction among 23 those engines used in nonhand-held equipment. Engines below 24 225 cubic centimeters are referred to as Class 1 engines, and 25 engines 225 cubic centimeters and above are referred to as PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 147 1 Class 2 engines. 2 Today, the typical Class 1 engine is a side-valve 3 engine that is likely to be used in a walk-behind lawnmower 4 designed for residential use. 5 The Class 2 engines have a more even mix of 6 side-valve and overhead valve engines and typically used in 7 commercial applications for equipment such as riding mowers. 8 The emission standards currently in place are too 9 stringent to be readily met by the industry. Additionally, 10 those standards do not address the emission deterioration. 11 The staff believes that the first step beyond 12 current Tier I engines is to ensure that engines are clean, 13 durable, like, for instance, overhead valve engines. 14 The current market is a mix of overhead valve 15 engines and side-valve engines, and the effect of the staff 16 proposal is likely to shift more of the market towards 17 overhead valve engines. 18 The staff has revised its proposal from the one 19 described in the staff report. We have identified an 20 alternative program supported by the engine manufacturers 21 that will achieve the same emission reductions as the plan 22 outlined in the staff report. 23 The revised proposal would delete the proposed Tier 24 III standards but add, in agreement from manufacturers, to 25 provide preempt engines that comply with the California PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 148 1 standards. 2 Additionally, manufacturers would provide extra 3 reductions through other engine based means, such as 4 evaporative emissions controls, or the advanced introduction 5 of cleaner engines. 6 The manufacturers would need to provide reductions 7 equal to those expected from the Tier II, Tier III proposal 8 in the staff report. 9 Under this revised proposal, the complying engines 10 will likely be produced exclusively for the California 11 market. This is because of the limited production capacity 12 of the manufacturers involved. 13 This graph shows how the emissions regulatory under 14 the regulations in place today, or rather, set to go into 15 effect in 1999, would compare to the inventory under the 16 proposal in the staff report and the revised proposal being 17 made today. 18 As shown, the proposal being made today will 19 provide the same emissions benefits as the proposal contained 20 in the staff report. 21 The only remaining category of engines is that of 22 diesel, or compression ignition engines. In this case, the 23 staff proposal follows the compression ignition engine 24 statement of principles agreed to by the staff, U.S. EPA and 25 the effected engine manufacturers. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 149 1 The provisions of this statement of principles 2 were developed only after extensive negotiations with all 3 parties, and the staff proposes to align with the final 4 U.S. EPA program after that is completed later this year. 5 Compared to the large number of gasoline engines in 6 the category, diesels comprised not only a small population 7 but a relatively minor source of emissions. 8 The proposed diesel standards are shown here. The 9 diesel engine statement of principles preserves the emissions 10 reductions counted on in the State Implementation Plan for 11 both preempt and nonpreempt diesel engines. 12 Along with the proposed modifications to the 13 standards, the staff proposed to modify the compliance 14 requirements. 15 The proposed modifications are designed to provide 16 industry with greater flexibility in meeting the regulations. 17 To ease the burden on smaller companies, the staff 18 proposes that those who produce less than 500 engines per 19 year for California be allowed to forego the emissions 20 durability demonstration. 21 We also propose to provide a program for the 22 averaging, banking and trading of emissions credits which 23 will allow industry to concentrate their resources on the 24 biggest bang for their buck. 25 The averaging program would not only allow PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 150 1 manufacturers to stagger the development and introduction of 2 cleaner product but would allow the continued production of 3 small volume products that may otherwise not be economical to 4 convert to cleaner technology. 5 Similarly, the staff proposes to modify the 6 Production Line Testing Program to reduce the burden on 7 industry. 8 In this case, the staff proposes to use the 9 U.S. EPA's Accumulative Sum Test Procedure with some 10 modifications. 11 Compared to the current requirement of one percent 12 of production be tested, the proposed procedure, with its 13 maximum of 30 tests per year, would greatly reduce the 14 resources that a manufacturer must devote to production line 15 testing. 16 Unlike the Federal Program, the staff proposes a 17 minimum testing requirement of two engines per quarter, which 18 would provide greater certainty that the data represent an 19 entire year's worth of production. 20 Finally, wherever feasible, we have attempted to 21 harmonize these programs with the U.S. EPA's proposed 22 programs. 23 For instance, the Averaging Program has been 24 constructed so that credit calculation is consistent with the 25 U.S. EPA Program. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 151 1 This slide summarizes the potential of the 2 Averaging Program. 3 Credits could be exchanged from one engine family 4 to another as internal averaging, or they could be traded 5 between companies, or banked for use in a future year. 6 Under this plan, manufacturers have the maximum 7 flexibility to decide how best to comply with the emissions 8 standards. 9 The proposal also includes a provision for 10 manufacturers to who can meet the adopted Tier II 1999 11 standards now, those manufacturers would be able to bank 12 credits, beginning with 1998 production from their complying 13 engine families. 14 In this way, the staff hopes to mitigate the effect 15 of the proposed relaxation on those who have successfully met 16 the standards put in place in 1990. 17 That is, in essence, the content of the staff 18 proposal. 19 Now I will describe the benefits that will result 20 from it. The emissions impact of the proposal is shown here. 21 Since the U.S. EPA is proposing to control 22 emissions beyond Tier I, we are using their proposal as a 23 baseline for gauging the proposals effectiveness. 24 In 2010, our proposal would reduce HC plus NOx 25 emissions by 21 tons per day beyond the proposed U.S. EPA PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 152 1 Program. 2 Carbon monoxide particulate matter increased 3 relative to the adopted standards that remain capped at or 4 below current levels. 5 The levels are relatively low compared to the 6 overall inventory for these pollutants. The staff proposal 7 achieves its reductions at a low cost. 8 The economic impact of the proposal has been 9 evaluated separately for hand-held equipment, such as 10 weedwhips, and for nonhand-held equipment, such as 11 lawnmowers. 12 For weedwhip type engines, there are various 13 technologies available from stratified scavenging, estimated 14 to add approximately $5 to the retail price of a piece of 15 hand-held equipment, to a fuel-injected two-stroke engine, 16 which is estimated to add $35 to the current retail price. 17 In our cost effectiveness calculations, we used the 18 highest cost in order not to underestimate the cost per pound 19 of HC plus NOx reduced. 20 Similarly, we used only the emission benefit beyond 21 what the proposed Federal program would attain. The result 22 is a cost effectiveness of $1.58 per pound of HC plus NOx 23 reduced, equivalent to $3,160 per ton. 24 This number differs from that in the staff report 25 because we corrected a calculational error. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 153 1 Although this updated figure is higher than the 2 estimate in the staff report, it remains well within the 3 range of cost effectiveness. 4 For nonhand-held engines, such as those used in 5 lawnmowers, the retail cost increase is determined to be from 6 zero to $23, depending on engine size. 7 The weighted cost effectiveness for these engines 8 is $2.60 per pound produced, which is equivalent to $5,200 9 per ton. 10 Both portions of this proposal are very cost 11 effective compared to the typical cost effectiveness of $5 12 per pounds with a maximum of $11 per pound noted in the ARB's 13 cost effectiveness guidance. 14 From another perspective, this program costs the 15 same, or less, than the reformulated gasoline and Smog Check 16 programs. 17 In addition to the cost effectiveness, we have 18 examined the effect of the proposal on the State's economy. 19 Although some stakeholders contend that the staff 20 proposal would be too stringent, the proposal is actually a 21 relaxation of the already existing requirement. 22 The economic analysis is compared to the 23 regulations on the books. Since the proposal would relax the 24 requirements and greatly increase industry flexibility, most 25 manufacturers and other businesses are expected to benefit PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 154 1 from the proposed amendments. 2 The consumer impact would also be low, as the cost 3 and cost effectiveness described previously shows. Although 4 staff and industry have spent over two years to develop this 5 proposal, there remain some issues on which there is 6 disagreement. 7 Staff has attempted to address those concerns by 8 proposing an early banking of credits for those who can meet 9 the adopted 1999 standards. 10 Additionally, the staff believes that those 11 companies will be better positioned to meet the proposed new 12 standards than those who could not meet the adopted 1999 13 standards. 14 Some members of industry disagree with the cost and 15 cost effectiveness figures calculated by the staff and 16 presented today. 17 However, the staff relied on industry input to 18 calculate the cost of the proposal, which is cost effective 19 under the ARB's guidelines, even under the worst case 20 assumptions that we have used for our analysis. 21 Additionally, the staff has, whenever possible, 22 proposed cost saving modifications to the existing small 23 off-road engine program, including averaging, banking and 24 trading, and the reduction in production line testing. 25 Some manufacturers have raised the specter of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 155 1 consumers not accepting cost increases or equipment being 2 unavailable, particularly with regard to hand-held equipment. 3 As even the highest cost for complying technology 4 is at a level that our focus groups of consumers identified 5 as acceptable, the staff does not believe that there will be 6 a significant problem based on cost. 7 Furthermore, although some equipment models will 8 probably be replaced by other models, or even other 9 technology, those technologies allow for unimpaired, or even 10 improved performance. 11 This table, which may be a little difficult to 12 read, shows the expected effects on equipment availability 13 for hand-held weedwhips due to the proposal. 14 As you can see, the lowest price point, less than 15 $80, is currently filled by electrics and some two-stroke 16 engines. 17 However, the price point is overwhelmingly filled 18 with electric products. In the near term, that price point, 19 which is essentially residential and consumer equipment, will 20 probably be served by electrics. 21 In the longer term, as manufacturers increase 22 production of complying engines, two-stroke engines and some 23 four-stroke engines may migrate back to the category. 24 At the next highest price point, $80 to $100, there 25 is still some electric equipment and quite a bit of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 156 1 two-stroke equipment. 2 In the near term, we expect the electrics to 3 remain, some complying two-stroke and four-stroke engines 4 being offered. 5 As time passes, the percentage of two and 6 four-stroke engine products will undoubtedly increase. 7 Above $100, the market is almost exclusively 8 two-stroke engines, with the exception of Ryobi and Honda 9 four-strokes. 10 In the near term, we expect these markets to be 11 served by four-stroke engines and a variety of two-stroke 12 engines using the advanced technology that we discussed 13 earlier. 14 The long-term will continue that trend. Since the 15 higher priced equipment is indicative of commercial 16 equipment, commercial users will always have engine powered 17 equipment as an option, whereas the lower priced consumer 18 market will look much like it does today with electric 19 equipment common and engine powered equipment available at a 20 slightly higher cost than the electrics. 21 The staff considered and rejected a number of 22 alternatives to the present proposal. None of the 23 alternatives were found to be more responsive to the industry 24 and the environmental needs than the proposal. 25 For example, some argued for the retention of Tier PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 157 1 II standards that are already in place for 1999. 2 Staff rejected this alternative because those 3 standards do not accurately reflect the industry's 4 technological capabilities, particularly for carbon monoxide 5 and particulate matter, and because those standards do not 6 address the increase in emissions as an engine deteriorates. 7 Some members of industry have asked for complete 8 harmonization with the U.S. EPA proposal as outlined in its 9 statements of principles including the standards and 10 implementation dates. 11 However, the Federal proposal would result in 21 12 tons per day of HC plus NOx more than the staff proposal. 13 Since those 21 tons per day can be achieved at a 14 cost per pound, even using the most expensive options 15 available, of $2.60 or less, the staff believes that its 16 proposal was more appropriate than the U.S. EPA proposal. 17 Finally, there has been much discussion regarding 18 the possibility of relaxing the standards further and making 19 up the difference by control of refueling emissions using 20 items such as no-spill fuel containers. 21 The issue of refueling controls is much broader 22 than just this category, stretching across personal water 23 craft, off-road motorcycles and all-terrain vehicles. 24 The staff believes that more work must be done to 25 include all potential stakeholders before an appropriate rule PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 158 1 could be developed. 2 The staff will work with industry and others and 3 return to the Board with a refueling control proposal in 4 1999. 5 Staff anticipates that a refueling control measure 6 could be implemented in 2001 or 2002 timeframe. 7 In summary, it should be emphasized that this 8 proposal would only affect new engines not existing engines 9 that are in the hands of consumers or on the store shelves 10 today. 11 The proposal for new small off-road engines is 12 based on technology that is now available. The proposal 13 ensures that emissions due to engine deterioration will be 14 controlled. 15 The proposal would achieve a Statewide reduction in 16 2010 of approximately 21 tons per day more than the similar 17 proposed U.S. EPA program, at a low cost and for a very cost 18 effective $1.58 per pound for weedwhips, and $2.60 per pound 19 for lawnmowers. 20 That concludes our formal presentation. We will 21 now answer any questions you may have. 22 CHAIRMAN DUNLAP: Ms. Rakow. 23 BOARD MEMBER RAKOW: Yes, I don't know which staff 24 would want to tackle this, but probably I'm not reading this 25 correctly, but this has really been bothering me since we got PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 159 1 the draft of the rules, the regulation last month, and it 2 says that this is a major regulation because the compliance 3 cost exceeds $10 million in a single year during the 4 regulation horizon. 5 Can you explain where this $10 million cost is? 6 MR. KENNY: While the staff is looking at it, what 7 we are really trying to address, essentially, is a California 8 State requirement, in which we have to identify as we go 9 forward, regulatory proposals, those proposals that will have 10 a major impact upon the industry. 11 The $10 million number is, essentially, a number 12 that is reflective of the total impact that the regulation 13 will have in the future. It is not simply tied to any one 14 particular -- 15 BOARD MEMBER RAKOW: So, it's not per single year? 16 MR. KENNY: Correct. 17 I think if the staff wants to add to that, they can 18 go from there. 19 BOARD MEMBER RAKOW: But this is a $10 million 20 impact in California, that is what we are dealing with? 21 MR. KENNY: That's right. 22 But that also is basically going forward into the 23 future. 24 It is not just simply a $10 million impact in any 25 one year. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 160 1 BOARD MEMBER RAKOW: Up to year 2010? 2 MR. KENNY: It would even go beyond that. 3 There was not a specific timeframe associated with 4 that as best as I can recall at the moment. 5 BOARD MEMBER RAKOW: The reason I'm trying to sort 6 it out is everything I have been hearing is, the economic 7 impact is very, very minor, it's not much, etcetera, and then 8 I read this, and $10 million to me is not minor. 9 CHAIRMAN DUNLAP: If I might, maybe Kathleen could 10 help, or Jim Schoening on this. 11 I'll give you a framework as a reference point. 12 Since 1993, since I joined the Wilson 13 Administration, there has been a number of State laws enacted 14 that require economic analysis and process involving what the 15 economic impact is on any rulemaking in the entire Cal EPA 16 family, and this threshold number, this $10 million, is 17 probably, Kathleen, am I right, required to be disclosed as 18 part of that statute? 19 MS. WALSH: Right. 20 It's specified by statute. 21 CHAIRMAN DUNLAP: Do you want to, at some point, if 22 the Board is interested in it, and I don't know if we would 23 do it today, but we could, Sally, provide you and others with 24 those laws and what we do to comply with them. 25 BOARD MEMBER RAKOW: I know the law exists. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 161 1 I was trying to, maybe, compare apples and oranges. 2 MR. KENNY: I think the question is a good one. 3 I think part of the answer is simply a comparison 4 to the other types of programs that we deal with, and maybe 5 one of the best things to do would be to simply give you some 6 sense to other programs, whether it's a fuels program or a 7 cars program, and what impacts are there. 8 Generally speaking, those are also over $10 9 million. I am going to turn it over to Mr. Cackette, and he 10 can actually give you probably an even more specific number 11 than that. 12 MR. CACKETTE: Well, I think as a round number, the 13 sales of this type of equipment is around a million a year, 14 or something slightly less than that. 15 If it is more than $10 increase in cost, that would 16 get you to the $10 million threshold. We used the upper 17 limit, but we were using $35 for the hand-held side and $23 18 or $24 for the lawnmower side. 19 That gets you over the $10 million threshold per 20 year. By comparison, though, Smog Check is a half a billion 21 a year. The incremental cost of new car emission controls is 22 over half a billion dollars a year as well. 23 If you take five cents a gallon times the fact that 24 there are a billion gallons per month, or something like 25 that, that adds up real fast, too. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 162 1 So, you can see the big place, we have a lot of 2 sales of everything, and these small unit costs add up. 3 BOARD MEMBER RAKOW: That explains everything. 4 Thank you. 5 CHAIRMAN DUNLAP: Mr. Parnell. 6 BOARD MEMBER PARNELL: I want to address, and 7 perhaps this is premature, but there are those that would 8 like to stay with Federal EPA Tier II standards, and we just 9 saw that we would forego 21 tons per day in the event we were 10 to elect to go that way. 11 Is there any reason to believe that there is 12 another approach that might result in the savings and still 13 bring less pain to those folks that want to stay with that 14 standard in that could we, for example, as we have done in 15 the automobile industry institute incentive programs, where 16 they institute some incentive programs which would seek to 17 bring out of the marketplace higher polluting engines, 18 getting a more, getting an immediate result and a reduction 19 in tons, and buying time for technology to continue to roll 20 on, and ultimately, I would think, that at the end of the day 21 we had a plus-plus. 22 I know that you don't -- I mean we have had this 23 conversation, and I want to be sure I understand it before we 24 go forward, if I have made myself totally unclear. 25 MR. KENNY: No, actually you are coming in clear. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 163 1 I understand exactly what you are asking. 2 I think the best way to answer the question is in 3 the context of the two categories that we are talking about, 4 the over 65 CC and the under 65 CC. 5 When you look at the original staff proposal, with 6 regard to over 65 CCs, we did begin to engage in a fairly 7 substantial dialogue after that proposal went out, even 8 though we had also engaged in a dialogue with industry before 9 the proposal went out, with regard to what other alternatives 10 and options might be available to achieve the same level of 11 emissions reductions that we were proposing to achieve. 12 It was only, literally, in the last 24 hours that 13 we have really kind of come to kind of final agreement with 14 the over 65 CC industry, and that is the part of the staff 15 proposal to you today. 16 We reached a conceptual agreement with them, 17 probably about, maybe, two weeks ago. So, on that side, we 18 actually have alternatives that we think will achieve exactly 19 the same level of emission reductions that we are proposing 20 in the staff report. 21 In the under 65 CC category, we have three 22 manufacturers, who will testify today, who, actually, let me 23 rephrase that, we have at least three manufacturers, all of 24 whom can meet the existing 1999 standard that is on the 25 books. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 164 1 Those manufacturers, I think, you will hear them 2 argue that, in fact, there should not be any change, or if 3 there is one it should be a limited change as being proposed 4 by staff. 5 In that same under 65 CC category, you will hear 6 from other manufacturers who will argue that, in fact, the 7 changes being proposed by the staff is limited. In fact, 8 there should be a more lenient standard, and there should be 9 a longer timeframe associated with compliance. 10 We don't think that, in fact, that's true, 11 especially in light of the fact that we have complying 12 products that actually could be put into the marketplace 13 today. 14 I have even applications for certification from 15 three companies for products that would actually meet the 16 proposal that is before this Board today, if this Board were 17 to approve that proposal. 18 So, we have tried to work out as much as we could, 19 alternative approaches, and at least on the greater than 20 65 CC side, we were able to do so, but we don't see that 21 option available on the under 65 CC side. 22 MR. CACKETTE: May I address the incentives part of 23 that, maybe to complete the response. 24 There is no doubt that if we had an incentive 25 program, somebody offering up money for you to turn in your PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 165 1 older piece of equipment and buy a newer complying piece of 2 equipment, that that would help improve air quality today, in 3 the short-term. 4 So, incentive programs are valuable from that 5 standpoint. We also have to look at the SIP, and remember 6 that the SIP has got an attainment deadline for Los Angeles 7 area of 2010, and this regulation goes into effect in our 8 proposal ten years before that, or in the year 2000. 9 The lifetime of most of this equipment is seven 10 years. So, what that means is by 2010, the fleet, if you 11 want to call it that, of all of the weedwhips and lawnmowers 12 essentially will turn over to the new complying product. 13 If we give a relaxation of the numerical emission 14 standard, it means that it will turn over to a fleet of, 15 let's say, 70 or 80 gram engines by 2010, and if you go with 16 the staff proposal, it will turn over to a fleet of 54 gram 17 engines. I'm talking about the hand-held side now, so you 18 can see that even though you can provide some air quality 19 benefit up-front, an incentive program can't really help with 20 the attainment deadline issue. 21 The engines have to be at the 54 level and similar 22 12 to 9 gram level for the lawnmower side in order to get the 23 tons that were embedded in the SIP in 1990 when the Board 24 adopted it. 25 So, that is the difficulty of the short versus the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 166 1 long-term here. 2 MR. CROSS: Just very quickly, also, the 21 tons 3 that you cited is actually split between hand-held and 4 nonhand-held. 5 The hand-held part is about 11, and the 6 nonhand-held, which essentially is resolved so there is no 7 loss, was about 10. 8 So, when the hand-held category, which we are still 9 discussing, is about a 10 ton loss compared to the Federal. 10 CHAIRMAN DUNLAP: We have -- Sally, I'm going to 11 let you speak in just a second. 12 We have 22 witnesses that have signed up. I am 13 going talk about how we are going to handle that in a minute, 14 but we have an Ombudsman commentary that we are going to ask 15 for. 16 So, Sally, will you yield to them, and then we will 17 get back to you? 18 BOARD MEMBER RAKOW: Yes, I will. 19 It was just a quick comment on the incentive 20 program. 21 CHAIRMAN DUNLAP: Okay. I'll let you. 22 BOARD MEMBER RAKOW: Oh, very quickly, I think 23 there's another aspect of an incentive program, a short-term 24 incentive program, it would give a kick-start. 25 I'm thinking of the user now, not the manufacturer, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 167 1 and it would give an incentive to that small landscape 2 business to turn in their equipment and get new equipment. 3 I'm thinking, you know, in the short-term, and it 4 could be under just a very finite time period. I have a 5 concern with that individual or two or three-man landscape 6 company, of which there are many in California. 7 This might be something that we could discuss 8 later. 9 CHAIRMAN DUNLAP: We will come -- Tom, you know, we 10 are going to hear fro some folks later. 11 Why don't you and your team give some thought to 12 any ideas, and Jerry Martin in our press office has worked on 13 a mow-down pollution program, I think that is what it is 14 called, where there are some incentives for folks scrapping 15 lawnmowers and things, if he's around here I will see if we 16 can get him to tell you a little bit about that. 17 Okay. Mr. Schoning, would you and Ms. Steel take a 18 couple of minutes and tell us about your views of how this 19 regulatory package has came to the Board for consideration? 20 MR. SCHONING: Yes, Mr. Chairman. Nancy Steel is 21 our Deputy Ombudsman, as you know, for Southern California, 22 and has done most of the heavy lifting on the nonhand-held, 23 as well as the hand-held, on this item and will be presenting 24 our comments. 25 MS. STEEL: Thank you, Jim, Mr. Chairman, Members PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 168 1 of the Board. 2 As you heard from staff, some eight years ago this 3 Board approved the first regulations to control emissions 4 from small off-road engines because of the uncertainty of 5 projecting technological developments in this previously 6 unregulated industry through to the year 1999, when the 7 second Tier comes into effect. The Board asked staff to come 8 back with an update in 1996. 9 When, in January of 1996, the staff made their 10 presentation on the progress of the technology development 11 for Tier II, they were instructed by you to perform 12 additional outreach and analysis of the capability of 13 manufacturers to comply with the 1999 Tier II standards. 14 Staff has already discussed the results of their 15 analysis. You have heard the proposal to delay 16 implementation by one year and to relax some of the emission 17 standards in response to some manufacturers difficulties with 18 the technology necessary to meet the 1999 standards. 19 You have also heard about other changes that are 20 being recommended to make the regulations easier to comply 21 with and to harmonize certain portions of the regulation with 22 the U.S. EPA's upcoming national standards. 23 And as you will hear from witnesses today, not 24 everyone agrees with staff's conclusions in this proposal. 25 You will have witnesses who will argue that staff PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 169 1 has not made the right decisions, and these amendments will 2 not necessarily be good for their businesses. 3 Nonetheless, we have found that staff have complied 4 with your directive for further outreach and have worked 5 intensively with manufacturers before bringing this item 6 before you. 7 The outreach efforts, while not producing an 8 unanimous agreement with staff's proposal, have been 9 extensive in both in breadth and depth. 10 What we would like to discuss now are those 11 outreach activities. Since the 1996 public hearing before 12 this Board, staff have communicated with stakeholders through 13 six mail-outs, two workshops and over 90 face-to-face or 14 telephone meetings. 15 There have also been countless informal short 16 telephone conversations. First, the mail-outs to 17 stakeholders have covered notifications and clarifications, 18 requests for proposals for additional research and requests 19 for comments. 20 Second, the two workshops were held to conduct a 21 status review in May of 1996 and to air the preliminary staff 22 proposal in May of 1997. 23 Both of these workshops were extensively noticed 24 and well attended. 25 Third, staff has met many times with manufacturers PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 170 1 individually and through their association representatives. 2 As you know, the major associations representing 3 manufacturers are the Portable Power Equipment Manufacturers 4 Association, PPEMA, which represents, we found, about 60 5 percent of the gasoline powered engines for the hand-held 6 equipment market, the Engine Manufacturers Association, which 7 represents the manufacturers of engines for the nonhand-held 8 equipment, and the Outdoor Power Equipment Institute, which 9 represents the small off-road equipment manufacturers. 10 In addition, several manufacturers and other 11 stakeholders met with staff individually, including 12 manufacturers of small hand-held engines who are not members 13 of PPEMA. 14 Finally, I want to mention also the over 225 15 letters that you have received from members of the public, 16 mostly dealers in lawn and garden equipment and gardeners 17 protesting these amendments. 18 Most of the these letters have been similar, if not 19 identical letters. Staff have responded to these people by 20 sending them two letters, and in some cases, calling the 21 concerned citizens. 22 Not only have staff sent out a standard letter 23 responding to their concerns, but they also sent a second 24 letter with a fact sheet that responds point by point to some 25 of the misunderstandings contained in many of the letters. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 171 1 I should note that most of the people who wrote 2 letters were under the incorrect impression that staff's 3 proposal would outlaw existing two-stroke engines, as well as 4 banning two-stroke engines in the future, thus eliminating 5 the equipment these people sell and use to make a living. 6 Since the January 1996 status report to this Board, 7 you have heard that staff have been working hard to reconcile 8 the comments they have received. 9 In fact, many facets of this proposal today reflect 10 requests by PPEMA and EMA. Just to give you some examples, 11 PPEMA members requested the one-year delay, the increase in 12 the carbon monoxide standard, averaging, the use of a method 13 for calculating PM rather than directly measuring 14 particulates and many additional parts of the proposal. 15 On the nonhand-held side, staff have been in 16 intensive negotiations with EMA, and I think you have heard 17 about that, over the last month, and they have come to an 18 agreement on changes. 19 Staff have not, however, relaxed the hand-held 20 hydrocarbon plus NOx standards, as requested by some 21 manufacturers, primarily because there are other 22 manufacturers who are producing equipment that can meet the 23 standard. 24 The point that I make about this is that staff has 25 also listened to these other manufacturers, outreach to all PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 172 1 manufacturers, has discovered that some do not want a great 2 relaxation in the hydrocarbon plus NOx standard because they 3 have already invested time and money in meeting the 4 regulations on the books. 5 In conclusion, we find that staff have conducted 6 extensive outreach and ensured participation by all affected 7 and interested parties on the small off-road engine proposal. 8 In response to the ongoing outreach efforts, staff 9 will be submitting new text, in fact, reflecting changes made 10 as a result of the negotiations subsequent to the staff 11 report. 12 Although the process has not been smooth or boring, 13 as we would like it to be, staff has demonstrated a 14 commitment to listening to stakeholders in developing this 15 regulatory proposal. 16 Thank you. 17 CHAIRMAN DUNLAP: Thank you, Ms. Steel. I 18 appreciate the thoroughness of that report and the 19 perspective that you shared. 20 Do any Board Members have questions, or do you want 21 to hop into the witnesses? 22 I recommend we do the latter. All right. 23 What I have asked Jim and Nancy to try to do was to 24 assemble these witness categories in clusters, and they have 25 done it with some minor effect, I think, so we are going to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 173 1 try, I mean, if I could ask, I wanted to give the audience, 2 those who are planning to testify, my perspective as it 3 relates to the clock and as it relates to the substantive 4 issues here, I have installed a timer that I can set for 5 three to five minutes, or so, and I can run that timer. 6 I know some of you feel you need a little bit more 7 time to make your points, and I certainly am sympathetic to 8 that, but one thing we don't want to do is we don't want to 9 hear things over and over again, nor do we want people to 10 stand up and read their testimony off a letter that we have 11 received some weeks or days ago. 12 So, I am going to work out kind of a partnership 13 with you all to come up and testify before us. If I have 14 heard it two, three, four, six times in a row, I am going 15 tell you that, and we are going to get on to things that are 16 new, or different, or a different take. 17 So, what we are going to do is we are going to call 18 up the first group, if you will, and I am going to ask each 19 of you to try to limit, from this group, try to limit your 20 remarks collectively, as it appears there are four of you, 21 you know, I am willing to give this group, you know, upwards 22 of 10 minutes each to make their points, but if you want to 23 tag team and use each other's time and use each other's 24 ability to make a point, that is fine. 25 This would be Kim Leichty from PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 174 1 Husqvarna/Frigidaire, Larry Will, Tom Griswold. Larry Will 2 is from Echo. Tom Griswold is from John Deere Products, and 3 then Mac Dunaway and Jim Lyons are from PPEMA. 4 So, I would ask all of you to kind of cue up 5 somewhere. Anne, maybe you could help them out as far as 6 where they sit. 7 Then the next group after that is going to be a 8 smaller group made up of the Landscape Contractors 9 Association and the Nurserymen. 10 Okay. Now, the reason that I am giving this group, 11 so my Board understands it, is this is the PPEMA, the core 12 group, and there has been some contact with Mac Dunaway and 13 others to, you know, package it, so that is why I am giving 14 them a little bit more time individually. 15 So, Kim, if you would come forward and then Larry, 16 be on the heels, Tom Griswold, Mac Dunaway and then Jim 17 Lyons. 18 If you would indicate if we have written comments 19 already and that kind of thing, so we can flip through our 20 papers and follow-up. 21 I apologize if I mispronounced your last name. 22 MR. LIECHTY: That was close enough. Good 23 afternoon, and thank you for the opportunity to speak today. 24 My name is Kim Liechty. I am Director of Product 25 Development for Frigidaire Home Products, and that does take PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 175 1 a little bit of explanation. 2 My comments today will be on behalf of 3 Poulan/Weedeater, who is the company that I directly work 4 for, and Husqvarna. 5 This first slide talks about us. The Frigidaire 6 Home Products Division is a business unit comprised of 7 Frigidaire Home Products, which manufactures White Goods, 8 American Yard Products, who does mowers and tractors, and 9 Poulan/Weedeater, who manufactures hand-held products. 10 We do manufacture our products for selling 11 globally. They are focused on the homeowner consumer for the 12 Poulan/Weedeater Division, and the professional side for 13 Husqvarna. 14 We have been in the business of developing and 15 producing these products, which primarily has focused on 16 two-stroke, but I will get into some of those technologies in 17 a minute, for over 51 years. 18 Our major retail customers are Sears, Home Depot, 19 Wal Mart and Lowes. This is the majority of the products 20 that both Husqvarna and Poulan/Weedeaters manufactures. They 21 are again, hand-held trimmers, blowers, chain saws, edgers 22 and hedge trimmers. 23 One of the things that I might mention really 24 quickly is a lot of the focus that we have been talking today 25 on, which you saw demonstrated earlier this morning out on PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 176 1 the table, was strictly for trimmers. 2 Now, there has been a lot of conversation, and some 3 companies stating they can make other products, but as you 4 noticed, a lot of those technologies were geared for, and the 5 products you saw, were string trimmers only. That still 6 leaves blowers, chain saws, edgers and hedge trimmers without 7 a technology for some of those. 8 This slide shows some of the technologies that we 9 are currently manufacturing. The first four bullets deal 10 strictly with Poulan/Weedeater. 11 We manufacture two-stroke equipped products. We 12 manufactured 3.9 million this year. 13 Over one million of those will be sold retail 14 for $69. Now, you heard earlier, the price difference that 15 staff talked about on the four-stroke trimmers with a 16 comparatively equipped two-stroke trimmer, the problem is 17 that you still have these $69 trimmers that will need to be 18 replaced with something, the only other alternative out there 19 currently was that four-stroke that we talked about. 20 We also manufacture 3.3 million electric products, 21 and they retail between $19 and $119, a half a million 22 battery powered products per year, and 2500 solar equipped 23 lawnmowers. 24 Husqvarna on the other side is about a third of 25 each of those, so you can add in a third of each of those PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 177 1 numbers for the Husqvarna volumes. 2 This slide deals with a bit of past emissions 3 history. I want to take just a minute, this is in grams per 4 horsepower hour of hydrocarbons. 5 The first group of three bars reflects prior to any 6 regulation. What you see happen with both the EPA Phase I 7 and California Tier I is that there was approximately a 34 8 percent reduction from each class of engines, Class 3, 4 and 9 5. 10 Then in EPA Phase II, there is again another 30 11 percent reduction, and then we have the staff's proposal for 12 the Tier II. 13 This basically set the stage of one, why was there 14 three classes for hand-held? 15 Well, originally it came from, they started at 16 unique levels, and we took an even reduction from each of 17 those product categories, and also, there is price 18 sensitivity in each of those categories that I will address 19 in a minute. 20 This slide is almost impossible to read in black 21 and white, and I apologize because that is the copies that 22 you have, it also is very busy, but it does a good job of 23 showing exactly what each of the standards does for the 24 different years and for the different classes. 25 If you look at the upper left-hand corner, it PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 178 1 starts out with Class 3, which if you look to the bottom of 2 the left-hand corner is from zero to 20 CC's, which is Class 3 3 for hand-held. 4 Class 4 goes from 20 CC's to 50 CC's, and Class 5 5 goes from 50 CC's and up. The red line that goes 6 horizontally across the screen, and is broken at 220, 180 and 7 120, is the California Tier I emission levels. 8 The blue line that is broken evenly with it is EPA 9 Phase I, which adopted the California Tier I levels. 10 The next line down, which is the 156, 128 and 86 11 levels, represents the EPA Phase II levels. The final line 12 on there, the 54 grams per horsepower hour, is a standard 13 that staff is proposing for Tier II. 14 A couple of things of significance that I want to 15 note here, major differences between these standards, Tier I 16 and Phase I, which is the blue and red line, were new engines 17 only. 18 The next two are in-use, meaning the engines must 19 comply throughout their useful life. That is a big 20 differential, mostly from an emissions standpoint, but also 21 from a durability standpoint from the manufacturer. 22 The other notable thing on this chart is that you 23 see it's 54 grams across for all engines. Class 3 are the 24 $69 trimmers that I spoke about earlier. 25 They are the most price sensitive. They also are PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 179 1 requiring the largest reduction under staff's proposal. 2 There is 75 percent reduction from Tier I levels to 3 the 54 grams. The Class 4 is approximately 70 percent, and 4 the Class 5 is a little over 50 percent. 5 This chart is not totally up to date, but what it 6 reflects is if you pull out the inventory in tons that is 7 generated from the hand-held product category, where are the 8 tons coming from, and this was generated off of the inventory 9 model that was in place in December of 1997, so it is a 10 little bit out of date, but the levels are pretty much the 11 same. 12 It shows the overwhelming majorities from chain 13 saws and then trimmers are a little under 30 percent and the 14 blower category is a little over 20. 15 What it does show is that Class 3 is right around 16 three percent of the total inventory. This is the same class 17 of engines that staff has asked for the largest reductions 18 from and, also, the most price sensitive. 19 I noted earlier that some of the technologies we 20 are already manufacturing. We are not embracing two-stroke 21 because it's only technology out there. 22 It does happen to fill a niche, and it has 23 fulfilled our customers needs and the requirements of the 24 products we manufacture for a large number of years. 25 The technologies we have looked at for future PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 180 1 application are tolerance control, and I will show you a 2 chart in just a minute on how it applies to the potential 3 reductions versus the cost. 4 Tolerance control is nothing more than tightening 5 down the tolerance of the components that relate to 6 emissions, being the piston, the cylinder, the carburetor, 7 those kind of components, and there a good share of emission 8 reductions that can come from those components. 9 It does cost money though. It requires new 10 equipment. 11 For example, this year and the following year, we 12 will purchase new machines to machine our pistons that go 13 into our two-stroke engines. These machines cost a million 14 and a half dollars apiece. 15 It allows us to go from a tolerance of three to 16 four-thousandths between the cylinder to half a thousandth. 17 Half a thousandth is less than the size of a human hair. 18 Enleanment is another strategy that has a lot of 19 potential, and we have focused a great deal on that. 20 It requires, also, improved cooling systems to 21 account for the cylinder distortion that goes with the leaner 22 mixture. 23 Two-stroke engines and four-stroke engines, from 24 air cooled engines, receive some of the cooling benefit from 25 the fresh charge that comes into the engine. So once you PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 181 1 have removed some of that charge by enleanment, you have less 2 cooling to cool the piston cylinder. 3 Porting and combustion chamber changes and 4 stratified charge and air scavenged, you all are going to 5 hear about, I would like to lump those together a little bit. 6 Those hold a lot of promise for two-stroke engines at a 7 fairly reasonable cost. 8 They are not new. We have worked with these for 9 over five years. 10 It does require very extensive testing and 11 development to perfect these types of technologies, and then 12 you have fuel injection in four-stroke. 13 The one thing that I do want to talk about on 14 four-stroke is Poulan/Weedeater has manufactured two 15 different types of four-stroke prototypes in the last 10 16 years, one that was geared towards trimmers. 17 The unique thing about the trimmer application is 18 that it required a premixed fuel, like a two-stroke engine, 19 thus eliminating the need for a crank case oil reservoir and 20 also promoting better all-position use. 21 The second type of engine, four-stroke, that we 22 produced was applied to our chain saws. That did not utilize 23 the premix as the trimmer engine did. 24 Both of these applications run into problems during 25 the development cycle. I will talk about that in a minute. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 182 1 The major problems with using that technology, from 2 my company's perspective, was cost and weight, and the third 3 one was durability. 4 Our cost to produce the trimmer that we had 5 designed and tested was $165. It did not meet our durability 6 requirements with our field crew, which was tested side by 7 side with our comparable two-stroke products. 8 The four-stroke product for the chain saw was 9 discontinued for two major reasons. One, the cost was double 10 of the current two-stroke product, and secondly, the size and 11 weight was over double the current two-stroke product. 12 I might also mention that in order to obtain the 13 required horsepower for the four-stroke chain saw, the 14 displacement was well above the preempted class of 45 CC for 15 the four-stroke. 16 I'm not going to spend a lot of time with this, but 17 I will say that the first three technologies are the one's 18 that we believe have a lot of promise because the potential 19 for reductions versus the added cost is the greatest, those 20 technologies being tolerance control, enleanment, catalyst 21 and it's called stratified charge, but it's really different 22 types of charging in the cylinder, not just stratified. 23 The red bar represents the relative cost, the blue, 24 the percent reduction, and these are averages, not the 25 maximum or minimum. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 183 1 I have taken four of our engines, latest version 2 engines, and done a comparison. What you will see is the 3 bottom bar, there is a 24 CC trimmer, a 20 CC blower, a 4 54 CC chain saw and a 60 CC chain saw. 5 These engines were designed for the California 6 Tier I standard and the EPA Phase I standard, which went into 7 effect January 1 of this year, for the chain saws, the chain 8 saws are preempted from the California regulation. 9 What you will see there is fairly low numbers. The 10 dark or the gray blue bar represents if you put that engine 11 on a dynamometer and run it, what value do you get? 12 For example, let's look at the 54 CC chain saw. 13 You see a value of approximately about 75 to 80 grams per 14 horsepower hour of hydrocarbons. 15 The darker blue bar directly on top of that shows 16 the certification value that we must adjust the engine to all 17 parameters, meaning the rich and lean limits of the 18 carburetor. 19 That shows that in order to certify that engine we 20 would have to go to the top of the blue bar, which is about 21 90 grams per horsepower hour. 22 On top of that the lighter blue bar represents the 23 variations, and we call it head room that we require to 24 account for the variations in manufacturing tolerances that 25 we have. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 184 1 So you can see, there is -- the other thing that's 2 not added in on this chart because it doesn't apply to 3 Tier II and Phase II, is deterioration because these engines 4 are designed for a new standard only. 5 Deterioration would also have a bar on top of that 6 that we would have to account for. This chart is real busy, 7 and I am not going to talk in detail about it, but what it 8 shows is the investments that we have made as a company 9 towards emission reductions. 10 It includes the technologies we have explored for 11 engines, the equipment that we have purchased, the 12 facilities, the tooling that we have modified, the 13 manufacturing equipment and the staff. 14 Basically, this represents a $45 million investment 15 from 1990 to 1998. Some of those are technologies that were 16 explored and never incorporated and others, well you can see 17 there is a peak about 1994 and 1995 when the first Tier of 18 California standards went into effect. 19 So, there is a substantial investment just to stay 20 in business. There are a number of technologies that we have 21 explored that I talked about earlier that are not ready for 22 production yet, that are represented in this chart. 23 There are some issues that I touched on briefly 24 before, but issues that are going to require changes in our 25 products. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 185 1 First of all, the standard that is being proposed 2 today is an in-use standard versus the new standard, and I 3 showed you in the bar chart the effect that will have on us 4 as manufacturers. 5 The second one is new technologies versus our 6 ability and performance. We have a very good track record 7 with the technologies that we are using today. 8 Many of the technologies in the development cycle 9 take several years to prove out. Are they durable in the 10 customers hands? 11 Ultimately, we as manufacturers can make the most 12 product in the world that we feel, and you as regulators can 13 promulgate the best standard for the finest air quality that 14 you could hope for, but what is going to decide whether these 15 products are successful or not is the customer that must use 16 the product. 17 Will it perform for him? Is it durable? Does it 18 meet his expectations? Is it a good value for the price he 19 paid? 20 Then cost versus volume. Obviously, if the cost 21 goes up tremendously, our ability to amortize over volume, 22 that cost, or spread that cost over the volume is reduced, 23 and it becomes a vicious cycle. If the price goes up, the 24 volume goes down and round and round. 25 Then we also require some form of stability versus PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 186 1 the investments that we have made. A lot of the investments 2 you saw in that real busy chart were made at the expense of 3 components or products that were foregone. 4 They cost money to design and develop and that 5 money went into emissions development rather than new 6 products. 7 I will run through this quickly. This is the 8 product development cycle that we have developed over the 51 9 years of the history of our company. 10 The first office to build a prototype, to prove the 11 concept, does it work? Then there is some testing and debug 12 of the prototype, does it meet some of our needs that the 13 design intended, and then the next stage is to design that 14 prototype so it can be manufactured and can be tooled. 15 The next step is to invest in tooling and develop 16 the tooling to go into production with it. Then you must go 17 back and refine durability and quality based on the changes 18 that were made to the manufacturing and tooling. 19 You must check for standards compliance, not just 20 air quality, but there are safety standards and user 21 standards that are in place, fire safety, U.S. Forest 22 Service, those types of standards, then the next step is to 23 go into a pilot production and do some testing, verification 24 and validation of those products based on the pilot 25 production run. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 187 1 When a project is first started there are a set of 2 parameters that are developed that include cost. Once you've 3 reached the pilot production stage, you must go back and 4 verify, does the product meet those intents and will it still 5 meet the standards? 6 Sometimes there's manufacturing changes that we 7 have to go back and then redefine the product to make it meet 8 those standards. 9 Then comes production, and we call this an 10 experimental stage, because there are still three major 11 hurdles that the product has to go through. 12 Does it meet the marketing sales needs? Can they 13 sell it, market it to our customers? Are the customers going 14 to accept the product whether it be the features, function or 15 price? 16 And then, are the customers going to perceive the 17 quality and durability as a value to them? 18 Then finally, after it stood that test, the product 19 does become an acceptable market proven product, and we 20 consider it a success. 21 The conclusions, you have seen the major 22 investments that our company has made, Husqvarna and 23 Poulan/Weedeater. I have also shown you that we feel there 24 are several technologies that have some potential. 25 We do feel that the timeframe that the staff is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 188 1 proposing is compressed, and that compressed timeframe has 2 some high risks. 3 Those high risks are the potential for new 4 products, new technologies that will fail in the marketplace 5 for the reasons that I have mentioned earlier. 6 There is also the risk that promising technologies 7 that require a long lead time to develop will be abandoned 8 because of the shorter time period, and also there is a 9 potential for higher cost with less emissions reductions 10 versus time. 11 Some of the technologies that we have discussed do 12 take a considerable amount of time to develop but have a very 13 high potential for the future. 14 Finally, I have been very patient and not spoken 15 out against some of the issues that I felt strongly about, 16 and I feel it is time to do so. 17 I have worked in air quality for about four and 18 half, five years now, and without exception, every one of 19 these meetings that I attend, there are a number of investors 20 or entrepreneurs that are looking to profit from the 21 regulations. 22 They bear no responsibility or accountability. It 23 is solely on the shoulders of the manufacturer. 24 When you regulate a product and propagate those 25 regulations, it is the manufacturer of that engine and that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 189 1 product who has responsibility to maintain the emissions over 2 the useful life of that product, not the investors who come 3 and show you the wonderful new technology that holds promise. 4 They are not liable. We, as manufacturers, are. 5 Lastly, you are going hear a little bit from some 6 of the other people of the PPEMA proposal, which is 125 grams 7 per horsepower hour for zero to 20 CC's, and that recognizes 8 two of the issues that I brought up earlier, one that the 9 Class 3 products are very cost sensitive, and two, that their 10 ability to meet the regulations is much more difficult 11 because of the small displacement, and it also recognizes an 12 even reduction from that class of engines compared to the 20 13 CC and above, and finally, the 86 grams per horsepower hour 14 for 20 CC's and above. 15 We do support this PPEMA position, and it will be 16 explained further by Mac Dunaway. 17 CHAIRMAN DUNLAP: Thank you, Kim. I appreciate it. 18 Any questions of the witness? 19 Mr. Calhoun has one. 20 BOARD MEMBER CALHOUN: I have two. 21 Mr. Liechty, you mentioned, made reference to the 22 equipment that was shown out in the, next to the building 23 this morning, and you said that was all for trimmers. But 24 the Ryobi equipment has some attachments that would fit for 25 the other categories. You omitted to mention that. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 190 1 MR. LIECHTY: I didn't see that, because we weren't 2 invited to participate. 3 BOARD MEMBER CALHOUN: All right. One other 4 question, very quickly. 5 I'm looking at the product development cycle, what 6 kind of time are we talking about here? 7 MR. LIECHTY: Well, it depends on the product. 8 Normally, two years is pushing it. Again, it 9 depends on the amount of development that is required, how 10 far along the technology is and the required investment, 11 usually in dollars of capital. 12 It can stretch out as long as ten years. We have 13 been working with, for example, we spent a billion dollars 14 with a company that you may have heard of, BKM, researching 15 fuel injection. 16 We spent three and a half years working very 17 diligently with them and very hard. We assigned three 18 engineers to work with them, and it never delivered on any of 19 the promises that were made by BKM, and we were incapable of 20 helping them over the very rough breadboard prototype stage. 21 BOARD MEMBER CALHOUN: What is the typical product 22 development cycle? 23 MR. LIECHTY: Without a new technology, if you use 24 an existing technology and you want to put it into a new 25 product or a new feature, it's typically 18 months. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 191 1 That's an average. Some are less, and some are 2 more. 3 CHAIRMAN DUNLAP: Okay. 4 Any other questions of the witness? 5 Very good. Thank you, Kim. 6 Larry Will, from Echo. 7 MR. WILL: Mr. Chairman, Members of the Board, my 8 name is Larry Will, and I am Vice President of Engineering, 9 at Echo, Incorporated. 10 We are located in Lake Zurich, Illinois. We 11 manufacture commercial quality lawn care power products for 12 the 20 to 60 CC displacement category. 13 I would like to explain why we cannot meet the 14 staff proposal of 54 grams per horsepower hour HC plus NOx. 15 It's not possible for us to maintain 54 grams per 16 horsepower hour HC plus NOx as a corporate average because we 17 need head room to allow for manufacturing tolerances and 18 deterioration of performance over the life of the engine. 19 It does not matter what type of technology is used 20 to achieve this level. All engines will be subject to 21 manufacturing variations, and there is no affordable way to 22 automatically adjust for these deviations. 23 An automobile is able to achieve to maintain 24 emissions levels through the use of computers and 25 sophisticated sensors. The cost to the owner of a car with PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 192 1 such a system is well over a thousand dollars. 2 Obviously, this method of controlling emissions is 3 not economically feasible on hand-held power products such as 4 those in our industry. 5 Another method to achieve 54 grams, which is the 6 one recommended by the staff proposal, is to use four-stroke 7 engines. 8 For the volume of products sold in California, 9 absorbing the cost of what amounts to building a new 10 manufacturing facility, is simply not realistic for our 11 company. 12 For commercial applications, four-stroke engines 13 remain unproven and essentially experimental when one 14 considers the rough handling these products receive in actual 15 application. 16 Our field tests seen on existing four-stroke 17 engines has uncovered several endurance and performance 18 problems. 19 Four-stroke technology is not new and has been 20 considered for our products in the past, but over the past 50 21 years two-cycle engines have become the design of choice, 22 because they are the most powerful and the most reliable 23 alternative. 24 All other methods are unproven and experimental at 25 best. Even some of these, such as fuel-injection, will PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 193 1 remain infeasible due to their high cost and unreliability. 2 What is available and most cost effective in 3 building an engine to a higher level of precision applying a 4 fixed jet carburetor and adding a catalyst, this is the 5 method that we are developing for our products. 6 We have learned through the manufactured Tier I 7 products that in order to meet 180 grams per horsepower hour, 8 or HC plus NOx, for a Class 4 engine, we must develop product 9 capable of 135 grams per horsepower hour. This provides a 10 head room of 45 grams. 11 On a prototype engine being designed for Tier II in 12 the laboratory, we have been able to meet 41 grams per 13 horsepower hour after two years of development and 14 experimentation. 15 This engine is hand built under ideal conditions, 16 very precise and without variables. Comparing this to the 17 proposed standard of 54, we have only 13 grams of head room. 18 This is simply not enough to allow for 19 manufacturing variations in the engine and in the emissions 20 components on the engine. 21 Realistically, since this is our only alternative, 22 we must have a standard of 86, which is what the PPEMA 23 proposal will be. 24 When 10 identical production engines with design 25 parameters of four percent CO were tested, we saw a low of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 194 1 two and a half percent and a high of six percent. 2 Measuring CO on the assemblyline is a quick and 3 reliable way to indicate what is happening to the emissions 4 level. 5 Normally, more CO means more hydrocarbon emissions. 6 This simple test proves that significant variations do exist. 7 In addition, we must consider the deterioration 8 factor. Although two-cycle engines do not significantly 9 deteriorate over time, catalysts do. 10 They are subject to failure due to vibration as 11 well as simple contamination. I don't think anyone knows for 12 sure what would happen to a catalyst on a small engine over 13 the 300 hour durability requirement in the real world. 14 Remember, we have commercial products. It's 300 hours. 15 The type of fuel, the additives, the type and 16 amount of oil used will impact the life and performance of 17 the catalyst. 18 Even running the unit on the choke for extended 19 periods can do damage. All of these variables are out of the 20 manufacturer's control, but we must still allow for the 21 deterioration caused by them. 22 It's not possible to maintain 54 grams per 23 horsepower hour, the HC and NOx, as a corporate average 24 because of the defects of manufacturing tolerances and 25 deterioration. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 195 1 Even at 86 grams per horsepower hour, we are not 2 certain that we will be able to meet the regulation with all 3 of our products. 4 Small chain saws, for example, will not be able to 5 use higher efficiency catalysts because of the added fire 6 hazard this might create. 7 It will take an aggressive effort to achieve 86 8 grams as a corporate average and will require a diligent 9 effort to quality control in order to maintain it. 10 We are determined to meet California's SIP goals 11 while providing an affordable product for our customers in 12 California. 13 We believe the PPEMA proposal will allow us to meet 14 these goals, which you will hear a little later, and we urge 15 California Air Resources Board to accept the proposal as 16 submitted. 17 It will provide the head room needed to be able to 18 manufacture products with the new regulation. 19 Thank you. 20 CHAIRMAN DUNLAP: Thank you. 21 Any questions of the witness? 22 Yes, Ms. Edgerton. 23 BOARD MEMBER EDGERTON: Could you tell me please, 24 sir, if you have any manufacturing facilities in California? 25 MR. WILL: No, we do not. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 196 1 BOARD MEMBER EDGERTON: Is the Lake Zurich, 2 Illinois, your only manufacturing facility. 3 MR. WILL: We are a part of a company called Kirtz 4 Corporation, which is stationed in Japan. They are the 5 actual manufacturer of the engines we use. 6 We take these engines and manufacture the products 7 that we sell in California. 8 BOARD MEMBER EDGERTON: So, you assemble them in 9 Illinois? 10 MR. WILL: We assemble in Illinois, that's correct. 11 BOARD MEMBER EDGERTON: How many dealers do you 12 supply in California? 13 MR. WILL: Unfortunately, I can't give you that 14 answer. 15 I might be able to find out for you. 16 BOARD MEMBER EDGERTON: Do you have a gross revenue 17 from California, a figure? 18 MR. WILL: I don't have those numbers for you. 19 I can tell you that we sell about 63,000 units in 20 this State. 21 BOARD MEMBER EDGERTON: 63. Thank you. 22 That's helpful. So, you have significant sales. 23 MR. WILL: Well, we have 63,000 total units, but we 24 have 17 different engine families. 25 So, any one family is really relatively small in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 197 1 volume. 2 BOARD MEMBER EDGERTON: I just wanted to be sure 3 that I understand Echo's position. 4 Is it your understanding that the California Air 5 Resources Board staff proposal that's before us today bans 6 all two-cycle engines in California? 7 MR. WILL: Well, I wouldn't call it a ban, but what 8 it's doing is it's making it necessary for us to go to some 9 technologies that we feel we can't afford to put on these 10 units and don't feel that four-cycle for us is a solution 11 because of its performance and its durability. 12 BOARD MEMBER EDGERTON: Are you aware of a letter 13 written by Joseph V. Rund, Vice President of Sales and 14 Marketing of Echo, February thirteenth, to Echo dealers in 15 California? 16 MR. WILL: Which letter would that be? 17 BOARD MEMBER EDGERTON: I will let you see it in 18 just a second, but it's a one-page letter by Mr. Rund, and 19 the second paragraph, well, the first paragraph says, 20 "Dear Echo Dealer: Recently you 21 received the attached letter from Bob Hurst, 22 President of Golden Eagle Distributing. 23 "Bob strongly urged you to mail it, your 24 own version of it, to Governor Pete Wilson and 25 Members of the Air Resources Board. These PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 198 1 politicians are trying to eliminate all gas 2 two-cycle engines from California. 3 "If you do not act to stop these politicians, 4 Tier II will become law, and you will not be able 5 to sell any two-cycle products in California." 6 Can you tell me why your company has written 7 California dealers and told them that the proposal was to ban 8 two-cycle engines? 9 MR. WILL: It's my feeling that's the way the 10 proposal is written, at 54 grams, it's intended for, and I 11 think we heard testimony from staff themselves, that you will 12 be needing to go to four-cycle engines, or some advanced form 13 of technology, perhaps fuel-injection, which is simply, to 14 us, not economically feasible, and it puts us in a position 15 where we don't have a product available to meet the 54, even 16 though we are spending a great deal of time and effort to try 17 and meet that. 18 As you know, and as I said, we are at 41 in the 19 laboratory, but I think when you get into production 20 situations, we are not going to be able to maintain that 21 standard. 22 We know that from experience with Tier I. 23 BOARD MEMBER EDGERTON: Would you agree that this 24 is a misleading statement, these politicians are trying to 25 eliminate all gas two-cycle engines? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 199 1 MR. WILL: You are asking me to defend something I 2 didn't write, so I don't know how to answer that for you. 3 BOARD MEMBER EDGERTON: Well, that's -- you know, 4 obviously you are -- I respect your decision not to. 5 Well, I'm just -- it's quite a concern that this 6 has been represented by your, I mean, to me, by your Vice 7 President, that a proposal that we have made has been 8 represented as a ban on two-cycle engines, when I am aware of 9 in 1996 there having been testimony that we would expect them 10 to be coming along. 11 I mean, even the two-cycle engines, two of them 12 that were out there this morning, which are apparently ready 13 to go on the market, are not quite on the market, they are 14 two-cycle engines, and they meet the proposed 54 grams 15 standard; is that correct? 16 MR. WILL: I don't think that we know that they do 17 over 300 hours. 18 MR. CACKETTE: The manufacturers of the two engines 19 that you saw this morning have submitted applications for 20 certification. 21 That means they are willing to live up with the 22 durability period that they have selected, their emissions 23 were below 54 standard, so they have head room, which is one 24 of the issues that Mr. Will brought up, and in fact, one of 25 them, I think, was almost 30 grams. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 200 1 They are both intended to be sold either this year 2 or by the end of this year. 3 BOARD MEMBER EDGERTON: Mr. Cackette, would you 4 kindly refresh my memory as to what the names of those two 5 companies are? 6 MR. CACKETTE: One was, they are both, both 7 products you saw were in the commercial range, and they were, 8 one was Komatsu Zenoah, which is a stratified charge 9 two-stroke, and the other one was Tanaka, which is stratified 10 charge plus catalyst, and we also indicated to you this 11 morning that the technology that Mr. Liechty said they had 12 abandoned, which is the BKM fuel-injection, again designed 13 for a higher-end product, that they had abandoned it, and in 14 fact, the one manufacturer, Tanaka, has plans of trying to 15 commercialize that fuel-injection system. 16 BOARD MEMBER EDGERTON: Thank you. 17 Mr. Will, I would ask that you take the message 18 back to your Mr. Rund, that I, for one, would appreciate his 19 sending a letter clarifying his position here, because I do 20 feel that this is a letter that has come in from 21 out-of-state, misrepresenting to Californians what the 22 California Air Resources Board is doing and getting them 23 quite alarmed. 24 So, thank you, very much. 25 CHAIRMAN DUNLAP: Any other questions for the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 201 1 witness? 2 Thank you, sir. One of the things, just in 3 passing, maybe to give you a context for, I think, 4 Ms. Edgerton's concern, is we have been pushing staff pretty 5 hard in this process, collectively as a Board, to make sure 6 that they are open and taking people at their word and 7 straight-up. 8 So, when you get advocacy that perhaps 9 mischaracterizes, or inflames, or encourages letter-writing 10 campaigns based upon false facts, it is a concern to us. We 11 feel like people aren't dealing with us straight-up. 12 So, you know, the intent of this process is to hear 13 from you all on honest points, and points of disagreement, 14 but, you know, if this kind of thing occurs for anybody that 15 is testifying, you know, we are public officials, and I 16 wouldn't characterize us as politicians per say in this role, 17 and we reserve the right to ask those questions. 18 So, next witness please. Mr. Griswold, from 19 John Deere. 20 MR. CACKETTE: It was just pointed out to me that 21 the durability period for the two pieces of product that we 22 showed this morning, or described this morning, are 300 23 hours, the two two-strokes. 24 The four-stroke, which was a residential product, 25 is for the shorter period. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 202 1 BOARD MEMBER EDGERTON: Thank you for the 2 correction. 3 CHAIRMAN DUNLAP: Okay. Mr. Griswold. 4 I guess Mac and Jim Lyons are following you, and 5 so, we are crowding 50 minutes, so I would like to get 6 moving. 7 MR. GRISWOLD: I'll be brief. 8 My name is Tom Griswold. I am with John Deere 9 Consumer Products. 10 Thank you for the opportunity to present these 11 comments to you. I had a few minutes ago distributed a 12 written copy of those comments. 13 I am going give you the Readers Digest condensed 14 version. We are a manufacturer of small hand-held gasoline 15 powered outdoor equipment and tools, string-trimmers, 16 blowers, chain saws, that we have been talking about. 17 You will probably recognize the brand names, 18 Homelite, John Deere and Green Machine. Particularly the 19 Homelite brand, we do occupy a significant share of the 20 consumer hand-held equipment market. 21 We are asking for approval of the alternative 22 regulation that will be offered by PPEMA. John Deere has 23 maintained a strong policy for environmentally responsible 24 products. Indeed it is even part of our visions and 25 principles. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 203 1 We embrace environmental innovation. We have 2 examined, we have developed, prototyped, licensed several of 3 these technologies that are under discussion. 4 We have significant financial investment. It has 5 been heavy in the engineering and testing expenses, 6 licensing, consultant fees, purchase and replacement of 7 production equipment, the tooling and so forth. 8 The objective of clean engines is shared by us. We 9 have explored many avenues. 10 Some of those avenues, however, lead to dead-ends. 11 That is thought, to us, the natural evolution of these 12 products. 13 The key in all of this, the driver for 14 technological change, to us, is the customer. This is most 15 often expressed by the customer with his pocketbook, or her 16 pocketbook, that is, the decision to purchase, or refrain 17 from purchasing the product. 18 However, there are constraints that, as 19 manufacturers, that we must contend with in order to have a 20 successful product. 21 First of all, the users acceptance of the 22 technology. Second of all, financial limitations, and third, 23 safety of the user. 24 The common element in all of this though, again, is 25 the user. If the manufacturer does not offer a product that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 204 1 meets the users needs at an acceptable price, and it is 2 protective of the user and others, the user is not going to 3 buy the product, and the manufacturer is going to cease doing 4 business. 5 Most business decisions, however, are made in 6 anticipation of these constraints, these purchaser 7 preferences, that is, we ask questions. 8 Will the product perform to the user's expectation? 9 Will a purchaser pay the price that is needed to produce the 10 product, and will the product be safe for use? 11 I am going address just briefly all three of those 12 issues. 13 First of all, user acceptance of the technology. 14 Staff's current preferred technology, the four-stroke engine 15 again, is not here. Mr. Liechty has already talked about 16 that, and we, too, I mean it goes back to the years when men 17 walked around in the woods with two-man chain saws. 18 However, there are still inherent limitations with 19 that technology that have not been overcome and disadvantages 20 that severely impact performance. 21 These problems persist, and I am just going to 22 enumerate them quickly. Limited multi-position operation, 23 that has not been resolved. 24 Weight, I don't know whether you were picking up 25 the equipment out there, but that has not been resolved. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 205 1 Deterioration of emissions performance, I do not 2 know where Mr. Carlock's statement a few minutes ago came 3 from. The four-stroke engines do not deteriorate, but it is 4 in direct contradiction. 5 Mr. Carlock's slide showed deterioration of 6 four-stroke engines. They deteriorate. 7 Crankcase oil replenishment requirements, crankcase 8 oil disposal to the environment. 9 User acceptance to us has not been demonstrated. 10 The evidence is there in the extent product returns of these 11 products, retailers rejection of them, including on one 12 occasion, withdrawal of the product, and announcements of 13 next generation micro four-strokes before even the present 14 generation has reached the end of its life-cycle, they must 15 at present be regarded as experimental. 16 Direct injection and stratified charge, we've 17 examined, analyzed, prototyped, developed them and still 18 found them to be lacking. 19 The proof is there in the fact that they are 20 completely, presently, absent from the market. Yes, I hear 21 they are coming, but they are presently absent from the 22 market. 23 The first unit has not come off the production 24 line, much less has there been true field experience, or 25 opportunity of acceptance of these products by the users. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 206 1 Finally, the unspoken alternative that keeps 2 getting slipped in through the back door, electric products. 3 I am going to make three points. Electrics are now 4 available. They have been available for years. 5 Their price is comparable, at prices comparable to 6 and competitive with the low-end opening price point gas 7 trimmers, yet purchasers and users still have a need for, 8 and do purchase the gas powered units in large volumes. 9 Why? 10 Convenience, utility, labor savings, safety and 11 durability. 12 Second, I hate to enter this area, but I am going 13 to do it again, electric power consumption does come at an 14 environmental cost. 15 The cost of electric power for electric hand-held 16 products are significant. They have not been analyzed. 17 Third, battery powered products also have an 18 environmental cost. The introduction of heavy metals into 19 our water systems as a result of an increased uncontrolled 20 battery usage presents a serious danger. 21 Furthermore, if electric products are seriously 22 considered as alternatives in this regulation, the 23 technological feasibly and acceptance, the financial cost, 24 the safety implications, the environmental impact merit close 25 scrutiny, and that project is not even begun. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 207 1 It is to me procedurally unfair to base a rule or 2 regulation on an undeclared rational or justification that's 3 not been fully evaluated. 4 Financial limitations, and I will be brief on this 5 point because there is more to come on this, if there has 6 been an honest accounting of financial cost for adoption of 7 four-cycle technology, it will demonstrate the loss of major 8 markets to hand-held product manufacturers. 9 It will show restrictions on product availability. 10 It will show resulting cost to the public for no real added 11 benefit to the environment. 12 Two points I wanted to make. First, the cost of 13 converting to four-cycle technology, as has been presented by 14 the staff, is grossly underestimated. 15 We conducted a detailed analysis line by line of 16 the EFFE report, that is the basis of the staff's report, 17 there are many, many areas in which parts are left out, costs 18 totally underestimated, production volumes inflated, and so 19 forth. 20 The incremental price increase of $66 for a high 21 volume family is what we see. That raises an opening price 22 point unit to $135 from $69, and the average price about 23 $156. 24 The second point, quickly, is that market 25 sensitivity to reasonable price increases can be tolerated, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 208 1 but if price increases on the scale of what we are talking 2 about for conversion to four-stroke technology, that will 3 lead to severe product unavailability and extreme user 4 dissatisfaction. 5 Then, I want to make one final observation, there 6 has been often times expressed scepticism about manufacturers 7 estimates of cost, they say they are exaggerated, they're 8 blown out of proportion, and so forth, and then years later, 9 that price increase is not there. 10 I don't think that is a fair way of looking at it. 11 If you only look at price increases, I think it is hellacious 12 and misleadingly simplistic. 13 Such an approach fails completely to look at 14 internal company costs and margins, profits or the absence of 15 profits, restructures of companies, competitive and market 16 dynamics. 17 Take an example, the Tier I rule, prices did not 18 rise simply because the manufacturers absorbed those costs. 19 Margins were squeezed, profits reduced, eliminated 20 or losses incurred. Companies cannot continue to absorb 21 increased costs indefinitely. 22 Ultimately, that practice is going to lead to job 23 losses. 24 Finally, product safety, just a few remarks. I 25 come from a product liability background. I am very PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 209 1 sensitive to this issue. 2 It's really received no consideration. Product 3 safety, that is the immediate risk of personal injury or 4 property damage to user. 5 It is the last thing that a responsible 6 manufacturer wants to see happen, that is, injury to the user 7 of the product. 8 This issue has not been analyzed. Just by way of a 9 few examples, fuel and fuel vapor exposures to ignition 10 sources from new technology, malfunction of engines during 11 critical operations, increased use of electricity in 12 unfriendly environments, worker fatigue from the heavier 13 weight of four-cycle and larger preempted products, increased 14 damage from fire as a result of unavailability of products 15 that are needed for clearing and material removal. 16 For us, there can be no trade-off when it comes to 17 safety. The staff may believe it is acceptable practice to 18 send out unproven, unreliable technology into the field, but 19 if there is a safety hazard that is introduced, it is not 20 acceptable to us. 21 I appreciate the opportunity of making these 22 comments. We do believe that with the flexibility allowed by 23 the PPEMA alternative, that we will be able to make products 24 available to meet the needs of users, and at the same time 25 provide products that respond to the air quality issues. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 210 1 I would be happy to respond to questions. 2 CHAIRMAN DUNLAP: Thank you, Mr. Griswold. 3 I certainly want to acknowledge the fine reputation 4 of your company and its commitment to quality and for 5 bringing forward new technology historically. I appreciate 6 that. That does not go unnoticed by me. 7 Any questions or comments of the witness? 8 BOARD MEMBER CALHOUN: I have one question that I 9 would like to ask Mr. Griswold. 10 He mentioned the fact that no consideration is 11 given to product liability. 12 Now, I am absolutely certain any manufacturer 13 producing a product considers product liability. That is 14 sort of, in my mind, sort of inherent in the development of 15 the product. 16 If they are going to offer a product for sale -- 17 MR. GRISWOLD: I would certainly hope so, but I 18 have not seen the word, product safety, mentioned in any of 19 the staff's analysis. 20 I mean, are we saying that this is totally up to 21 the manufacturer? 22 There are more global concerns than just the 23 product, and one, again, example I give, is if we are talking 24 about increased use of electric products, we are talking 25 about more cords dragged around outdoors. That is not a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 211 1 consideration, typically, that a manufacturer would look at 2 when looking at a singular product. 3 BOARD MEMBER CALHOUN: I won't elaborate on that 4 point. 5 Let me ask one other question. 6 You mentioned the fact that staff's, at least, the 7 staff's perceived product of choice is four-cycle. I didn't 8 hear the staff give any kind of indication as to preference 9 for the type of technology. 10 We saw four-stroke technology this morning and 11 two-stroke technology. 12 MR. GRISWOLD: Right. 13 Two commercial, as Mr. Cackette pointed out a 14 minute ago, two commercial units with two-stroke technology, 15 with extremely high price increases associated with them. 16 I'm not -- my primary concern is not that 17 commercial market. We are in the consumer market with that 18 low-end product of where there is significant volume, very 19 low emissions contribution. 20 CHAIRMAN DUNLAP: Okay. Yes, Ms. Edgerton. 21 BOARD MEMBER EDGERTON: Do you have a manufacturing 22 facility in the State of California? 23 MR. GRISWOLD: We have distribution facilities 24 here. 25 We do not have manufacturing facilities. They are PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 212 1 located in the Carolinas. 2 BOARD MEMBER EDGERTON: Thank you. 3 It was a statement that you made that took me by 4 surprise. I wanted to ask Mr. Cackette to respond to it. 5 I found it in your written materials, so I'll quote 6 it, just to make sure that it is what you said. It's on page 7 three, in the middle of the page. 8 You said, without a detailed exposition of their 9 technical limitations -- here, I guess your -- why don't you 10 go to your page three, third full paragraph, when you are 11 talking about, we have examined, analyzed, prototyped and 12 developed them, these are announced or promised technologies, 13 and found them lacking. 14 Direct injection and stratified charge are, and I 15 am continuing to quote, are generic descriptors of a 16 multitude of different systems, and then in paren, we 17 maintain volumes of papers and patents describing various 18 attempts to apply these concepts to two-cycle engines, close 19 paren, then you said, without a detailed exposition of their 20 technical limitations, the proof of their nonacceptance by 21 users is their complete absence in the marketplace for 22 hand-held equipment. 23 MR. GRISWOLD: Yes. 24 May I explain? 25 BOARD MEMBER EDGERTON: Please. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 213 1 MR. GRISWOLD: Well, my point is, as also mentioned 2 by the volume in the parentheses, the volumes of papers and 3 patents describing these technologies, these technologies 4 have been around for decades. 5 The volumes -- 6 BOARD MEMBER EDGERTON: Can you be more specific 7 which one you are talking about, four-strokes? 8 MR. GRISWOLD: They are both direct injection and 9 stratified charge that is referenced at the beginning of that 10 paragraph. 11 What I am saying there is, yes, four-strokes, too, 12 but including direct injection and stratified charge that, 13 and four-strokes, too, have been around for decades. This is 14 not a new technology. 15 The paper patents on this stuff have been produced 16 for years and years and years, and yes, many attempts have 17 been made to commercialize those products unsuccessfully. 18 BOARD MEMBER EDGERTON: Well, my understanding, 19 from the display this morning, was that there are two, wait a 20 minute, I will let you all respond to this, because you 21 obviously want to. 22 So, Mr. Cross. 23 MR. CROSS: I guess that, I think what you are 24 saying is there are two products sitting on the table this 25 morning which are on their way to commercialization using PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 214 1 stratified charge technology, not fuel-injection, but 2 stratified charge. 3 BOARD MEMBER EDGERTON: Yes, thank you. 4 And then, also, there were, I think, three that 5 were four-stroke currently in the market place. 6 MR. CROSS: Yes. 7 MR. GRISWOLD: Would you like me to go through this 8 again? 9 I will be happy to, about my concerns with 10 four-strokes and direct injection and stratified charge? 11 BOARD MEMBER EDGERTON: No, actually, really, that 12 won't be necessary. 13 I just wanted it to be clear that they -- I wanted 14 to correct the record, that from what the staff has 15 presented, there is not a complete absence in the 16 marketplace. 17 MR. GRISWOLD: Yes, there is. 18 They are not on the market, stratified charge and 19 direct injection are not on the market. 20 BOARD MEMBER EDGERTON: Those two are going to be, 21 but the four-strokes are on the market, and you just -- 22 MR. GRISWOLD: That is not what I said. 23 I did not say four-strokes were not on the market. 24 If you would read what I said there, I said the direct 25 injection and stratified charge are not on the market. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 215 1 BOARD MEMBER EDGERTON: Well, I just, a minute ago, 2 asked if you included four-stroke, and I must have 3 misunderstood you. 4 I thought you were -- 5 MR. GRISWOLD: Yes, and I include four-stroke in 6 the fact that they have been around for decades. 7 There are thousands of patents on four-stroke 8 technology. 9 BOARD MEMBER EDGERTON: Well, then without further 10 adieu, we will just accept that this was limited to just be 11 stratified, to the specific two that we saw there. 12 MR. GRISWOLD: As far as their not being on the 13 market, and there is absolutely no field experience with 14 those units. 15 BOARD MEMBER EDGERTON: That would not be true for 16 the four-strokes. 17 I'm done. 18 MR. GRISWOLD: The problem with four-strokes, I 19 outlined at the top of page three, limited multi-position 20 operation, weight, deterioration of emissions performance, 21 crankcase oil replenishment requirements, crankcase oil 22 disposal to the environment. 23 BOARD MEMBER EDGERTON: I would like to -- I can 24 see that you feel strongly about this issue. 25 MR. GRISWOLD: I do. Jobs are on the line. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 216 1 BOARD MEMBER EDGERTON: And they are here, too, 2 sir. 3 I would like to make a comment on the general 4 fairness issue, just sort of to drop back and comment on life 5 at the California Air Resources Board with the Clean Air Act 6 and the California and Federal Clean Air Acts. 7 We see industry after industry sector come before 8 us finding it very difficult to comply with what we ask them 9 to do with our regulations. 10 Perhaps it would be of interest to you to know that 11 American Automobile Manufacturers Association presented a 12 chart to me showing that a California LEV automobile can 13 drive from Dallas, or was it Houston, one or the other, to 14 New York and back, round trip, twice, and emit an equivalent 15 amount of pollutants as a chain saw operating to 1995 16 standards in California for one hour. 17 There are a lot of issues here for us which go to 18 fairness in terms of we what we ask from one sector versus 19 fairness from what we ask of another sector. 20 So as you reflect on what is fair for us to ask you 21 to do, I ask you to be mindful that we have to be always 22 mindful of what we have asked of all the different sectors 23 and the tremendous effort that we have asked of them. 24 Thank you. 25 MR. GRISWOLD: I can appreciate that, and if I may PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 217 1 respond to that, we are also asking for just merely fairness, 2 and the proposal that we are making is not asking that you 3 cut us any break in that respect. 4 All that we are asking is that we be treated fairly 5 as well, and we are offering a proposal that gives the same 6 benefits as the staff's proposal. 7 CHAIRMAN DUNLAP: Thank you, Mr. Griswold. I 8 appreciate that testimony. 9 Mac Dunaway. We have a court reporter that needs a 10 break after you. 11 MR. DUNAWAY: Mr. Chairman, go ahead and take the 12 break now. I would like to divide my, what little time we 13 have remaining, between myself and Jim Lyons. 14 We have kind of a unified presentation for you. 15 For us, it might be easier, Mr. Chairman, if we went ahead 16 and took a break now. 17 CHAIRMAN DUNLAP: Fine. Why don't we take a five 18 minute break and give you an opportunity to stretch your legs 19 here, and then we will come back. 20 (Thereupon a brief recess was taken.) 21 CHAIRMAN DUNLAP: Go ahead, Mac. 22 MR. DUNAWAY: Thank you, very much, Mr. Chairman, 23 and Members of the Board. 24 You have a copy of my testimony, which I will 25 summarize. That is intended to supplement the written PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 218 1 comments that we have previously delivered to the Board and 2 to the staff. 3 I wanted to make a couple of points before I launch 4 into a summarization of the written testimony. It first has 5 to do with the useful life of the products that we represent, 6 and I'm sure that Tom Cackette did not mean to mislead the 7 Board when he said lifetime was seven years. 8 In fact, as the staff report demonstrates, the 9 average lifetime for commercial products is two years, and 10 average lifetime for consumer products is five. 11 Secondly, which again will relate to my written 12 comments, the 11 tons per day that was the difference between 13 the SIP numbers that the EPA Federal Phase II numbers and 14 staff's proposal, is based not on the emission rate in the 15 inventory that you approved but another one. 16 It is not based on 39 grams per horsepower hour. 17 It is, in fact, based on 22, so that you remember that and 18 don't forget it. 19 In other words, the benefits are not based on the 20 inventory that you proposed but instead on a number that we 21 found out about on Monday. 22 So, I know you know that we have some significant 23 problems with the staff proposal. We think it will 24 essentially mean the demise of low cost two-stroke hand-held 25 equipment. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 219 1 In response to that, we came up with an 2 alternative, which some of you allowed us to present to you, 3 which we presented to staff. 4 Our alternative will deliver emission benefits at 5 least equal to staff's proposal. It consists of several 6 elements. 7 The first element is that the hydrocarbon and NOx 8 emission limits for nonpreempted engines will be more 9 stringent than EPA Phase II, and they will be phased in over 10 a period beginning 2001 through 2003. 11 It will be divided into two CC categories, less 12 than 20 CC and 22, what we thought was 60 when we came, but I 13 guess now it is 65 CC. 14 Second, we are proposing a voluntary spillage 15 reduction program, which would include both preempted 16 products as well as nonpreempted products. 17 In other words, products that you cannot regulate. 18 There are approximately nine tons a day in spillage, 19 approximately four of which come from products that are 20 outside your jurisdiction and authority. 21 We believe that a spillage program can achieve at 22 least a 50 percent reduction in those numbers, that it can be 23 implemented quickly and will cover products that you cannot 24 cover. 25 Thirdly, we have suggested a scrappage program, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 220 1 which we would suggest be targeted to areas that have some 2 difficulty in complying with their SIP obligations in 2005, 3 the program, which we believe could be very specifically 4 targeted, one which would replace older equipment with 5 complying Tier II engines. 6 We think that that can provide some significant 7 benefits for those specific air basins and air quality 8 management districts that have a problem. 9 Fourthly, we are proposing an incentive, and we 10 believe it is a real incentive, to manufacturers to produce, 11 design, develop and produce low-emission engines. 12 That provision, that incentive, would exempt those 13 ultra-clean engines from production line testing 14 requirements, a significant cost for any manufacturer. All 15 you have to do is ask any one of them that are here. 16 Last, but not least, we are prepared to commit to a 17 Tier III following not only implementation of our Tier II 18 proposal but some reasonable period of stability. 19 We are suggesting the year 2006, possibly 2007. 20 What that timeframe will do for you is that by the year 2010, 21 because of the shorter lifetime of these products, you will 22 have basically fleet turnover. 23 The emission levels, which I may have forgotten to 24 mention, that we are suggesting in our proposal, which all of 25 you know about, are 86 grams of horsepower hour for the 20 to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 221 1 60 CC engines, and 125 grams per horsepower hour for the 2 under 20 CC engines. 3 We believe, and my friend, Mr. Lyons, will cover 4 the emissions benefits from this proposal, we are sorry that 5 staff was not able to compare their proposal with our 6 alternative, but we have gone forward in an effort to do so. 7 Jim. 8 MR. LYONS: Thank you, Mac. Again, I'm 9 Jim Lyons, with Sierra Research. 10 I am going to deviate quite a bit from my written 11 testimony in an effort to kind of get to the point and 12 shorten things up here. 13 The first thing that I want to say is what I am 14 going to talk about today are differences in the emission 15 benefits, cost, and cost effectiveness of the staff's 16 proposed revisions to the Tier II standards relative to this 17 alternative that PPEMA has developed and put forth. 18 During the staff presentation, you saw comparisons 19 of the benefits of Tier II to the Federal Phase II standards. 20 As Mac pointed out, the PPEMA alternative goes 21 beyond that to lower emission levels. 22 The other thing that I want to point out is the 23 differentials that I talk about between the Tier II proposal 24 and the PPEMA alternative deal only with exhaust emissions, I 25 haven't gone through and taken into account these other PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 222 1 programs to get additional emission reductions. 2 What this first slide shows is using the staff's 3 methodology, the emissions inventory for hand-held engines in 4 2010, and it's HC plus NOx again, because that's what's 5 important here, as you go from uncontrolled engines on the 6 far left to Tier II engines on the far right. 7 You will see the first phase of regulations, 8 Tier I/Phase I, dropped you from about 63 to about 45 tons 9 per day, about a 20 ton per day difference, roughly a third 10 of the original inventory. 11 Moving to Phase II would get you another 10 tons 12 roughly down to about 35, and moving beyond that into the 13 realm of the PPEMA alternative, and the Tier II standards 14 gets you somewhere between another 5 or 6, or as 15 Bob Cross pointed out earlier, 11 tons per day. 16 So, the first point here is that the biggest bite 17 out of the bar, if you will, in terms of emission reductions, 18 has already occurred due to the Tier I, Phase I standards. 19 Moving over to the right-hand side of the chart 20 there, you see the PPEMA alternative at about 29 tons per 21 day, Tier II at about 30, and a Tier II at about 25. 22 This first larger bar is computed using the 23 emission factor that Mark Carlock talked about earlier today 24 that was in mail-out 9804. The other one is an adjusted 25 emission factor that I understand the staff has used to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 223 1 estimate the benefits of its revised proposal. 2 We can go to the next slide. 3 This slide just shows what these two different 4 emission factors are. You've got zero hours in a 5 deterioration factor, or DF, which is used to estimate the 6 increase in emissions over time from these engines. 7 The zero hours, about 40, and what Mark talked 8 about today, it's about 22 and a quarter, and what the staff 9 has indicating that their proposal is, and there are changes 10 in the deterioration factor, as well. 11 Go to the next slide. 12 This is Table 6 out of the staff report 13 that shows what staff published in terms of engines that 14 it felt were representative of those that could meet the 15 Tier II standards and their emission levels. 16 If you can go all the way down to the bottom of the 17 chart, or back up a little bit, it is my understanding that 18 the adjusted Tier II emission factor is based on data from 19 the two Honda four-strokes, the ICAT BKM/Tanaka fuel-injected 20 two-stroke and the Komatsu Zenoah stratified scavenging 21 two-stroke engines. 22 The two Honda emission levels are labeled for new 23 engines, so is Komatsu Zenoah. ICAT BKM isn't labeled. It's 24 a prototype engine. I'm assuming that is new. 25 The point to be made here is that those are PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 224 1 emission levels that are very much below the 54 gram per 2 horsepower hour level, which is kind of average base standard 3 in that manufacturers comply with it on average. 4 Now, if you go back up to the top of the chart, we 5 have got a Ryobi engine, and we've got three Husqvarna 6 engines all with emissions that are much closer to the 54 7 grams per horsepower hour level of the standards that were 8 apparently not included in this adjusted emission factor. 9 We talked about earlier today uncertainties in the 10 inventory, the impact of assumptions and what it means to get 11 equivalent tons. 12 What I have done here is gone through and made some 13 adjustments to this, or revisions, if you will, to keep that 14 terminology correct, to suggest a Tier II emission factor and 15 I have made a comparison of that to the PPEMA alternative, 16 and what we see is that what was four tons per day earlier, 17 in terms of emission differentials, become .3 tons per day 18 now using what, I think, are more reasonable assumptions. 19 CHAIRMAN DUNLAP: Jim, on that point, does that 20 mean that you have come up with, quote, a more reasonable 21 assumption that is not what we had just approved in the 22 inventory? 23 MR. LYONS: Well, this -- well-- let me back up. 24 CHAIRMAN DUNLAP: You are going to confuse me. 25 You have to answer that question. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 225 1 MR. LYONS: Yeah, I will answer that question for 2 you. 3 I talked about two issues related to the inventory 4 earlier today, the chain saw activity and the separation of 5 residential and commercial. 6 My revisions here include those factors, as well as 7 adjustments to the revision of the adjusted Tier II. 8 CHAIRMAN DUNLAP: They are based upon your 9 inventory? 10 MR. LYONS: They are based upon my estimates. 11 The reason for that is the staff estimates, going 12 back to my first slide, the differential is about four tons 13 per day, so that sets kind of the upper limit, and I'm 14 looking to see what happens if we start to change some of the 15 staff's assumptions. 16 CHAIRMAN DUNLAP: Okay. 17 MR. LYONS: I mentioned that we also looked at 18 cost. 19 What we have done is we have performed a critical 20 review of the reports generated by EF and EE, which has been 21 staff's contractor evaluating the cost of compliance, or cost 22 of moving to the Tier II standards. 23 We have looked at EPA Phase II technology and CARB 24 Tier II technology, which is what EF and EE has addressed in 25 various reports, and then we have also looked at estimates PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 226 1 for the cost of the PPEMA alternative. 2 EPA Phase II is about $6 an engine, based on our 3 estimates, and PPEMA alternative is 20 to 25, and CARB 4 Tier II is on the order of 50 to 55. 5 Those estimates are higher than CARB staff's, and 6 again, they reflect the correction of some mistakes and the 7 use of, what we think, are some more reasonable assumptions 8 that are laid out in the report that we prepared for PPEMA. 9 What I want to draw your attention to before I move 10 on is this differential in cost between the PPEMA alternative 11 and the CARB Tier II standards, which ranges from about $25 12 to $30 per engine. 13 We have done some cost effectiveness calculations, 14 the first column there, lifetime CARB-Tier II, that is the 15 staff's estimate of benefits for their proposal versus the 16 PPEMA alternative using this cost interval of $25 to $30 per 17 engine. 18 What you see are cost effectiveness ratios ranging 19 from about $5,000 to $9,000 per ton of emissions eliminated. 20 Staff's kind of going rate for these emission 21 reductions ranges from about $4,000 to $10,000 per ton. 22 Now, if you move over to the next column for 23 lifetime revised Tier II, in this case, the only change that 24 I have made is this change to the emission factor that I 25 talked about just a minute ago, you see that the cost PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 227 1 effectiveness numbers changed dramatically just from changing 2 that one assumption. 3 Now the cost effectiveness ranges from $10,000 to 4 $60,000 a ton, which is above the staff's maximum rate of 5 about $22,000 a ton. 6 Both of these columns were done for the combination 7 of residential and commercial engines. As I mentioned this 8 morning, residential engines make up most of the population, 9 but they don't get used very much. 10 Basing a slightly modified methodology, I went back 11 and looked at cost effectiveness for residential engines 12 based on their 50 hours of life. 13 Here, except for the large chain saws, the cost 14 effectiveness ratios are in the $23,000 to $29,000 a ton 15 range, again, above the $22,000 a ton maximum rate of CARB 16 staff. 17 So, to kind of conclude things here, the emissions 18 differential, in terms of exhaust emissions, ranges from, 19 let's say .4, excuse me, four tons per day to .3 tons per 20 day, depending on the assumptions that you make. 21 To put that value in perspective, the 2010 22 Statewide inventory for hydrocarbons and NOx is 4,900 tons 23 per day. 24 It is my conclusion that these are very small 25 differences, and they're within the uncertainties associated PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 228 1 with this tool that we are using to measure things here, the 2 off-road model. 3 What has also been shown here is that if you change 4 staff's assumptions to move away from this adjusted 5 Tier II emission factor, which basically assumes that 6 two-strokes are 40 percent below the standard for their 7 entire lives, you get cost effectiveness numbers that exceed 8 the staff's criteria for what represents cost effective 9 hydrocarbon and NOx control. 10 Thank you. 11 CHAIRMAN DUNLAP: Okay. Very good. 12 Any questions of Jim before he departs? 13 MR. DUNAWAY: Quick wrap. We believe we have 14 presented you a viable alternative, one that gets you where 15 you want to go, one that gets you where you told us you want 16 to go, one that gets you where staff has told us you want to 17 go in terms of tons per day. 18 It's one that has very, very high, good cost 19 effective solutions for not only the Board but for the 20 consumers and the professional and commercial users of our 21 products. 22 We urge you to give it very careful consideration, 23 and we are prepared to do whatever we can to work out any of 24 the details that need to be worked out in the alternative, 25 and we urge you to accept it. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 229 1 Thank you very much for your attention. 2 CHAIRMAN DUNLAP: Thank you. 3 Mr. Calhoun. 4 BOARD MEMBER CALHOUN: Did I understand you to say 5 at the beginning of your presentation that the staff has not 6 had a chance to -- 7 MR. DUNAWAY: No. 8 We gave it to the staff, as a matter of fact they 9 ran some initial calculations on it, and that's where they 10 come up, essentially, the difference between the PPEMA 11 alternative and the current staff proposal at four, four and 12 a half tons a day, that's the number that Jim gave you 13 earlier. 14 The comparison that is the worst is roughly well 15 over four tons a day, and the more favorable is .3 tons per 16 day as the difference between CARB staff proposal and the 17 PPEMA proposal. 18 So, it is a small, we think, it is a pretty small 19 margin. 20 CHAIRMAN DUNLAP: Dr. Friedman. 21 BOARD MEMBER FRIEDMAN: Depending on the 22 assumptions that you use, you can have any set of numbers 23 that you want. 24 What I need to know, though, is whether the 25 assumptions that form the basis for the PPEMA proposal have PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 230 1 been examined by us in some detail, and what are your 2 findings? 3 MR. CROSS: A couple of things. 4 One, I would like to get this overhead put up, if I 5 could. The major discussion which Jim had at the outset, 6 which I think makes the biggest difference, there were only 7 two factors that make a difference. 8 One is the emissions rate assumed for the control 9 engine, and the second is the cost. 10 Before we look at the table here, Jim threw up a 11 table of technologies, which showed Husqvarna engines, the 12 Ryobi engines, etcetera, etcetera, and he questioned the 13 staff's exclusion of those from the average. 14 With respect to the Husqvarna engine, Husqvarna 15 wrote us a letter basically saying that since those were 16 taken at the lean, lean setting, that we should not be 17 treating their engine as an engine which could comply with 18 the standards. 19 They are saying that in customer service the engine 20 would be set at the center of the settings, not at the lean 21 setting, so it shouldn't be treated as a complying engine. 22 Similarly, Ryobi's engine is actually an engine 23 which is certified to the Tier I standards, not a Tier II 24 intent engine. 25 The other engines that we included in the average PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 231 1 were the Hondas and two stratified charge engines, which are 2 all declared Tier II intent engines, and what you see from 3 those data is exactly what some of the manufacturers were 4 talking about in complying with the standards. 5 They have designed in additional head room for 6 production variability and things like that. 7 So, the numbers that we used to reflect, what we 8 think industry would have to do to meet the 54 standard, are 9 one's that are derived from 54 intent engines as opposed to 10 one's that might make it. 11 So, we think that the emission factor that we used 12 for our analysis is consistent with what would be required to 13 comply with those standards. 14 There was a comment made about deterioration, we 15 changed the deterioration to a lower level to reflect that 16 these technologies don't have catalysts and therefore are 17 more stable. 18 We did not change it to zero. We changed it to 19 just a number which is reflective of the lower deterioration 20 rate in the engine type controls. 21 With respect to cost, briefly, PPEMA's numbers are 22 what, 49 to 60 for Tier II, as opposed to what we used 35, 23 which was the upper bound, and we think it is probably more 24 like 20 for the four-stroke engine based on input we have got 25 from the manufacturers. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 232 1 Ryobi, based on the trimmers that we just bought, 2 is marketing the four-stroke and the two-stroke engine at $40 3 a part today. 4 The four-stroke engine is a very low-volume 5 production engine, and it's running on a small, sort of 6 semi-pilot, or first generation production line. 7 So, I think that that $40 would be the upper bound, 8 and then when it is learned out it is going to be less than 9 that. 10 Also, both the Komatsu and the Tanaka engines, 11 since they are two-stroke engines, have few parts and fewer 12 assembly steps than the four-stroke engines, so there is no 13 reason to anticipate that those engines would necessarily 14 cost more than the four-stroke. They should cost less, as 15 the staff predicted. 16 Now, looking at the chart that you have on the 17 overhead, basically, what we ran is the 86 with phase-in, is 18 the PPEMA proposal evaluated in calendar years, 2000, 2005, 19 and 2010, compared to the staff proposal, which is 54 in 20 2000. 21 What you can see is the 86 with phase-in produces 22 losses in all of those years, 2.2 tons in 2000, 7 tons in 23 2005 and 4.7 in 2010. 24 The reason that it is higher in 2005 is because the 25 phase-in delays fleet turnover. So, the fleet in 2005 is a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 233 1 mix of older engines plus the newer engines, which is what 2 you might expect. 3 The intermediate number was one that we just sort 4 of ran to see how were these numbers sensitive to changing 5 the emission standards, and you can see that it sort of 6 tracks, in other words, if you, in 2010, if you move the 7 standard about halfway between 54 and 86, the difference also 8 goes down about by half. 9 These assumptions, I would agree with Mr. Lyons 10 that the numbers aren't cast in stone. In other words, I 11 wouldn't argue whether it's 4.7 or 5 or 5.5 or, you know, 12 maybe even 3.9, but I would say that they are done on an 13 apples to apple basis, and we think that they are internally 14 consistent with the inventory you adopted this morning, and 15 we think that they are certainly a good yard stick for 16 starting the consideration which the Board might want to make 17 later. 18 CHAIRMAN DUNLAP: I want to move on to the next 19 witnesses. 20 We will come back to this. 21 Is that all right, Bill? 22 Mac, thanks. Stay close. If we need you, we'll 23 bring you back up. 24 Okay. Larry Rohlfes, and I apologize again if I 25 mispronounced your name, Larry, California Landscape PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 234 1 Contractor Association, and Robert Falconer. 2 Is Robert there, too? 3 Come on up, Robert. 4 Have you guys talked? 5 Do you guys have similar views on this? 6 MR. FALCONER: I don't know. 7 CHAIRMAN DUNLAP: Oh, okay. Sit back down, Robert. 8 MR. FALCONER: We talk once in a while. 9 CHAIRMAN DUNLAP: All right. What I was getting at 10 is if you guys had the same perspective, you know, you could 11 share the mike, and we would get to it once, but if you 12 haven't talked, then that's fine. 13 MR. ROHLFES: Good afternoon, Chairman Dunlap and 14 Members of the Board. My name is Larry Rohlfes, and I am 15 with the California Landscape Contractors Association. 16 CLCA is a nonprofit trade association of State 17 licensed landscape contractors. We have approximately 2,500 18 members throughout the State of California. 19 Although we are a good sized organization, I 20 believe I also speak for a much larger group, the tens of 21 thousands of people who make a living maintaining 22 residential, commercial and public landscapes in urban 23 California. 24 Although CLCA has 2,500 members, there are more 25 than 11,000 licensed landscape contractors in the State, and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 235 1 since a Contractors License is not necessary to perform pure 2 landscape maintenance, there is an unknown number of 3 gardeners who mow, groom, and otherwise care for the 4 generally smaller landscapes in the State. 5 Our best guess is that this number substantially 6 exceeds 50,000. These are hardworking small business people, 7 many of them first generation Americans, and they are not 8 very well organized as a trade. 9 They are unlikely to be here today, even though 10 their livelihoods could depend on the decisions that you make 11 today. 12 Together we comprise the bulk of the State's 13 landscape industry, an $8 billion industry in 1995. So, 14 small businesses, big industry. 15 As I'm sure you have all recognized, portable power 16 equipment is essential to the landscape maintenance business. 17 String trimmers, leaf blowers, hedge trimmers, 18 these are the tools of our trade. They are just as important 19 to us as the nail gun, or power saw is to the carpenter. 20 They are second only in importance to the lawnmower. 21 Clearly, we can't go back to using shovels, rakes, 22 hoes any more than carpenters can give up their tools. 23 With respect to electrical equipment, with respect 24 to electrical leaf blowers, our members tell us that it takes 25 twice as long to do the job with electric blowers as compared PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 236 1 to gas powered blowers. 2 CHAIRMAN DUNLAP: Larry, if I might, and that 3 overview has been terrific, and it kind of anchors where you 4 are coming from, the question that I have for you, what would 5 you have us do? 6 I mean, you are kind of taking us in a 7 philosophical place here. I just want to know what about the 8 staff proposal do you like or don't like, and what would you 9 have us do in consideration of this? 10 I don't think anybody is telling you to go to 11 electric. 12 MR. ROHLFES: As far as the staff proposal is 13 concerned, it is critical that our hand-held tools, number 14 one, perform properly, and number two, not fall apart after a 15 few months use, and with the increasing concern about 16 ergonomics in the workplace, it's also important that the 17 tools not be too heavy. 18 One thing is for sure, our members are very 19 concerned about the proposed regulations. The Ombudswoman 20 mentioned 200 letters from the industry, and I personally 21 received 106 of those letters from our members. 22 The landscape industry might seem a little touchy 23 on this issue, but you have to understand that from the point 24 of view of the landscape maintenance professional, his or her 25 tools are getting hit from two sides. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 237 1 You have the Air Resources Board tightening up air 2 emissions requirements, and you also have cities and counties 3 banning leaf blowers outright, and it's getting a little 4 scary. 5 Now, you might respond that there are two separate 6 issues here, air emissions and noise, the latter of which are 7 not your concern, but that is not really true. 8 In a very recent court decision, the City of Los 9 Angeles cited air quality as a major reason for its ban. 10 CLCA believes that landscaping improves the 11 environment, and many of our members consider themselves to 12 be environmentalists. 13 We don't want to be obstacles to cleaning up, 14 admittedly, dirty air. Without getting into the technical 15 merits of the different proposals that are being debated 16 today, a subject of which we have no expertise whatsoever, we 17 simply wish to convey that we can live with any compromise 18 that keeps gas powered hand tools on the market. 19 We can live with any air emissions strategy that 20 manufacturers can realistically accomplish. 21 Furthermore, we are committed not only to fixing 22 the problem but hopefully to working with the Air Board and 23 manufacturers to head off misguided local bans that, in our 24 opinion, conflict with the Air Board's jurisdiction in 25 regulating mobile sources. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 238 1 So, to conclude, I simply want to thank you for 2 giving me the opportunity to convey the importance of these 3 machines to tens of thousands of commercial users. 4 CHAIRMAN DUNLAP: I appreciate that. 5 Could I offer a couple things up that you might 6 want to consider doing with us? 7 Do you have a newsletter? 8 Could we write a guest column in it to clear up 9 fact from fiction? 10 MR. ROHLFES: Actually, our magazine would be 11 especially appropriate for that. 12 CHAIRMAN DUNLAP: Okay. We would be happy to do 13 that, if we could help get the word out and separate fact 14 from fiction. 15 Also, I am going ask staff to put you on every 16 mailing list under the sun about what's going on here from a 17 regulatory standpoint, and we will also be willing to have a 18 meeting and talk to your membership, if that will help, about 19 what's really been considered, and what we will have done, 20 ultimately, when the day ends, and facilitate getting you the 21 information that you need and listening to you. 22 We will be happy to do that. That is a reasonable 23 thing to want. 24 MR. ROHLFES: Thank you. 25 CHAIRMAN DUNLAP: Any questions for the witness? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 239 1 Okay. Very good. 2 Thank you. 3 Mr. Falconer. 4 Sorry to pull you up and have you stand in 5 detention. 6 MR. FALCONER: No problem. 7 We have a little bit different spin on the issue 8 than CLCA does. 9 My name is Bob Falconer. I'm the Director of 10 Government Affairs for the California Association of 11 Nurserymen. 12 We're a Statewide trade association representing 13 approximately 1,400 members, wholesale growers as well as 14 retail garden centers and associated businesses as well. 15 We address the proposed regulation today on two 16 fronts. First on the basis of the users of the product, and 17 secondly from the standpoint of those who retail the product, 18 the retail garden center. 19 On the first issue, we represent growers of nursery 20 stock. Like any other outdoor productions business, there 21 are sanitation issues to be addressed, and the two-cycle 22 engines are used on a number of jobs for weed control and 23 general property maintenance around those, as well as some 24 pruning of the shrubs. 25 Secondly, we represent the retail garden centers PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 240 1 which sell the power equipment. Our largest members, such as 2 Home Depot, supply hardware and do a significant business in 3 these products. 4 I was glad to see the staff acquired their test 5 models from Home Depot. In fact, some of the Home Depot 6 stores will sell over a million dollars a year of power 7 equipment out of their garden centers, per store. 8 Our concern in both cases are the manufacturers of 9 the current products, and in talking to some, there are 10 roughly 20 manufacturers of these products, state that they 11 can't comply with the proposed rule, and thereby, a lot of 12 these products will go by the wayside and will go off the 13 market. 14 Now, we understand that manufacturers of the one's 15 that can comply have made significant inroads in this, and we 16 applaud that, and in fact, our retail members would gladly 17 sell those products and grower members would gladly use them. 18 CHAIRMAN DUNLAP: If I could give a bit of a 19 context on the point you just made, if I might, based upon 20 15, 20 years as regulator, today, in this hearing, there is a 21 lot of positioning, people, you know, trying to negotiate, 22 so, I would suggest to you that some of the positions 23 represented to you today may not be the positions in a month, 24 or two months down the road, because people will be looking 25 at this issue, perhaps, a little bit differently depending on PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 241 1 how things come today. 2 So, I wouldn't take everything said in this room 3 today to be everybody's hard position forever. Do you know 4 what I mean? 5 MR. FALCONER: I understand. 6 CHAIRMAN DUNLAP: I think that what I am hearing 7 you getting to is that you are worried about our regulation 8 displacing some product in the marketplace, thereby making it 9 more difficult to meet consumers need, etcetera, etcetera, 10 and you don't want to lose market share, or have your members 11 suffer economically in any way, and we are concerned, too, 12 about what happens in the marketplace. 13 So, and I can commit to you, not to shortchange you 14 in saying what you wanted to, but, you know, we are going to 15 look at that very closely. We're going to be asking staff, 16 no matter what happens, what's out there in the market, at 17 what cost, and what's happened with some of the sales volume 18 information, so we can watch it, and if we determine that 19 there is a problem that emerges, we're not above coming back 20 and revisiting an issue. 21 MR. FALCONER: Okay. I guess most of the concern 22 is that of these alternatives, the new technology, the oldest 23 has been around for four years, and some of them aren't even 24 on the market yet but yet are being touted as replacements, 25 to replace products that have been in the market and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 242 1 developed over decades, and that is of concern to us. 2 We just are skeptical whether that equipment has 3 undergone adequate field testing, and all the applications 4 and circumstances. I know Mr. Parnell is familiar with the 5 ranching, I mean how many different positions, and what not, 6 can you get on a farm with these types of machinery. 7 I doubt that all that has been done adequately to 8 really field test the equipment sufficiently. 9 So, we would ask just that the Board not rush into 10 taking away the valuable tools that we have today, and make 11 sure we do have adequate means of performing these work 12 tasks. 13 CHAIRMAN DUNLAP: Okay. I would be happy to get a 14 list from you, you could share with the Board about things 15 that we ought to look at as this program is implemented over 16 time, and the tough questions that we ought to ask, and I'll 17 make a commitment to you, if my Board Member colleagues will 18 agree to it as well, we'll watch those things, and we will 19 ask those questions, and we will watch what is going on in 20 the marketplace. 21 BOARD MEMBER FRIEDMAN: I need to ask a question. 22 There seems to be an assumption that this 23 imperative of field testing, can someone tell me what the 24 field testing was like when these two-stroke engines were 25 first introduced? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 243 1 This is called progress, and not everything needs 2 to get field tested for years. I don't know if anyone made 3 these arguments with the introduction of these pieces of 4 equipment initially. 5 I really find that spurious. I can't handle this 6 harking back historically when there is no history. 7 I mean, we all understand that magnetic resonance 8 imaging is better than X-rays, it didn't get field tested all 9 over the world. It was better. 10 I am getting confused over what is opinion and what 11 is evidence. I don't know if historically there is this 12 precedence that you need to do years of field testing. 13 CHAIRMAN DUNLAP: Dr. Friedman, we're going to 14 have, after one more witness, we are going to have about six 15 manufacturers of so-called compliant folks that are 16 positioned to deal with us, and we will ask them about the 17 field testing. 18 MR. FALCONER: I guess the response, I would say 19 that going from a hand-held saw to a chain saw would be 20 better regardless. 21 We have good products today. We're just concerned 22 about the durability and whatnot. 23 CHAIRMAN DUNLAP: Those points are not lost on us, 24 and we will keep the lines of communication open, but I would 25 welcome some correspondence from you about the things that we PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 244 1 ought to track as this program gets implemented further down 2 the line. 3 MR. FALCONER: Thank you. 4 BOARD MEMBER EDGERTON: I think it would be worth 5 adding here our experience, for example, with motor vehicles. 6 Each time we asked for, before I was here, and 7 since I have been here at the Board, we asked for additional 8 reductions in the emissions. 9 There were concerns, similar to yours, raised that 10 the products be attractive to consumers and that they be 11 useful and that they be within, they be affordable, and in 12 almost every instance, in fact, I know of no instance where 13 consumers have ultimately been disappointed and have not been 14 able to get their needs satisfied. 15 So, with that bit of history, I would urge you to 16 keep an open mind about your members having their needs 17 satisfied. 18 MR. FALCONER: We would just like to make sure that 19 happens this time, also. 20 CHAIRMAN DUNLAP: Thank you. Mr. Larry Otto, from 21 Lawn Tech Equipment Company, after which we will have a group 22 of manufacturers, McCulloch, Komatsu Zenoah, Tanaka, Ryobi. 23 If you guys would cue up, we will get you up next. 24 Hello. I saw you earlier at the demonstration. 25 Good to see you stuck with us. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 245 1 MR. OTTO: Thank you. I'm Larry Otto. 2 I own Lawn Tech Equipment Company, from Riverside, 3 California. 4 I'm a dealer that has Tanaka, Red Max, Echo, John 5 Deere, I have most of these manufacturers that are here, I am 6 a dealer for. 7 I have worked with them closely through the years. 8 I have to commend the leadership here as well as outside, 9 everybody is trying to do a good job. 10 I will try not to be confrontational, just try to 11 make some points. I truly feel that most of the 12 manufacturers are trying to do a good job with this matter. 13 The dealers pretty much would like to go with the 14 PPEMA proposal. We just heard that they are also introducing 15 possibly a Tier III for 2006 or 2007. We would also support 16 that proposal. 17 As time has gone through this noise and safety 18 issues, most of the manufacturers have gone up to the plate 19 and met those standards. 20 I think eventually most of the major players will 21 be there, also. We have this weighing of can we do it now, 22 or can we do it later. 23 I think there are some good manufacturers out there 24 that we would all hate to see go because some of them have 25 better products, so we want to encourage them to stay in the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 246 1 marketplace based on that. 2 We get involved with, are we going to break it or 3 bend it. When I have sat in these meetings with them, a few 4 of them are just about ready to break right now. 5 I think that if we can move in this process, it is 6 a tough decision, that if we can just keep moving forward we 7 will be there. 8 There are some manufacturers that I do consider 9 still experimental. I am hearing words of assumption, that 10 evolving models could meet, that is a difficult thing. 11 I don't want to be repetitive, you guys are still 12 addressing that, the issue of two-cycle versus four-cycle, 13 one is dirtier than the other. It basically sounds to me 14 that once we are at this level that we are going to be at the 15 same emissions of two-cycle versus four-cycle, so that 16 shouldn't be the issue, whether one is dirtier than the other 17 one. 18 There was an item in the staff, where the cost of 19 compliance, they had the dealers at a 16 percent gross 20 profit. Generally we are at 25 percent gross profit. 21 So, there was roughly nine or ten percent there. 22 So, on a $300 item, that would probably go up $30. Generally 23 speaking, from the distributor level to the dealer there is a 24 $25, sometimes $30, but being conservative, I'll say $25. 25 From a servicing standpoint, when we went to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 247 1 Tier I, we get to see the problems, in other words, 2 hard-starting, the idea of product failure, there are service 3 bulletins that we get, generally speaking, that the 4 manufacturers do a great job now. 5 We have, I am not here to pick on any manufacturer, 6 don't cancel me -- 7 BOARD MEMBER RIORDAN: You want to keep your 8 options open. 9 MR. OTTO: One of the advantages of being a dealer 10 is we get into this win-lose situation. 11 I'll win because I'm the dealer, and I will still 12 be able to sell this. So, I am in a neat position. 13 We do have hard-start difficulty with jetting, and 14 that is a concern, because if we get involved with changing 15 jetting, the dealer has to be qualified. We don't want to be 16 tampering. 17 CHAIRMAN DUNLAP: You are just talking about what 18 happens, generally speaking. 19 You're not picking on a future technology. You are 20 just saying, right now with things in the marketplace, these 21 things happen. 22 MR. OTTO: And it's a concern. 23 CHAIRMAN DUNLAP: Right. So, when new stuff comes 24 in, you are worried it could be confounded or it could be 25 increased? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 248 1 MR. OTTO: Things are getting tighter. 2 Things break easier. They are harder to fix. 3 CHAIRMAN DUNLAP: But it does happen now still, is 4 what you are saying? 5 MR. OTTO: Yes. 6 When we went to service school for Honda, we asked 7 them, what are the tools to use, is it a serviceable engine? 8 You know, they've got the little tiny valves, and there were 9 basically no tool to do that, and in our industry, we call 10 that an Oklahoma valve job, where we have to go in and just 11 clean the valves, and there is no tool for that. 12 I hope there's no one from Oklahoma. I'm a native 13 Californian. 14 So, that is a concern. We have product safety 15 recalls that comes out. We have hard-starting. We have 16 ignition failures. 17 So, these are concerns as we get into these tighter 18 tolerances. I would like to see the PPEMA proposal as it 19 comes in. 20 I think that we have talked about this. It sounds 21 like about 20 to 30 tons, and there are five tons. It's not 22 like we are close. 23 I know we're in a town that makes deals. 24 CHAIRMAN DUNLAP: You say you're from Riverside, 25 right? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 249 1 MR. OTTO: Right. 2 CHAIRMAN DUNLAP: Riverside does okay up here, 3 generally. 4 MR. OTTO: From a marketing standpoint, the dealers 5 would encourage, of course, any safety levels, labels, we 6 would like noise, the DBA, we would like HC and NOx labels 7 put on them. 8 From a marketing standpoint, consumers could choose 9 as we go through these levels, the 50 versus 300, we would 10 like to see those labels. 11 We encourage this reward and penalty system, 12 however you guys want to work that out, we think that's 13 great. 14 Also, I worked with AQMD down south with Rule 1623 15 on the Trade-in Program. We think that is a great idea. 16 We encourage scrappage programs. 17 CHAIRMAN DUNLAP: We have a Board Member colleague 18 over here that is very interested in incentives, and she'll 19 be talking about that later. 20 MR. OTTO: Okay. I have to say, any time I have 21 gone and talked with staff, AQMD, I have had a great 22 experience. 23 Although we may disagree, which that does come up, 24 but the experience has been a good one, and I have been 25 encouraged sitting out here listening that you guys are PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 250 1 tentative, and I've gone to some meetings where it was an 2 absolute disaster, and I commend you guys. It is nice to sit 3 out here and look and see that you guys are doing a great 4 job. 5 Just to conclude, there was one other item, on the 6 spillage, just so you know this is available, our shop keeps 7 these, this is a little spillage device for containers, and 8 it costs the dealer $2.64. 9 BOARD MEMBER DESAULNIER: Do you want this back? 10 MR. OTTO: So, I know staff chose not to put that 11 forward, I wish they would have. I think we can do that now. 12 The dealer certainly can, the manufacturers can put 13 that in with their product. I think that could be moved 14 forward real quickly. 15 CHAIRMAN DUNLAP: On that front, we have been 16 encouraged, too, about some things that we've been hearing 17 from people wanting to tackle it, and Mac and the group have 18 said, hey, it's something that they want to get into. 19 We have heard other segments that we regulate now 20 and some we don't that want to get involved. So, I think you 21 can count on us dealing with this probably within the next 22 year, no matter what. 23 MR. OTTO: Okay. All right. 24 Well, that is all I have, and thank you. 25 CHAIRMAN DUNLAP: Thank you. I appreciate it. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 251 1 Any questions of our friend from Riverside here? 2 All right. We appreciate it. 3 Okay. Jim White, Jim Cotton, Tom Sawada, Randy 4 Haslam, Frank Coots, Singh Suchdev and Ed Strohbehn. 5 Okay. Gentlemen, we want to hear from you. We are 6 tired. It's been a long day. I would be grateful if you 7 guys could keep it short, you know, focus on the key things 8 here. 9 It is important, and we will listen to whatever you 10 need to say, but if you could help us with bottomline kind of 11 perspectives, I'd be grateful. 12 MR. WHITE: We will do that for sure. 13 We have already taken, we won't put up all the 14 slides. I think you all have copies of the materials. I 15 think that will be sufficient. 16 Mr. Chairman, Members of the Board, thank you for 17 the opportunity to present. 18 My name is Jim White. I'm Vice President of 19 Marketing for McCulloch Corporation. 20 We are not here to do an Oklahoma valve job but to 21 present an effort that we have been going through for the 22 past couple of years. 23 Our purpose really is to assist the decision-making 24 process on how we can best regulate California emissions 25 without restricting new technology and the California PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 252 1 consumer, while making sure we provide them with economic 2 options that meets the emissions goals. 3 Our objective here is to provide a solution that 4 supports California's 2010 State Implementation Plan and also 5 offers an opportunity to purchase clean and reasonably priced 6 products. 7 I feel like it is necessary to do a little 8 background on McCulloch, our company. As the recent history, 9 it's a 50-year-old company, but recent history is probably 10 more pertinent. 11 It was purchased in 1995 by the Dawson, Luck and 12 Jeanrette Murchon Bank Group, and we are a manufacturer of 13 gasoline and electric products. 14 We produce over two million gasoline powered 15 products and electric powered hand-held products a year. 16 Our core competency, however, is in the gasoline 17 two-cycle technology and manufacturing. McCulloch is the 18 number one brand in the U.S. for both gas and electric power 19 chain saws, so I know there has been a lot of comments about 20 chain saws today. 21 We have headquarters in Tucson, Arizona. We do 22 engine machining and manufacturing in Arizona. We also have 23 high-end manufacturing located in Italy, which builds a lot 24 of commercial grade products. 25 We've been working with a company, Battell Memorial PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 253 1 Institute, located in Columbus, Ohio. They are the largest 2 research and development firm in the world. 3 They have 7,500 scientists and engineers and 4 support specialist located around the world, and this is a 5 relationship that we've enjoyed for the last couple of years 6 that has really brought us capabilities in this effort that 7 go beyond what you see traditionally in this industry. 8 McCulloch and Battell have worked together for the 9 past two years in looking at both gas and electric products 10 as a total solution for emissions. 11 We kind of started with a baseline of doing a 12 benchmark analysis that involved 34 gas products and 72 13 electric products, evaluating over a hundred attributes of 14 all of those, and we really took kind of a clean sheet of 15 paper approach to this whole thing, and on the gas side it 16 included evaluating the emissions performance, which become 17 the baseline for a very in-depth technology review. 18 Our technology review team of Battell engineers and 19 technicians, along with McCulloch, worked together, and this 20 process led the team into a process where we identified over 21 some seven different technologies, all of which have been 22 discussed here today, so I won't go into that. 23 The development brought us to the building of a 24 product plan that included a total solution in gas and 25 electric products to meet the future needs of the market. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 254 1 I think it is noteworthy that McCulloch invested 2 $2.8 million in 1997 in the development of the new electric 3 products, and we have a very aggressive product plan going 4 forward with the introduction of new electric products, so 5 just the fact that companies are investing in new 6 technologies, I mean, that goes beyond just four-stroke, it 7 certainly includes electric, as well. 8 Since that time, McCulloch has tracked the CARB 9 Tier II proposed Legislation for hand-held products. 10 As a little background, in January we presented to 11 Bob and his people, a summary of what we have been looking at 12 and suggested Tier II proposal from McCulloch. 13 Since that date, we have reviewed the February 14 sixth staff report and kept in communications with staff. 15 Our technology review included, again, all of the 16 potential technologies that would meet the emissions, that 17 included two-stroke with catalyst, two-stroke stratified, the 18 four-stroke side valve and overhead valve, we looked at 19 rotary technology and we looked at port and direct injection. 20 We also looked at these, not only from the 21 technology perspective, but we looked at these from the 22 economic perspective, which I think is equally as important. 23 On the consumer side, lawn and garden hand-held 24 products are, for the most part, discretional products, 25 although admittedly the alternatives aren't very attractive. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 255 1 Creating the best products for the intended task in 2 terms of weight, balance and all position operation, 3 durability and cost, are all key considerations. 4 We know the market is elastic. You don't have to 5 do a lot of price elasticity studies. All you really have to 6 do is look backwards. 7 It wasn't too many years ago when the opening price 8 point for gasoline powered trimmers, for example, when it was 9 $149, the market was around 2 million units. 10 Today the opening price point is at $69, and the 11 marketplace is about 4.1 million units. Also noteworthy is 12 today's typical consumer is much less technical, and I think 13 this has been expressed, but I think we have to keep an eye 14 toward the products, and what I would call, dumbing down, the 15 process to make sure that the products are not so technical 16 that they're difficult to operate. 17 We also took from an economic perspective, we 18 looked at the impact on the major California retailers. 19 What we did in looking at the industry, we see a 20 major shift in distribution over the last ten years, where 21 hand-held products are delivered at a little over 70 percent 22 of the retail through mass channels today, we would predict 23 that to mature at a little over 80 percent in the not too 24 distant future. 25 McCulloch contacted three of our largest retailers, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 256 1 Sears, Home Depot and K Mart. We wanted to get a perspective 2 of how they view these proposed Legislation changes. 3 Significant investments have been made by these 4 retailers in California in lawn and garden. The following is 5 just kind of a recap of some of their current and future 6 plans and concerns relative to the impact of the proposed 7 Legislation. 8 The number of stores in California today for these, 9 for the total of Sears and Home Depot and K Mart, where they 10 have 390 retailers throughout California, southern, mid and 11 northern California, and they plan a 30 percent increase over 12 the next five years, over 500 stores. 13 A number of California employees in lawn and 14 garden, you can see they are headed toward over 4,000 15 employees in those stores selling these products, and 16 somebody mentioned some of the stores are selling, at Home 17 Depot alone, over a million dollars worth of lawn and garden 18 products per store a year. 19 We are looking at over 4,000 stores here. The 20 importance of lawn and garden in the category relative to 21 their overall store, and we asked them to rate that on a 1 to 22 10 scale, and an overall rating of the 3 companies is 7.6, 23 you can see that they are expressing concern about what 24 happens here. 25 You can see also that we asked them to rate their PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 257 1 concerns relative to a number of other issues here, migration 2 to alternative power sources, like electric, 7.7 is not a 3 casual concern, seasonal impact in the stores, departmental 4 volume loss, price sensitivity, product weight, all rated 5 rather high. 6 We also looked at the, from an economic standpoint, 7 on the supply chain side. California business makes up a 8 significant portion of the supply chain providing 9 manufacturers with components that build some eight million 10 trimmers, blowers, hedge trimmers and saws annually. 11 McCulloch alone purchases in excess of $11 million 12 annually from some 20 independent companies located across 13 California. 14 Significant volume reductions in any given engine 15 family or increases in technology that cause the technology 16 change would likely impact these California businesses 17 significantly. 18 Also, I would like to take just a minute to talk 19 about some of the shortcomings that our McCulloch/Battel team 20 found in some of the current technology. 21 As part of our review, we did a detail cost 22 analysis, much like what Tom Griswold talked about, of the 23 current four-stroke technology, and quite frankly, we don't 24 know how you can build those products at the premium 25 identified. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 258 1 We also went out for OEM quotes, and not casual 2 numbers, but total replacement type volumes, and we found 3 that the cost increase was from 45 to 150 percent in the 4 engine cost. 5 So, we know that those kind of numbers would have a 6 major impact on the elasticity of the marketplace. 7 Also, currently, four-stroke engines are configured 8 for trimmers and brush cutter applications only, and chain 9 saws have a very different engine requirement. 10 This graphic up on the wall right now with the 11 chain saw graph on the top and the trimmer on the bottom, 12 shows a very different power curve. 13 The low end of the chain saw peak is near the end 14 of the trimmer power curve. As you can see, if you would use 15 this trimmer to cut wood, it would be past its peak in power 16 at the minimum cutting rpm. 17 As a chain saw company, we design engines 18 specifically to cutting wood, and the requirement is very 19 different. 20 The line tip speed on the trimmer, as you can see 21 here, the rpm is generally less, and the power needed is not 22 as much, and it doesn't need to rise. On the other hand, to 23 have a good performing chain saw requires a different engine. 24 Also, I think it is worth noting that if you just 25 look at a chain saw, logic tells that you can't take an PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 259 1 engine off of a trimmer and say, here's an engine, let's put 2 it on a chain saw. 3 It's the packaging and everything wrapping around 4 the product and the all-position nature of how you use a 5 chain saw that's important. 6 So, chain saw engines are different. 7 Next, I would like to point out another look at 8 these seven technologies that we looked at, and we took a 9 little different perspective. We took the staff 50 hour and 10 300 hour limits, because we think that's a very appropriate 11 way to look at it, because clearly, 50 hour engines are 12 consumer, and 300 hour engines are professional. 13 We went down and took a real look at the ability to 14 meet these Tier II emissions levels as proposed. The only 15 twist we put on this was we said, to maintain the consumer 16 marketplace, we looked at it as a maximum of $30 premium at 17 retail for all the 50 hour product. 18 Of course, where there is question marks we said, 19 we can't really say, but it would require a long-term 20 development to say if this technology fits in this area. 21 Clearly, two-stroke with catalysts, you could meet 22 the cost, but the performance, we don't think so, and the 23 rest of these are all cost issues, and what this points out 24 clearly, is that if you look at this from a pure 25 technological perspective, you can say, sure there is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 260 1 stratified technology and there is overhead valve technology 2 that meets the letter of the agreement, but can it do it and 3 meet the marketplace needs of the low-end consumer, which is 4 70 to 80 percent of the total market. 5 McCulloch and Battel put together a suggested Tier 6 II, which we think is a very simple approach that addresses 7 both the technical and economic equations. 8 It is kind of a one, two, three approach here. One 9 is establish a hydrocarbon and NOx limit at 74 grams per 10 horsepower hour for all hand-held engines. 11 We have established that there are technologies 12 that will allow us to maintain the consumer market at 74, 13 that would take us out of the market at 54, and we could 14 begin that in year 2000, again, an agreement in the timeframe 15 with staff's proposal. 16 Secondly, establish a hydrocarbons and NOx limit at 17 54 grams per horsepower hour for all hand-held engines with 18 300 hours. 19 Let the marketplace police itself. The 20 manufacturers are not going to put 50 hour engines out and 21 try to market them as professional products. 22 So, this proposal here, along with the agreement of 23 implementing a fuel spillage effort, either voluntary or 24 otherwise, we feel would meet both sides of the equation. 25 Finally, I would say that on the technology and the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 261 1 cost, the 74 grams per horsepower hour level would allow 2 products with a modest premium, such as two-stroke and 3 catalyst or stratified scavenging two-stroke, and when you 4 are trying to reach the 54 grams per horsepower hour, where 5 it requires a major technology change with relatively large 6 costs and size and complexity, that that's more appropriate 7 for the commercial engines in technologies like four-stroke, 8 direct fuel-injection, or stratified scavenging or catalyst 9 approach. 10 This last chart, I think, kind of says it all from 11 our perspective. This is not, we don't pretend to get into 12 inventory calculation discussions, but this is utilizing the 13 chart that has been used prior, and this is a simple 14 comparison of the different proposals. 15 The blue area is the inventory created by 16 commercial grade products, and red area on the top is from 17 the consumer, and you can see that most of the emissions does 18 come from that area. 19 So, by having the 54 for the commercial, you are 20 controlling the inventory where it needs to be controlled, 21 and by having 74 for the consumer, you are not having a 22 negative impact on the inventory, yet you are maintaining, 23 you are giving the marketplace the opportunity to have the 24 products that are best suited. 25 In summary, I would say that, one, this proposal PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 262 1 preserves the consumer market. Secondly, it minimizes the 2 impact on the California consumer as well as the California 3 businessman and those businesses that are part of the supply 4 chain. 5 It allows industry to develop technologies most 6 appropriate for their application in both the consumer and 7 professional market. 8 It also has a minimum impact on emissions 9 inventory, and it will deliver the numbers that the CARB 10 staff proposal for 2010, and this does not reflect any effort 11 of spillage. So, if there was any effort for spillage, that 12 would be on top of this. 13 BOARD MEMBER RIORDAN: Thank you, Mr. White. 14 Are there any Board Members that have questions of 15 the witness? 16 Ms. Edgerton. 17 BOARD MEMBER EDGERTON: Thank you for your 18 testimony and for the nice presentation. 19 Do you think that McCulloch can make an engine as 20 clean as Ryobi's? 21 MR. WHITE: I think McCulloch can build an engine 22 as clean as Ryobi's, but I don't think McCulloch can build an 23 engine at 54 and satisfy the market where there is 70 percent 24 plus of the products that are delivered today are selling for 25 around $69, and I feel, and in our analysis we made the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 263 1 assumption that we could go to $99, which is a 40 percent 2 increase. 3 If we went to $99, clearly, the market would 4 shrink, but we felt like that was a reasonable approach. 5 We feel like when you start going over the $99 6 limit, you go up to the $149 limit, the market will suffer 7 dramatically. 8 BOARD MEMBER EDGERTON: Thank you. 9 What year did you retain Batell? 10 MR. WHITE: For two years now. 11 BOARD MEMBER EDGERTON: 1996. 12 MR. WHITE: Yes. 13 BOARD MEMBER EDGERTON: Did someone from your 14 company attend the 1996 ARB hearing where Ryobi presented its 15 assertions that they had disclosed to our staff, privately, 16 that they could meet the standards, the new proposed 17 standards, the Tier II? 18 MR. WHITE: Yes, myself, we did have a 19 representative. 20 BOARD MEMBER EDGERTON: So, if I understand 21 correctly, your company was well-aware of the competition, 22 you were well-aware that there were companies coming down the 23 road as long ago as 1996 who had publicly, which is quite a 24 different thing from privately, publicly released their 25 intention to enter, in a significant way, the market for PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 264 1 clean small equipment. 2 MR. WHITE: We were aware, yes. 3 BOARD MEMBER EDGERTON: I see from your chart that 4 you put in 1997 you apparently invested $2.8 million in 5 developing new electric products. 6 Your point was to, it says, you've been working to 7 develop a product plan to include a total solution in gas and 8 electric products. 9 MR. WHITE: The reason for that, if I can explain, 10 is that we do feel even going from $69 to $99 as an opening 11 price point that that's going to force a lot of customers 12 into electric products, and we want to have a solution that 13 participates on both sides. 14 We do sell gas and electric products. So, we have 15 invested in the electric side, although we also feel very 16 strongly that the electric products do not meet the 17 requirements that the customer demands in all aspects, the 18 power, the portability, the positioning, things of that 19 nature. 20 BOARD MEMBER EDGERTON: Well, I appreciate your 21 working toward a total solution, because that helps here in 22 California, particularly. 23 I'm ignorant on the subject, but I know in the 24 automotive field, and in many other products, a competitor 25 might go and buy the product of their competitor and take it PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 265 1 back to their shop and disassemble it and try to figure out 2 how they made it that way. 3 Does that happen in your field? 4 MR. WHITE: Absolutely. 5 In fact, I suggested that we costed the four-stroke 6 technology and went to great lengths, and we've costed the 7 stratified technologies, and much like Homelite, I think we 8 are probably at odds. 9 In fact, the numbers that we come up with that are 10 suggested being retail numbers look closer to the cost 11 numbers to us. 12 We have also met with some of these same companies. 13 We sat in the office with BKM, the company that is developing 14 the fuel-injection system, and the numbers that they quoted 15 to us was $35 to $37, if the industry volume shifted, and 16 there was significant volume there that allowed manufacturers 17 that were supplying components to hit those high volumes and 18 bring that cost down. 19 So, even that $37 was a qualified number, at cost. 20 BOARD MEMBER EDGERTON: Are you, if I understand 21 your testimony today, you are the number one, you are the 22 largest, or the number one provider of small engines to 23 California? 24 MR. WHITE: Chain saws, ma'am. 25 BOARD MEMBER EDGERTON: Chain saws. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 266 1 What percent of the chain saw market do you, what 2 size is your share of the market? 3 MR. WHITE: About 25 percent. 4 BOARD MEMBER EDGERTON: 25 percent. 5 So, of the overall small, including that you have 6 people marketing under your name, like Sears and others, what 7 percent of the engines that we are proposing to regulate 8 today would be engines that are yours in market share? 9 MR. WHITE: Well, two million of the eight million 10 that are manufactured. 11 BOARD MEMBER EDGERTON: Would you consider yourself 12 the dominant? 13 MR. WHITE: No. 14 Dominant in chain saws and a significant player in 15 the other categories. 16 BOARD MEMBER EDGERTON: Did I understand correctly 17 that you did not start, that your company did not start 18 working on this meeting our requirement that we adopted in 19 1990 until 1996? 20 MR. WHITE: No, that is not true. 21 The company was acquired in November of 1995, and 22 there was an engineering effort ongoing, of course, looking 23 at solutions. 24 However, what the new management brought in was an 25 opportunity to take a clean sheet approach and bring the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 267 1 Battel Memorial and use their efforts along with ours to 2 expand our ability to look at it from a pure technology 3 standpoint and have been working full-time over the last two 4 years with Battell in that effort. 5 BOARD MEMBER EDGERTON: Thank you. 6 One final comment based on what I have heard so 7 far, and that is, I, it just keeps popping into my mind that 8 there might be some competitive advantage to a delay that you 9 would perhaps reap, that, you know, that if there's one 10 company that doesn't quite have the technology yet, or 11 doesn't feel they're well positioned to maintain their same 12 size segment, then they might want to delay the regulations 13 in order to get themselves into a sufficient position to 14 out-compete, or to undercut the other company that already 15 has the technology. 16 Is that happening in your field? 17 MR. WHITE: I would say categorically, no. 18 In fact, you mentioned, and we look at it perhaps 19 the other way, that maybe there is some technology being sold 20 that is not tried and tested that perhaps has the ability to 21 benefit those who have the technology. 22 From our perspective, we are looking at, and we do 23 believe that any one of these seven technologies could 24 deliver the numbers, and we -- once we know what the target 25 is, we will invest, and we will be in the marketplace. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 268 1 We are trying to do it with the least penalty on 2 the consumer, and the marketplace is clearly, if the price of 3 these products go up significantly, the marketplace is going 4 to get much smaller. Our cost, if we go from a two million 5 engine manufacturer to a one million engine manufacturer, of 6 course, you know, overhead and everything else goes up 7 appropriately, so from that perspective we have a concern, 8 yes. 9 CHAIRMAN DUNLAP: All right. 10 Any other questions of the witness? 11 Thank you. 12 BOARD MEMBER RAKOW: I would have a question of 13 staff. 14 Have you responded to McCulloch about their 15 conclusions, and how do you differ from your conclusions and 16 his conclusions? 17 MR. CROSS: We can't respond in great detail, 18 because we have only been able to -- the analysis that I put 19 up with that overhead looked at the idea of 74 or 75. 20 They were proposing 74. We picked 75 to run. 21 We looked at 75 for the entire period of time, and 22 I think we came up with 2.8 tons difference in 2010. 23 The 54 for commercial applications will knock that 24 down substantially. However, that is not a proposal that we 25 had sort of put before us analyzing in any great detail. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 269 1 BOARD MEMBER RAKOW: I wondered whether it had been 2 presented to you. 3 MR. CROSS: We have talked to McCulloch, I mean, 4 obviously they have asked questions about various things that 5 are going on, I mean, obviously, all of the manufacturers are 6 talking to us, but in terms of being able to hammer out some 7 kind of a proposal that could be presented today, no. 8 So, we didn't analyze the 54. I can say that the 9 point that they are making about commercial being the heavier 10 emitting particle category is, in fact, correct. 11 So, if you did get the commercial to 54, it would 12 produce a lot of the emission reductions that the staff 13 proposal is proposing. 14 BOARD MEMBER RAKOW: It would reach the eventual 15 goal. 16 MR. CROSS: It wouldn't reach the goal completely, 17 because you still have the residential at the higher rate, 18 but it would help. 19 I guess what I am saying is if you look at it, at 20 85 for everybody, you are way off, but at 75 for everybody 21 you are getting closer, and then each chip in the market that 22 you bring down to 54 is going to help. 23 I think that what they are suggesting is that if 24 you go after the part with the highest usage, and also the 25 part that costs the individuals the lowest, in other words, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 270 1 the commercial equipment is the highest price. 2 CHAIRMAN DUNLAP: Okay. 3 Staff, yes, no answers are acceptable. 4 I am going ask Mr. Cackette to watch you, Bob. 5 Mr. Cotton, you have a colleague, Tom Sawada, is he 6 with you? 7 Would you bring him up there to stand right next to 8 you. 9 MR. COTTON: He is going to help with the slides, 10 and he is Chief of Research in Japan, so if there are any 11 questions that are over my head, which is very possible, ask 12 him. 13 CHAIRMAN DUNLAP: We'll look to him, and by the 14 way, I'm not trying to rush, all of you guys have been 15 waiting. 16 MR. COTTON: I will rush, because I am not 17 comfortable up here. 18 CHAIRMAN DUNLAP: You are a good man. 19 MR. COTTON: I appreciate being here, Mr. Chairman 20 and the Board. I'm Jim Cotton, with Komatsu Zenoah, America. 21 We do not have a problem with the Tier II 22 standards. Great insight was used to set the standard. 23 It is very interesting to note that the major 24 players of the marketplace are the one's that come to this 25 meeting empty-handed. They have no solutions. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 271 1 All they have is questions and doubt. They're 2 resisting change because of the great risk they have 3 involved. 4 Honda is not in the two-cycle engine business or 5 the hand-held business until now. They invested a lot of 6 money for a new market. They had never made a profit in this 7 market. 8 Ryobi is large. They are different. 9 Red Max and Tanaka are very small players. 10 Together they represent probably less than five percent of 11 what Echo does. 12 Why are these large players not coming here with a 13 product that will meet the requirements of this Board? 14 We not only have one product, we have two products. 15 We have developed a stratified scavenging engine. 16 It is very simple. It's been around a long time. 17 But being around and everybody understanding it is 18 different than being able to make it work. Komatsu Zenoah, 19 you may never have heard of the name before, but it is owned 20 wholly by Komatsu Industries in Japan. 21 They are one of the top largest industrial 22 corporations in Japan. We know what we are doing. The 23 technology is not that advanced or radical. 24 We use a basic engine and make some conversions to 25 it. The technology that we have is adaptable to low-priced PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 272 1 equipment, if that low-priced equipment is fairly well 2 manufactured. 3 Now, this is completely different than anything 4 else that you heard today, but our view is different. 5 We didn't go into this with a can't be done. We 6 went into this and we said, we are going to do it, because we 7 owe the world cleaner equipment. 8 Our approach was two-cycle and also four-cycle. 9 Because of expertise in engineering, we went to work with 10 Ryobi in a partnership agreement to develop a commercial 11 engine out of what they currently have in their four-cycle 12 engine. 13 My presentation is going to include technical 14 feasibility, cost feasibility and mass production plans. 15 As you've heard before today, there are some great 16 advantages in two-cycles, compactness, high-powered weight 17 ratio, which is extremely important, simple construction, 18 which reduces end, low cost. 19 The disadvantages of a two-stroke engine is high 20 THC emissions and low thermal efficiency. The drawbacks are 21 mainly results of short circuiting of mixture during the 22 scavenging process. 23 Our major target was to reduce the short circuiting 24 of the engine. The research and development targets were 25 conforming to the original Tier II standard. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 273 1 We set out to comply with that standard. We didn't 2 come up and say, well, if we do this, we get so far. We 3 said, we are going to comply to it. 4 To accommodate that, we developed three strategies. 5 The three research and development strategies was a leaner 6 combustion chamber for CO and THC emissions reductions. 7 We reduced the short circuit mixture for emission 8 reductions and better thermal efficiency. To reduce the 9 short circuiting, we applied airhead stratification. 10 Our strategies included not using a catalyst, 11 because there are some major problems in using catalysts. 12 Our leaner combustion was accomplished by 13 optimizing the engine parameters, such as combustion chamber 14 shape, spark plug positioning and ignition timing. 15 Our targeted air fuel emission was 14. Our current 16 engines are 11 to 13. 17 The engine that we had out on display, and most of 18 you had a chance to run it, is the newest design of a regular 19 engine. 20 We changed a few parts to it for the new technology 21 to make it a stratified scavenging engine. It did not 22 require a completely new engine. 23 There were some advantages to a stratified 24 scavenging engine. One is that it runs cooler, which relates 25 to longer life. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 274 1 The exhaust temperatures are almost 10 percent 2 less. One of the disadvantages, it does not develop quite as 3 much horsepower. 4 We greatly improved the erratic combustion over our 5 current engine, which is a very important thing, which means 6 that it runs smooth at an idle. 7 There are the heat test results up there. It is a 8 very simple design. 9 Typically, the area that the manufacturers are most 10 concerned with is the exhaust. Our current two-stroke engine 11 runs at 250 degrees. 12 We also believe we may be able to possibly improve 13 that. The current two-cycle engines from the horsepower has 14 been happening over many, many years. 15 As time goes on, we will be able to improve this 16 greatly in this engine. We are not going to get into a lot 17 of theory. 18 If you look at the illustration on the bottom, 19 right, basically, all we do is we inject air into the 20 cylinder through the carburetor in two tubes. 21 We put an air barrier between the incoming fuel in 22 the exhaust, which is a burn fuel. The problem with the 23 two-cycle engine is that when it exhausts, it is also 24 bringing fresh fuel mixture into it, which exits, there's 25 where the major pollution is. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 275 1 So, what they have done is they put a barrier of 2 air in there to eliminate most of the bleeding of the fuel 3 out of the exhaust. 4 It is very, very simple. 5 Problems that you run into with something like this 6 is a heat factor, and we have reduced the heat. 7 The appearance of our second prototype engine is a 8 34 CC unit, that I previously said, is a basic model. 9 It is brush cutter trimmer engine. There's a 10 reason why it's a brush cutter trimmer engine from Komatsu 11 Zenoah America. We typically do not do much in chain saws in 12 the United States. 13 The biggest potential for us is in line trimmers. 14 That is why we developed that engine the way that it is. 15 That technology will fit on any engine that we 16 build. It has lean combustion technology, airhead 17 stratification, and it has no catalyst. 18 This table shows specifications of the second 19 prototype engine, and also, of the current engine. 20 Note that they have the same displacement. The 21 prototype is five percent lighter. 22 Let's look at the test results. This table shows 23 the summary of the test results and shows each one of 24 emissions and thermal efficiency at the rate of horsepower. 25 In summary, the THC emissions and the thermal PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 276 1 efficiencies were greatly improved. These tests satisfy the 2 proposed CARB II standard. 3 Those ratings, emission ratings, get better as some 4 hours are put on that engine. That engine will last a lot 5 more than 300 hours. 6 Three graphs here. It is rated at 14 air fuel 7 mixture on both engines, the current engine and the prototype 8 engine. 9 Top graph is THC and second graph is CO and the 10 third is NOx. The blue line is a current engine, the red 11 line is the second prototype engine. 12 The THC is 80 percent lower at the rate of speed in 13 the new engine. The second prototype engine also achieved 14 your target in CO and NOx. 15 Cost feasibility, we're just informed that this 16 engine when it is introduced, and it will be in a smaller 17 size, will be offered in the United States at no additional 18 charge. 19 The stratified scavenging engine is cost effective. 20 It will meet CARB, and it is relatively simple construction, 21 with minimal and additional parts. 22 This is an exciting time for Komatsu Zenoah. 23 Because of our huge investment, it positions us where we can 24 obtain a large share of the market in California. 25 We have done what you have asked. We trust that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 277 1 there will be no additional delays or any changes in the 2 specifications. 3 Thank you very much for your time, and I will be 4 glad to answer any questions that I possibly can. 5 CHAIRMAN DUNLAP: Does the Board have any questions 6 for the witness and his technical advisor? 7 MR. COTTON: There is another reason I think that 8 you are right. 9 I am really a California citizen. I have lived 10 most of my life here. My grandkids live here, and I 11 appreciate you protecting them. 12 CHAIRMAN DUNLAP: Yeah. Good, thank you. 13 Joe, do you have any questions? 14 BOARD MEMBER CALHOUN: I am tempted to. 15 CHAIRMAN DUNLAP: Why don't you hold it? 16 We will have you hang close if we need you. 17 To the audience for a minute, and I know people 18 have come long distances, and I know this is an important 19 issue, and I want to deal with this, and I think the Board's 20 instincts are to deal with this by early evening, you know, 21 or sooner, if we can. 22 So, I know folks have very nice slide presentations 23 and all that, but I am going to encourage you not to go into 24 that. I'd like to get to some bottomline comments. 25 I know there's a few representatives from the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 278 1 environmental community, too, that have been waiting a long 2 time. 3 So, at last count we had 11 or 12 witnesses left. 4 I am going ask the next handful, I have three Ryobi reps, and 5 I know you guys have been planning 15 or 20 minutes, and I am 6 going to ask you to try to cut that to five or so, if you 7 can, and Tom, I am going to let you and Bob maybe ask some 8 questions of them, you know, bring some points up that you 9 think are particularly important for the Board to know. 10 If Ryobi would give me that flexibility, I would 11 appreciate it, but before we hear from Ryobi, I see Randy 12 Haslam from Tanaka is here. 13 So, I will have you come forward. I guess you 14 would like three to five minutes or so, which is the right 15 size. 16 MR. HASLAM: Chairman Dunlap and Members of the 17 Board. Thank you for this opportunity. I will be very 18 brief. 19 My only visual is one of the products that you kept 20 this morning. 21 It's a statute thing, isn't it? 22 Sorry. My name is Randy Haslam, and I represent 23 Tanaka. We are a premium two-cycle engine manufacturer. 24 Our products include line trimmers, hedge trimmers 25 and other types of professional hand-held equipment. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 279 1 All of our current models comply with CARB's Tier I 2 regulations, of course. Years ago, when we began our 3 compliance efforts with the State, we were forced to make 4 some very key decisions about out future direction. 5 The Tier II regulations set forth by CARB posed an 6 unprecedented challenge to industry worldwide. We at Tanaka 7 were forced to look within and identify our capabilities and 8 limitations in the face of this adversity. 9 We are neither lawyers nor lobbyists, but we are 10 rather expert engine builders. Our decision was to build 11 clean burning two-cycle engines. 12 We began paralleling several concepts. We 13 continued to be an active partner in a consortium to build a 14 fuel-injected single cylinder engine. 15 Our partners include Suzuki, Yamaha, Tahatsu, 16 Honglin and BKM, as mentioned earlier this afternoon. 17 However, the largest funding partner in this 18 program is the State of California through its innovative 19 Clean Air Technologies Program. 20 Our significant progress with this program is 21 briefly described in the staff's recent proposal published in 22 prelude to this meeting. 23 Another design and optimized scavenging two-cycle 24 with a catalytic converter was developed by our engineering 25 staff. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 280 1 This was the machine that you folks viewed this 2 morning. This 40 CC engine meets all of the requirements set 3 forth in staff's recent proposal and is scheduled for 4 production in July of this year. 5 If the Board accepts the staff's proposal, we 6 expect to be the first to certify a two-cycle hand-held 7 engine to the Tier II standards. 8 We have an application that is complete and has 9 been submitted to staff. This will be the realization of a 10 long-term goal of ours. 11 This was an objective that we set many years ago. 12 We are in the prototype stages with a 26 CC version of the 13 same design and are confident that we will have it in 14 production late this year or early next. 15 It's our opinion that any relaxation to the Tier II 16 regulations beyond what staff has proposed would present a 17 penalty to manufacturers like ourselves who have made 18 significant investments in securing our future in this 19 marketplace. 20 We have met the challenge presented by CARB, and 21 urge you not to change that challenge at this late date. 22 Again, thank you for this opportunity. 23 CHAIRMAN DUNLAP: Okay. I appreciate that. 24 Could you just say a word or two more about this 25 being a goal of your company's, and you know what I am PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 281 1 saying, and about what I think you are alluding to is a moral 2 obligation of this Board to take a course of action. 3 MR. HASLAM: Well, sure. 4 I think that, as Jim mentioned, from Komatsu Zenoah 5 earlier, I think that the vigor of a lot of companies was 6 determined several years ago in attacking this. 7 I made the statement that we are neither lawyers 8 nor lobbyists. I think that the quality of my presentation 9 probably has a clear enough indication of that. 10 What we are is engine builders, and we are very 11 good at it. We have been in business for a long time, and we 12 accepted the challenge. We thought we could do it. 13 We took several different approaches. We spent a 14 lot of money on it, as all of these folks have, no doubt, but 15 we had one goal in mind and that was to meet your Tier II 16 proposal. 17 I guess that sums it up. We actively pursued it, 18 and we feel that we have accomplished it. 19 BOARD MEMBER FRIEDMAN: I wonder, all those that 20 have succeeded in reaching this goal, I would like to know 21 what the projected cost to the consumer is going to be in the 22 different categories? 23 I don't have to ask Jim Cotton that, but obviously 24 that is of concern, so if the data may not be precise, 25 because it is not on the market, but surely there are PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 282 1 projections? 2 MR. HASLAM: Right. Well, I certainly can't speak 3 for any other manufacturer other than Tanaka, although I 4 think that I did hear Jim mention that there was going to be 5 no incremental cost increase. 6 However, I will say that the Tanaka design will 7 incorporate probably a five percent increase at the retail 8 level. 9 Our products are very high-end. We only sell to 10 the professional landscaper. We don't market anything that 11 is a homeowner consumer product. 12 So, admittedly, our products are a lot less price 13 sensitive than a lot of the manufacturers who testified 14 today, but we expect that to be insignificant. 15 CHAIRMAN DUNLAP: Have you given any thought to 16 looking at the homeowner market at all? 17 MR. HASLAM: No. 18 It is a real difficult market to compete at, 19 products that retail for under $100. For the most part, the 20 people who are players in that market have been well 21 established for a long time. 22 BOARD MEMBER CALHOUN: Since this is a relatively 23 new product, what about the durability of it? 24 MR. HASLAM: Actually, this is not a new product. 25 This is a hybrid of a 40 CC engine that we PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 283 1 certified to your Tier I regulations. 2 The durability, it has met the 300 hour durability 3 test, and staff will agree, and I guess to answer your 4 question with a question, I am in stark contrast with a lot 5 of the folks that are here today, I don't think that I would 6 be here protesting that we meet these regulations if in fact 7 we weren't confident that it did. 8 BOARD MEMBER CALHOUN: I know, but I am interested 9 in whether or not, if someone does buy one of your products, 10 whether it's going to last two weeks or two days? 11 That's one of the reasons why I raised the 12 question. 13 Let me pursue another thing, assume that you 14 warrant your product, and for how long? 15 MR. HASLAM: Well, in fact -- 16 BOARD MEMBER CALHOUN: Let's take the existing 17 product that you have out there right now. 18 MR. HASLAM: Our product, currently this particular 19 model would carry a one-year commercial warranty. 20 Of course, under the proposed Tier II regulations, 21 the emission system on this engine would be required to be 22 warranted for 300 hours. 23 Does that answer your question? 24 BOARD MEMBER CALHOUN: Partially. 25 Let's move on. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 284 1 CHAIRMAN DUNLAP: Okay. Very good. 2 Thank you. Ryobi. 3 Five minutes, I know, is going to be difficult to 4 do. If you need to, take more time. 5 MR. COOTS: Good afternoon, my name is Frank Coots. 6 I'm with Ryobi, North America. 7 I'm going to have a very brief presentation for 8 you. I've only got about a dozen slides, and I'm going to 9 move through them pretty quickly. 10 Singh Suchdev is our Technology Vice President and 11 is head of our operation in Arizona, where we build all of 12 our engines, will discuss some of the technical aspects of 13 our new four-stroke engine. 14 I said I'm going to move through these quickly. We 15 are a big company. We make about two million engines a year. 16 We have the largest market share in trimmers for 17 our brand, and we have about a 20 percent market share of the 18 hand-held category in the U.S. 19 Our products are distributed nationally, primarily 20 through the home centers. We also produce OEM products for 21 Sears, Toro, Steel, other manufacturers. 22 Breakdown of our line, about a million engines are 23 sold under the Ryobi brand name, 800,000 plus are OEM 24 products. 25 We support the existing Tier II rule for hand-held PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 285 1 engines. We have made a significant investment to meet this, 2 just as the gentleman from Tanaka indicated. 3 We took a look at this back 1991. We made an 4 announcement back in 1992 that we were going to have an 5 engine out to meet Tier II, and in fact, we delivered that 6 engine in 1994, and it's one of the two engines that you saw 7 out there. 8 Since 1994, there have been a number of other 9 companies that have come along. You have heard from several 10 of them today that have responded with clean technology that 11 just demonstrates that the ARB's technology forcing rule has 12 indeed worked. 13 I want to touch on the issue of fairness. Ryobi 14 has invested, since 1991, more than $10 million in developing 15 this technology, and you've heard some of the other companies 16 have invested significant amounts of money as well, and we 17 really believe that any further delay in this rule discounts 18 the value of our investment significantly. 19 Now, when I say that we support the existing Tier 20 II rule, I will also tell that you that in conversations with 21 staff recently, we have indicated to them that we can accept 22 the staff proposal. 23 We have been working with staff pretty closely 24 on that. I don't need to remind you or the staff that the 25 Tier II rule is essential to meet the SIP goals. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 286 1 I do want to say a word or two about our friends at 2 PPEMA. We used to be members of PPEMA, but we have had a 3 parting of ways. In 1992, when we announced our new 4 technology, and we were interested in meeting the Air 5 Resources Board Tier II standard, and at that time and today 6 as well, PPEMA was not interested in these cleaner 7 technologies to meet Tier II. 8 We had a parting of the ways then. You heard 9 accurately, I believe, from your staff that PPEMA represents 10 about 60 percent of the gas hand-held gas market. 11 You look at the total hand-held market, including 12 gas and electric, their membership represents about 30 or 35 13 percent of the hand-held category. 14 Just a couple of weeks ago we saw the most recent 15 PPEMA proposal, but again, it is asking for more delays. 16 It doesn't recognize the proliferation of Tier II 17 technologies. It does not recognize the broad application of 18 these technologies. 19 It doesn't recognize electric technologies. It 20 doesn't recognize the dynamic market response, particularly 21 in the last year that we have seen in response to Tier II and 22 the number of companies that have come forward in just the 23 last year and what you might reasonably expect over the next 24 couple of years as you head into your Tier II deadline. 25 This is from the staff chart. These are the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 287 1 companies that currently have Tier II technologies, that 2 either have product on the market or have indicated that they 3 will have the them on the market in the next year or two, 4 certainly in time for Tier II. 5 All of the Tier II capable engines shown on the 6 previous chart that have been developed since 1997 are all 7 positioned, that includes the new Ryobi engine. 8 It means it can be operated in all positions, 9 upside down. It means it's appropriate for chain saws. 10 You saw the two-stroke and four-stroke models, 11 residential and commercial. The new Ryobi engine is a 12 commercial engine. It will also be sold to consumers. 13 Aside from its all-position use, we have 14 significantly reduced the weight. It actually weighs less 15 than our more popular two-stroke models right now. 16 This is a little hard to see. I hope you can. I 17 think this is an important chart. 18 We have heard a little bit about the choice 19 available to California consumers, what's going to happen if 20 you adopt a Tier II rule, will product be available to 21 California consumers? 22 Look at the percentage. If you look at the total 23 market, look at the percentage in California of electric to 24 gas, you have about 65 percent. 25 65 percent of the electric market is -- of the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 288 1 total hand-held market is in electric as opposed to gas. 2 In each one of the categories identified there, 3 trimmers, blowers, hedge trimmers, significant numbers of 4 electric equipment, even in chain saws, if you look at the 5 bottom line there, please, if you look at chain saws at 45 CC 6 and under, you see nearly a 50/50 break in electric and gas. 7 As far as price points, this is what we plan on 8 doing. Our current four-stroke equipment sells in the $179 9 to $199 range. 10 Next year, we will have a four-stroke trimmer that 11 will sell for $129. We believe that technology featured can 12 be sold at $100, and of course, we offer electric and 13 cordless equipment as well, which retails at price points 14 beginning as low as $50. 15 Now, I will give you Mr. Suchdev. 16 MR. SUCHDEV: Good afternoon, Mr. Chairman and 17 Members of the Board. My name again, is Singh Suchdev, and 18 I'm the Technology Vice President of Ryobi North America, and 19 the Chief Operating Officer for Ryobi outdoor products that 20 designs, manufactures, distributes and services our products. 21 Today, I would like to share with you the Ryobi 22 Tier II compliant technologies for hand and lawn gardening 23 equipment, namely their four-stroke, electric and battery. 24 In 1994, Ryobi produced the world's first small 25 hand-held four-stroke engine that was capable of meeting the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 289 1 Tier II emission regulations. 2 Ryobi markets a line of trimmers and brush cutters 3 using this engine that retails for $179 to $199 and can be 4 used with add-on accessories, as you saw this morning, as 5 blowers, vacuums, hedge trimmers and snow blowers. 6 While the customer satisfaction with these 7 four-stroke products is very high, Ryobi recognized that 8 engine weight and all-position use was areas for continuous 9 improvement. 10 Ryobi has been successful in enhancing its 11 technology to develop light-weight, all-position, four-stroke 12 engines. 13 This engine will be used to power string trimmers, 14 brush cutters and again, our add-on accessories for 15 residential and commercial use. 16 These products will retail this fall at $209 to 17 $249. You, again, saw a demonstration of the trimmer that is 18 featured on the left-hand side. 19 This little 26 CC jewel weighs less than seven 20 pounds. It is one horsepower, and it meets Tier II. 21 These latest four-stroke enhancements make it 22 possible for this technology to be used in all-position use 23 applications, such as chain saws. 24 Currently, Ryobi does not manufacture these 25 category of products. However, we expect to have a concept PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 290 1 prototype available later during this year. 2 Benefits of this four-stroke technology go beyond 3 meeting the Tiered regulations. This technology offers lower 4 noise, lower operating costs and no oily drips at competitive 5 weight, power and all-position use. 6 Retail price increase for this technology is 7 estimated at $20 for high wall end production. Ryobi has 8 embarked on developing a whole family of new four-stroke 9 products, trimmers that will accept add-on accessories. 10 We expect consumers to be able to purchase these 11 trimmers for $129 at retail in 1999. 12 We will also, all 26 to 31 CC, for residential and 13 commercial hand-held equipment, these engines will be 14 available in the year 2000. 15 We also intend to expand this category of products 16 and the larger engines from 40 CC to 60 CC, two to three 17 horsepower range, that will utilize the high speed 18 four-stroke technology that can be used to power chain saws, 19 brush cutters, blowers and other applications, these engines 20 could also be available in the year 2000. 21 I would like to reiterate that Ryobi four-stroke 22 technology is available to others through licensing and OEM 23 agreements. 24 Ryobi also offers zero emission electrical 25 equipment, such as blowers, trimmers and hedge trimmers. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 291 1 They retail from $29 to $79. 2 The trimmers can also use our add-on accessories. 3 In addition, Ryobi offers a line of zero emission battery 4 products such as trimmers, hedge trimmers that retail for $59 5 to $99. 6 In conclusion, Ryobi support, and supports the 7 existing Tier II rule. However, as my colleagues said all 8 year that we can live with the staff's proposed rule. 9 I urge the Board to act now and not to delay the 10 decision on adopting the rule. Clean small engine 11 technologies are proliferating. There are many engines, many 12 manufacturers, different technologies to meet the proposed 13 rule. 14 As the staff has already said, Tier II will have 15 little economic impact on California businesses and 16 consumers, and not the least, Tier II is essential to meet 17 the SIP and provide low cost emission reductions. 18 This concludes Ryobi's formal presentation. I, and 19 my colleagues, will be happy to answer any questions that you 20 may have now. 21 CHAIRMAN DUNLAP: Okay. Thank you for compressing 22 that. I appreciate you doing that for us. 23 Ed, did you want to add anything? 24 Come on up. You have been a friendly face that 25 helped me get briefed, and I cut you out of the loop here. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 292 1 MR. STROHBEHN: Thank you, very much, Mr. Chairman 2 and Members of the Board. I have just a few comments that I 3 would like to make. 4 First, the fuel spillage alternative that PPEMA 5 proposes is really not an alternative at all. It's 6 voluntary. It's an MOU. 7 So, it's not a regulation. It's not enforceable. 8 There's no way that you can be assured the standards you 9 think that you are getting from the alternative will in any 10 way meet the standards that you have. 11 Moreover, this MOU with PPEMA will represent only 12 60 percent of the gas market. The rest of the gas market 13 will not be obligated under that proposal. 14 Finally, I'm no emissions expert, and I'm no cost 15 expert, but somehow that proposal, they seemed to mistake the 16 fact that they are getting emissions out of fuel spillage, 17 which is not entirely what we are dealing with here. 18 We are dealing with emissions from hand-held 19 engines. Those are the emissions that you have to worry 20 about. 21 The fuel spillage is coming later. It makes no 22 sense to even think about it now. We will deal with that 23 later. 24 Secondly, the representative Poulan/Weedeater, I 25 was rather intrigued by his investment profile. I was struck PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 293 1 that I couldn't quite tell what he was investing in, but I 2 could tell the years. 3 This Board adopted this rule in 1990. The first 4 time they began heavy investment was 1994 and 1995. 5 Where were they when the Board put the rule out? 6 I was also intrigued by Mr. Griswold's comment 7 about crankcase oil emissions, somehow they make our engine a 8 dirty product. 9 Last time I heard, it is illegal to dispose of oil 10 improperly. Meanwhile, his two-strokes put out all the oil, 11 minute-by-minute, day-by-day, hour-by-hour, into the 12 environment with no control. 13 It's important, to conclude, that we are dealing 14 with Clean Air Act goals. The Clean Air Act requires the 15 Board, excuse me, has goals which are to achieve the maximum 16 degree of emissions possible and attain those standards at 17 the earliest possible date, considering the economic, 18 technological and fuel factors, among others. 19 The staff has done that. They have given you a 20 proposal which is worthy of your consideration, in fact, I 21 think demands your adoption. 22 In conclusion, let me say that as a basic issue of 23 fairness, you owe it to the people who have invested because 24 this comes up in your Tier II rule. 25 Please adopt this rule. Thank you, very much. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 294 1 CHAIRMAN DUNLAP: Thank you, Ed. 2 I appreciate that. 3 BOARD MEMBER EDGERTON: I just want to say that I 4 have been mindful, as we have been talking about this issue, 5 that earlier today we adopted, or we were presented with this 6 wonderful document, Identification of Achievable Performance 7 Standards, or Emerging Technologies, and in this, the 8 California Clean Air Act is again cited, and what we are 9 saying to the district is that we have, recognizing that the 10 California Clean Air Act provides that districts can develop 11 approvable plans, provided the plans commit to the 12 implementation of "every feasible measure" on an expeditious 13 schedule. 14 The "every feasible measure" language is found in 15 the law itself, in the California Clean Air Act. Now, I have 16 to assume, or I do assume that where there is an existing 17 product on the market which meets the standards, it is 18 presumptively feasible under the California Clean Air Act. 19 Consequently, I don't believe we have the authority 20 to change it. I think we need to keep it as it was, Tier II. 21 I, we have reservations about whether we even have 22 the authority under the Clean Air Act to postpone it a year. 23 That's the one thing that I wanted to say about 24 this here. Secondly, there are tremendous problems in my 25 view with, and I have said this before, this is a consistent PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 295 1 position, thank goodness, and I don't know if it's good that 2 I have been here so long that I am starting to have a 3 consistent position on something, but I believe once you put 4 a technology forcing regulation in place, it is unfair to the 5 market and to competition to change it, absent extraordinary 6 circumstances. 7 I recall being a lone vote years ago when we had 8 reformulated gas and the large oil companies could achieve 9 the standards but the small independents couldn't, and there 10 was a great deal of sentiment and sympathy with the smaller 11 oil companies who were not yet up to speed on the technology. 12 Although I had sympathy with them, they did not get 13 my vote. I voted with the large companies because they were 14 the one's who had met our standards. 15 Similarly, when the issue came up with Dupont and 16 our hairspray regulations, Dupont had a competitive advantage 17 because they had developed the propellant that would enable 18 the lower emissions for our Board and would be able to meet 19 our standards. 20 I was prepared to vote to, behind Dupont on that 21 because of the principle of technology forcing and supporting 22 those companies that put their pedal to the metal. 23 So, here again we have a situation, Ryobi has put 24 $10 million, and I have not seen any numbers that approach 25 that by anybody else, I think I just saw McCulloch $2 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 296 1 million, but $10 million into this effort. 2 They are our partners, and I believe we should stay 3 with them as we go forward to meet the regulation. 4 So, the reason why I have gone on a bit is to thank 5 you for your cooperation and for your partnership. 6 Thank you very much. 7 CHAIRMAN DUNLAP: All right. 8 MR. SUCHDEV: Our company has a passion for this 9 kind of product and innovation. 10 CHAIRMAN DUNLAP: Okay. Lynn, don't close too 11 early. 12 We have a few more witnesses. I know that you know 13 that. 14 Tim Carmichael, Coalition for Clean Air, Julie 15 Kelts, represents herself and an outfit called Ecos, Jed 16 Mandel from EMA, Bob Wyman from Briggs, Stratton and 17 Tecumseh, along with Peter Hotz and Roger Gault, and then 18 Andrew Frasier from Pioneer Eclipse, Paul Maurer, Kenneth 19 Zeltner and Bruce Bertelsen. 20 Again, brevity is a virtue. Good afternoon, Tim. 21 MR. CARMICHAEL: Chairman Dunlap, Members of the 22 Board, Tim Carmichael, Coalition for Clean Air. 23 Today I have the honor of representing not only the 24 Coalition but the Natural Resources Defense Council and the 25 Sierra Club of California. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 297 1 A lot of things to comment on. I will do my best 2 to keep it brief. General comments, and I believe you have 3 circulated a summary of our main points. 4 We believe that a relaxation of the proposed 5 standards hurts the companies that did exactly what 6 California asked them to do. We think that is absolutely 7 fundamentally wrong. 8 We have had more than one company, in fact, three 9 or four of them, represented in the staff, meet the 10 challenge, meet the standard, and now California is caving on 11 them. 12 You are backing out on them, the State's end of the 13 agreement, as far as we are concerned. We don't think that 14 is acceptable. 15 It was interesting, just before I came up, Board 16 Member Edgerton mentioned the concept of "all feasible 17 measures." 18 I was actually going to address a similar concept 19 relating to holding all segments of California society 20 equally responsible for air pollution and holding them to a 21 requirement to do everything that they can. 22 In Southern California, and I believe it is the 23 concept that is used in other parts of the State, it's a 24 thing called BACT, Best Available Control Technology, which 25 requires industries to employ the cleanest technology PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 298 1 available. 2 We have multiple examples, not just one example, 3 which is required under BACT, but multiple examples of 4 engines and manufacturers that meet the standards, once 5 again, supporting our position that we should not be relaxing 6 or delaying these standards. 7 The focus of this Board is protecting public 8 health. It should not bending over backwards to accommodate 9 the manufacturers that have failed to do their part to 10 address the air pollution problem in this State. 11 Yes, there should be an examination of where we 12 could be flexible, and we need to be sensitive to impacts on 13 the market, the consumers, manufacturers, jobs, all of that, 14 but from our read of the staff report, this Agency has bent 15 over backwards to accommodate manufacturers that have done 16 less, not more, done less to achieve California's air quality 17 goals. 18 It goes without saying, and I will spend a moment 19 on this, but the roll back that is proposed by staff has a 20 profound negative on the State Implementation Plan. I will 21 speak on that in just a minute. 22 We just received today this Attachment A, and we 23 will be submitting some written comments, but there are a 24 couple of things that jumped right out at me that I would 25 like to share with the Board. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 299 1 The extreme nonattainment language that appears in 2 Attachment A basically singles out Southern California and 3 says that the engine manufacturers should provide cleaner 4 engines for that part of the country because they have 5 extreme nonattainment. 6 My read of that is that's its intent is not really 7 to do more for the extreme nonattainment area of Southern 8 California, but the intent is to prevent other parts of the 9 country from employing the same clean air standards, the same 10 clean air technologies that would be available in California. 11 That is fundamentally wrong, and we strongly oppose 12 that position, that concept, and it should not be embraced by 13 this Board. 14 Specifically, on the hand-held regulations, we are 15 actually generally supportive of the proposal that staff has 16 brought forward. 17 We do not believe that a delay is necessary, as has 18 been indicated by several of the manufacturers. The 19 technology is there today. 20 You have the defense. You have the support you 21 need to push ahead with this technology for the program. 22 On that note, we commend the manufacturers that 23 have, in fact, delivered on the demands, the regulations in 24 California. 25 On the nonhand-held side, which appears to be the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 300 1 more difficult one, as far as attaining the standards, there 2 in the staff report, there is a list, a table, which I 3 actually attached to the summary of our comments, which 4 indicates a list of manufacturers that don't necessarily meet 5 the standard, some do, but some are right on the cusp, again 6 we have several manufacturers, several engine types that have 7 failed to meet it, or they are right on the cusp of meeting 8 the standard. 9 Consistency in our regulations and our regulatory 10 program would suggest that the argument that the staff has 11 made for the nonhand-held, sorry, for the hand-held, the 12 smallest engines, saying that we have working examples, we 13 should move ahead with the regulation, and I would like to 14 make the same argument on the larger engines. 15 If we have working examples that are meeting the 16 standard, or on the cusp of meeting the standard, why does 17 this Agency feel the need to triple, or quadruple the 18 standard, not relax in a small way, but triple or quadruple 19 the standard, plus, for us that's shocking, but staff feels 20 the need to go even further and provide a significant delay 21 in the implementation of these triple and quadruple 22 standards. 23 We strongly oppose that position and do not believe 24 that the staff report justifies such a relaxation. 25 In fact, California can't afford the luxury of that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 301 1 relaxation. You relax standards when you attain the air 2 quality standards. You relax the regulatory standards on 3 industry when you can afford to do it. 4 Right now we are in the position of scrambling for 5 every ounce of reductions that we can find from every 6 industry. 7 A relaxation here not only hurts the engine 8 manufacturers that have done what they needed to do to 9 achieve the standards, it hurts every other industry that 10 this Agency is going to be forced to go after, to squeeze out 11 additional emission reductions. 12 We are giving away too much here, and it is not 13 justifiable because the technology argument is not 14 justifiable because some of the manufacturers didn't invest 15 the money to get there when they should have. 16 We have a couple of comments on the SIP relative to 17 the nonhand-held engines, and this Attachment A, there is 18 another important point. 19 The Attachment A proposes to eliminate Tier III, 20 that's the standard that would have kicked in 2004 or 2006 21 depending on path of the staff proposal. 22 Eliminating Tier III takes away the technology 23 forcing component of this program. We need to keep setting 24 tough standards in the future, driving these industries to do 25 what all that they can to reduce emissions. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 302 1 We strongly oppose the elimination of Tier III as 2 proposed by staff. Relative to the California SIP and air 3 quality, the proposed relaxation combined with inventory 4 changes has a really profound impact on the SIP, more than 50 5 tons per day. 6 That is a huge emissions burden, and in fact, it is 7 a multiple exponentially bigger than most of the regulatory 8 programs will achieve. 9 It once again gives an opportunity to say that we 10 think you are going too far to accommodate manufacturers in 11 your attempt to relax this program. 12 We are separately concerned about carbon monoxide 13 attainment. Southern California just recently received 14 attainment status for carbon monoxide. 15 Every time that we relax a CO standard, we fear 16 that that attainment status is in jeopardy. 17 CHAIRMAN DUNLAP: Ten new areas, not South Coast, 18 there is one in South Coast that prohibited them from being 19 in attainment, but you're right, the State just moved 20 dramatically forward in that area. 21 MR. CARMICHAEL: And we are worried that this might 22 slip us back, and that is a serious concern. 23 CHAIRMAN DUNLAP: Tim, I wanted to focus on a 24 point, whenever you are done or whenever you think it's 25 appropriate. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 303 1 MR. CARMICHAEL: Two more minutes. 2 One point that hasn't been raised today, which I 3 actually expected to come up, it was raised from a different 4 perspective, one of the gentlemen that spoke earlier today 5 talked about concerns for the users and safety concerns for 6 the users, but there was no mention about the concerns 7 relative to air pollution and the emission exposure of the 8 current users and those people that will continue to use 9 these pieces of equipment. 10 Here is another very individualized concern that 11 this Board needs to be aware of. There is an impact from the 12 emissions from these pieces of equipment on the people that 13 use them on a daily basis, and in fact, on the people that 14 use them once a month. 15 Finally, we have a couple of requested changes, at 16 least one of them is relatively easy for this Board to 17 implement and some may be a little bit more difficult. 18 The easy one first. Staff is proposing a 19 modification to the labeling requirements relative to 20 durability. 21 We would encourage this Board to go a step further 22 and to require as part of that labeling requirement some form 23 of emissions index, some number, or scale that indicates to 24 the consumer what the emissions are associated with this 25 piece of equipment that they are purchasing, and it should PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 304 1 apply to all small engines sold in California. 2 It is important for us to educate the consumers, 3 educate every Californian on the impact of the purchases that 4 they make, whether it's an automobile or a piece of 5 equipment. 6 It is a simple thing to do. This Agency can 7 require it, and we strongly urge you to do it. 8 The more difficult changes. We do not believe that 9 the relaxation relative to the larger engines, greater than 10 65 CC, is appropriate or justified. 11 We would ask this Board to have staff modify the 12 amendments that they are proposing and return with a proposal 13 that it achieves greater control efficiency. 14 I failed to mention a minute ago, if you read the 15 staff report thoroughly, you would notice that the existing 16 standards proposed approximately a 90 percent control 17 efficiency on this class of engines. 18 The amendments being brought forward by staff today 19 would relax that control efficiency down to about 67 percent, 20 not pooh-poohing 67 percent, that's a significant reduction, 21 but compared to 90 percent, it is a significant shortfall, 22 it's a significant relaxation, once again, one that we don't 23 think that we can afford, one that we don't think is 24 necessary. 25 So, a simple request is to ask staff to take this PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 305 1 component of the proposal, rework it, come back with a 2 greater control efficiency, maintain the technology forcing 3 component, achieve greater emission reductions and better 4 protect public health. 5 Thank you very much for considering our comments. 6 CHAIRMAN DUNLAP: Okay. Thank you, Tim. 7 The question that I had of you, was about the, I 8 wanted to get your view on the Federal authority for this 9 area. 10 You know, the industry has talked to us about 11 harmonization and sticking with the Federal Program would be 12 preferred, and unless -- 13 MR. CARMICHAEL: The Federal Program is weak and 14 EPA had no backbone in negotiating, you know that was a pity 15 that staff noted -- 16 CHAIRMAN DUNLAP: I just wanted to get that 17 perspective. 18 Tim, you know well, because we have talked about it 19 many times, you know we are proud and aware of our technology 20 forcing heritage here. 21 You also know that there are times, and I think you 22 have even been on board in recent times, on a few times when 23 we have had to modify things because we learned new things, 24 true barriers, you know that. 25 What do you really think is different about it this PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 306 1 time? 2 Do you think because the folks have spoke about the 3 technology development work and success that they have had, 4 you just think we ought to just stick to this and say, live 5 with the deadline? 6 MR. CARMICHAEL: Philosophically, why give an 7 advantage. 8 Why help out the companies that failed to do what 9 we asked them to do? 10 If you are going to support one group, support the 11 group that did what we asked them to do. 12 They had eight years to do it. Some of them 13 invested tens of millions of dollars, and you are giving a 14 competitive advantage to people that did nothing. If you 15 relax this program, you are giving a competitive advantage to 16 the manufacturers that did not deliver the cleaner engine. 17 That's wrong. 18 CHAIRMAN DUNLAP: Yeah. 19 MR. CARMICHAEL: Just on the Federal standards, 20 you brought them up. 21 CHAIRMAN DUNLAP: I don't need any more. 22 I mean, I'm afraid that, I mean, I'm not looking to 23 play a word game with you. I just wanted to get a 24 perspective, and you gave it, and I am well aware on your 25 view there. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 307 1 Any questions for Mr. Carmichael? 2 BOARD MEMBER EDGERTON: I have a point of 3 information. 4 Mr. Carmichael, when you mentioned that there were 5 six manufacturers meeting the nonhand-held regulations, I'm 6 trying to understand what -- do you have some attachments? 7 I'm trying to understand which one. There is a 8 Table 7. 9 What you meant -- did you mean six, oh, make, make 10 is not a company. Oh, right that is six, I apologize. 11 MR. CARMICHAEL: My written comments actually say 12 more than six, because one of the problems we identified with 13 the staff proposal that it doesn't aggregately highlight the 14 potential of electric equipment. 15 That is not listed here even though it is noted in 16 another part of the report. There is significant potential 17 for electric equipment, and in fact, if there is one goal 18 that we should be shooting for, it should be zero emission 19 equipment, and that is not communicated in this staff 20 proposal. 21 BOARD MEMBER EDGERTON: One other thing. 22 CHAIRMAN DUNLAP: Is that for the witness? 23 I will give you plenty of time to say what you want 24 to say at the right time. 25 BOARD MEMBER EDGERTON: Later? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 308 1 CHAIRMAN DUNLAP: Yeah. 2 Ms. Kelts. 3 Tim, thank you very much. 4 Tom, I want you to address later about the tons, 5 you know, he inserted a lot of tons there, and so, I wanted 6 Dr. Friedman, and Joe and I want you to illuminate that a 7 little bit, I want to understand his math. 8 Thank you for waiting. 9 MS. KELTS: Good afternoon. My name is Julie Kelts 10 and I am a member of ECOS, and that is the Environmental 11 Council of Sacramento. That is a coalition of environmental 12 and progressive groups. 13 I have been authorized by our President to speak 14 for that group, and also, since Mr. Rohlfes got up here and 15 said he was speaking for 50,000 gardeners, I would like to 16 say that I am speaking for about 25 million breathers. 17 We support clean air and oppose weakening of the 18 requirements on these small engines. We believe the interest 19 of the general public and clean air outweigh the needs that 20 some members of one industry see as their route to 21 profitability. 22 The numbers of people here today are not 23 representative of the overall public interest. Those 24 testifying in favor of weakening the standards are paid to 25 come here. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 309 1 On the other hand, I think it is safe to say that 2 not one in a thousand members of the public even knows this 3 hearing is going on, and those that do are mostly at work and 4 can't attend. Of course, they are not at work now. 5 I am not a scientist, but I believe that I am 6 capable of understanding the issues here in a general sense. 7 According to the ARB's own literature, 90 percent 8 of Californians live in areas of polluted air. According to 9 a number of recent articles, including one in August 1977 10 Consumer Reports, even air that meets present pollution 11 standards can be hazardous to our health. 12 Every little bit of pollution harms us. According 13 to a 1997 article in The Sacramento Bee, 152,000 people in 14 Sacramento County, for example, have health conditions that 15 make them particularly vulnerable to the effects of air 16 pollution. That's 13 percent of our population. 17 Consumer Reports and others, such as World Watch 18 have pointed out that industry typically exaggerates the cost 19 of complying with new regulations. 20 Even some manufacturers here today support the 1999 21 standards. Finally, the engines most able to comply with the 22 emissions standards will tend to be quieter, and this is a 23 major advance for the quality of life in our communities. 24 As a member of Citizens for a Quieter Sacramento, I 25 talk daily with people who are terribly disturbed by the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 310 1 noise of leaf blowers and other lawn maintenance equipment. 2 The proliferation of the lawn care industry has 3 brought with it a troublesome amount of noise, a problem not 4 sufficiently recognized by many of our policy makers today. 5 Please continue to place the good of the entire 6 population above the interests of one industry. 7 Thank you. 8 CHAIRMAN DUNLAP: Okay. Thank you for that 9 perspective. I appreciate that. 10 Any questions of the witness? 11 Okay. Very good. 12 Jed Mandel and Bob Wyman. 13 Would the court reporter like a few minute break? 14 Okay. Why don't we take a five-minute break, and 15 then Jed and Bob, if you would cue up here, we would be 16 grateful. 17 (Thereupon a brief recess was taken.) 18 CHAIRMAN DUNLAP: I would like to ask folks to take 19 their seats. 20 I certainly understand people needing to stretch, 21 and I don't even mind if people want to stand in the hallway 22 or the aisles or any of that stuff. 23 They're on their way out. That's fine, but we do 24 need to get through this witness list. 25 I'm going to run through the names again so we can PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 311 1 see who is up. Mr. Mandel, who is at the mike, from EMA, Bob 2 Wyman, who has two colleagues with him, Peter Hotz and Roger 3 Gault, Andrew Frasier. 4 Mr. Frasier, I got some feedback, if you are still 5 here, that you needed 20 minutes or something. With all due 6 respect, you are not going to get that. So, we will 7 negotiate on that when you take the mike. 8 Paul Maurer, Kenneth Zeltner and Bruce Bertelsen. 9 That is all that stands between the audience and 10 the Board and wrapping this thing up. 11 So, Jed, Good afternoon. 12 MR. MANDEL: I think, technically, good evening, 13 but thank you, Mr. Chairman. 14 I am Jed Mandel. I am speaking today on behalf of 15 both the Engine Manufacturers Association and the Outdoor 16 Power Equipment Institute. 17 When you hear our testimony today, think the larger 18 of the small engines, or what we have been referring to as 19 the nonhand-held industry. 20 I do have some prepared remarks. I will try to 21 move through it quickly. If you have questions for us on 22 anything that you have heard previously today, I am prepared 23 to address your questions and comments. 24 EMA and OPEI are unified in their position and are 25 presenting our comments jointly. While our comments today PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 312 1 will focus primarily on spark ignition engine issues, we also 2 will comment on the staff's proposal to align ARB's 3 regulatory program for CI, compression ignition diesel 4 engines, less than 25 horsepower, with EPA's soon to be 5 finalized program. 6 EMA and OPEI and their members have actively 7 engaged with the Board and its staff in the development of 8 emission regulations for small off-road engines since the 9 late 1980's. 10 We worked with you on the adoption of standards in 11 December of 1990 and a review of those standards in January 12 of 1996, and in the intervening time, we have been engaged in 13 an active and positive dialogue with the staff, focused on 14 identifying the best means to provide lower emitting, cost 15 effective, technologically feasible and customer acceptable 16 products for the California market. 17 We agree with the staff that the Tier II program 18 originally adopted in 1990, and currently set to go into 19 effect in 1999, would not do that. 20 In addition, we do not believe that the Tier II, 21 Tier III program outlined in mail-out 9802 would be cost 22 effective, feasible or customer acceptable. 23 However, the alternative program outlined by the 24 staff today does provide significant emission reductions for 25 California, and it does so recognizing the unique PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 313 1 characteristics of the nonhand-held engine and equipment 2 industry. 3 The staff's alternative program will provide 4 manufacturers with much needed flexibility and will provide 5 an incentive to both pull-ahead technology and introduce 6 lower emitting technologies early. 7 We strongly support the staff's alternative 8 proposal and urge the Board to adopt it. In doing so, EMA's 9 engine manufacturing members commit to, one, provide 10 nonpreemptive Class 1 engines in the timeframes called for by 11 and meeting the requirements of the proposed Tier II emission 12 standards, and two, provide preemptive Class 2 engines in 13 2003, meeting the proposed Tier II standards. 14 In addition, as you will hear in a moment from the 15 effected manufacturers, they will also provide, on a 16 Statewide basis, products that meet the requirements of the 17 special program applicable only to the Los Angeles Basin 18 extreme nonattainment area. 19 That special program properly recognizes the unique 20 air quality needs of the Los Angeles Basin extreme 21 nonattainment area and will result in more than 60 percent of 22 all small nonhand-held engines sold in California meeting the 23 Tier II standards in the year 2000. 24 As the Board knows, and it recognized when it 25 reviewed the feasibility of the Tier II standards in January PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 314 1 1996, the small nonhand-held engine and equipment industry is 2 characterized by a large volume of inexpensive, highly cost 3 sensitive, entry level market products for consumer 4 purchasers and a small volume of expensive, sophisticated 5 specialty application products for commercial purchasers. 6 In addition, the vast majority of the industry is 7 not vertically integrated. In other words, different 8 manufacturers produce the engine and the finished product. 9 Those products are sold through a multi-channel 10 distribution system that allows customers to purchase 11 products through mass merchandisers, specialty dealers, 12 distributors, mail order, and in some cases, even direct. 13 Those factors constrain what, when, where and how 14 manufacturers can implement emission reductions. 15 The program outlined on the staff's alternative 16 proposal today recognizes those constraints and will result 17 in a set of regulations that will provide significant 18 emission reductions throughout the State, an additional 19 reductions in the area that needs the most reductions. 20 Moreover, the alternative proposal will provide a 21 significant, although not complete measure of harmonization 22 with EPA's proposed program. 23 In that regard, there are a number of technical 24 issues that should be addressed to minimize to the greatest 25 extent possible differences between ARB and EPA procedures. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 315 1 Those differences have no impact on emissions but 2 significant impact on costs. We are ready to work with the 3 staff and EPA to identify and minimize such differences. 4 We urge the Board to direct the staff to work with 5 manufacturers and EPA to avoid unnecessary costs and 6 duplicative regulatory burdens. 7 Manufacturers are prepared to make the alternative 8 program work. We urge the Board to adopt it. 9 Finally, I would like to comment briefly on the 10 staff's proposal to align the emission regulations applicable 11 to small nonroad compression ignition engines with those of 12 EPA. 13 We fully support that effort. ARB, EPA and the 14 effected CI engine manufacturers signed a statement of 15 principles regarding the regulation of nonroad CI engines. 16 The emission regulations set forth in the SOP will 17 provide California the emission reductions it requires from 18 CI nonroad engines. 19 EPA has been doing its part to implement the SOP. 20 It is proposed and will soon finalize the SOP standards. 21 As such, it is appropriate for the Board to extend 22 the existing Tier I standards applicable to small diesel 23 engines until January 1, 2000. 24 Thereafter, set forth in the SOP, we expect ARB and 25 EPA to fully align their emission regulation programs, such PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 316 1 that a nonroad CI engine certified by either ARB or EPA will 2 be fully accepted by the other. 3 Today's proposal for small CI engines is an 4 important step toward that ultimate goal. 5 If you have any questions, I know it has been a 6 long day, but I am pleased to address them. 7 Also in the audience today is staff and counsel 8 representing the Outdoor Power Equipment Institute if you 9 have specific questions for the equipment side of the 10 industry. 11 CHAIRMAN DUNLAP: Any questions of Mr. Mandel? 12 All right. Thank you very much. 13 I appreciate that. If you don't mind, take a 14 second and introduce your colleagues that are here, so we 15 will know who they are. 16 MR. MANDEL: The next presenter is Bob Wyman, 17 representing both Briggs and Stratton Corporation and 18 Tecumseh Products Corporation, the two principal 19 manufacturers of the smallest of the nonhand-held engines. 20 CHAIRMAN DUNLAP: All right. 21 Bob, you're a long way from Los Angeles. 22 MR. WYMAN: I know, and actually, I was supposed to 23 be in London tonight, but thanks to you for sticking to your 24 Agenda, I am here instead. 25 That is how much I love you all. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 317 1 I'm sorry, I wouldn't have said anything, but you 2 mentioned Los Angeles. It just sort of slipped out. 3 Good evening, Mr. Chairman and Members of the 4 Board. My name is Bob Wyman, and I am with Latheman and 5 Watkins, usually from Los Angeles. 6 I'm testifying tonight on behalf of Briggs and 7 Stratton Corporation and Tecumseh Products Company. 8 Briggs and Stratton and Tecumseh are the two 9 leading producers of gasoline powered engines used in 10 nonhand-held outdoor power equipment. 11 Together these two companies supply more than 80 12 percent of the gasoline engines used by U.S. equipment 13 manufacturers in this category. 14 The list of companies who buy Briggs and Stratton 15 and Tecumseh engines includes more than a dozen equipment 16 manufacturers here in this State. 17 Now, I am accompanied this evening by the two 18 gentlemen behind me, who are standing far enough away so you 19 won't ask them any questions. This is Roger Gault, of 20 Tecumseh, and Pete Hotz, of Briggs and Stratton. 21 Notwithstanding, they are just as happy to answer 22 any questions that you have tonight, should you have any, but 23 they do not have any prepared remarks. 24 Since January of 1996 when you last convened here, 25 testimony on the status of the Tier II small engine PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 318 1 regulations, Roger, Pete and their colleagues have been 2 working diligently with the staff and with other stakeholders 3 to find a regulatory strategy that achieves the desired 4 emission reductions in a manner and a timeframe that actually 5 be achieved by the industry. 6 These discussions have been quite difficult, but 7 thanks to what truly has been an extraordinary effort, 8 mutually, by both your staff and the industry over these many 9 months, we have found in the staff's alternative proposal an 10 approach that we think will work. 11 By describing the issues discussed with the staff, 12 I hope to illustrate why this approach works so well. 13 The proposed Tier II standards will require the 14 development and introduction of engines with materially 15 cleaner, and as is distinct from the original standards, more 16 durable emissions performance. 17 We believe we can produce cleaner, more durable 18 engines by implementing a variety of significant improvements 19 in engine design. 20 Introducing the improved engines to the market will 21 require us to retool and make other substantial investments. 22 And since we talked about the benchmark of $10 23 million, I can assure you we are talking about substantially 24 greater than that amount. 25 It also creates risks associated with introducing PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 319 1 new products to consumers, because this is the entry level 2 for most lawnmowers, and that is why it is so price 3 sensitive. 4 We believe we can meet these challenges for 5 California production volumes, but there are severe limits to 6 our production capacity. 7 EPA recognized this production capacity limit by 8 choosing a memorandum of understanding as the mechanism which 9 it used to allow engine manufacturers to test-market these 10 new technologies at volumes that can be achieved in the 11 near-term. 12 We need an approach like that for California that 13 likewise achieves the desired reductions but does not place 14 engine manufacturers and equipment manufacturers in the 15 unintended predicament of having to produce greater volumes 16 of this new technology that can possibly be achieved given 17 the industry's production and distribution concerns. 18 Our greatest concern is that while we can achieve 19 the volumes needed for California, where other States opt 20 into this program, we could not do the same elsewhere. 21 And in fact, we could not do the same here in 22 California, and I would like to hear just for a minute, 23 mention two or three other points that Mr. Carmichael made 24 earlier, because they bear directly to this point. 25 Mr. Carmichael suggested, for example, if clean PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 320 1 engines were good for California, they should be good for 2 everyone, and we don't quarrel with that. 3 The problem is that like every other resource in 4 the world, they are scarce, and you have to choose. 5 You can't make engines for everybody in the same 6 one to two year timeframe that we are doing here. That's 7 what EPA recognized and which this staff alternative proposal 8 recognizes. 9 If we were to spread across the country the maximum 10 volume we could produce in a short timeframe, California 11 would get six percent, and we offering to give you a much, 12 much greater percentage. 13 Just a couple of other quick points on what Tim 14 said that I think are worth mentioning. He mentions that 15 there are some engines on the cusp. 16 There are a handful. He mentioned six that already 17 comply. In fact, we have the list. He was kind enough to 18 share it with me just a moment ago, and I, just to be fair, 19 and I hope Tim would agree with this, if you look at these 20 six, these technologies are not in place. 21 Four of the six are Class 2 engines. You will look 22 in vain to see a vertical shaft Class 1 lawnmower, the high 23 volume, low cost lawnmowers that we are talking about 24 introducing to the State. 25 This is not a problem that has already been solved. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 321 1 It is a problem that needs an effort. 2 We have been working on it for eight years. We are 3 going to continue to work on it, but to suggest that somehow 4 the technology is already out there for the engines that 5 matter here, is incorrect. 6 The other point that Tim made that I think is 7 important to distinguish is that the staff proposal, and our 8 alternative proposal that we support as sent out three to 9 four times the original standard. 10 As the staff said at the very beginning of its 11 presentation, that's apples and oranges. The original 12 standard was a new engine standard only. 13 The current proposed standard before the Board for 14 the nonhand-held category is an in-use, fully deteriorated 15 standard. 16 In that sense, if you look at it apples to apples, 17 it is every bit as aggressive as the original staff proposal. 18 So, there's our challenge. We have to find a way 19 to meet within our production constraints, the aggressive 20 desire by California for the substantial emission reductions 21 called for by the staff proposal. 22 Now, we think that the approach recommended by the 23 staff, which we fully support, is the right balance. 24 It provides a basic Statewide program that assures 25 the introduction of new technologies on a reasonable PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 322 1 timeframe, from 2002 to 2006. This is the basic program, 2 and that any other State can opt into, because we can meet 3 those targets, following the model established by Congress in 4 the 1990 Clean Air Act amendments. 5 It also provides for a set of enhanced emission 6 reduction requirements for the area of the very worst air 7 pollution, namely the State's extreme nonattainment area of 8 South Coast. 9 California, as you know, is currently the only 10 State with an extreme ozone nonattainment problem, and hence 11 the enhanced program can only take effect in this State, in 12 California, because other states could not opt in to these 13 enhanced emission reduction requirements, as distinguished 14 from the basic one's. 15 We are able to meet the most stringent requirements 16 within our production and distribution limitations. 17 Our customers, the original equipment 18 manufacturers, who build the equipment around our engines, 19 cannot separately distribute one type of equipment in one 20 part of the State and another in another part of the State. 21 Therefore, the only practical choice we have in 22 order to demonstrate that we have met the extreme area 23 requirements is to deliver the new cleaner, more durable 24 engines throughout the entire State on the schedule required 25 in the enhanced program, and we will do that. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 323 1 As a result, commencing with model year 2000, more 2 than 60 percent of the engines sold in California will meet 3 the Tier II standards contained in the staff's original 4 proposal. 5 As part of the enhanced requirements, we are also 6 agreeing to certify large volumes of clean construction and 7 agricultural engines that otherwise would be exempt from 8 California regulation. 9 The alternative proposal thus delivers the same 10 emission reductions that would be required by the staff's 11 proposal in the same timeframe, but in a manner that allows 12 Briggs and Stratton and Tecumseh and its customers, many of 13 whom are here in the State, to deliver a complying product 14 without the catastrophic market disruptions that would 15 otherwise occur. 16 We very much appreciate the staff's effort in 17 working with us, as indicated, up to the last minute, to 18 resolve this difficult challenge, and we urge the Board to 19 adopt the alternative proposal. 20 CHAIRMAN DUNLAP: Thank you. 21 Bob, say a word or two, I think you hit it well, 22 and I think you said it in a way that was easy to track, say 23 a word or two more about the equivalency of this revised 24 proposal to the existing one. 25 I mean, you said it well. Tell me why you feel it PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 324 1 is as good, and I understood by the way, your logic, too, 2 about California versus other markets and what that meant to 3 your production capacity, but could you expand on -- 4 MR. MANDEL: Sure, I would be happy to do it, and 5 if I'm not answering with the right information, just keep 6 pressing. 7 What the staff has done is to basically direct the 8 perspective benefits of the original staff proposal that went 9 out a couple months ago and has done it for various periods 10 of years. You will see in one of the sections various 11 benchmark years, from 2000 to 2010, where the staff has 12 compared the inventory, has identified what the inventory 13 would be under their proposal, and what they have then said 14 is that under the proposal that we and they are now in 15 agreement on, that we would have to meet those targets in 16 those timeframes, so that it is not just a quick snapshot. 17 It's a dynamic equivalency, and then you see 18 several ways in which we could get there. 19 One, as I indicated, is to accelerate the 20 introduction of the clean technology to the year 2000, which 21 will be the high volume percentage of the market, and then we 22 have a variety of other ways we can do this. 23 We can use evaporative emission controls. We can 24 certify engines for longer periods of time than provided in 25 the staff's report, and those are fairly long, but if we can PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 325 1 do better, we get credit for that. 2 We can make the engines cleaner by any strategy, 3 whether it's catalyst, whether it's clean fuels. If we can 4 find a way to bring those to market sooner under subparagraph 5 C, we get benefit for doing that. 6 So, there is an immediate incentive, a dynamic 7 incentive for any clean or new technology or any acceleration 8 of a strategy, or even new strategies like evaporative 9 control, to be brought in, and, of course, what the staff 10 will do is to review the original plan to make sure that, in 11 fact, it hits the benchmark emission years, and then if at 12 any point it does not, they will require a revised plan and, 13 of course, will hold us accountable for that. 14 CHAIRMAN DUNLAP: Okay. Ms. Edgerton. 15 BOARD MEMBER EDGERTON: I'm following up on also 16 the Chairman's question with more discrete numbers. 17 We just had Mr. Carmichael say he thought that the 18 proposal was 50 tons per day short. Is that what his 19 assertion was? 20 And I don't know which part Mr. Carmichael said was 21 attributable to the nonhand-held, but let's see if we can 22 sort out where that difference is, Mr. Wyman, and staff. 23 MR. KENNY: Ms. Edgerton, the 50 tons that 24 Mr. Carmichael is referring to is in a context of everything 25 that the Board is looking at today, both the inventory and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 326 1 the emissions reductions that would come from this regulatory 2 proposal. 3 In terms of the proposal that Mr. Wyman is talking 4 about, the staff proposal that would be a modification to 5 what was originally proposed, the emissions reductions that 6 are associated with the original staff proposal and the 7 modified proposal that is before you today that Mr. Wyman is 8 speaking in support of are the same. 9 BOARD MEMBER EDGERTON: What are they? 10 MR. KENNY: Tom. 11 MR. CACKETTE: This is the question that I have 12 feared for so long, so let me see if I can explain it. 13 Remember from this morning, when we discussed the 14 inventory, the inventory changed a lot. There more than two 15 and a half times emissions than we had thought in 1990. 16 So, we have tried to look at this in two ways. 17 First of all, if we learned none of the things that we 18 learned since 1990, and we were still operating with the same 19 tools, the same model, the same errors as it turned out to be 20 in some cases, what would -- and then we gave you the 21 proposal that we have today, there would be about a five ton 22 Statewide increase in emissions. 23 Most of that would come from the fact that we do 24 not believe that the 1990 standard for the lawnmower side, 25 which was 3.2 grams, could be met feasibly. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 327 1 So, as a result, we proposed a relaxation of that 2 standard. Going from that number to the higher number would 3 have caused something on the order of a five ton increase. 4 It would have been more, except that we've now 5 included deterioration, and so those engines would be more 6 durable and that will help offset that. 7 There will still be a small increase from the 8 relaxation of that one standard, so now from five tons, where 9 do we get 50? 10 50 comes from the fact that under the no control 11 scenario before Tier I, or any of the regulations, we thought 12 there were about 74 tons, and I am going to use the staff 13 report numbers. 14 They have been changed a little bit as a result of 15 this discussion we had this morning, but we had about 74 tons 16 from these category of lawnmowers and weedwhips and the whole 17 area, but that is now 210 tons, so you can see that it went 18 way up. 19 As a result, even though we are applying the same 20 efficiency of controls, or very similar efficiency of 21 controls, we are obviously taking 70 percent reduction from a 22 number two and a half times bigger, so we are going to end up 23 with a bigger number even with all the engines of the new 24 clean engines. 25 That difference happens to be, we thought we were PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 328 1 going to have 16 tons resulting from this category of 2 engines, when all of them turned over and essentially, with 3 the new clean one's, we are going to end up with 71 now, and 4 the difference is 54 or 53 tons, and so, most of it comes 5 from the fact that there was more product out there that we 6 did not understand in 1990, there were more engines in 7 population, they were used more than we thought, that they 8 had a higher emission rate when we took into account 9 deterioration both before and after controls, and that is why 10 that number has gone up, but it was up because there were 11 tons that were not in the SIP to start off with, that we now 12 recognize are really there in the air. 13 Even though we have reduced those tons by a large 14 percentage, there is still more there left when the controls 15 are all in place. 16 BOARD MEMBER EDGERTON: Does the 71 add back the 17 durability benefits? 18 MR. CACKETTE: Yeah. 19 But it also has the disbenefits. I mean the fact 20 that there is deterioration in use but also that we gain that 21 back because we are actually controlling it. 22 CHAIRMAN DUNLAP: This is the very essence of the 23 inventory work that we are engaged in. 24 It's going to change. It's going to evolve. We 25 are going to be better at determining what's out there than PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 329 1 we were years earlier. 2 So, that doesn't trouble me, and I know the spirit 3 in which Mr. Carmichael offered that, but at the same time, 4 it's not a completely honest assessment of what's gone on 5 relative to the controls of these categories, or what's being 6 proposed either. 7 MR. CACKETTE: Well, I think you have to look at it 8 in a number of ways, and you can pick and choose the way that 9 you want to look at it, but I think it's -- we put that 10 number in the staff report to illustrate there would be more 11 tons there after this regulation's in place than we thought 12 before, but I think it is also important to look at it the 13 other way is that on a apple to apple comparison, we are 14 getting almost all of what we talked about getting in the 15 first place. 16 MR. KENNY: If I could add one quick comment to 17 that. 18 I think one of the important things to keep in mind 19 is there are really two accounting methodologies. We are 20 looking at a straight SIP to SIP accounting methodology, and 21 then we are looking at an inventory to inventory accounting 22 methodology, and when you hear a 50 ton number, what you 23 really are looking at is SIP to inventory methodology, which 24 is not really on the books for the SIP but which is reality. 25 That is something that we will address as we go PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 330 1 forward with SIP revisions in the future. 2 BOARD MEMBER EDGERTON: But for purposes of the 3 SIP, it is the same? 4 MR. KENNY: For the purposes of the SIP, we have 5 about a five ton shortfall. 6 BOARD MEMBER EDGERTON: You were SIPing, but the 7 same. 8 CHAIRMAN DUNLAP: Which has been acknowledged in 9 the work. 10 That is translated to a Statewide number. We don't 11 have a Statewide SIP. 12 BOARD MEMBER EDGERTON: I understand what you said. 13 CHAIRMAN DUNLAP: I'm heartened by Bob and Jed's 14 testimony relative to that segment. 15 I am personally feeling more comfortable with that. 16 Bob, thank you. 17 Yes, Supervisor Patrick. 18 BOARD MEMBER PATRICK: While we have a 19 representative of Briggs and Stratton up at the microphone, I 20 would like to ask a question, and it's relevant to pumps that 21 are used in agricultural, and my question is, is the small 22 Briggs and Stratton engine going to be available in the year 23 2000, and what is the increase in price likely to be? 24 MR. WYMAN: Lucky I have Mr. Hotz with me, who is 25 probably hiding. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 331 1 MR. HOTZ: Good afternoon. To answer your 2 question, we continue to continue to supply the agricultural 3 industry. 4 We realize there are some small manufacturers out 5 there. There are some provisions to allow these people to 6 have a very limited number of engines for very small 7 manufacturers to continue. 8 We aren't trying to force any one out of business 9 here. 10 The small pump engine, as you call it, we are 11 producing brand new engines of the smaller horsepowers, five 12 horsepower, in the new overhead valve designs, these are 13 being introduced. In fact, we already have one on the 14 market, and there will be something available for these 15 people. 16 BOARD MEMBER PATRICK: What is the price increase 17 likely to be? 18 MR. HOTZ: I'm going to say in the neighborhood, 19 I'm trying to remember what our retail price is on our L head 20 engine, or our older one, I'm going to say in the 21 neighborhood of probably $20 to $30 dollars on a piece of 22 equipment. 23 However, keep in mind, these are agricultural 24 pieces of equipment. That kind of an increase generally 25 isn't steep. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 332 1 We are looking, also, just to quickly comment, we 2 are also looking at lower cost versions of this better 3 engine, so I think that may mean the opportunity to have it 4 be closer. 5 MR. CACKETTE: Pete, could you comment on whether 6 there is a fuel advantage? 7 MR. HOTZ: Yes, that is a very good point. 8 With the overhead valve design you generally get a 9 significant decrease in fuel consumption because there is 10 more power per cubic inch. So, if we had the same sized 11 engine, you would use less fuel. 12 CHAIRMAN DUNLAP: Okay. Thank you. 13 All right. Mr. Frasier. 14 Four witnesses left. 15 Mr. Frasier, how much time do you need? 16 MR. FRASIER: I will try and limit it to as small a 17 time as possible, but again -- 18 CHAIRMAN DUNLAP: Well, let me tell you my problem. 19 I have got some Board Members I am going to lose, 20 and I'm not going to have a quorum possibly to deal with this 21 item today. 22 So, I want to deal with this item today, and I have 23 four witnesses left. 24 Bruce Bertelsen, and your other group, how much 25 time does your group need? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 333 1 Bruce, are you here? 2 Okay. Why don't all of you come to the front row 3 here, and why don't you caucus as a group. I know you're not 4 all blood brothers or anything, but I would like for you to 5 figure it out, so I don't lose my quorum. 6 Mr. Frasier, go ahead. I'm serious, I am going to 7 give you five minutes. That's it. 8 Okay? 9 MR. FRASIER: Okay. Again, the -- one of the 10 reasons why I wanted to take the time to make sure that we 11 got the proper consideration by the Board is the fact that as 12 I get into more detail in my presentation here, is all of the 13 testimony, witnesses, including the proposal that you heard 14 today, have been directed at gasoline power engines for 15 outdoor applications. 16 The company that I represent is an entirely 17 different line of business. Once again, we have not been 18 given that consideration. 19 We have been lumped in with the gasoline and 20 outdoor application engine manufacturers in the past and are 21 today. 22 Pioneer Eclipse manufactures a line of equipment 23 for inducing a high polish finish to different types of hard 24 floors. This would be tiles, that type of situation, the 25 type of thing you see in the malls and what have you. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 334 1 All of the floors that we supply the engines for 2 are for indoor applications, and so from the conception of 3 this process, and this floor finishing concept, we have had 4 to produce equipment with absolute minimum CO emissions, 5 because they are indoor application. 6 On the conception of the company, we have also been 7 under OSHA regulation for CO emissions in the workplace 8 atmosphere, for again, an indoor atmosphere. 9 The way we achieve this is we have taken in the 10 past, take basically gasoline small engines and convert them 11 over to propane technology. 12 Pioneer Eclipse was one of the founders of this 13 technology. In order to meet the OSHA requirements means we 14 cannot produce an engine that will develop more than 50 parts 15 per million of CO over an eight hour period in a given work 16 area. 17 Because we sell in Canada, we also come under the 18 Canadian Gas Association regulations, and they require 1500 19 parts per million measured at the tail pipe at any given 20 moment. 21 In our endeavor to supply the safest equipment, we 22 have always set these engines up that would only go to the 23 absolute minimum possible CO achievable with the technology. 24 We also had to develop the means of testing this on 25 a, basically, what has been referred to as a production line PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 335 1 basis. 2 To assure that we are meeting this minimum CO 3 requirement, 100 percent of our equipment manufactured, we do 4 analyze the exhaust gases for CO. 5 The technology that we use right now measures in 6 parts per million, and it also measures the hydrocarbons. 7 Again, in the indoor application with propane, 8 hydrocarbons is not a measure of consideration simply 9 because propane does not produce hydrocarbons in any large 10 amounts. 11 NOx has been a consideration of ours in the past 12 because, again, NOx will, over a period of time, make an 13 operator sick. 14 The reason that we focus then on the CO was because 15 carbon oxide will do much more than make an operator or 16 occupants of the enclosed place sick. 17 When CARB Tier I regulations and EPA Phase I 18 regulations were being promulgated, we were under contract 19 with one of the major engine suppliers who were supplying us 20 with a propane ready engine. 21 Over the period of the contract, because of the 22 performance and problems that developed with the engine and 23 their technology, we started developing our own technology, 24 and it was fortuitous that we did that for the simple reason 25 that about a year ago when the, back in 1995 when Tier I of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 336 1 CARB was introduced, we were under the assumption that we 2 would be covered under their certification. 3 Shortly after that period of time that that 4 particular company decided they would no longer sell their 5 propane ready engines to the indoor application because of 6 their perceived exposure to the liability for CO poisoning, 7 at that stage of the game, we had to kick in our own 8 technology and develop our own engines. 9 In making our own personnel familiar with the 10 regulations, we found out because we were modifying the 11 engines, the gasoline engines over to propane, we were 12 considered tampering. 13 To avoid that, we had to those engines modify them 14 and then submit for our own certification for our propane 15 setup. 16 This we have done, and again, I think in the 17 discussions that occurred today, they talk about a number of 18 technologies that are available that are cleaner than Tier I 19 or the Tier II. 20 CHAIRMAN DUNLAP: Mr. Frasier, can I ask you kind 21 of a bottomline question? 22 What would you have us do specifically in your 23 case? 24 MR. FRASIER: In this particular case, what we 25 would like to do is be exempted from the regulations, the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 337 1 requirements for certification. 2 CHAIRMAN DUNLAP: And the logic you would have us 3 follow is, what, why should you be exempted? 4 MR. FRASIER: Well, if I can show my next couple of 5 slides, I would like to show you. 6 CHAIRMAN DUNLAP: I will look at your slide, but I 7 just wanted you to articulate, give me a logic, and I promise 8 you I will consider it here for the sake of discussion. 9 MR. FRASIER: Again, what I will demonstrate, and 10 I'd like you to take a look at the slides, to give you some 11 perspective, is that the cost to Pioneer Eclipse to meet 12 these regulations is prohibitive, and I will show here where 13 the results both to Pioneer and to CARB and EPA. 14 CHAIRMAN DUNLAP: How many units do you sell in 15 California? 16 MR. FRASIER: Again, I would prefer in written 17 response next week, because it is an economic impact on our 18 business, being a small organization that we are. 19 CHAIRMAN DUNLAP: Could you give me a sense? 20 I don't need to know exactly but 7 or 500? 21 MR. FRASIER: Less than 200 units a year. 22 Again, this chart here, basically what we have done 23 is we have taken the cost of initial certification for each 24 family of engine and multiplied that. I have listed on the 25 chart, which again, is not up on this chart for confidential PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 338 1 reasons, but the number of engines that we purchase each year 2 in those families, and then the next column is the number of 3 engines that would require PLT during the year. 4 CHAIRMAN DUNLAP: And the bottomline is what? 5 MR. FRASIER: Well, again, you take all the costs 6 to meet regulations, not including consulting fees and what 7 have you, in excess of $85,000 Pioneer Eclipse. 8 CHAIRMAN DUNLAP: How many thousand, again, sir? 9 MR. FRASIER: $85,000. 10 CHAIRMAN DUNLAP: Okay. 11 MR. FRASIER: Just below that chart, I have two 12 scenarios laid out. 13 They are based on what the weighted average cost 14 per engine would be, and the only difference between one 15 scenario and the other is whether or not we can amortize the 16 certification cost over a one-year period as opposed to a 17 five-year period. 18 CHAIRMAN DUNLAP: On that point, Mr. Cackette, do 19 you have any potential remedy here? 20 MR. CACKETTE: I think we do. 21 Since this gentleman has to convert engines already 22 to propane in order to get a -- or get a propane engine in 23 some way, we are bringing to the Board in the next couple of 24 months an after-market parts regulation for off-road 25 equipment. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 339 1 One of its applications is when you want to change 2 the fuel of an engine and the compliance cost is limited, 3 usually to running a test on your engine and then putting the 4 equipment on and running another test on the engine plus 5 maybe a little bit more, I'm not sure. 6 CHAIRMAN DUNLAP: Do you feel pretty good that that 7 will take care of his concern? 8 MR. CACKETTE: It would really reduce the cost and 9 make it pretty simple, as long as they can do the conversion 10 correctly. 11 And they are doing that kind of thing now, right? 12 CHAIRMAN DUNLAP: You guys have this thing on 13 track? 14 MR. CACKETTE: In the summer. 15 CHAIRMAN DUNLAP: Okay. 16 Bob, are you working on that directly? 17 MR. CROSS: I have staff who are working on that 18 now. 19 CHAIRMAN DUNLAP: What kinds of assurance can you 20 give this gentleman that his needs are going to be met in a 21 couple, three or four months, or whenever this comes to the 22 Board on this issue? 23 MR. CROSS: It will be met. 24 There is a certification. 25 CHAIRMAN DUNLAP: Do you have a working group, or PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 340 1 committee that is looking at this, and can you include 2 Mr. Frasier in that? 3 MR. CROSS: Yes, absolutely. 4 CHAIRMAN DUNLAP: Okay. Mr. Frasier, I am going to 5 ask the staff to get back to me in a month and tell me how 6 this is going, and if your deal hasn't been addressed to your 7 satisfaction, or if you think we've taken this thing in a way 8 that it shouldn't be for a small business like yours, I want 9 you to let me know, and the Board will deal with that issue. 10 I will make sure that happens now. Mr. Cross, you 11 and Mr. Schoning get with this gentleman, okay. We're 12 talking less than 200 units. 13 We're talking about after-market conversion 14 situations. So you guys feel comfortable about this, Tom -- 15 MR. FRASIER: Could I take just one more minute, I 16 can show you my last chart with emission reductions -- 17 CHAIRMAN DUNLAP: Sometimes talking past yes is not 18 a good thing. 19 All right. 20 Mr. Bertelsen, make your way up here. 21 MR. FRASIER: Let me show you the chart and let it 22 speak for itself. 23 CHAIRMAN DUNLAP: All right. We will look at the 24 chart. 25 MR. FRASIER: The only point and comment, the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 341 1 figure there you see of tons of emissions generated in the 2 various categories were not per day. 3 That is per year. 4 CHAIRMAN DUNLAP: Okay. That gives us some 5 comfort. 6 By the way, I appreciate you taking the time. You 7 put together a very professional presentation, and you are 8 very willing to pitch that to us, and I want you to know that 9 I recognize and appreciate that, and we ought to be able to 10 find a way to work something out with you so you are not 11 disadvantaged, and your business is not put at risk. 12 So, we are going to try to do that for you. 13 Mr. Bertelsen is in a group with Mr. Maurer and Mr. 14 Zeltner. The final three witnesses, and I know you are not a 15 homogenous group, and I also know that your issues are a 16 little bit different that some of the others. 17 MR. ZELTNER: Good evening Chairman Dunlap and 18 Members of the Board. I will be very brief. 19 My name is Ken Zeltner, and I am representing 20 Autonic Research. We are a California corporation, and we 21 manufacture usage meters. 22 We have a very small device that attaches to the 23 sparkplug wire on any small engine. 24 I would like to discuss the recent changes that are 25 calling for durability regulations, and most of the small PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 342 1 engines that are sold today do not include usage meters, and 2 in contrast, odometer meters are used on all highway vehicles 3 so that the end user is made aware of the accumulated usage. 4 Under the proposed regulations, durability periods 5 will be selected for each engine and the end user will be 6 informed by the label. 7 It is acknowledged that there are wide variations 8 between the calendar time and the actual engine usage, 9 depending on such factors as the equipment application, 10 climate and types of service. 11 The calendar time to approach the end of useful 12 life for an engine could be anywhere from five years to a 13 single season on commercial applications. 14 Usage meters keep the public informed and active in 15 the small engines emission reduction program. We feel that 16 high emissions are inevitable if an engine is operated well 17 beyond the selected durability period, and we stress the 18 importance of keeping the end-user informed of the actual 19 accumulated time. 20 It's not likely that end-users will be inclined or 21 able to accurately keep track of accumulated usage without an 22 installed automatic meter. 23 CHAIRMAN DUNLAP: Okay. So you would like us to 24 require this meter on these units? 25 MR. ZELTNER: Or address the issue in the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 343 1 regulations. 2 CHAIRMAN DUNLAP: Okay. Can I ask staff a 3 question? 4 How does staff feel about having these meters on 5 these units? Are we in a position to request the auto 6 industry to have these on or require them? 7 MR. CROSS: First of all, at least on my level, the 8 first that I have heard of this, and I think that it is 9 something that we would have to explore in terms of looking 10 at cost, etcetera, before thinking about it. 11 CHAIRMAN DUNLAP: All right. 12 Now, you would be, if the manufacturers wanted to 13 put this device on voluntarily, and you could make a market 14 argument that this is a good thing for consumers to know and 15 to track, right? 16 Have you had any luck being able to meet with these 17 folks to make your pitch? 18 MR. ZELTNER: Yes. 19 We are currently manufacturing in small volumes. 20 CHAIRMAN DUNLAP: All right. 21 Now, do you want to us to consider adding this to 22 this regulatory package and require them to do it, because, 23 you know, that kind of flies in the way of kind of a free 24 market, you going out and finding a way to -- you know, I'm 25 not trying to put you on the spot here, but I just want to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 344 1 find out how I can help you. 2 MR. ZELTNER: Well, we didn't really expect that it 3 be written in. 4 CHAIRMAN DUNLAP: Okay. Well, let me say this, for 5 our part, I will be happy to have staff sit down with you and 6 learn all about this device, and if there is a way for us, 7 outside of a regulatory opportunity, to encourage people to 8 look at your device, it might help give the consumer a little 9 bit added perspective about how long the device has been used 10 and all that, we will definitely explore a way to do that 11 with you, but, I don't want to, I don't think you want to 12 confound this regulatory decision by making what I think 13 might be a very worthwhile presentation, but it is not 14 germane to what we are going to be dealing with right now. 15 MR. ZELTNER: If I could make one other point in 16 addition, which I feel is very germane to the whole issue of 17 the emissions program. 18 In addition to informing the end-user of 19 accumulated time, there is the issue of maintaining the 20 engines properly. 21 CHAIRMAN DUNLAP: That is important, and we all 22 agree that to the extent that the consumer can know how it's 23 operating and when they are likely to have problems, they 24 could maintain it better in a way that lasts, and emissions 25 would be positively impacted if it's properly maintained. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 345 1 Why don't I make a commitment, Mr. Kenny, for you 2 to sit down with this gentleman to see if there is a way to 3 learn about the device that he has, and if there is a way to 4 encourage working with the manufacturers to consider it, I 5 think that is something that government ought to be able to 6 do. 7 MR. KENNY: We will be happy to. 8 CHAIRMAN DUNLAP: Thank you for your patience. I 9 appreciate you coming tonight. 10 Do my Board Member colleagues have any questions on 11 that? 12 Our next witness, Mr. Maurer. 13 MR. MAURER: Good evening. I'm Paul Maurer from 14 Maurdyne Industry. 15 We are located right outside of Denver, Colorado, 16 and for the last 40 years we have been developing a secondary 17 air injection system to be used with small single cylinder 18 utility engines. 19 I have gotten very good results. I provided 20 written hand-outs, and I will not go over those test results 21 that are set forth there. 22 The system, the main point of it is, is that it 23 provides a low-cost maintenance free means of injecting the 24 secondary air in proportion to engine speed with no net power 25 loss or increased fuel consumption principally anticipated to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 346 1 be used with a catalyst, and I am going to let Mr. Bertelsen 2 talk about the pros of the catalyst and will shorten my 3 presentation. 4 The opposition of catalyst have been primarily 5 cost, availability and heat. The durability with respect to 6 our air injection system, we will be doing a comprehensive 7 in-field use durability test over the next six to eight 8 months. 9 CHAIRMAN DUNLAP: Can you coordinate that with our 10 technical staff, so they can be aware of that? 11 MR. MAURER: Yes. 12 CHAIRMAN DUNLAP: Mr. Cross, would you make sure -- 13 MR. MAURER: I would also like to talk about 14 Mr. Cackette's remark about the after-market proposal this 15 summer. 16 CHAIRMAN DUNLAP: All right. So, Bob and Tom, why 17 don't you follow-up with this gentleman, to see if there is a 18 way to work together? 19 MR. MAURER: It's a cost effective system. 20 I have laid out some cost effective analysis in my 21 written presentation, and I will not go through that again. 22 We perceive an after-market for this device. It is 23 a substantial and growing percentage of consumers would be 24 willing to pay a premium for very low emissions equipment, 25 provided that they are adequately informed. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 347 1 To that end, that gets to my request for the 2 proposed regulations. We would like to request that the 3 proposal also contain some formal provision for a technology 4 review that would occur, I would suggest every two years, so 5 that technological innovation is not stagnated by locking in 6 the standards for the next six years. 7 The second request that I have is a green labeling 8 program. This is similar to, I think, what Tim Carmichael 9 was talking about with emission index labeling. 10 We would propose two ranges to be recognized by 11 this labeling program. Emissions in the 40 to 60 percent 12 range of mandated standards would qualify for low emissions 13 labeling, below 40 percent of mandated standards would 14 qualify or an ultra-low emissions labeling. 15 But the important point with respect to the 16 labeling is that what we want to be able to do is to have the 17 promotional benefits of such a program be available not to 18 just engine manufacturers but to after-market suppliers such 19 as ourselves, and we propose that such after-market systems 20 would have to meet a durability period equally or exceeding 21 the certified emissions durability period of the engine on 22 which it is going. 23 CHAIRMAN DUNLAP: On that point, we will plug into 24 that after-market issue. 25 Now, as it relates to labeling, Ms. Rakow is going PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 348 1 to bring that up in a bit. 2 Mike, what about this two-year technology review? 3 We do it in other areas? 4 MR. KENNY: I think that is a good idea. 5 I think it is the kind of thing that gives us a 6 chance to apprise the Board of where the technology is going 7 and to see that we can take advantage of that as we proceed 8 down the regulatory path. 9 CHAIRMAN DUNLAP: How does industry feel about a 10 technology review, just generally? 11 Can I see heads, do people like the idea? Bob your 12 head up and down. 13 If you don't like it -- 14 Okay. Tim, you made a point that I think was 15 relevant to this, so people are not surprised years later on 16 how it's going. 17 MR. MANDEL: We are concerned about having a 18 regulated sense of review. 19 Socrates once said, the unexamined life isn't worth 20 living. We think we are always under review. There is 21 always a challenge to develop. 22 And the staff's alternative is putting in place an 23 incentive type program that will, in fact, develop 24 technologies, and part of the alternative proposal is close 25 communication between the manufacturers and the staff. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 349 1 I'm a little concerned about scheduling that, such 2 that it stands in the way of the work that needs to be done. 3 CHAIRMAN DUNLAP: Let me give you some comfort, and 4 give you an analogy that I know you know about, maybe not, we 5 have done technology reviews for the ZEV mandate, for 6 example. 7 We think that is important, so the public who have 8 an interest in this kind thing know what we are thinking and 9 what we are learning. 10 One of the things that I am certainly cognizant of 11 is, you know, this regulation was originally adopted seven or 12 eight years ago when we got some people showing up here and 13 acting surprised about things. That troubles me. 14 I would rather have some touch points where we can 15 kind of know what people are doing and what they're not doing 16 so we don't all of the sudden have an issue six or eight 17 years later where things are changing and people have a 18 problem with that. 19 So, the spirit is not, Jed, that we would somehow 20 have a hearing and look at tweaking the rule every time, but 21 we just have a formal way to examine and discuss publicly 22 about how things are going. 23 MR. MANDEL: I think the idea of some sort of a 24 workshop or something with the staff might be a means of 25 doing that. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 350 1 I am always getting concerned that if we take the 2 Board's time and we have to go through all the process that 3 is involved in that, it gets somewhat debilitating. 4 The idea of a workshop, public availability notice, 5 I would have no objection to that. 6 CHAIRMAN DUNLAP: Thank you. 7 MR. MAURER: I'm not suggesting that the 8 regulations be changed but simply if cost effectiveness and 9 technology could be examined. 10 CHAIRMAN DUNLAP: Mr. Kenny, Mr. Cackette, are you 11 comfortable with doing some kind of a workshop with a written 12 report every couple of years on how this is going? 13 MR. KENNY: We could do an oral report and look at 14 all of the off-road categories at one time. 15 CHAIRMAN DUNLAP: Okay. Very good. 16 Is the Board comfortable with that? 17 BOARD MEMBER EDGERTON: I am reminded of 18 Mr. Churchill, who said that all history could be condensed 19 into two words, challenge, response. 20 CHAIRMAN DUNLAP: Yeah. 21 Mr. Bertelsen, you are the last witness. 22 MR. BERTELSEN: Good evening. I have a heavy 23 responsibility here to wrap things up, and I will try to be 24 very brief. 25 I do want to take a moment, and I hope this time PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 351 1 won't count against me, first of all to commend the Board for 2 their outstanding efforts in addressing this source, as well 3 as many of the other sources. 4 The progress that has been made in moving towards 5 that 2010 attainment has been nothing short of remarkable, so 6 I do want to congratulate you on that. 7 I also want to commend the staff for a truly 8 outstanding staff report, and a lot of hard work in putting 9 this proposal together. 10 We really appreciate the opportunity to testify 11 today. For the record, my name is Bruce Bertelsen. I am the 12 Executive Director of Manufacturers of Emission Controls 13 Association. 14 We are a nonprofit association of companies that 15 manufacture emission control equipment for mobile sources. 16 We have 33 member companies. A number of those 17 companies are working on technologies for small engines. 18 When the Board adopted the regulatory program for 19 small off-road engines, it really caused a spark in 20 substantial R and D efforts. 21 There has been considerable effort, and perhaps 22 maybe some effort greater in some areas than others, but 23 nevertheless, considerable progress. 24 It certainly put our companies into action in 25 response to and reliance of the Board's proposal and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 352 1 continuing interest in this area. 2 Our companies have spent literally millions of 3 dollars in R and D efforts with catalyst technology, and the 4 result of that investment together with over 25 years of 5 experience in catalyst technology has led us to the point 6 today where we are seeing catalyst technology being put on 7 both nonhand-held and hand-held engines, and I think that is 8 a real success story. 9 I do want to make a couple of comments. Our 10 written testimony, which you have, and I will just briefly 11 refer to that, was based on the staff's original proposal. 12 As you heard today, there have been some last 13 minute suggestions, and I would like to take just a couple of 14 minutes to comment on that, and also, perhaps, offer some 15 suggested enhancements, particularly of the staff's 16 recommendation with regard to nonhand-held engines, if 17 adopted. 18 The first point I would like to make is with regard 19 to the comment that was made earlier and, actually, several 20 people have commented on it, and that is the role of market 21 based incentives. 22 I personally, and I think we as an organization, 23 feel that market based incentives can play a very, very 24 important role. 25 It is not a substitute for a comprehensive PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 353 1 regulatory program, but it can be a very, very effective 2 enhancement, and I would like to talk about some thoughts 3 that we have on that subject. 4 One thing that was mentioned, the idea of labeling 5 and emission indexing. We think that is an excellent 6 suggestion. 7 Something that might, perhaps, be modeled after the 8 index labeling for the current automobiles with a range of 9 zero to 100 with, perhaps, zero the electric powered engines, 10 and 100 being your Phase I or Tier I standards. 11 Just a quick comment on the hand-held side. I 12 think you have heard a great deal about the enormous progress 13 that has been made. 14 From our perspective, we are very excited that 15 catalyst technology looks like it is one of many different 16 paths that will get you to Tier II, and, frankly, we expect 17 some engine manufacturers will utilize catalyst technology 18 to, as you heard today, to meet the proposed Tier II 19 standards for hand-held engines. 20 With regard to nonhand-held engines, to be totally 21 frank, we cannot enthusiastically support the staff proposed 22 change. 23 We think that, while we commend their efforts to 24 try to come up with an innovative way of getting comparable 25 reductions, we think it falls short in two regards. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 354 1 First of all, it does not really take advantage of 2 everything that could be done on the nonhand-held side 3 between now and the year 2006. We are talking about eight 4 years. 5 Secondly, we think that it will not spur the kind 6 of continuing technological advancement on the nonhand-held 7 side that we have not seen, that we certainly are seeing on 8 the hand-held side. 9 We viewed the Tier III standards, which under the 10 staff's proposal will be eliminated. We viewed the Tier III 11 standards as not the end of the story but just another step 12 forward in a continuing effort to get to a truly clean small 13 engine. 14 We are concerned that the fact that there will no 15 longer be a Tier III standard is going to send the wrong 16 message not only to companies that are involved in catalyst 17 technology but other innovative technologies, some of which 18 you have heard about and staff has information provided over 19 the past few months. 20 In that regard, we do have some problems with the 21 staff's recommendation. We have tried to be proactive and 22 come up with some suggestions about, perhaps, ways, if the 23 Board decides to go ahead and approve the staff's most recent 24 recommendation, things that might be done to try to address 25 some of the concerns that I mentioned, and we really suggest PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 355 1 three things here. 2 First of all is to -- we have suggested adopting 3 optional reduced emission standards for HC and NOx beginning 4 in the year 2000, and that suggestion was based on a similar 5 idea that has been expressed with regard to heavy-duty 6 engines. 7 Now having said that, the staff may have some ideas 8 on how to accomplish the same goal without necessarily 9 specifically adopting optional low emission standards. 10 The concept is to set some targets out there around 11 which you can build a market based incentive program. 12 The second element of our proposal is for the staff 13 to look very hard at the issue of market based incentives and 14 see what could be done in that area. 15 I think a program either based on optional reduced 16 emission standards, or some other fashion, whether it's set 17 targets, it could have an effect. 18 CHAIRMAN DUNLAP: One thing, and I certainly am 19 interested in market based incentives, but I think you may 20 know this, Bruce, right now there has been some legal issues 21 that have cropped up, and there's a lot of interest in that 22 matter, so it is one that we are still committed to, but are 23 moving very carefully in. 24 So, any ideas that you have regarding specific 25 approaches that you think we ought to consider or encourage PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 356 1 to be considered, we would like to hear them from you. 2 MR. BERTELSEN: Well, we would be very interested 3 if the Board directs the staff to go forward with a 4 comprehensive evaluation in this area, we would be very 5 anxious to work with the staff on that. 6 I can just tell you that I have talked to a number 7 of air quality officials at the local level, and other 8 states, and they are very interested in a program like this, 9 and we are suggesting something similar with EPA, so I think 10 it is something that has tremendous possibilities. 11 The third thing that I would like to suggest is a 12 technology review. I'm not suggesting that it be done every 13 two years, but I think the idea of doing a workshop after two 14 years has some value. 15 I do think that four years from now it would be 16 worthwhile to have a formal technology review. That 17 technology review would be designed to accomplish three 18 things. 19 First of all, take a look at how things are going. 20 How is the program that you will adopt today doing in terms 21 of emission reductions. 22 Secondly, what is the state of technology 23 development that we are talking four years from now, and the 24 point that I earlier made that I think more could be done 25 now, I think if we look in four years, where are things, is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 357 1 there more that could be done technologically. 2 The third part of this review would be, what does 3 California need in terms of future reductions? 4 CHAIRMAN DUNLAP: I think on the last point, I 5 think we can accommodate that request, particularly when we 6 wrap up here. 7 MR. BERTELSEN: With that, I will conclude. 8 I think the issue has been raised about catalyst 9 technology. We obviously feel that the proof is in the 10 pudding. 11 We have spent a good deal of time providing 12 information to the staff. We think it is a real solution. 13 I will just close by saying that I think the Board 14 is taking a big step forward. We wish it were a little 15 bigger, but in any event, I want to pledge very strongly our 16 commitment to work with the Board and staff to advance this 17 program. 18 Thank you very much. 19 CHAIRMAN DUNLAP: Bruce, for what it's worth, we 20 know you and your members of your organization have been a 21 partner with us for many years, and we know that we both have 22 grown accustomed to agreeing more often than not, and so I 23 know the spirit in which you offer those mild criticisms, and 24 we appreciate your candor. 25 Mr. Parnell. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 358 1 BOARD MEMBER PARNELL: Well, at the risk, I know 2 you are trying to rush along, there are some things that 3 trouble me, and since Socrates was quoted, and I think 4 Churchill was quoted, my favorite quotation is Satchel Bates, 5 who said, it ain't what you don't know that will hurt you, 6 but it's what you think you know that just ain't so that will 7 really hurt you, and we have a very qualified reputable 8 people here from John Deere who testified that four-cycle 9 engines have been on the market and been withdrawn, or 10 something to that effect, that the micro four-cycle engine is 11 experimental at best. 12 We have other folks here that say that it is the 13 best thing since sliced bread. We talk about stratified 14 engines, and all of these opposed views are unsettling to me, 15 and I would like it addressed from staff, at least, their 16 experience, give me some assurance that we are not moving off 17 into the abyss when we move in this direction. 18 I have all the respect in the world for what Ryobi 19 and Tanaka and Honda and Komatsu and all of the rest have 20 done, and believe me, that's worth supporting, but I would 21 like some assurance. 22 CHAIRMAN DUNLAP: Let me get that done first, but 23 only after we run through the written comments. 24 We received a lot of mail on this, and we have had 25 some themes expressed as were expressed by the witnesses. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 359 1 Let's do that and then come back to Mr. Parnell's question. 2 Tom, we are looking for kind of an executive 3 wrap-up here relative to what the central issues were that 4 you mentioned. 5 This review, I would like for you to articulate 6 what the review would be. Also, Ms. Rakow wants to say a few 7 things, and I certainly would support that, about labeling, 8 and Tom, I know you and your team have had some experience 9 with that in the light-duty car area, and I want you to share 10 that. 11 Jackie, are you going to be the one that does the 12 honors with mail? 13 MS. LOURENCO: We have supporting letters from the 14 County of Kern, South Coast Air Quality Management District, 15 and the Bay Area Air Quality Management District. 16 They support the staff proposal and ask for no 17 further delays. 18 A couple of manufacturers have asked for some 19 harmonization issues, some of them would be included in some 20 of the EMA comments, so we will be dealing with those later, 21 and also Muriel Strand has also supported our proposal. 22 The other comments are from EMA, and they have just 23 recently gave us a list of harmonization to technical changes 24 they want to address. 25 We have indicated to them already which items we PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 360 1 will spend some time working on, and those are cleanup 2 harmonization, some of the items that we think will reduce 3 the effectiveness of our proposal. 4 We will try to hold on to those, but there will be 5 some more discussion on them. 6 MR. LIVINGSTON: We had a letter from the 7 Environmental Defense Center. 8 They had three main points. The first one was 9 general support of keeping the current Tier II standard. 10 The second was SIP concerns, and third was relaxing 11 inadequate CEQA analysis they claim for relaxing. 12 You have heard plenty on the first two points, and 13 regarding CEQA, in my opinion, staff adequately analyzed the 14 mitigation measures, air quality impacts and the 15 alternatives. 16 CHAIRMAN DUNLAP: Okay. 17 Can I do ex parte before we close the item? 18 Why don't we get that out of the way. 19 Tom, we'll have you cover the items for Mr. 20 Parnell. 21 Just a remainder to Board Members of the policy 22 concerning ex parte communications. 23 While we may communicate off the record with 24 outside persons regarding Board rulemaking, we must disclose 25 the names of our contacts and the nature of the contents on PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 361 1 the record. 2 This requirement applies specifically to 3 communications which take place after notice of the Board 4 hearing has been published. 5 I know there are some communications that we need 6 to disclose. I will start, Ron, with you, and we will work 7 our way around. 8 BOARD MEMBER ROBERTS: That is fine. I noted that 9 the convention at visitors bureau has been keeping track of 10 the numbers of visitors to San Diego, said there was a sharp 11 increase this month, partially because of this item, so 12 probably nobody got to stay overnight, the hotels didn't 13 benefit greatly from it, which is unfortunate. 14 I will give you a quick rundown. On March sixth, I 15 met with the group from Portable Power Engines Manufacturing 16 Association, and I could give you the list of the names, or I 17 could turn it in. 18 On March ninth, I met with the group from Ryobi. 19 On March twelfth, I met with a group representing the Outdoor 20 Power Equipment Institute, and on March eighteenth, I had 21 some of our own staff members visit me in San Diego. 22 I will provide the specific names for the record. 23 I could read them if you like. 24 CHAIRMAN DUNLAP: Does that work if he provides 25 them? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 362 1 MS. WALSH: That will be fine. 2 CHAIRMAN DUNLAP: Thank you. I appreciate that. 3 BOARD MEMBER PATRICK: I met with a group from 4 PPEMA as well, and I sent the names to the Clerk of the 5 Board. 6 If you would like me to read them, I would be happy 7 to. 8 CHAIRMAN DUNLAP: No, there's no need to read them. 9 Dr. Friedman. 10 BOARD MEMBER FRIEDMAN: We didn't allow anybody 11 into the operating room here, none. 12 CHAIRMAN DUNLAP: All right. Mr. Calhoun. 13 BOARD MEMBER CALHOUN: The third of March I met 14 with two representatives of Ryobi, and PPEMA, five or six 15 people, and I have to get those names to you, and on the 16 eleventh of March I met with some representatives from 17 Outdoor Power Equipment Institute and representatives from 18 Briggs and Stratton, and their testimony was essentially the 19 same as they presented here today. 20 CHAIRMAN DUNLAP: Thank you, Mr. Calhoun. 21 For my part, I met on February eleventh, March 22 twentieth and twenty-fifth with PPEMA's advocates in 23 Sacramento, Denny Carpenter, of Carpenter, Snodgrass, on the 24 twentieth of February and the tenth of March I met with 25 Mr. Flannigan, on the twenty-fifth I met with Bob Wyman, of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 363 1 February, and March tenth I met with John Liechty of OPEI, as 2 well as Mr. Ghurie of OPEI, on the sixteenth of March I met 3 with PPEMA, Mac Dunaway and Don Purcell, on the twentieth I 4 met with Ryobi, Mr. Urike, I can't pronounce that, I must be 5 tired, Ed Strohbehn and others on the twentieth of March. 6 That is it for me. 7 BOARD MEMBER RIORDAN: Mr. Chairman, I had two 8 meetings, one with the Portable Equipment Manufacturers 9 Association, Mr. Purcell, President, and Mr. Griswold, who 10 was there and Mr. Liechty and Mr. Larry Will. 11 On another day I met with Ryobi, Frank Coots and 12 their counsel from McCutchen, Doyle, Brown and Henderson. 13 Basically, both the meetings clearly were 14 encompassed in the testimony that was given today, their 15 positions. 16 CHAIRMAN DUNLAP: Thank you. Mr. Parnell. 17 BOARD MEMBER PARNELL: On March third, I met with 18 Carol Flannigan and Jed Mandell. 19 On the fourth, I met with Denny Carpenter 20 representing PPEMA, and numerous times since. On the 21 twentieth, we met with Ed Strohbehn of Ryobi, and I think 22 that covers it. 23 CHAIRMAN DUNLAP: Thank you, Jack. 24 Ms. Edgerton. 25 BOARD MEMBER EDGERTON: On March eleventh, I met PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 364 1 with Bob Wyman from Briggs and Stratton, and John Lieske, 2 Outdoor Power Equipment, William Gary and Tim Flannigan, I 3 think they were all Outdoor Power Equipment as well. 4 The subject was nonhand-held equipment regulation 5 and their concern about how they are going to provide 6 California with the cleanest nonhand-held equipment in the 7 largest possible numbers under the proposal. 8 CHAIRMAN DUNLAP: Okay. Thank you. 9 BOARD MEMBER RAKOW: On March second, I met with 10 Mr. Purcell, Mr. Will, Kim Leichty, and Mr. Dunaway, all 11 representing PPEMA, and their testimony today covered what 12 the conversation was. 13 On March tenth, I met with Mr. Geary and Tim 14 Flannigan and the Outdoor Power People, and their testimony 15 covered what was presented. 16 CHAIRMAN DUNLAP: Thank you. For being one of the 17 more junior Members of this Board, you did that better than 18 us. 19 It must be from your Energy Commission experience, 20 perhaps. 21 BOARD MEMBER RAKOW: It must be. 22 MS. WALSH: If I could just clarify for the record, 23 for Supervisors Robert, and Patrick, and Mr. Parnell, 24 everybody else indicated that their meetings, the content was 25 of their meetings was consistent with the information we PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 365 1 heard today from the testimony, but if you could just confirm 2 if that was the case. 3 BOARD MEMBER PARNELL: Confirmed. 4 BOARD MEMBER PATRICK: Confirmed. 5 BOARD MEMBER ROBERTS: That was the same for me. 6 CHAIRMAN DUNLAP: Mr. Cackette. 7 MR. CACKETTE: When the Board reviewed this item in 8 1996, I think, the message that you got from the testifiers' 9 was that one company, Ryobi, had come up with a very 10 innovative design that looked like it could meet the emission 11 standards, and they were promising to try to fill the market 12 need with that technology. 13 Looked at from the other side, there was one 14 manufacturer who had the product in one piece of equipment, 15 which happened to be over $200 at that time, weedwhip, and 16 there was nobody else out there, and a lot of variety of 17 equipment to worry about, and I think the Board expressed 18 some concerns, at least the signal that we took away was 19 concern, that maybe the technology wasn't going to develop in 20 time. 21 I think what you heard today is a very different 22 position. It's happened not just in the last two years but 23 more almost in the last six months in that we have seen Honda 24 come forward with four-stroke technology. 25 You've seen Ryobi get up today and say not just in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 366 1 a weedwhip at $199, but in one at $129 and may be sold to 2 someone else for $100, and maybe in a chain saw real soon, 3 and attachment equipment that can make it into a blower and 4 to a hedge trimmer, a commercial version, that they have put 5 in place with Komatsu Zenoah, so there is now one that, you 6 know, a $300 version versus the $50 version. 7 You have also seen that we are not just stuck with 8 four-stroke, but in fact, competition leaves us with 9 two-stroke technology again being introduced in the 10 commercial area, but testimony today saying that some of this 11 technology is measured in a few dollars and can trickle down 12 into lower cost equipment. 13 You have also heard, I think, very reassuring 14 evidence, that for the consumer there is a lot of electric 15 product out there, and the consumers like it. It's 50 16 percent or more of the market right now. 17 So, I think in the year 2000, when this regulation 18 goes into effect, that you will see most, if not all, of the 19 current product niches and types of equipment covered with 20 complying product. 21 I don't think we could have said that with great 22 confidence in 1996, but I think since then a number of people 23 have risen to the challenge, and quite frankly, I would bet 24 that some of those who have reservations about meeting these 25 standards probably have a product plan ready to go here to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 367 1 meet the standards. 2 They understand the marketplace and the 3 competition, and I think everyone will rise to it. 4 So, I guess in summary, I think, that is my capsule 5 view of, my Alka Seltzer, or whatever it is called for an 6 uneasy stomach, about whether there will be holes in the 7 product, I don't think we will see very much. 8 It will be covered for both consumers and for 9 commercial people. 10 It was thought, you know, these reviews, we will 11 keep an eye on it, and we will come back to you and let you 12 know. 13 CHAIRMAN DUNLAP: Tom, say a word about labeling. 14 MR. CACKETTE: Yes. The labeling idea that 15 Mr. Carmichael put forth is a good idea. 16 We have already proposed in the regulation that you 17 have to label the hours that the equipment will be certified 18 to last for, so when you now go and look at the box, you will 19 see a 50 hour weedwhip, or a 300 hour weedwhip, and you can 20 decide whether you want to pay more for the more durable one. 21 That is a market competition that I think will 22 result in more durable equipment out in the marketplace. 23 A similar concept to that is with labeling for 24 emissions, that would be good. We could pick some values. 25 It could be an index, 100 to zero, or it could be PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 368 1 some particular values that we could give names to, you know, 2 sort of like, you know, the stuff that we have with cars. We 3 could have low emission and ultra-low emission weedwhips, I 4 guess, and lawnmowers, and maybe one that would help sell 5 things. 6 But even if it doesn't, you know, the districts 7 have money sometimes to offer for programs. We have 8 participated in scrappage programs and sometimes the 9 incentive can be tied to that you replace your old one with a 10 lower than normal piece of equipment. It would be a good 11 market way of, at least you would find a backbone for a 12 market way of encouraging some of the new technologies in 13 place. 14 CHAIRMAN DUNLAP: Sally, say what you would like on 15 it, but, Tom, could I have you put together some proposals 16 for the Board to look at it? 17 It doesn't have to be in the Board meeting. 18 MR. CACKETTE: We have two choices. 19 We could take a shot at it as part of the 15-day 20 comments and see what people say, or we could do it on a 21 longer timeframe. 22 BOARD MEMBER RAKOW: I think that Mr. Carmichael 23 made a strong recommendation, and his point was, an educated 24 consumer is really key, and I have had direct experience with 25 that at the Energy Commission where we labeled appliances and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 369 1 labeled windows, and all of that for energy conservation, and 2 it really is a good incentive for people when they are 3 comparing products. 4 So, I would like to see some proposals. 5 MR. CACKETTE: In fact, you know, Mr. Bertelsen 6 talked about the many thousands of catalysts being sold on 7 pieces of lawn and garden equipment, and it is particularly 8 true in Europe, because there is a sense of agreement there, 9 people are putting catalysts on the product to sell them. 10 CHAIRMAN DUNLAP: And there is the labeling. 11 Germany has the Blue Angel and some other things 12 that I have seen. 13 About the technology review, Mr. Kenny, frame it 14 for a two-year and a four-year and a six-year review, tell us 15 what those would look like in your mind. 16 MR. KENNY: Well, I think what we would do is 17 something very similar to what we have done in the past with 18 regard to ZEV review. 19 We would look at, essentially, how the regulation 20 has proceeded along the path since the last time the Board 21 looked at it. 22 We could give you an update as to the technology 23 and the cost effectiveness of that technology, in terms of 24 meeting the regulatory requirements. 25 In this particular situation, I think we want to go PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 370 1 further than just simply focusing on just the small off-road 2 equipment. 3 We would want to have an off-road technology 4 review, such that we could look at all of the off-road 5 technologies and look at all of the off-road technologies 6 advancements over the previous two years period of time, and 7 that way it becomes a broader approach, and there's also 8 applicability if some of the technologies across categories, 9 when you take advantage of that. 10 CHAIRMAN DUNLAP: You would do this. 11 How would you propose to do it, formally at a Board 12 meeting, would you do it in writing, would you do workshops? 13 MR. KENNY: I think we can do this as an oral 14 presentation to the Board on a biannual basis. 15 CHAIRMAN DUNLAP: You have some public process 16 where people could come and listen, you have done it with 17 research. 18 Tom, you have had folks come in and do this. 19 MR. CACKETTE: Right. 20 CHAIRMAN DUNLAP: Okay. Why don't you also, in 21 this 15-day notice, put some review process on a sheet of 22 paper relative to timing. 23 MR. KENNY: What we could do with regard to the 24 proposal that is before the Board right now as it has been 25 modified by the staff, is we could add into that the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 371 1 emissions index that Tom just discussed, the technology 2 review, and the combination of the emissions index along with 3 the market incentive aspect that is already in the regulation 4 would provide at least some benefits to the consumers and to 5 the manufacturers, both in terms of education and in terms of 6 additional marketing opportunities. 7 CHAIRMAN DUNLAP: Okay. I do not want to hog all 8 of the time here, but I have a question or two to ask you, 9 Tom, about one of our sister agencies. 10 The California Department of Food and Agriculture 11 sent some questions over to several of us, and I have them 12 here, and I would like to get you to address them, and we can 13 report back to our colleagues about it. Okay? 14 Supervisor Patrick asked a question about the small 15 Briggs and Stratton engine, if it is going to be available 16 and what the price was likely to be, and we got that 17 answered. 18 I want to ask about the chain saws and their 19 availability in the year 2000. There are some tree pruning 20 that occurs. 21 They have these, what they call cherry pickers, or 22 whatever, they use small, light, setting in this device and 23 they will trim the trees. 24 Weight and performance is very important. They are 25 interested in knowing if the product is going to be available PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 372 1 for the ag community in this area. 2 Do you have confidence that that is going to be the 3 case, particularly in 45 CC and below? 4 MR. CACKETTE: I think so. 5 Although we have not seen complying product in the 6 chain saw area, you heard at least two manufacturers talking 7 about the possibility of putting it in there. 8 In terms of weight, the commercial Ryobi one is, in 9 the chart, it was a few ounces lighter than their comparable 10 two-stroke. That's the newest version. 11 So, I think the weight issue on the four-stroke 12 seems to have a possible solution. 13 On the two-stroke side, these technologies didn't 14 seem to add weight of any substance to the engine, so those 15 should be the same. 16 CHAIRMAN DUNLAP: I will appeal to some of the 17 manufacturers in the audience to get to our staff so I can 18 respond to my colleagues in this area, because it is an 19 important issue to them and asked us, Tom, yesterday to get 20 some answers for them. 21 Okay. All right. 22 I know some of the other Board Members may have 23 questions of staff. It has been a long meeting, and I am 24 appreciative of the Board staying with it, and for the 25 audience, we have still, a very full house, and I know that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 373 1 it inconvenienced many of you to stay this late. 2 Mr. Calhoun, you are the engine expert on the 3 Board. Do you have any issues that concern you that we need 4 to address at this point? 5 BOARD MEMBER CALHOUN: I guess the concern that I 6 have is that in listening to all the comments, I saw that 7 together their technology is not really a problem. 8 It may ultimately surprise all of us. I am 9 inclined to think that there are manufacturers out there just 10 waiting. This is a very competitive business. 11 I assume that it is just about like the automobile 12 industry, and one company doesn't allow the other company to 13 get too far ahead of them. 14 I am somewhat bothered by PPEMA's expressed concern 15 that their proposal had not been submitted in time so that it 16 could be evaluated by the staff. 17 I guess my question of staff would be, would it 18 have made a lot of difference? 19 I don't know that. I am just thinking in terms of, 20 PPEMA did submit an alternative proposal, and had the staff 21 had that proposal, or this latest version of the inventory 22 assessment that they presented this morning, if that would 23 have made any difference? 24 MR. KENNY: If we had had that proposal, and I 25 think the key thing here is that in the hand-held category PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 374 1 you have two sectors, you have the manufacturers who 2 specified today that, in fact, they have developed compliant 3 products, the Ryobi's, the Tanaka's, the Komatsu's, and then 4 Honda, who didn't testify, and then the other sector is the 5 PPEMA sector, and they are testifying that it is not 6 technologically feasible. 7 So, I think to the extent that we are talking about 8 the PPEMA proposal, that really misses the mark a little bit. 9 The real key here is that, are there technologies 10 out there, that in the hand-held area can meet the staff's 11 proposal, or the Board's original adopted regulations, and 12 the answer to that is, yes. 13 I really think that was kind of at the heart of 14 what we looked at. 15 BOARD MEMBER CALHOUN: I guess that I was also 16 somewhat bothered, not necessarily bothered by all of the 17 letters that I received, I received an envelope from 18 Sacramento about three or four days a week, and almost every 19 week there must have been a dozen or more letters in it, and 20 I read them. 21 There were some common elements in each of the 22 letters, but the interesting thing was that California should 23 accept the Federal standards, and I am kind familiar with 24 that. Coming out of the automobile industry, we used to push 25 this 50-state car thing, and we never got very far with it, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 375 1 so, it is not something that I am not familiar with, but I 2 guess I feel comfortable at this point in time in supporting 3 the staff proposal. 4 CHAIRMAN DUNLAP: Joe, if you have any ideas on 5 this review, I know you have been through that, too, I would 6 encourage you to speak up. 7 I know that you are not shy. Talk to the staff and 8 give them suggestions on what kinds of things ought to be 9 examined. 10 I'm not looking to go around the Board and make 11 everyone talk. I know it's late, but if somebody has a few 12 things to say, please do. 13 BOARD MEMBER ROBERTS: Mr. Chairman, I was not sure 14 if Mr. Calhoun was making a motion or not, I would second it 15 if it was. 16 BOARD MEMBER CALHOUN: I so move. 17 CHAIRMAN DUNLAP: Before we do that, I need to 18 close the record. 19 So, I am going to do that now, and then we are 20 going to continue with our discussion here. 21 I will now close the record on this Agenda item. 22 However, the record will be reopened when the 15-day notice 23 of public availability. Written or oral comments after the 24 hearing date and before the 15-day notice is issued will not 25 accepted as part of the official record on this Agenda item. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 376 1 When the record is reopened for a 15-day comment 2 period, the public may submit written comments on the 3 proposed changes, which will be considered and responded to 4 in the final statement of reasons for the regulation. 5 We have done ex parte, so we will go back to 6 Supervisor Roberts -- 7 BOARD MEMBER EDGERTON: I move to separate the 8 hand-held and the nonhand-held categories. 9 CHAIRMAN DUNLAP: Okay. We will talk about that in 10 the Resolution. 11 Kathleen, I am going to ask you to figure out if 12 that can be done. 13 BOARD MEMBER ROBERTS: I don't have any questions. 14 First of all, I want to compliment the staff. 15 As we started working through this, I had some very 16 strong concerns as to whether people were really being 17 treated fairly or not. 18 The only concern that I have now is really a 19 question of whether we should be putting this into effect 20 earlier rather than extend it by a year. 21 I noted that even some of the people who had the 22 technology were accepting the fact that maybe it should be 23 extended for a year, and that is probably the only reason 24 that I am willing to do this. 25 It's clear that there is going to be some winners PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 377 1 and losers, but it's also clear that these people put some 2 effort into this, and others who just haven't gotten around 3 to it. 4 The technologies don't seem to be that 5 revolutionary. In fact, we heard all of those ideas have 6 been out there for years. 7 Well, somebody should have taken them if they have 8 been out there for years, as the successful applications have 9 done. 10 I think it is unfortunate we have received a lot of 11 letters, and it's clear that, I thought what Mr. Calhoun 12 said, that there was some elements in common. Many of the 13 letters were the same letter either typed on letterhead or 14 just simply filled in. 15 I think there is a lot of misinformation out there, 16 and I think that is unfortunate, but let me note, the one 17 thing that I think is distressing about this is that even 18 with the adoption of this, we have got a larger amount, if 19 you will, to move in our little black box that has to be 20 solved in some other way, and that is going to go on some 21 other industry ultimately. 22 I think what disturbs me, and this is not so much 23 that we are going ahead, but rather that given the new 24 inventory, that we have got a bigger problem here than what 25 we thought. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 378 1 It seems to me that, if nothing else, should 2 suggest strongly that we should not postpone this or make 3 this thing more lax. I am not saying make it tougher, and 4 that's not what we are doing, but it seems to me that with 5 the evidence that you have, that you have companies here that 6 are meeting the rules and the regulations, that you have got 7 a much larger problem than you expected that you were going 8 to have, a residual problem, that I think it is incumbent 9 upon us to do something. 10 I think the staff recommendation is a good one, and 11 I guess I would have liked to have seen it, if I would have 12 made a change it would have been to start everything a year 13 earlier, but I think I understand why they are recommending 14 that. 15 CHAIRMAN DUNLAP: Okay. I appreciate that, Ron. 16 One comment that I will make on spillage. Tom, I 17 will ask you, and Mike, and your team to get together, and I 18 want to see a spillage proposal, or some movement in that 19 area before the sun sets on the Wilson Administration. 20 MR. KENNY: We could say, before the sun sets 21 today, but it's a little late for that, but we actually 22 already have directed staff to begin working on that. 23 CHAIRMAN DUNLAP: I want it agendized, you know, 24 Kathleen or Anne, or somebody get something on the agenda. 25 We want to look at that, because there have been PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 379 1 several Board Members who have made comments, and we have 2 heard some folks talk about it today, and I think that might 3 provide some comfort to Ron and the others that are concerned 4 about any make-up tons. 5 Okay? 6 Ms. Edgerton would like to separate the two halves 7 of the item, and I know it's complicated, relative to the 8 Resolution. 9 Kathleen, I'm tired, and I will look for you to 10 tell me how to do it. 11 MS. WALSH: You have one Resolution before you that 12 covers both the hand-held and nonhand-held categories, but 13 the provisions both of the Resolution itself and the proposed 14 regulation itself are segrable. 15 We could treat two separate votes, if that's the 16 Board's desire. 17 CHAIRMAN DUNLAP: There is no mystery to that. 18 She just feels particularly strongly about one 19 item, and she has asked for us to try to find a way to do 20 that. 21 BOARD MEMBER RIORDAN: Just as a point, Ms. Walsh, 22 help me, there is a motion on the Floor. 23 It's been seconded, which we have encompassed the 24 full staff proposal, wouldn't that have to come, though, as 25 an amendment to the motion? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 380 1 MS. WALSH: Resolution and amendment, right, you 2 need a second and a vote. 3 BOARD MEMBER EDGERTON: Okay. Or a substitute 4 motion. 5 CHAIRMAN DUNLAP: Let me ask the original maker of 6 the motion, Mr. Calhoun, and we will just do this over again. 7 Mr. Calhoun, would you accept having the motion to 8 approve Resolution 98-15 include a separating of the two 9 halves of the issue? 10 BOARD MEMBER CALHOUN: That is fine. 11 CHAIRMAN DUNLAP: Okay. Is the seconder okay with 12 that? 13 Okay. Supervisor Roberts is fine with that. 14 Are the rest of the Board all right with that? 15 Okay. We have before the Board a motion and a 16 second regarding Resolution 98-15. There are two regulatory 17 elements of this. 18 One is the hand-held, and one is the nonhand-held. 19 I would like to take a voice vote on the 20 nonhand-helds -- no the other way around, the hand-held. 21 All those in favor of this, say aye. 22 Any opposed? 23 BOARD MEMBER EDGERTON: No. 24 BOARD MEMBER PATRICK: No. 25 BOARD MEMBER EDGERTON: In the alternative, you PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 381 1 could have asked for a substitute motion. 2 CHAIRMAN DUNLAP: We are past that. 3 So, you have a no vote. 4 BOARD MEMBER EDGERTON: But my no vote is because I 5 wanted to stay with the existing regulation. 6 BOARD MEMBER PATRICK: Me, too. 7 CHAIRMAN DUNLAP: I got the explanation there. 8 That motion carries. 9 We have a motion and a second to approve 10 Resolution 98-15, as it relates to nonhand-held. 11 All those in favor, say aye. 12 Any opposed? 13 BOARD MEMBER EDGERTON: I need to make a comment. 14 CHAIRMAN DUNLAP: Hold on. 15 Resolution 98-15 is approved. 16 We have two no votes on the one-half for reasons 17 commented on. 18 Now, we are all tired, Lynn. So, make it quick if 19 you would, and then Ms. Rakow. 20 BOARD MEMBER EDGERTON: For the record, this was 21 difficult for me, and the reason why I wanted it put on the 22 record is because the same issue seems to be coming up again 23 and again. 24 On one hand, I'm mindful of my obligation under the 25 California Clean Air Act to secure all feasible emissions for PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 382 1 our State, and in that spirit I have voted for this measure. 2 It is creative and innovative, and it does give us 3 the cleanest lawnmowers. On the other hand, I doubt the 4 wisdom of crafting California regulations which would even 5 unintentionally impair the ability of other states to adopt 6 our regulations. 7 It is a matter that is troublesome because we see 8 it come up again and again as a reason why we should not do 9 what we proposed to do, or why we should do what we proposed 10 to do, and I would suggest, Mr. Chairman, that we form a 11 small task force that we try to get proactive about what is 12 the best way to handle this. 13 I want to compliment the staff for not going 14 forward with an MOA on this, I don't think the MOA is the 15 right way to do it, and I think we sort of figured that out. 16 That is my comment, and I know everyone wants to go 17 home. 18 CHAIRMAN DUNLAP: On that point, though, I can tell 19 you, Mr. Kenny and the team that worked on this issue were 20 very concerned about it, and so, they share your concern. 21 As it relates to a task force, or whatever, Mike, I 22 will let you have a conversation about some of the legal 23 issues, Kathleen, we will work through it. 24 If I need to be more involved, let me know. 25 BOARD MEMBER RAKOW: Back to the incentive program, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 383 1 I think on a market basis that incentives is something that 2 manufacturers are involved in. 3 I don't look at market based incentives as a 4 consumer going out and buying refrigerator X compared to 5 refrigerator Y. 6 MR. KENNY: I agree with you, basically, market 7 based incentives do involve manufacturers. 8 BOARD MEMBER RAKOW: So, the previous discussion 9 with market based incentives, I wonder, I'm still back 10 thinking of those 50,000 landscape, gardeners and the 11 residential user, and I received information earlier on this 12 afternoon about our lawnmower rebate program, and it seems to 13 me that is a very good model to build on, and perhaps bring 14 in the manufacturers, put together some type of group that 15 could put together an incentive proposal that we could then 16 kick-start this off, and it could be defined within a limited 17 period of time, but just to build on the lawnmowers and see 18 where we can go from there, so that my gardener can go and 19 buy a new product right away. 20 CHAIRMAN DUNLAP: I will ask, Mike, for you and, I 21 mean this staff has been living and working on this, I am 22 going to ask you to include Jerry Martin, who has done some 23 outreach in this area with some of the local air districts, 24 and would you get a written report that you can share with 25 Sally and the rest of the Board Members. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 384 1 If there is a way to add the State's resources, 2 there is a logic behind it, to help with that, I would like 3 for you to examine that. 4 MR. KENNY: All right. 5 CHAIRMAN DUNLAP: I have one more. 6 Thank you. 7 BOARD MEMBER EDGERTON: I have a comment. I wanted 8 to ask, Mr. Chairman, what is happening with the other 9 recommendations which Bruce made, the technology review? 10 CHAIRMAN DUNLAP: Mike is going to get back to us 11 in the 15-day period. 12 BOARD MEMBER EDGERTON: Okay. The optional reduced 13 standards for HC beginning in 2000, is that going in the 14 market incentives discussion? 15 MR. KENNY: We will do an emissions index, and it 16 is a way of accomplishing the same thing. 17 BOARD MEMBER EDGERTON: I'm done. 18 CHAIRMAN DUNLAP: I want to thank the staff that 19 worked on this, a lot of work. 20 I know it was a long process, and I am grateful for 21 your sticking with it. 22 Also, one comment to the audience, we are always 23 sensitive about ex parte communication, and the fact that we 24 avail ourselves to meeting with people, and I think there was 25 a lot that we talked about today, and I think that the Board PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 385 1 Members had an opportunity to hear directly from the parties 2 that expressed concern, and I think it's a positive thing, 3 and I want to commend the Board for taking the time to do 4 that. 5 It is not always easy or convenient, but I do feel 6 that people had an opportunity to be heard, and that is what 7 good government is about. 8 We have one item. We will conclude with that item, 9 which is the very last item is the Open Comment Period. 10 This is an opportunity for the public to speak 11 before the Board. 12 No one signed up for it, but if anyone would like 13 to speak, raise your hand, and we will give you the 14 opportunity. 15 If not, this meeting, the March meeting of the 16 California Air Resources Board, is now adjourned. 17 (Thereupon the Air Resources Board meeting was 18 adjourned at 7:50 p.m.) 19 --o0o-- 20 21 22 23 24 25 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 386 1 CERTIFICATE OF SHORTHAND REPORTER 2 3 I, VICKI L. MEDEIROS, a Certified Shorthand 4 Reporter of the State of California, do hereby certify: 5 That I am a disinterested person herein; that the 6 foregoing hearing was reported in shorthand by me, Vicki L. 7 Medeiros, a Certified Shorthand Reporter of the State of 8 California, and thereafter transcribed into typewriting. 9 I further certify that I am not of counsel or 10 attorney for any of the parties to said hearing nor in any 11 way interested in the outcome of said hearing. 12 IN WITNESS WHEREOF, I have hereunto set my hand 13 this fifth day of April, 1998. 14 15 16 VICKI L. MEDEIROS 17 Certified Shorthand Reporter License No. 7871 18 19 20 21 22 23 24 25 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345