BOARD MEETING STATE OF CALIFORNIA AIR RESOURCES BOARD LOS ANGELES AIRPORT SHERATON GATEWAY HOTEL 6101 WEST CENTURY BOULEVARD LOS ANGELES, CALIFORNIA FRIDAY, SEPTEMBER 24, 2004 8:30 A.M. JAMES F. PETERS, CSR, RPR CERTIFIED SHORTHAND REPORTER LICENSE NUMBER 10063 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 ii APPEARANCES BOARD MEMBERS Dr. Alan Lloyd, Chairperson Ms. Sandra Berg Ms. Dorene D'Adamo Supervisor Mark DeSaulnier Dr. Henry Gong Ms. Barbara Patrick Ms. Patricia Salas Pineda Mrs. Barbara Riordan STAFF Ms. Catherine Witherspoon, Executive Officer Mr. Tom Cackette, Chief Deputy Executive Officer Mr. Michael Scheible, Deputy Executive Officer Ms. Lynn Terry, Deputy Executive Officer Ms. Diane Johnston, General Counsel Ms. Kathleen Tschogl, Ombudsman Mr. Steve Albu, Mobile Source Control Division Mr. Richard Corey, Chief, Research and Economic Studies Branch, Research Division Mr. Fereidun Feizollahi, Air Resources Supervisor I PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 iii APPEARANCES CONTINUED STAFF Mr. Paul Hughes, Manager, Low Emission Vehicle Implementation Section, Mobile Source Control Division Mr. Aron Livingston, Staff Counsel Mr. Nic Lutsey, Graduate Student Assistant, Mobile Source Control Division Mr. Chuck Shulock, Vehicle Program Specialist ALSO PRESENT Ms. Louise Bedsworth, Union of Concerned Scientists Mr. Brian Bunger, Bay Area Air Quality Management District Mr. Bahram Fazeli, Communities for a Better Environment Mr. Larry Green, Sacramento Air Quality Management District Mr. Eric Haxthausen, Environmental Defense Ms. Bonnie Holmes-Gen, American Lung Association Mr. Roland Hwang, Natural Resources Defense Council Ms. Wendy James, Clean Cars Campaign Mr. Brian Johnson, Managing Director, City of Santa Monica Mr. Kenneth Johnson, KJ Innovation Mr. Joseph Kubsh, MECA Mr. Lewis Lem, AAA Mr. James Lyons, Sierra Research Ms. Laura MacCleery, Counsel for Auto Safety Mr. John McNamara, California Refuse Removal Council Mr. John Perez, United Food & Commercial Workers PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 iv APPEARANCES CONTINUED ALSO PRESENT Ms. Nancy Pfeifer, City of El Segundo Mr. Carlos Porras, Independent Mr. Terry Tamminen, CalEPA Secretary Mr. John White, Sierra Club Mr. Brian Williams, Deputy Mayor, City of Los Angeles Mr. Dennis Zane, ALA PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 v INDEX PAGE Opening remarks by Chairperson Lloyd 1 Roll Call 2 Item 04-8-2(continued) 2 Mr. Eric Haxthausen 2 Mr. Bahram Fazeli 8 Mr. Kenneth Johnson 10 Mr. Joseph Kubsh 17 Mr. John Perez 21 Mr. Dennis Zane 23 Ms. Laura MacCleary 26 Mr. Brian Bunger 28 Mr. Larry Green 31 Mr. Roland Hwang 33 Ms. Bonnie Holmes-Gen 40 Councilmember Nancy Pfeifer 45 Ms. Louise Bedsworth 47 Mr. Brian Johnson 52 Ms. Wendy James 54 Mr. John McNamara 56 Mr. James Lyons 58 Mr. Carlos Porras 60 L.A. Deputy Mayor Brian Williams 63 Mr. John White 68 Mr. Lewis Lem 74 CalEPA Secretary Terry Tamminen 79 Staff Responses to Question from Public 84 Ex Parte Communications 112 Discussion & Q&A 118 Motion 142 Vote 142 Adjournment 143 Reporter's Certificate 144 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 1 1 PROCEEDINGS 2 CHAIRPERSON LLOYD: Meeting of the California Air 3 Resources Board is now in session. Today is a 4 continuation of yesterday's Board meeting. And in fact 5 will be a continuation of the witnesses on Item 4-8-2. 6 So I'm very pleased to welcome the first witness, 7 Deputy Mayor Brian Williams from the City of L.A., 8 followed by Council Member Todd Campbell from the City of 9 Burbank and Council Member Eric Busch, City of El Segundo. 10 Sorry. Not arrived yet. 11 We'll have then Dennis Zane, John Perez -- 12 another John Perez. 13 Denny, are you here? 14 Tim, what's happening to L.A. here? 15 Okay. Try again. 16 Bahram Fazeli, Dr. Marlyn Woo, Eric Haxthausen. 17 Eric, are you -- you want to -- 18 MR. HAXTHAUSEN: I'm here. Yes, I can speak. 19 CHAIRPERSON LLOYD: Yes, please. 20 EXECUTIVE OFFICER WITHERSPOON: Dr. Lloyd, the 21 clerk needs to take roll. 22 CHAIRPERSON LLOYD: Oh, sorry. 23 Clerk of the Board, would you please call the 24 roll. 25 BOARD CLERK ANDREONI: Thank you. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 2 1 Ms. Berg. 2 BOARD MEMBER BERG: Yes. 3 BOARD CLERK ANDREONI: Ms. D'Adamo? 4 BOARD MEMBER D'ADAMO: Here. 5 BOARD CLERK ANDREONI: Supervisor DeSaulnier? 6 BOARD MEMBER DeSAULNIER: Here. 7 BOARD CLERK ANDREONI: Dr. Gong? 8 BOARD MEMBER GONG: Here. 9 BOARD CLERK ANDREONI: Ms. Kennard? 10 Supervisor Patrick? 11 BOARD MEMBER PATRICK: Here. 12 BOARD CLERK ANDREONI: Mrs. Riordan? 13 BOARD MEMBER RIORDAN: Here. 14 BOARD CLERK ANDREONI: Supervisor Roberts? 15 Ms. Pineda? 16 BOARD MEMBER PINEDA: Here. 17 BOARD CLERK ANDREONI: Mr. Loveridge? 18 Chairman Lloyd? 19 CHAIRPERSON LLOYD: Here. 20 Thank you very much. Well then we'll have Eric 21 Haxthausen, followed by Kenneth Johnson and Joe Kubsh from 22 MECA. 23 I would appreciate if people can keep to about 24 five minutes today. We still have a growing witness list. 25 MR. HAXTHAUSEN: Thank you, Dr. Lloyd and members PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 3 1 of the Board. I'll try to be crisp this morning. 2 My name is Eric Haxthausen. I'm an economist and 3 clean car policy advocate with Environment Defense. And 4 yesterday -- yesterday you heard from my colleague John 5 DeCicco. I'd like to amplify a few of his remarks with 6 respect to some of the economic issues involved in the 7 proposal before you. 8 Could I have the next slide please. 9 (Thereupon an overhead presentation was 10 Presented as follows.) 11 --o0o-- 12 MR. HAXTHAUSEN: I'd like to make three basic 13 points today in my comments. 14 The first is that the proposed regulations 15 developed by the staff, the proposal that's before you, 16 are cost effective and they clearly meet the economic test 17 that's laid out, set forth in AB 1493. 18 Secondly, if adopted, the proposal would bring 19 net benefits to California. 20 And, finally, the analysis that the staff has 21 prepared is sound, thorough and comprehensive. 22 Next slide please. 23 --o0o-- 24 MR. HAXTHAUSEN: The key test in the statute is 25 is the proposal economical to the owner or operator of a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 4 1 vehicle, taking into account the full life cycle costs of 2 a vehicle? The staff proposal clearly meets that test. 3 It shows net cost savings to consumers over the full 4 vehicle life cycle and every year of the program. 5 Moreover, the operating cost savings exceed the increased 6 vehicle cost by $30 million in 2009 and $5.3 billion 7 dollars in 2020, and they increase throughout the 8 program -- the lifetime of the program. 9 Next slide please. 10 --o0o-- 11 MR. HAXTHAUSEN: And I want to emphasize one 12 thing. This is a very robust conclusion. Even if the 13 staff were to go back and make some revisions to some of 14 the costs that you have heard and we're comfortable with 15 their basic cost estimates, many of the assumptions -- 16 because many of the assumptions that underlie those 17 estimates are quite conservative. Even with an arbitrary 18 doubling or even tripling of the costs, this proposal 19 would still pass the test in the statute. I think that's 20 an important point that we'd like to have on the record. 21 And, indeed, we believe as my colleague, John 22 DeCicco, said yesterday that the proposal could be more 23 stringent and still be cost effective under those terms. 24 Next slide please. 25 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 5 1 MR. HAXTHAUSEN: The second point I'd like to 2 make is that the proposal will yield net benefits for 3 California. These cost savings through reduced operating 4 costs means more money in California -- the California 5 economy and in consumers' pockets. 6 The proposal will result in more jobs. The 7 proposal calculates -- the analysis shows 55,000 more jobs 8 and higher levels of individual income for Californians. 9 Moreover, the focus of the regulations is to 10 reduce greenhouse gases. And the proposal will reduce 11 them significantly, by 32 million tons of CO2 equivalent 12 annually in 2020, by 57 million tons in 2030 and 13 continuing out into the future. 14 It's worth noting, by the way, that the analysis 15 shows that the regulations would have overall net benefits 16 even before accounting for the value to California's 17 economy associated with taking these important steps 18 toward stabilizing California's climate. 19 Next slide please. 20 --o0o-- 21 MR. HAXTHAUSEN: The reductions in greenhouse 22 gases that this program will deliver are an important and 23 needed step towards stabilizing California's climate. 24 Because of the size of California's economy, the 25 significant fraction of greenhouse gases that come from PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 6 1 California motor vehicles and California's role as a 2 technology leader in the world, it is clear that any 3 reasonable climate stabilization policy will include 4 greenhouse gas emission reductions from California 5 vehicles. 6 The proposal before you today offers critical 7 leadership and paves the way for other jurisdictions, both 8 in the U.S. and elsewhere, to address this important 9 issue. 10 Although some will and have suggested that the 11 analysis underlying the proposal does too little to 12 clarify the precise effects of the regulation on the 13 climate, the key point is that this proposal takes a 14 needed step in the right direction. It is not necessary 15 to know precisely down to the tenth of a degree or to the 16 asthma-related death or to the hospitalization how this 17 proposal will affect Californians in the future. It's 18 enough to know that it's -- there's a problem, and a very 19 large problem, as we heard yesterday, and it's necessary 20 to begin to act. 21 And on this point it may be helpful to reflect on 22 the early days of smog control. It was not necessary to 23 wait for advances in air quality modeling to know that 24 action was needed to reduce smog-causing emissions. And 25 there was little danger at that time of overreacting at PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 7 1 the time in order to make the air, quote-unquote, too 2 clean. 3 Next slide please. 4 --o0o-- 5 MR. HAXTHAUSEN: Finally, the staff proposal is 6 sound and thorough. The analysis that underlies it is 7 sound and thorough, and the proposal relies on analysis 8 using standard economic methodologies. In particular, the 9 analysis that accounts for many mitigating factors that if 10 ignored could tend to reduce the benefits or increase the 11 costs of the regulation, those factors have been carefully 12 addressed by the staff. And you've heard from the staff 13 about the fleet turnover effect and the scrappage effect. 14 There's no major missing pieces in this analysis. It's 15 all there. 16 As you've heard, the analysis is also tailored to 17 California and California communities. Some of the 18 estimates that have been cited by others are nationalists. 19 And it's the estimates developed by the staff are tailored 20 to California and, therefore, more appropriate. 21 Next slide please. 22 --o0o-- 23 MR. HAXTHAUSEN: To summarize, the proposal is 24 economically well justified. It easily meets the 25 statutory cost effectiveness criterion. It passes a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 8 1 standard benefit cost test if one were to apply that. And 2 the conclusions are robust and they rely on reasonable 3 economic assumptions and thorough analysis. 4 Thank you. 5 CHAIRPERSON LLOYD: Thank you very much. 6 Any questions from my colleagues? 7 Seeing nothing. 8 Thank you very much. 9 Bahram Fazeli is now here. So I -- 10 MR. JOHNSON: Did you mention whether Kenneth 11 Johnson is here? Could I -- 12 CHAIRPERSON LLOYD: No, you can -- if we can -- I 13 didn't realize that Bahram was here. So after Bahram, 14 yes, please. 15 MR. FAZELI: Thank you. Good morning. 16 My name is Bahram Fazeli. I'm Southern 17 California Director with Communities for a Better 18 Environment. 19 CBE is a statewide environmental health and 20 justice organization. And we rely on community education 21 and organizing legal advocacy and technical research to 22 empower low income communities of color to engage in the 23 decision-making process. 24 Today I'm presenting CBE and also the 25 Environmental Justice and Climate Change Initiative. EJCC PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 9 1 is a diverse consensus-based group of U.S. environmental 2 justice, climate justice, religious, policy and advocacy 3 networks, working together to promote sane and equitable 4 climate policy. Our mission is to education and engage 5 the people of North America towards the creation and 6 implementation of just climate policies in both a domestic 7 and international context. 8 Climate change is a serious issue for everyone 9 who inhabits this planet. And Californians will face 10 serious challenges as the impacts of global warming are 11 realized. 12 Indigenous people, people of color, and 13 low-income communities especially need to make sure that 14 effective and just actions are taken to combat climate 15 change because they will be the hardest hit and least able 16 to adapt to its effects, as the Redefining Progress study 17 has found. 18 The Pavley Bill is important for people 19 everywhere, not just in California. The EJCC is concerned 20 about the bill because we recognize it as a significant 21 legislation that will serve as a model for states all over 22 the nation. As Beverly Wright, Co-chair of EJCC and 23 Director of Deep South Center for Environmental Justice, 24 points out, we want to make sure that this bill is 25 implemented in its strongest form so that if and when it's PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 10 1 adopted by other states, it will be effective enough to 2 make a real difference. 3 We want to recognize that this is only a first 4 step in our commitment for just climate policies, and 5 there is a long way to go. We applaud the efforts of ARB 6 staff and the leadership of the Board and we strongly 7 support the recommendations. 8 Thank you. 9 CHAIRPERSON LLOYD: Thank you very much indeed. 10 Thanks for coming. 11 Yes. Now, Mr. Kenneth Johnson. 12 An announcement from the hotel. There's a 13 Mercedes which has to be moved, apparently owned by -- it 14 says here, Chu Johnson. But that could be Stew Johnson. 15 Of course Stew Johnson from VW driving a Mercedes, I'm not 16 sure. So there may be some -- but if there really is a 17 Chu Johnson or a Johnson, needs to move their Mercedes. 18 So maybe we can pass that on. 19 Okay. So we have Kenneth Johnson, Joe Kubsh, and 20 Lewis Lem. 21 MR. JOHNSON: Let's see, my comments relate to 22 Section 7 in the staff report on regulatory alternatives. 23 This section is -- it's actually the shortest section in 24 the report. It's slightly over one page. It discusses 25 the alternatives of doing less or doing more. But it PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 11 1 doesn't say anything about doing anything fundamentally 2 different than the proposed LEV type 2 level standard. 3 One alternative that could have been considered 4 would be to set the emission standard for each test weight 5 according to an estimate of the maximum feasible 6 cost-effective emissions reduction for that weight. This 7 alternative would, by definition, satisfy the 1493 8 mandate. 9 Another option that I think some people have 10 brought up in previous workshops would be to set a single 11 uniform standard that applies to all weights. I think 12 there are good reasons that the staff rejected a 13 weight-neutral standard. Although the staff report does 14 not state those reasons. 15 The emission level that's attainable within the 16 limitations of feasibility and cost effectiveness 17 generally depend on vehicle weight. So it's not possible 18 to define a single standard that makes sense for all 19 vehicles. And a weight-neutral standard would only 20 satisfy 1493 on a sales average basis and then only for a 21 particular assumed vehicle weight distribution. 22 This is also true of the proposed two-level 23 LEV-type standard. 24 Fourteen ninety-three requires maximum feasible 25 cost-effective reduction of GHG emissions for motor PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 12 1 vehicles. The proposed standard does not comply with this 2 mandate. For example, according to staff analysis, the 3 smallest truck in an NESCCAF study, which has a 4250 pound 4 test weight, could in 2016 achieve emissions of 284 grams 5 per mile within the limits of feasibility and cost 6 effectiveness. Whereas a standard only requires an 7 emissions of 332 grams per mile. 8 So the only sense in which the proposed standard 9 can be construed as achieving the objective of 1493 is on 10 a sales average basis and only for a fleet weight 11 distribution matching General Motors 2002 California 12 sales. These conditions are too limiting to meet the 13 requirements of 1493 in part because the standard is not 14 self-consistent. The calculations underlying the standard 15 are premised on a specific fleet weight distribution and 16 yet the two-level formula standard would itself induce the 17 industry to change vehicle weights either by upweighting 18 or downweighting so that the assumed weight distribution 19 no longer applies. 20 For example, the 2002 market had 20 models, 21 including 8 GM models with test weights of 3750 pounds, 22 which is at the upper limit of the T1 weight range. The 23 calculations underlying the proposed standards assume that 24 these vehicles are in the T1 category. But the standard 25 creates a compelling incentive to upweight these vehicles PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 13 1 so that they are -- so they would be subject to the less 2 stringent T2 standard, 332 versus 205 gram per mile. 3 So by adding about 100 pounds to each of these 4 vehicles a manufacturer effectively gets 120 gram per mile 5 emission credits, which would have a value of probably 6 about $1500 in terms of compliance costs reduction. 7 If all manufacturers were to upweight their 3750 8 pound vehicles to move them up into the T2 category, the 9 effect on California emissions in 2030 would amount to 10 about 15,000 tons CO2 per day, which is about 10 percent 11 of the projected reduction under the proposed regulation. 12 And that's a reduction that is not accounted for and 13 neglected in the staff analysis. 14 If the manufacturers were to also equate their 15 3625 pound vehicles, that would add another 20,000 tons 16 CO2 per day. And if you extrapolate that to the national 17 level, that could probably be another factor of 10 18 increase. 19 CHAIRPERSON LLOYD: Mr. Johnson, have you passed 20 this on to staff? 21 MR. JOHNSON: I've submitted a written commentary 22 on this which goes into the technical details and 23 describes this in a lot more detail on August 11th. 24 VEHICLE PROGRAM SPECIALIST SHULOCK: Yes, we 25 received that information. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 14 1 CHAIRPERSON LLOYD: Okay. Thank you. 2 Maybe you could summarize. 3 MR. JOHNSON: Okay. The standard would also 4 induce downweighting due to the weight stratified 5 disparities in compliance costs. For example, in the 6 NESCCAF study -- well, let me just skip over this quickly, 7 because I don't want to take too much of your time. 8 But the downside of the incentive would provide 9 no environmental benefit because emission standards are 10 flat within each class. And while downsizing reduces 11 emissions, it also reduces a need for overcompliance 12 credits so small trucks could be designed to a less 13 stringent emissions of that. So the downsizing incentive 14 only functions to incentivize industry to substitute 15 downsizing for technology contrary to the technology 16 forcing nature of the regulation. 17 Upweighting and downweighting will shift the 18 vehicle weight distribution away from the assumed 19 California 2002 market conditions so that the standard no 20 longer satisfies the 1493 mandate even on a sales-average 21 basis. 22 And even if there were no upweighting or 23 downweighting, and if the vehicle weight mix in 2016 24 matched 2002 California conditions, the proposed standard 25 would still not comply with the mandate because, with the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 15 1 exception of GM, none of the six manufacturers is actually 2 required under this standard to achieve maximum feasible 3 and cost-effective emission reductions. GM is the only 4 company that's actually required to achieve that standard. 5 CHAIRPERSON LLOYD: Thank you. I'll have to cut 6 you off here, because you've had 10 minutes now. 7 MR. JOHNSON: Okay. Thank you. 8 But I would just encourage you to look at my 9 written comments. I propose specific numerical emission 10 limits that would be more environmentally effective, more 11 cost-concerted than the proposal. 12 Thank you. 13 CHAIRPERSON LLOYD: Thank you very much. 14 Questions? 15 Ms. Berg. 16 BOARD MEMBER BERG: Yes. Could we have staff 17 comment on some of these points? 18 EXECUTIVE OFFICER WITHERSPOON: Mr. Johnson did 19 submit several thoughtful substantive comments to us over 20 the course of the rule development process, raising 21 exactly the issues that staff wrestled with from the very 22 beginning in coming up with a form of the standard and the 23 stringency of the of standard. He mentioned the 24 consideration of weight-based designations and uniform 25 standards in addition to what staff selected, which was a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 16 1 LEV-based two-tier division. And that we had not fully 2 explained our reasoning for rejecting the others in the 3 existing staff report, that's correct. We spent so much 4 time and such exhaustive analysis that at the end it was 5 old history to us. But in the final statement of reasons 6 we will clearly articulate why we selected the LEV II over 7 the other methods. 8 He also spoke about upweighting and 9 downweighting, which would be an issue no matter what form 10 of the standard was selected there is a risk of gaming in 11 any direction. And we won't be able to manage and police 12 that until we have some experience with the standard 13 itself. 14 In the two-tier structure the car and light-duty 15 truck weights overlap. So the first issue is what's a car 16 and what's a truck. And staff will be exercising 17 discretion, ask manufacturers come forward to them with 18 different vehicles in the crossover categories in coming 19 up with the right designation. 20 And then Mr. Johnson spoke about what happens 21 based on weight alone. You move into truck, but there is 22 a part of the weight boundaries that overlaps. So both 23 things will be going on. 24 And I think that's pretty much -- and then he 25 reaches the conclusion that because we chose LEV II and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 17 1 because not all manufacturers have to strive as hard to 2 meet that framework of the standards, that by default our 3 standards don't represent maximum feasible. Staff 4 believes that they still do. There are also mandates in 5 the bill that we must provide flexibility to 6 manufacturers, we must manage costs. And so the 7 underlying theory of the standard is it has to be 8 achievable by everyone and the farthest behind 9 manufacturer sets the ceiling on maximum feasible, not the 10 farthest ahead. 11 And so that's the nature of staff's proposal. 12 MR. JOHNSON: Okay. Can I just make one belief 13 additional -- 14 CHAIRPERSON LLOYD: No, I'm sorry. Because we 15 had too much of that yesterday. 16 BOARD MEMBER BERG: Thank you very much. But 17 thank you, Mr. Johnson. I do have your comments here. 18 And you did a lot of hard work. And thank you for that. 19 MR. JOHNSON: I appreciate that. 20 CHAIRPERSON LLOYD: Then we have Joseph Kubsh and 21 then Lewis Lem, then John Perez, who's now here. 22 MR. KUBSH: Good morning, Mr. Chairman and 23 members of the Board. My name is Joe Kubsh. I'm the 24 Deputy Director of the Manufacturers of Emission Controls 25 Association, MECA. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 18 1 MECA is a nonprofit association of the world's 2 leading manufacturers of emission control technology for 3 mobile sources, with a proven track record over the last 4 30 years of developing emission controls for all kinds of 5 on-road and off-road vehicles. 6 My comments today are not directed at the core 7 proposals regarding reducing carbon dioxide emissions from 8 light-duty vehicles, since these technology options are 9 largely outside of the experience base of our industry. 10 But I would like to offer one comment with 11 respect to the relationship between reducing greenhouse 12 gases like carbon dioxide and reducing criteria 13 pollutants, that is also an important part of California's 14 emission goals. 15 Our industry firmly believes that all of the 16 light-duty power train options, including light-duty 17 diesels, can be combined with appropriately designed and 18 optimized emission control technologies to meet all 19 applicable California conventional emission requirements 20 during the proposed implementation years that we're 21 considering here for reducing climate change emissions. 22 The Chairman and staff are well aware of the 23 impressive track record of gasoline stoichiometric 24 technology that's in the marketplace already today 25 achieving in some cases near-zero tailpipe emission levels PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 19 1 of criteria pollutants. 2 I did want to also indicate that there's a 3 growing body of evidence of the impressive technology 4 development associated with clean diesel technology. And, 5 again, Chairman and staff are well aware of some of these. 6 We believe that in the 2009-2016 timeframe technologies 7 like particulate filters, NOx-absorbent technology, and/or 8 selective catalytic reduction technologies will allow 9 manufacturers to use clean diesel as an option even here 10 in California and, thus, all of the technology options 11 that staff includes in their report for reducing climate 12 change emissions do not preempt those vehicles from still 13 meeting criteria pollutant requirements here in 14 California. 15 And that concludes my comments for today. 16 CHAIRPERSON LLOYD: Thank you very much, Joe. 17 A comment was made yesterday questioning -- I 18 think it was from South Coast -- questioning the potential 19 durability of control systems which would come into play 20 for the new generation of diesel which could meet our 21 standards. Do you have any comment to that? 22 MR. KUBSH: Yes. I can state that, firstly, with 23 respect to diesel particulate filters, by the end of this 24 year there'll be almost a million vehicles in -- 25 light-duty vehicles in Europe equipped with particulate PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 20 1 filters that have operated for tens of thousands, in some 2 cases in excess of 80,000 -- 50,000 miles without any 3 problems, indicating that that technology is very robust 4 and certainly can provide very large reductions in 5 particulate matter emissions from light-duty vehicles. 6 There's still some remaining challenges on the 7 NOx side with respect to NOx absorbers and selective 8 catalytic reduction as they may be applied to light-duty 9 vehicles. But for reference, at the recent Department of 10 Energy DEER Conference that was held in Coronado here in 11 California a couple weeks ago, a couple manufactures 12 reported their latest results on light-duty diesel 13 vehicles equipped with filters and NOx absorber technology 14 and/or selective catalytic reduction technology, that 15 showed the ability to meet LEV II type NOx requirements 16 after a full useful life durability. 17 So, again, there's still some work to be done 18 there. But there's a growing body of evidence that these 19 technologies will be durable enough for light duty and we 20 believe even for heavy duty applications moving forward. 21 CHAIRPERSON LLOYD: Thank you. 22 Questions? 23 Thank you very much. 24 Lewis Lem. Then John Perez. 25 John Perez. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 21 1 MR. PEREZ: Good morning, Chairman Lloyd and 2 Board members. My name is John Perez. I'm the Director 3 of Political Affairs for the United Food and Commercial 4 Workers Union and the Vice President of the United Food 5 and Commercial Workers Western States Council. We 6 represent some 187,000 working families in the state of 7 California. 8 And I'm here before you today to ask you to adopt 9 the staff proposal to reduce greenhouse gas emissions from 10 motor vehicles that's before you today. 11 There's no longer any real doubt that greenhouse 12 gases are a key factor in the warming of the earth's 13 climate. And the impact of the global fever is already 14 being felt in the State of California. Our snow packs are 15 shrinking, our rivers are drying up, and our coast lines 16 are eroding. These changes threaten the lives and the 17 livelihoods of every working family in California. 18 Food, water, and energy costs are likely to 19 increase as the weather emergencies, insurance liabilities 20 and environmental losses and demands upon our public 21 health infrastructure. Indeed, California working 22 families, especially those in low income and environmental 23 justice communities, are at risk economically and socially 24 and they're most likely to fill the impact the quickest. 25 Passenger vehicles and light trucks are the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 22 1 largest source of global warming pollution in California, 2 accounting for approximately 40 percent of the state's 3 emissions. We can't continue to permit such excessive 4 greenhouse gas emissions from motor vehicles, especially 5 when technologies to reduce greenhouse gas emissions 6 already exist and more will be available in the years 7 ahead, as the CARB staff has identified. 8 We've already pumped out enough greenhouse gases 9 to affect California's climate, geology and economy for 10 decades to come. We owe it to the working families of the 11 State of California to rise to the challenge and stem the 12 global warming tide. 13 Organized labor in California is up to that 14 challenge. Over 23 unions in the state, including my 15 union, the United Food and Commercial Workers; electrical 16 workers; service employees; steel workers and machinists, 17 have indicated their support for the strongest possible 18 regulations to reduce greenhouse gas emissions from 19 automobiles. 20 There's no doubt that the labor movement takes 21 the threat of global warming and climate changes 22 seriously. The draft plan before you is a sound platform 23 for significant reductions and we urge your support. 24 CHAIRPERSON LLOYD: Thank you very much. 25 Questions? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 23 1 Oh, I've also got a John A. Perez here? 2 MR. PEREZ: Correct. 3 CHAIRPERSON LLOYD: Same person or not? 4 MR. PEREZ: I'm sorry? 5 CHAIRPERSON LLOYD: I've also got a John Perez 6 here. 7 MR. PEREZ: John A., John Perez, same person. 8 CHAIRPERSON LLOYD: The same one? 9 MR. PEREZ: Yeah. 10 CHAIRPERSON LLOYD: Okay. Thank you. Thank you 11 very much. 12 Well, I see that Denny Zane has arrived. And 13 then I don't know whether Dr. Marlyn Woo and Lewis Lem. 14 Laura MacCleery. 15 Is Lewis Lem here? Laura MacCleery? 16 So, Denny, are you going so come first and then 17 Laura MacCleery? 18 MR. ZANE: Good morning, Chairman Lloyd. My name 19 is Denny Zane. I'm a resident of the City of Santa 20 Monica, former mayor there. And for the last year or so I 21 have been working with the American Lung Association, 22 reaching out to cities and to labor organizations to find 23 support for this proposal. 24 And I must confess that I was quite surprised at 25 the readiness I found among elected officials and labor PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 24 1 leaders and the sense of urgency that they shared about 2 the importance of this regulation. 3 John Perez, who just testified, indicated to you 4 that there were some 23 labor organizations that offered 5 support for this proposal. I have a chart here that will 6 show you a list of those folk. 7 Well, I'll just hold it. 8 EXECUTIVE OFFICER WITHERSPOON: You can put it on 9 the easel. 10 MR. ZANE: Okay. Later when officials from a 11 number of the cities who have indicated support will be 12 here as well, we will show you a list of the cities and 13 counties that have indicated support. 14 I think that the sense of urgency is growing in 15 California. Recently when the proceeding of the National 16 Academy of Sciences released its report about the effects 17 of global warming on California, there was one image that 18 stuck with me and that I shared frequently when I spoke 19 with elected officials. The image was that over the next 20 century coastal communities will begin to feel like inland 21 communities and the inland communities will begin to feel 22 like Death Valley. 23 I recently made a trip to Death Valley. I 24 arrived at midnight. It was 101 degrees. I grew up in 25 Colton, an inland community near San Bernardino. I now PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 25 1 live in Santa Monica on the coast. 2 The imagery suggested by this spokesperson for 3 the National Academy of Sciences struck me quite close to 4 home. I do not look forward, nor should any of us, to the 5 day when the coastal communities will have days over 110 6 degrees like I frequently experienced when I was young man 7 in Colton; or when Colton, San Bernardino and other inland 8 cities will have a 101 degree temperatures at midnight. 9 This is not a future we should bequeath to our children. 10 This is a future to avoid. 11 You are perhaps the most important, perhaps even 12 the most influential, agency, collection of individuals 13 who can make a difference as to where we go over this 14 century. I envy you your role. I think were any of us to 15 choose careers or positions in public service, the 16 opportunity to make a difference is really what we are 17 seeking. You have an opportunity to make a difference 18 like few others have had before you or will have after 19 you. I urge you to stand tall to it and support this 20 measure. 21 Thank you. 22 CHAIRPERSON LLOYD: Thank you very much. 23 Impressive list of supporters. 24 Questions? 25 Thank you. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 26 1 Laura MacCleery, Brian Bunger, and Larry 2 Sherwood. 3 MS. MacCLEERY: Good morning, Mr. Chairman and 4 members of the Board. My name is Laura MacCleery and I'm 5 counsel for Auto Safety at Public Citizen. 6 At Public Citizen I work for Joan Claybrook, who 7 is Administrator of the National Highway Traffic Safety 8 Administration and for 30 years has worked on auto safety 9 issues. 10 Unfortunately, in our experience all too often 11 the auto industry wages what the springboards called an 12 irregulatory case on air bags, the regulatory equivalent 13 of war against safety standards such as rollover or roof 14 crush resistance or even air bags. 15 I just wanted to go on record today and say that 16 we're very supportive of the Board's proposal. We 17 disagree with some of the allegations raised by outside 18 groups, which we believe to be front groups for the auto 19 industry, that there are safety implications from the 20 proposal. The weight reductions that are at issue in that 21 argument are not going to flow from the Board's proposal, 22 which is a carefully thought-out and comprehensive 23 technology package, completely free of any implications 24 for the weight or vehicle attributes as the Board has 25 said. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 27 1 And even in the context of the arguments that 2 they're being made, the issue that weight and safety are 3 interrelated is a myth. In fact, weight is a function of 4 vehicle size, which is sometimes confounded with weight in 5 the data. And it's also function of vehicle design. So 6 smaller vehicles are as safe, if you look at driver death 7 rates, as larger or heavier vehicles. 8 I have made extensive comments in this regard and 9 slides to the record. But because the safety issue's not 10 been a huge issue in these proceedings, I'm just going to 11 refer to that. 12 I'd also like to submit for the record a report 13 that we commissioned several years ago on a retrospective 14 look on different cost estimates by industry for 15 regulations that the federal government has promulgated 16 over the years. It covers DOT, OSHA, FDA. It's quite 17 comprehensive. And in every case it found that the 18 prospective view of the costs of the regulatory compliance 19 were overstated, sometimes by a factor of 10. And it 20 explains some of the economic factors in the missed 21 analysis for that. So that's for the record for the 22 Board. 23 Thank you very much. 24 CHAIRPERSON LLOYD: Thank you very much. And 25 thank you for being mindful of our time. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 28 1 Any questions here? 2 Thank you. 3 Brian Bunger, Larry Sherwood, Roland Hwang. 4 MR. BUNGER: Good morning, Chairman Lloyd, 5 Supervisor DeSaulnier and members of the Board. Thank you 6 for the opportunity to address you today on this wonderful 7 piece of regulatory work. 8 My name is Brian Bunger and I'm the District 9 Counsel for the Bay Area Air Quality Management District. 10 Jack Broadbent, our Executive Officer, sends his regrets 11 that he could not be here today personally to address you. 12 Mr. Broadbent also sends his congratulations to 13 the new members of the Board and the continuing members. 14 And we both look forward to working with you as we 15 continue our mission to achieve clean air in the Bay Area. 16 I'm here today on behalf of Mr. Broadbent and the 17 staff to offer our support of this regulatory proposal. 18 We sent a letter by facsimile on -- I believe on 19 Wednesday, but I'll reiterate the comments we made there. 20 The Bay Area Air Quality Management District 21 staff supports the ARB staff proposal to control 22 greenhouse gas emissions from motor vehicles being 23 considered by you today. 24 In 2002 the Air District supported and lobbied 25 for passage of California's landmark legislation, AB 1493 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 29 1 (Pavley). 2 We believe that the proposal before you today is 3 a rational, reasonable beginning towards the more 4 responsible future for motor vehicles that the original 5 legislation envisioned. 6 There is clearly strong worldwide consensus in 7 the scientific community that human actions are affecting 8 climate through atmospheric build up of greenhouse gases. 9 In California the transportation sector is the largest 10 single contributor to greenhouse gas emissions. To 11 address this AB 1493 stipulates that the ARB enact 12 regulations to achieve the maximum feasible and cost 13 effective reduction of greenhouse gas emissions from motor 14 vehicles. We believe that the staff proposal before you 15 today achieves this goal. 16 While we note that costs have increased in the 17 addendum for compliance in the near term for cars and 18 light trucks, we do not believe that that in any way 19 diminishes the importance of passing this regulatory 20 proposal. 21 Higher compliance costs may mean higher initial 22 consumer purchase costs. But the staff proposal clearly 23 demonstrates that these are more than offset by reduced 24 lifetime operating costs. Thus we do not believe that the 25 information in the addendum should delay the Board's PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 30 1 regulatory adoption schedule. 2 For regions like the Bay Area that are very close 3 to attaining federal ozone standards, future global 4 warming and the resulting increase in ozone concentrations 5 jeopardizes our efforts. And global warming makes our 6 task of attaining state ozone standards even more 7 difficult. 8 While California's light-duty fleet is 9 responsible for a relatively small percentage of total 10 global emissions of greenhouse gases, we concur with the 11 staff report that this does not mean California should be 12 passive and ignore the problem. 13 California has long been a leader in air quality 14 efforts. California regulatory efforts and their 15 worldwide replication have historically impacted far more 16 than just California vehicles. The staff proposal would 17 have economic benefits for our state, both the personal 18 incomes here because of reduced automobile operating costs 19 and for other reasons, many of which you have heard from 20 other speakers. 21 In conclusion, we urge you and your colleagues to 22 adopt the staff proposal. It is critically needed and a 23 reasonable step forward on our journey towards minimizing 24 climate change. Please know that the Air District is both 25 supportive of your efforts and will be doing what we can PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 31 1 as well to address this issue. 2 Thank you. 3 CHAIRPERSON LLOYD: Thank you very much. 4 Supervisor DeSaulnier. 5 BOARD MEMBER DeSAULNIER: I'll just let my 6 colleagues know. Unfortunately our Board was not able to 7 take action to adopt it because we canceled a couple of 8 meetings in the summertime. But I'm quite confident that 9 my colleagues would not only be supportive, but would -- 10 if they were to draw, the rule would be more stringent. 11 MR. BUNGER: Thank you. 12 BOARD MEMBER DeSAULNIER: On behalf of the Bay 13 Area. 14 CHAIRPERSON LLOYD: Thank you. 15 I guess it looks like Larry Green's going to come 16 in. 17 Hi, Larry. 18 MR. GREEN: You have a Larry from Sacramento, but 19 a different one. 20 CHAIRPERSON LLOYD: Yeah, good. 21 And then Roland Hwang and then Bonnie Holmes-Gen. 22 MR. GREEN: Good morning, Chairman Lloyd and 23 Board members. 24 The Sacramento Air District strongly supports 25 this proposed regulation and commends the staff and Board PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 32 1 for the measured approach they've taken in this proposal. 2 Increased CO2 levels will have a very detrimental 3 effect on air quality in the Sacramento region. Being 4 part of the Central Valley, that includes both ourselves 5 and the San Joaquin, the weather impacts that were 6 outlined yesterday, our summer temperatures and longer 7 summers, will increase the frequency of ozone episodes and 8 both federal and state exceedances. Visionary measures 9 like this regulation are needed to reduce the impact of 10 these detrimental weather effects. 11 I've noted two key points about this regulation 12 that's -- it doesn't require the use of hybrids, 13 alternative fuels and other technology. But these are 14 really likely to be available and cost effective. 15 And we believe that this regulation is very much 16 supported by the residents in our region and that this 17 idea of life cycle costs being actually a positive aspect 18 for the consumers is an excellent aspect of the 19 regulation. 20 We urge you to adopt the regulation as 21 expeditiously as possible. And support you -- we'll be 22 there doing whatever we can to help along the way. 23 Thank you. 24 CHAIRPERSON LLOYD: Thank you very much, Larry. 25 I appreciate that. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 33 1 Roland Hwang, Bonnie Holmes-Gen, and Louise 2 Bedsworth. 3 Good morning. 4 MR. HWANG: Good morning, Dr. Lloyd and members 5 of the Board. 6 It's a pleasure for me to provide additional 7 comments from the Natural Resources Defense Council on 8 this very important issue. My colleague, David Doniger, 9 spoke to you about the green light on your legal authority 10 at the federal level to go forward with this proposal. 11 (Thereupon an overhead presentation was 12 Presented as follows.) 13 MR. HWANG: I wanted to quickly go over some of 14 the issues that were raised yesterday, particularly about 15 cost estimates and about the impact that California 16 actions will have nationally, even globally. 17 Next slide please. 18 --o0o-- 19 MR. HWANG: Also in your packet of comments I 20 want to point out that there is a global warming and ozone 21 report that the NRDC recently completed, and it was 22 released last Monday. We also did one for the East Coast. 23 I'm not going to actually review that. Today I'm going to 24 spend my time on the second and third bullets. 25 Next slide please. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 34 1 --o0o-- 2 MR. HWANG: And I'm going to skip over here. But 3 in your packet again we have a report called Smog in the 4 Forecast, Attachment A in your packet. It clearly shows 5 that global warming means more smog and more adverse 6 health impacts for citizens of California. 7 Next slide. 8 --o0o-- 9 MR. HWANG: And I'm going to skip this slide to 10 move on to a point here. 11 --o0o-- 12 MR. HWANG: I think it's very instructive as 13 we're listening here today in 2004 about cost estimates 14 from industry, about how they have estimated past air 15 pollution control measures and the costs. And typically 16 we see -- actually very consistently we've seen from 17 regulators -- we see the auto industry and regulators 18 overestimating the true cost of actual compliance. There 19 are several reasons for this: 20 One reason being regulators and industry are 21 conservative. 22 Second reason is that industry's often strategic 23 about the cost estimates. 24 And, finally, the third reason would be 25 unanticipated innovation. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 35 1 But the key point here is that we've seen over 2 and over again throughout history, really through the last 3 four decades of motor vehicle pollution control, a 4 consistent story here of cost overestimation for actual 5 regulatory compliance. 6 In the 1970's we saw auto makers, in this case 7 Chrysler in advertising claimed $1300 for a catalytic 8 converter, which turned -- which in today's dollars -- is 9 $2800 in today's dollars. And the actual cost turned out 10 to be closer to $1600 in today's dollars. 11 I'm sorry. The regulators estimated about $1600. 12 And the actual cost turned out to be between 875 and 13 1,350. The auto estimate in this case for catalytic 14 converters was about 1.6 to 3.2 times too high. 15 Next slide please. 16 --o0o-- 17 MR. HWANG: Another case study, 1990's, not 10 18 years ago, the auto industry was claiming $788, ARB staff 19 was estimating $120. The actual cost according to ARB 20 estimate was $83. Auto estimate was about 10 times too 21 high. ARB's estimate, while not right on the money, was 22 much closer, was 1.4 times. 23 Next slide please. 24 --o0o-- 25 MR. HWANG: This slide is I think also PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 36 1 instructive. This is during the 1990's when California 2 was debating the low-emission vehicle program about a 3 decade ago. This is actually -- the reason I brought this 4 up is that this is actually -- you saw a presentation by 5 Tom Austin yesterday from Sierra Research. Ten years ago, 6 him and his colleague produced some estimates for the auto 7 industry on the cost of compliance for the LEV program. 8 In this case T LEV's, LEV and U LEV standards. And these 9 are his estimates in red, as you can see. And you can see 10 the actual estimates where there's a bullet here which -- 11 if you could press the next button on the slide. 12 --o0o-- 13 MR. HWANG: Sierra Research estimates 10 years 14 ago were 4 to 6 times too high from actual compliance. As 15 you can see, they estimate for a LEV I standard a thousand 16 dollars, for a U LEV standard about -- almost $1500. So 17 that's the track record which this particular company and 18 this particular analyst has had in predicting air 19 pollution actual costs. 20 Next slide please. 21 --o0o-- 22 MR. HWANG: And, again, I've reviewed in my 23 comments. You can -- you're free to look at that at your 24 leisure. But I've reviewed the past history of motor 25 vehicle pollution control. And consistently what we see PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 37 1 is 2 to 10 times overestimation by the industry. So the 2 $3,000 you actually heard yesterday from Mr. Tom Austin is 3 actually very consistent and to be expected of what the 4 industry has predicted in the past in terms of their cost 5 overestimations. 6 Next slide please. 7 --o0o-- 8 MR. HWANG: The other point I'd like to make is 9 the -- the impact of California action cannot be 10 understated. My colleague, David Doniger, mentioned three 11 ways for which this is going to impact pollution outside 12 the state. And what I would like to reinforce is a 13 consistent track record again of California action on air 14 pollution being emulated nationally and by other states. 15 Starting in the early '60's California was the 16 first ever state or government agency to regulate 17 pollution for motor vehicles, positive crankcase 18 ventilation, emulated later federally and in other areas. 19 1966 California adopted the first ever pollution 20 tailpipe standard for carbon dioxide and hydrocarbons, 21 adopted federally in 1968. 22 And in 1970's a huge success story. First ever 23 requirement for catalytic converter here in California. 24 California stood up the auto makers when they claimed 25 economic calamity and high cost. And of course the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 38 1 catalytic converter is a huge clean air success story. 2 Next slide please. 3 --o0o-- 4 MR. HWANG: This story continues. 1990, first 5 unleaded gasoline or for made gasoline, coming across the 6 U.S. and now internationally. 7 1994 LEV program. Four northeast states adopted 8 that. Eventually became the model for the national LEV 9 program. 10 California's LEV II program, which is a current 11 criteria pollutant -- smog-forming pollutant control 12 program. That has been adopted by seven northeast states 13 and has served as a model for the current federal 14 program -- Tier 2 program. 15 2009 when these California CO2 standards take 16 effect, we believe -- if you look at the past history and 17 you look at the intentions from New York State, Canada and 18 elsewhere, have indicated interest in adopting these 19 standards. 20 CHAIRPERSON LLOYD: Are you going to -- getting 21 to a close? 22 MR. HWANG: Yes, I'm almost done, Dr. Lloyd. I 23 appreciate your attention. 24 --o0o-- 25 MR. HWANG: Let me close by saying the following: PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 39 1 I think that this is the most important air pollution 2 standard since the adoption of the catalytic converter in 3 the 1970's. In the 70's smog was a big problem for 4 California. Still is a big problem. These big problems 5 require big solutions. And I think that California's 6 standards today is a meaningful solution to a big problem. 7 So the question is: Is this -- I think the 8 question before the Board is: Is this problem big enough 9 for California to take meaningful action? I think the 10 answer has to be a resounding yes. 11 I think, is it -- if the question before the 12 Board is, is it appropriate for California to take action 13 ahead of the federal government, I think the answer has to 14 be a resounding yes because it is shown consistently in 15 the past that California's actions can lead to benefits 16 beyond the borders of this state. 17 Next slide please. 18 --o0o-- 19 MR. HWANG: And in summary, we think the proposal 20 is technically and economically well justified. It's 21 consistent with the intent and requirements of the law. 22 And though the stringency in phase-in could be stronger, 23 on balance we believe this is a good proposal, we believe 24 the Board should adopt what is before you today. And I 25 think this -- California has an opportunity here to repeat PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 40 1 the success it has had over the last four decades fighting 2 smog forming pollution from tailpipes and repeat their 3 success of the catalytic converter during the 1970's. 4 Thank you for your attention. 5 And, Dr. Lloyd, I apologize for running a little 6 bit longer. 7 CHAIRPERSON LLOYD: Thank you. I know you had a 8 lot of information there. 9 Questions, comments from the Board? 10 Thank you. 11 Going to take Bonnie Holmes-Gen. But then we 12 have Assemblywoman Nancy Pfeiffer from the City of El 13 Segundo. So we'll take her after Bonnie Holmes-Gen. 14 MS. HOLMES-GEN: Good morning. 15 My name is Bonnie Holmes-Gen. I'm representing 16 the American Lung Association of California, which is the 17 oldest voluntary nonprofit health organization in the 18 country. And I'm hear to communicate the strong support 19 of the American Lung Association of California for the 20 greenhouse gas regulation that's before you today, and to 21 present to you with petitions, letters and resolutions 22 from around the state in support of your efforts. 23 The American Lung Association Board of Directors 24 approved a greenhouse gas and global warming position 25 statement in June of 2004. And I'm not going to read you PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 41 1 the whole statement. But I am going to point out that 2 there's three main points in our statement: 3 That rising temperatures will likely contribute 4 to increased ozone formation and increased emissions of 5 pollutants that dirty the air and damage lung cells. 6 Worsening air quality will lead to worsening of 7 respiratory illnesses, including increased asthma attacks, 8 increased hospitalizations for respiratory and 9 cardiovascular diseases, reduced lung capacity, and 10 premature deaths. 11 And California, are resolution says, should adopt 12 the strongest possible regulations to reduce greenhouse 13 gas emissions from motor vehicles, and should increase the 14 stringency of those regulations over time as more 15 alternative fuels and new technologies become available. 16 My main message today is this: The Auto 17 Alliance -- the Alliance of Automobile Manufacturers is 18 wrong about this regulation in many respects, but 19 especially when they try to say that there are no 20 demonstrable public health benefits from this regulation. 21 Make no mistake, this regulation is clearly a public 22 health measure. That's why the American Lung Association 23 of California and public health organizations across the 24 state, including the California Medical Association, 25 American Academy of Pediatrics -- you heard from yesterday PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 42 1 Dr. Roth -- American Academy of Family Physicians, 2 California School Nurses Organization, and many others 3 have expressed their support for this regulation. 4 That's why over 160 doctors, nurses, respiratory 5 therapists and other health professionals have signed a 6 petition urging you to adopt this regulation. And I 7 believe you have this in your packets. 8 As your own publications state, over 90 percent 9 of California population already live in areas where the 10 air is unhealthy according to state and federal standards. 11 We already know that the air is responsible for thousands 12 of premature deaths and hospitalizations every year. We 13 are finding out that people are experiencing lung health 14 problems even at levels that meet our current standards, 15 which is a tremendous concern. 16 Clearly we cannot afford to let rising 17 temperatures make our air pollution problems worse. We 18 need every tool in our tool kit to deal with our severe 19 air quality problems here in California. And that 20 includes reducing greenhouse gas emissions, which is -- 21 you should consider a key element of our state strategy to 22 control smog. And, as you know, not only will the 23 greenhouse gas regulation benefit California from slowing 24 the warming of the planet that contributes to ozone 25 pollution, but it will also have direct smog benefits from PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 43 1 the regulatory controls on the order of five tons per day, 2 which is extremely significant. 3 I'd like to present to you in addition to the 4 over 160 physicians and respiratory therapists and nurses 5 over 3,000 letters of support from the public that's 6 collected by the American Lung Association. Here is just 7 a small sampling. We have a box outside. And these 8 letters urge you again to move forward today and adopt 9 this resolution. Many Of these are from health 10 professionals or individuals suffering from lung illness. 11 And most of these have some personal messages for you. 12 And I'm just going to read one very briefly. 13 "Asthma affects all of us. I don't have asthma, 14 but I have a serious genetic lung condition which is 15 highly exacerbated by pollution. I can't live in areas 16 with high pollution, and often have to live in places 17 where the cost of living is much higher just to have 18 cleaner and healthier air. I am particularly concerned 19 about our air pollution problems because avoiding a lung 20 transplant is a high priority for me. In the broader 21 picture there are millions of young children who are born 22 in polluted areas, who are growing up with underdeveloped 23 lungs and much higher rates of asthma." 24 This is just one of many, many letters. 25 Okay. I'd also like to present to you over 60 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 44 1 resolutions, letters of support from local governments 2 around the state. We have a board here listing all of 3 these cities and counties that have taken positions. You 4 also have a folder with all of these resolutions and 5 letters. We actually keep collecting them. Everyday we 6 get a few more. So you actually have over 60 I think in 7 your packet. We've had 56, but now we have over 60. 8 There's fairly equal representation from northern 9 and southern California. And all of these local 10 governments have urged you to adopt the strongest possible 11 regulations to reduce greenhouse gas emissions from motor 12 vehicles and are urging you to take strong leadership on 13 this issue. 14 You will hear from representatives from several 15 cities today later in the program. 16 Local American Lung Association offices worked 17 very hard together with other organizations over the past 18 year to encourage local governments to take these actions 19 in support of the greenhouse gas regulation. We're very 20 proud to have such broad support. 21 In closing, public health demands that you take 22 action to control greenhouse gases. We are urging you 23 today to demonstrate strong leadership for public health 24 for California and the world by adopting the proposed 25 regulations. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 45 1 Thank you for your time. 2 CHAIRPERSON LLOYD: Thank you very much, Bonnie. 3 Comments? 4 Again, congratulations on all the hard work, and 5 thanks for all the cities weighing in. 6 So we now have Councilwoman Nancy Pfeiffer from 7 the City of El Segundo. And then we'll go with Louise 8 Bedsworth from UCS. 9 COUNCILWOMAN PFEIFFER: Good morning, Chairman 10 Lloyd, members of the Board. I'm Nancy Pfeiffer here to 11 represent the City of El Segundo. Mayor Kelly McDowell 12 asked me to read the following statement into the record 13 of today's proceeding: 14 The City of El Segundo urges you to adopt new 15 strong regulations to reduce greenhouse gas emissions from 16 motor vehicles. The city supports the proposal that is 17 before you for consideration today. 18 In the study of the effects of global warming on 19 the State of California, 19 scientists warn that 20 California faces devastating impacts due to greenhouse 21 gases. 22 Local governments are likely to suffer severe 23 consequences from the effects of global warming, as we are 24 often the agencies of first recourse for constituents 25 facing the burdens of poor environmental decisions. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 46 1 Unfortunately, under California law, local governments 2 have the least flexibility to generate the resources 3 needed to respond effectively, a problem likely to be 4 compounded by the expected adverse economic consequences 5 of global warming on industries essential to the fiscal 6 health of local governments such as real estate, tourism 7 and agriculture. 8 In short, global warming threatens California's 9 health, environment, economy, and quality of life; and 10 greenhouse gas emissions from passenger vehicles and light 11 trucks contribute vastly to the buildup of greenhouse 12 gases in the atmosphere that results in global warming. 13 The city believes it is imperative that 14 California lead the way in addressing the problem of 15 global warming. We must act now to avert even more severe 16 impacts from global warming in the future. We must act 17 now to cut greenhouse gas emissions from vehicles. 18 The city of El Segundo, along with 60 other 19 cities throughout the State of California, supports strong 20 measures to reduce vehicle greenhouse gas emissions and 21 the proposed regulations that staff has prepared are a 22 good start. They are a step in the right direction to 23 ensure to the maximum extent feasible the cost-effective 24 reduction of greenhouse gases emitted by passenger 25 vehicles as mandated by AB 1493. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 47 1 The City of El Segundo encourages the Air 2 Resources Board to adopt staff's proposed regulations. 3 Thank you. 4 CHAIRPERSON LLOYD: Thank you very much. 5 Louise Bedsworth, Wendy James, and Jane Williams. 6 MS. BEDSWORTH: Good morning, Chairman Lloyd and 7 Members of the Board. Thank you for providing the 8 opportunity to comment on the proposed regulations. My 9 name is Louise Bedsworth. I'm a senior analyst in the 10 Clean Vehicles Program at the Union of Concerned 11 scientists. 12 (Thereupon an overhead presentation was 13 Presented as follows.) 14 MS. BEDSWORTH: Before I present our comments I 15 would just like to commend staff for preparing a very 16 thorough and detailed regulatory proposal. It clearly 17 reflects attention to the intricacies and requirements of 18 AB 1493. And I'd also like to thank staff for the very 19 open and participatory process that has led to this 20 regulation. We very much appreciate the workshops that 21 have been held over the last year, and also just the time 22 that staff has taken to meet with us and explain some of 23 the intricacies of this regulation. I know this has 24 helped a lot with our understanding. And so I just want 25 to thank staff and acknowledge the time that they've put PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 48 1 into that. 2 So overall we feel the proposed regulation is 3 very strong, has a very sound technical base, and puts 4 technologies that we're seeing emerging in the vehicle 5 market, as evidenced by the vehicles that were here 6 yesterday, into wider use throughout the vehicle fleet. 7 The standards are exceptionally cost effective to 8 California consumers. 9 I'd like to focus the bulk of our comments on the 10 modeling results that staff has produced and how they can 11 compare to some prepared by the Union of Concerned 12 Scientists in a report released this spring. 13 The two studies represent the only analyses that 14 were available through the drafting of the regulation to 15 assess the technological potential and cost of reducing 16 vehicle -- greenhouse gas emissions in California in 17 accordance with the regulation. 18 --o0o-- 19 MS. BEDSWORTH: The UCS study was conducted 20 independently. We used the modal energy and emissions 21 model, which was developed using federal highway funds 22 through the Universities of Michigan and California. 23 Like CARB's analysis, our analysis is bases on 24 vehicle simulation modeling. We modeled five classes of 25 vehicles and we looked at two different levels of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 49 1 technology. 2 In addition, we estimated the cost of 3 technological improvements using a recent analysis of 4 vehicle technologies completed by researchers at some 5 national laboratories. 6 So this graph here shows the results of our two 7 studies. The Air Resources Board are the bars, with the 8 blue bar showing the lowest emission reduction potential 9 in each vehicle class; and the yellow bar, the highest 10 technology package that was modeled in that vehicle class. 11 The red triangles are the results that our study found. 12 And this is for near-term technologies. 13 One difference in the study that I should point 14 out is where ARB relied on a small truck, we modeled an 15 SUV. But I think what's important is particularly in the 16 near-term technologies you see that the two results are 17 quite similar, with overlapping reduction potential across 18 all vehicle classes. 19 In addition, you see a consistency across the 20 vehicle classes and the reduction potential that is 21 available. 22 --o0o-- 23 MS. BEDSWORTH: The next slide shows the same 24 information for the midterm technology. And probably not 25 surprising to many people is you'll see that our study is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 50 1 a bit more optimistic in the midterm. We've made some 2 more aggressive technology assumptions, applied a bit more 3 technology to our vehicles, and we have slightly higher 4 reductions. In this case we estimate about a 40 percent 5 reduction potential in the midterm, as opposed to the 30 6 percent. 7 But I think what remains important here is 8 consistency across the vehicle classes. We see a similar 9 reduction pattern across. 10 So in the next slide I want to show the cost 11 estimates from the two studies. We've heard a lot about 12 costs. 13 --o0o-- 14 MS. BEDSWORTH: This shows for the large car, 15 just one of the vehicle classes, the cost associated with 16 a given percent reduction in greenhouse gases emissions. 17 The dots are -- each of the technology packages modeled in 18 the Air Resources Board study are the stars, the blue 19 being near-term; red, long-term. And the black line is 20 the average trend through those points. The green 21 triangles and the green line are the results from the UCS 22 study. 23 And what this shows is that for a given percent 24 reduction in greenhouse gas emissions the two studies 25 produced very similar estimates of the costs of complying PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 51 1 with this regulation. And when you look at this across 2 all the vehicle classes you find similar results. 3 So I think together these two studies illustrate 4 the feasibility and cost effectiveness of the proposed 5 regulations. 6 I do want to touch on one area where we feel 7 there is a potential for strengthening the regulation. 8 And the next slide -- 9 --o0o-- 10 MS. BEDSWORTH: In the current proposed standard, 11 hybrid electric vehicles have not been factored in. And 12 we feel that in the 2016 standard this is a missed 13 opportunity. According to announcements by auto makers at 14 least 13 models of hybrids will be available by 2010. 15 This is across all vehicle classes. Currently about 25 16 percent of hybrid vehicle sales occur in California. And 17 given current waiting lists and interest in the available 18 vehicles, this does not seem likely to abate in the 19 future. 20 In addition, hybrids are likely to be a primary 21 compliance pathway employed by auto makers in the ZEV 22 Program. Under the ZEV Program approximately 12 percent 23 of new vehicle sales in California could be hybrids by 24 2016. Depending on the emission reductions achieved with 25 these vehicles, this could be an additional -- up to an PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 52 1 additional 2 percent reduction. And it seems at this time 2 that it would be wasteful to leave those potential 3 reductions on the table given the cumulative nature of 4 greenhouse gas emissions. 5 So in conclusion, I just would like to thank you 6 all for the opportunity to commend today. And we 7 definitely support the adoption of this regulation and 8 look forward to California taking a leadership role once 9 again in addressing air pollution. 10 CHAIRPERSON LLOYD: Thank you very much. 11 Any questions or comments? 12 Thank you. 13 And in terms of your last slide there, I should 14 draw people's attention that haven't seen it already the 15 excellent write-up on the new Honda Accord hybrid vehicles 16 in today's U.S.A. Today. So very favorable write-ups. 17 Thank you. 18 We have Brian Johnson, Director, Environmental, 19 City of Santa Monica, and then Wendy James, and John 20 McNamara. 21 MR. JOHNSON: Good morning, Board and Chair. My 22 name is Brian Johnson. I am the Managing Director of the 23 City of Santa Monica's Environmental Division. 24 The City of Santa Monica is here today to applaud 25 and support your efforts to reduce greenhouse gas PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 53 1 emissions, and your leadership is welcome. The city has 2 taken extraordinary steps to mitigate its own greenhouse 3 gas emissions, and we will suffer extraordinary harmful 4 consequences from the impacts of these emissions should 5 they not be abated. 6 For instance, we have replaced approximately 80 7 percent of our sizable vehicle fleet that belongs to the 8 city with low polluting emission vehicles. We have 9 purchased 100-percent renewable energy for all city 10 facilities at a very cost competitive rate. 11 These are two of the many programs undertaken by 12 our small city to take responsibility for our share of 13 global emissions. We applaud your efforts in allowing the 14 State of California to take similar responsibility. We 15 made this commitment in recognition of the risk to the 16 health of our community, the risk of damage to our coastal 17 tourism infrastructure, our storm water management system, 18 and indeed our water supply. 19 We recognize that there are costs involved, and 20 these costs may be inevitable. Yet these costs pale in 21 comparison to the cost of attempting to manage and pay for 22 the global damage, some of which may be irreversible, 23 resulting from greenhouse gas emissions at its present 24 rate. 25 The city urges you to confirm your leadership and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 54 1 your forward-looking vision in this matter, and looks 2 forward to your establishment of the most aggressive 3 greenhouse gas emission requirements as possible. 4 Thank you. 5 CHAIRPERSON LLOYD: Thank you very much. 6 Wendy James, John McNamara. 7 MS. JAMES: Good morning. My name's Wendy James. 8 I am campaign coordinator for the California Clean Cars 9 Campaign, which is a coalition of 15 health, environmental 10 and public interest groups that support the adoption of 11 the regulation you're considering today. 12 In addition to the 15 organizations that are 13 actively involved in the coalition, we have provided the 14 Board members with a compilation of letters and 15 resolutions of support. You should have each received one 16 of these notebooks that includes letters from hundreds of 17 supporters, in addition to the approximately I think it's 18 113,000 now pieces of mail out in the hall in the mailbags 19 from private citizens. But this particular notebook is a 20 compilation of about 65 cities, counties and local 21 officials from Agoura Hills to Yucca Valley, a very broad 22 range in terms of size and geographic location; 225 23 businesses, business organizations and business leaders, 24 ranging from the California Restaurant Association to, our 25 particular favorite, Spin & Margie's Desert Hideaway; 16 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 55 1 health and medical organizations, including the California 2 Medical Association and the Health Officers Association of 3 California; 23 labor organizations, including the 4 California Nurses Association and the Pipe Trades Council; 5 and nearly 40 environmental -- environmental justice, 6 community and public interest groups. 7 The staff recommendation, while conservative, 8 responds effectively to the directions set forth in the 9 original legislation. ARB's adoption of the proposed 10 vehicle emissions standards represents an important step 11 forward in the state's efforts to protect public health 12 and reduce harmful global warming pollution from cars. 13 Our coalition believes the ARB's analysis over 14 the past two years has resulted in a proposed rule that 15 fairly complies with the law and that will deliver 16 affordable clean car choices for California consumers. 17 Many off-the-shelf technologies identified in the 18 staff analysis, and several of which were displayed in the 19 vehicles outside the hearing room yesterday, can reduce 20 global warming pollution at a price that is cost effective 21 to the consumer, without affecting vehicle safety, size, 22 weight or performance. The proposed regulation gives auto 23 makers complete flexibility to apply these technologies in 24 varying combinations to achieve significant emissions 25 reductions. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 56 1 The rule being considered by the Board today is 2 technically justified with the thorough analysis conducted 3 by staff. However, the coalition of organizations 4 involved with the California Clean Cars Campaign believes 5 that the conservative analysis has resulted in a proposed 6 regulation that should be strengthened. We believe that 7 the regulation could be more effective in a number of 8 ways; for example, by increasing the stringency of the 9 standard and/or shortening the implementation timeframe. 10 Individual organizations involved with the campaign have 11 offered specific proposals for strengthening the 12 recommendation in their direct testimony, but we do 13 support the regulation before you. 14 Thanks very much. 15 CHAIRPERSON LLOYD: Thank you very much. 16 And I notice from the binder you provided here 17 that among the elected officials urging strong support of 18 the regulation is Mayor Loveridge. 19 MS. JAMES: Yes, that came in about march. 20 Thank you very much. 21 CHAIRPERSON LLOYD: Thank you very much. 22 John McNamara, James Lyons, Carlos Porras. 23 MR. McNAMARA: Good morning, Chairman Lloyd, 24 Board members and staff. My name is John McNamara and I'm 25 a staff member for the California Refuse Removal Council. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 57 1 We recently worked with you on the refuse fleet rule, the 2 solid waste collection rule. And thank you for the 3 opportunity to come here and address you today on this 4 issue and provide our comments. 5 The CRRC member companies have extensive 6 experience with natural gas and alternative fuel engines 7 in refuse vehicles, especially over the last four years 8 here in southern California. And some of our members have 9 implemented and spearheaded and introduced programs for 10 over ten years trying to be leaders in the area of clean 11 engine technologies for refuse vehicles. 12 CRRC submitted a report to you in response to 13 this rule making that documents the failures of the 14 natural gas engines, alternative fuel engines that we've 15 had in the refuse industry over the last four years. Some 16 of them have been extensive with engine failures and fuel 17 tank failures and what not. 18 The purpose of that was just to highlight a 19 couple of issues that we saw in your staff report. And we 20 wanted to make a couple comments and contribute to the 21 discussion today. 22 Number one is that our experience shows that 23 natural gas engines at least for the vocation that we have 24 are not ready for commercial use. They're more expensive 25 and they have more problems than we'd normally expect for PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 58 1 a commercially available vehicle. We're trying to do the 2 best we can with what we've got right now. But they're 3 not working in the ways that they were proposed to work in 4 the regulations and by the manufacturers that were 5 proposing before you during those rule making processes. 6 And then also we support rule making that 7 includes a dual path or a few neutral policy. We've seen 8 that that's much better than rules that dictate the 9 individual technologies or constrained your ability to use 10 technologies that could achieve the emission goals. 11 That concludes my comments. And thank you very 12 much again for letting me make the presentation. 13 CHAIRPERSON LLOYD: Thank you very much. 14 Questions, comments? 15 Okay. James Lyons, Carlos Porras, Lewis Lem. 16 Now, if we get our two elected officials come, 17 the Deputy Mayor Brian Williams of L.A. or Council Member 18 Todd Campbell, please let me know. 19 MR. LYONS: Good morning. My name's Jim Lyons. 20 I'm a senior partner at Sierra Research. You heard 21 testimony yesterday from my partner, Tom Austin. 22 I'm up here for the moment because I understand 23 that because Tom testified yesterday, he's unable to do so 24 again today. 25 But I'd like to just take two minutes to address PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 59 1 a couple of things that have come up about my firm's cost 2 estimations in the past and to provide a little bit more 3 information about what Tom said yesterday. 4 First, with respect to the cost of the LEV 5 vehicles that's been brought up here today, it's been 6 pointed out that our previous analysis was a factor of 10 7 off from what the, quote-unquote, actual results are. I'd 8 like to point out that those actual results the staff is 9 presenting are based only on information from vehicles 10 where the emission control system in California is 11 different from that sold federally. There's a label that 12 has to be dealt with when those vehicles are sold in 13 California. 14 And in most cases, as CARB staff has pointed out, 15 emission control systems are the same on vehicles on a 16 nationwide basis. These emission control systems cost 17 hundreds of dollars, not $83. It's only the difference 18 when it exists between a California vehicle and a federal 19 vehicle that's been reported here. 20 Secondly, there was a big discussion yesterday 21 about Martec, what costs are in, what costs are out. I'd 22 just like to point out that we went back, because we were 23 confused, talked with Martec. They sent a letter to Tom 24 Austin, which has been entered into the record, which 25 supports Tom's position and indicates that the appropriate PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 60 1 multiplier is not 1.4 that staff has used, but rather 2 2.44, which if you take staff's number, multiply that 3 thousand by this multiplier after dividing by the old 4 multiplier. For that error alone puts the cost about 5 $1750, which is higher than the fuel savings reduction 6 that Tom pointed out yesterday, that I haven't heard 7 anybody comment on so far. 8 CHAIRPERSON LLOYD: Thank you, Jim. Yeah, this 9 was helpful. I'm sure that we're going to hear from staff 10 responding to that. 11 MR. LYONS: Thank you. 12 CHAIRPERSON LLOYD: Thank you. 13 Carlos Porras? 14 Lewis Lem. 15 MR. PORRAS: Good morning. Welcome to Los 16 Angeles, for those of you Board members who are not from 17 Los Angeles. 18 My name's Carlos Porras. I am here just as a 19 private citizen, but having done several years of work in 20 the L.A. area, primarily the Alameda Corridor communities 21 of southeast L.A. County. And it is primarily a work that 22 has been motivated by environmental justice. Communities 23 that I worked in are approximately 98 percent people of 24 color and low to moderate income. And so while this may 25 be redundant from some of your two days of testimony, I PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 61 1 think it's important enough for me to come to speak a 2 little bit about not only some of the potential impacts of 3 the future, but also to point out very current and 4 existing impacts of global warming that are having 5 tremendous impacts in communities of color throughout the 6 world. And I think that it is very important for this 7 Board to understand its potential to show a leadership 8 role and global responsibility. 9 As you have probably heard, low income 10 communities of color in this country are very vulnerable 11 to disease, environmental disease, have high incidences of 12 respiratory disease including asthma. And any potential 13 exacerbation of environmental degradation and impacts to 14 the health would be significant and a further devastating 15 burden on these communities, primarily because less than 16 one in three have medical insurance and adequate access to 17 health care. 18 Similarly the infrastructure of these communities 19 is less than adequate, and so the heat rises would also 20 have significant impacts to these communities who don't 21 have adequate housing stock and are able to afford any 22 kind of mitigation of those impacts. 23 And so it is important I think for the Board to 24 continue in its leadership role by looking at this in a 25 very serious manner, adopting this role, working within PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 62 1 the communities that would be impacted to find mutual 2 solutions and working with all stakeholders to make sure 3 that we can move forward and gain progress on this. It's 4 very important. 5 Thank you. 6 CHAIRPERSON LLOYD: Thank you very much, Carlos. 7 I appreciate you coming. 8 Lewis Lem. 9 Lewis Lem, not here. 10 Deputy Mayor Williams -- Brian Williams? 11 Not here. 12 Counsel member Todd Campbell? 13 Not here. 14 Do we want to look to you, Ms. Witherspoon, as to 15 whether you want to -- seeing that there's time, whether 16 we should take a short break for the court reporter. 17 EXECUTIVE OFFICER WITHERSPOON: I think, since we 18 were expecting elected officials to arrive and don't want 19 to miss their opportunity to speak, that if we did a brief 20 recess now. We'll also need one at the very end of the 21 witness list for staff to regroup on all the last-minute 22 comments and prepare their presentation to you. 23 So if we could take perhaps 10 to 15 minutes now 24 and then complete the witness list when we reconvene. 25 CHAIRPERSON LLOYD: Okay. Let's try to get back PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 63 1 at 10:15, take a 10-minute break. 2 (Thereupon a recess was taken.) 3 CHAIRPERSON LLOYD: I'd like to restart and 4 extend our welcome to the Deputy Mayor of Los Angeles, 5 Brian Williams. 6 Thank you very much, sir, for coming. 7 LOS ANGELES DEPUTY MAYOR WILLIAMS: Good morning. 8 Thank you. Thank you for the opportunity to address you 9 on behalf of the Mayor and the City Council of Los Angeles 10 and all of those who are interested in this -- greatly 11 interest in this subject this morning. 12 I do have a very short statement that I'd like to 13 read to you. I have copies of it available to present to 14 your executive secretary and executive staff. But this is 15 a message from the Mayor, who at this point is speaking on 16 behalf of the Mayor and the entire City Council. 17 Good morning, Chairman Lloyd, Board members and 18 staff. I'm Brian Williams, Deputy Mayor for the City of 19 Los Angeles. 20 Mayor James Hahn and the City 21 Council of the City of Los Angeles have 22 adopted a resolution which was forwarded 23 by Council Members Perry and Carter, is 24 to "urge the California Air Resources 25 Board to adopt the strongest possible PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 64 1 regulations to reduce greenhouse gases 2 emitted by passenger vehicles pursuant 3 to AB 1493. 4 "We endorse the staff proposal that 5 is before you for consideration today." 6 And I take it yesterday as well. 7 "Assembly Bill 1493 requires the 8 California Air Resources Board to adopt 9 regulations to achieve the maximum 10 feasible and cost-effective reduction of 11 greenhouse gases emitted by passenger 12 vehicles. Since passenger vehicles and 13 light trucks are the state's biggest 14 source of global warming pollution and 15 climate change threatens California's 16 health, environment and economy, the 17 City of Los Angeles strongly supports 18 this effort. 19 "In addition, to city recommends 20 that the State Legislature support such 21 regulations to protect the health and 22 the welfare of the state's residents and 23 economy. 24 "The new regulations by AB 1493 will 25 continue the drive toward advanced PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 65 1 technology and alternative fuel vehicles 2 that can achieve extremely low levels of 3 both traditional air pollutants and 4 greenhouse gases." And I'd like to 5 submit to you that I did in fact drive a 6 hydrogen vehicle here today. 7 "The regulations would give 8 consumers additional choices of clean 9 vehicles without taking away existing 10 vehicle options. 11 "Studies of global warming warn that 12 California faces the potential for 13 dwindling water supplies, a rise in 14 heat-related deaths, reduced crop yields 15 and other devastating impacts if we fail 16 to sharply cut greenhouse gas emissions. 17 "The City of Los Angeles is 18 especially concerned with the effects of 19 global warming on our water supplies and 20 the quality of our air, two issues long 21 associated with southern California. 22 "Evidence that global warming may be 23 reducing the Sierra snow pack has 24 already been widely reported. Every 25 southern California city is dependent PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 66 1 upon water imports from the Sierra 2 runoff and they all need to watch 3 carefully the impact of these 4 developments in our water supply. 5 "In addition, there is evidence that 6 global warming will worsen our air 7 quality both by creating meteorological 8 conditions favorable to ozone formation, 9 which may lead to increased asthma 10 attacks and other respiratory impacts, 11 and by stimulated greater demand for 12 electric power to operate air 13 conditioning units. 14 "We believe that it's imperative 15 that California leads the way in 16 addressing the problem of global 17 warming. 18 "The city too is committed to 19 reducing greenhouse gas emissions from 20 city operations through the adoption in 21 2001 of the Energy Climatic Action Plan. 22 This plan includes a number of 23 strategies to reduce energy use and 24 emissions from the city's fleet 25 vehicles. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 67 1 "Again, we strongly urge you to 2 adopt the strongest possible regulations 3 to reduce greenhouse gases from 4 passenger vehicles." 5 And on behalf of the City of Los Angeles, Mayor 6 Hahn thanks you for your efforts to reduce air pollution 7 in southern California. 8 CHAIRPERSON LLOYD: Thank you very much indeed. 9 LOS ANGELES DEPUTY MAYOR WILLIAMS: Thank you, 10 sir. 11 How do you find the hydrogen vehicle and where do 12 you refuel? 13 LOS ANGELES DEPUTY MAYOR WILLIAMS: We refueled 14 it downtown. We have one standing refueling station. And 15 we hope to have another one some time soon. It's a great 16 vehicle to drive. I just wish it came in a slightly 17 larger version. 18 (Laughter.) 19 LOS ANGELES DEPUTY MAYOR WILLIAMS: Thank you. I 20 have copies of the statement. 21 CHAIRPERSON LLOYD: Thank you very much for 22 coming. 23 I don't know whether we have Council Member 24 Campbell here -- Todd Campbell. 25 No? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 68 1 Then Lewis Lem and John White. 2 Lewis Lem, John White. 3 MR. WHITE: Mr. Chairman, Board members, thank 4 you for having me. It's a good day to be in Los Angeles 5 and an historic occasion. 6 I want to thank, first of all, the staff of the 7 Board for the terrific job that they've done in building 8 the analytical case for the rule making and the patience 9 that they've shown. With all of the input that they've 10 received, their traditional good grace has stayed with 11 them. And I think the cases they've put forward, while 12 more modest than what we would support -- I'm here today, 13 by the way, representing the Sierra Club of California. 14 We believe the regulation could be stronger, but we 15 believe it's a good first step. We also think that the 16 analytical support for the regulation is robust. 17 And we're really sort of surprised that we 18 haven't gotten a better effort from the car companies in 19 response. We had hoped in working on this legislation 20 that we could stimulate a really constructive effort on 21 the part of the auto industry in working to craft a global 22 warming pollution reduction strategy that would be 23 something that would represent a partnership, as we have 24 done in times past. 25 But it appears that, despite all the evidence, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 69 1 most recently the National Geographic cover story on the 2 rising threat of global warming and the growing scientific 3 consensus, it appears that the auto industry is simply 4 continuing to delay and ignore the imperative need for 5 action. And so it's up to you and the Governor to get 6 them to act as needed. 7 I think there are a lot of positive signs in the 8 current environment with regard to technology and with 9 regard to the opportunities for accelerating the progress 10 of the technology. 11 My friend Carl Pope from the Sierra Club noted 12 the other day that the waiting list for the Prius is 13 longer than for a kidney. So I think that that's a sign 14 of how much the public wants cleaner cars. 15 I'm also very disappointed that the auto 16 industry's continuing to fund the most outrageous 17 propaganda through independent third parties that attempts 18 to attack and raise fears of the public. This is 19 unfortunately a part of the strategy that they pursued 20 with Ms. Pavley and the Legislature, is to basically hire 21 third parties, set up front groups to cast the most 22 spurious allegations about the effect of this rule, 23 instead of debating the facts. 24 And I recall during the legislative process 25 there's one moment in the debate when the Senator Debra PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 70 1 Bowen, who happens to represent this area, I believe -- at 2 least Marina Del Rey and Venice, you know, said to the 3 auto industry, "Get rid of your lawyers. Get your 4 engineers to work." 5 And I would add to that, not just the lawyers and 6 the whole legal strategy of attacking the state's 7 sovereignty and saying that we don't have the authority to 8 protect our citizens from global warming and the threats 9 that it causes, but also these political hacks that they 10 have hired to go and do their dirty work. 11 Some of the very best companies, that have the 12 very best products have been silent in this regard. And I 13 think it's time for them to step up. I know there's a 14 strategy in the auto industry of "all for one and one for 15 all" and "we're going to let the lawyers take care of this 16 problem." But we really would suggest that the public 17 needs a better response than that. 18 We need a committed and concerted effort to 19 accelerate the deployment of these technologies, building 20 on the success of the electric vehicle mandate, which 21 despite yesterday's comments in fact is a successful 22 experiment because we had the courage, this Board 23 especially, strong supporters of the electric 24 vehicle mandate, like Mr. DeSaulnier and Ms. D'Adamo, 25 listened to the merits, and we crafted adjustments that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 71 1 got us many more benefits than we would have gotten had we 2 not done the mandate in the first place. 3 And I would point out -- I thought it was sort of 4 ironic yesterday when Mr. Austin proclaimed his 5 astonishment that we would rely on the federal test 6 procedure for fuel economy. I don't see the auto industry 7 going to the federal -- National Highway Traffic Safety 8 Commission and asking to revise the test procedure in 9 light of the real-world procedure because it overstates 10 fuel economy. 11 And it's like when we had the flexibility that we 12 introduced for the auto industry with regard to compliance 13 with the ZEV mandate, and we ended up with a lawsuit 14 because we dared to give them flexibility to build hybrids 15 instead. And they wonder why their customers don't trust 16 them. Because of their behavior and because we know they 17 can do better and they must do better. 18 This regulation is a first step. It is a modest 19 step. You can see in the experience in the marketplace, 20 with the technologies that are emerging, with the waiting 21 lists, with the enthusiasm of the customers and with the 22 competitive pressures, that you're on firm ground and 23 moving forward. 24 But it's very important that we act today and 25 it's very important that somehow, some way we get a more PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 72 1 constructive response from the auto industry and we get to 2 work on solving this problem, which can no longer be 3 denied. And it can no longer be denied what the stakes 4 are for California. And while there are those who believe 5 it would be better if this were done at the federal level, 6 the fact is we can't wait. There is an imperative to move 7 now to protect the public, to introduce new technologies, 8 to come up with a plan that makes sense. As always, good 9 lead time is provided, flexibility is provided, choices 10 are provided. Most recently I believe there's been an 11 adjustment that allows a better opportunity for plug-in 12 hybrids, which Ms. D'Adamo has been helping us with. 13 So, again, we're continuing to be innovative in 14 California, the Board is listening. But it needs to 15 respond to facts and to simply ignore the diatribes and 16 the disruption. 17 And at some point we hope that the management of 18 these companies will give us the kind of leadership that 19 their customers need and that the citizens of not just 20 California but of the whole world need to move on solving 21 this problem. 22 Thank you, Mr. Chairman. 23 CHAIRPERSON LLOYD: Thank you very much. 24 Any questions? 25 I would say, John, in response to that, we did PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 73 1 get a letter today -- the Board got a letter today from 2 Honda. And, as I mentioned earlier, the very excellent 3 write-up of their new Accord hybrid. 4 MR. WHITE: Well, in U.S.A Today there's a very 5 nice write-up from an independent source. 6 CHAIRPERSON LLOYD: That's what I was referring 7 to. 8 But Honda also states in the letter that they do 9 stand willing to work with us. They don't agree with the 10 regulation, but they will -- would like to work with us to 11 address what they also consider to be an issue. 12 MR. WHITE: Well, I don't believe that Honda is 13 participating in these public exaggeration campaigns to my 14 knowledge, so I don't want to include them. But I believe 15 that some of these front groups that run through the PR 16 firms in Washington and the laundered money and so forth, 17 the rest of the auto industry does hold some 18 responsibility for those activities. 19 CHAIRPERSON LLOYD: But on the other hand, Honda 20 does agree with Mr. Cabaniss's comments yesterday. So I 21 don't want to say that they're -- you know, they're 22 absolving themselves of all guilt. But I did get this 23 letter. 24 MR. WHITE: It takes great courage to break from 25 the status quo. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 74 1 CHAIRPERSON LLOYD: Thank you very much. 2 Oh, and then can I take Lewis Lem. And then it 3 gives me great pleasure to also welcome my boss, Secretary 4 Terry Tamminen, Secretary of Cal EPA. 5 MR. LEM: Good morning, Board members. Thank you 6 for the opportunity to speak with you. I have some very 7 brief comments. 8 I'm from the Triple A of northern California. We 9 have about four million members in northern California and 10 Nevada and Utah. We also -- there's also the Auto Club of 11 Southern California, which is a separate organization. 12 And both of our organizations have taken an interest in 13 the proposed regulations. 14 At this time this point we do not have a position 15 on the regulations. Obviously these regulations would 16 have a significant effect on consumers. And so we are 17 certainly very interested in what you decide today. 18 The particular issue that I would just say a few 19 things about relates to the cause of the legislation that 20 has to do with whether the regulation is economical to the 21 consumers. Part of our work is to speak on behalf of the 22 consumers with regard to the costs to the consumers. Of 23 course these numbers are subject to debate, and we're 24 certainly interested in what happens in the future with 25 regard to the cost to the consumers. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 75 1 There is some work that we've been looking at 2 relating to this question of payback period. And I would 3 say at this point that it's really not clear from the 4 consumer's perspective what the rate payback period is in 5 terms of what a consumer will choose to purchase a 6 vehicle. There's some discussion about payback period 7 over the life of the vehicle. But the best information 8 seems to suggest that consumers don't make their choices 9 about purchasing vehicles over the life of the vehicle but 10 rather thinking in a much shorter time period. So this 11 does affect the question of whether there's a net benefit 12 in terms of the cost for operation of vehicle or not. At 13 this point though, it's really not clear what the 14 consumers' payback period really is. This is certainly a 15 question I think that we'd like to have more information 16 on as we go forward. 17 Thank you very much. 18 CHAIRPERSON LLOYD: Does the association 19 typically reflect the feelings of the members? 20 MR. LEM: On selected issues we will try to get 21 some information on the feelings of our members. In this 22 particular case we haven't conducted a survey or a poll of 23 our members. But we generally get feedback from our 24 members, and generally -- there is a concern about any 25 additional costs for purchase and for operation of the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 76 1 vehicles. But on this particular issue we don't have a 2 survey of our members. 3 CHAIRPERSON LLOYD: I was just referring to the 4 surveys and the discussion we had yesterday and the fact 5 that 80 percent of Californians support this -- doing 6 something about greenhouse gases. And I wonder whether 7 your members would fall into there. And while you've got 8 a neutral position, maybe some of the members would like 9 to support doing something like -- 10 MR. LEM: This is a very good question. I mean 11 we're aware of the polls and certainly the PPIC polls and 12 other poles which indicate broad levels of support for 13 environmental progress on air pollution issues. Those 14 polls are generally reflective of the population as a 15 whole. 16 CHAIRPERSON LLOYD: Including the greenhouse 17 gases, specific to that? 18 MR. LEM: The general public opinion polls seem 19 to indicate that, yes. 20 CHAIRPERSON LLOYD: Thank you. 21 MR. LEM: Thank you. 22 CHAIRPERSON LLOYD: Questions? 23 Question, Supervisor DeSaulnier. 24 BOARD MEMBER DeSAULNIER: I just wanted to point 25 out I'm a member. So you'll find out where I stand. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 77 1 (Laughter.) 2 CHAIRPERSON LLOYD: So am I. 3 BOARD MEMBER DeSAULNIER: Everyone raise their 4 hands. 5 CHAIRPERSON LLOYD: Yeah, it looks as though 6 we've got more than 80 percent. 7 BOARD MEMBER DeSAULNIER: I think that 8 constitutes a professional survey. 9 (Laughter.) 10 MR. LEM: We can take a survey right here, I 11 guess. 12 BOARD MEMBER GONG: Just curious. I'm sure many 13 of the surveyed populations that were studied were drivers 14 or are drivers. So I assume that they're part of Triple A 15 and everything else. So I would urge Triple A to 16 actually, you know, poll their people. But now it's kind 17 of late. 18 I was also wondering: What about the southern 19 California chapter? Do they -- does that organization 20 have a stand on this proposal? 21 MR. LEM: I can't speak for them, unless there's 22 somebody here from the Auto Club of Southern California. 23 But my understanding is that neither of the clubs have 24 taken position on the regulation. We did track the 25 legislation, AB 1493, the Pavley legislation. So we did PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 78 1 have an opportunity to comment during the legislative 2 process. 3 I would say also though, just in terms of 4 predicting the future, there's this question research-wise 5 about what people say they're willing to do and what they 6 actually do. And until they actually as consumers do 7 something, we don't really know whether their stated 8 preference is the same as their revealed preference. And 9 that's part of I think what we're trying to figure out as 10 we go forward. 11 CHAIRPERSON LLOYD: So the public is different 12 than politicians? 13 (Laughter.) 14 BOARD MEMBER DeSAULNIER: Present company 15 excepted. 16 CHAIRPERSON LLOYD: Thank you very much. 17 MR. LEM: Thank you very much. 18 BOARD MEMBER RIORDAN: Mr. Chairman, in 19 seriousness though, I think it would be very helpful for 20 both auto clubs, northern and southern California, to be 21 involved in our process, because it is, by your analysis, 22 that then you would begin to understand best and be able 23 to provide that information to your members. And so I'm 24 hopeful that if we hold any further workshops on this 25 subject as it evolves forward that you all are present at PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 79 1 those workshops. Now, maybe you are and I'm not aware of 2 it. But I think it would be very helpful, because you are 3 an important arm of information to thousands and thousands 4 of Californians who drive everyday of their lives. 5 So let's include the automobile club in those 6 efforts. 7 CHAIRPERSON LLOYD: Thank you. 8 MR. LEM: Thank you. We would be delighted to 9 take part in anything involved here. 10 Thank you very much. 11 CHAIRPERSON LLOYD: And thank you for coming 12 down. We appreciate it. 13 Now, as I said before, we have the pleasure to 14 introduce Cal EPA's Secretary, Terry Tamminen. 15 CALIFORNIA EPA SECRETARY TAMMINEN: Thank you, 16 Chairman Lloyd. And thank you to everyone for allowing me 17 to speak out of order. Unfortunately I, as you can 18 imagine, have a number of other things to get on to, as I 19 know many of you do, so I'll remain brief. 20 I just wanted to, first of all, come here today 21 to say thank you to everyone who has put so much hard work 22 in on this measure and on this question, on all sides of 23 the issue. There's no question how much hard work and 24 thought has gone into this issue of global warming. 25 Just, by the way, I grabbed this tie running out PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 80 1 this morning and put it on. And I didn't realize until I 2 walked in here that it has polar bears on it, which might 3 be one of the species most at risk if we fail in our task 4 of curbing global warming. 5 But I do want to sincerely thank all of our Board 6 members, especially our new appointees. Welcome. And 7 it's good that you've started off your first meeting with 8 an easy task. 9 (Laughter.) 10 CALIFORNIA EPA SECRETARY TAMMINEN: But thank you 11 for your deliberations, as I know you'll be wrestling with 12 your decisions here in the coming hours, obviously future 13 decisions in the coming months. 14 I want to thank the staff, who I think has done 15 an exemplary job of looking at the technology here and 16 presenting options and alternatives and the science of 17 global warming, and just say thank you for your, as 18 always, stellar scientific work. 19 I certainly want to thank the author of this 20 measure, Assemblywoman Fran Pavley, who I'm honored to say 21 is my Assemblywoman; and actually someone who used to work 22 for her, who now works for me, who was very engaged in 23 this, Ann Baker, who is here today as well, who is my 24 Deputy Chief of External Affairs, Deputy Secretary of 25 External Affairs at Cal EPA. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 81 1 But of course success has many parents, while 2 failure is an orphan. And many members of the public, of 3 the stakeholder community have also worked on this. 4 And so today is really a very momentous occasion. 5 This is one of those days that we will remember for all of 6 our lives. And the question is: For what will we 7 remember this day? We all have these kinds of days in our 8 lives, when we were married or when we found out there was 9 no Santa Claus, the birth of our first child or the death 10 of JFK. If we're of a certain age we remember December 11 7th, 1941. No matter what our age we remember the other 12 date that will live in infamy, 9/11. 13 But the question is for what will we remember 14 this day? Will this be the day that California, as a 15 nation -- or as a state, as a society, as a group of 16 stakeholders and public officials and members of the 17 public, as citizens, as people of a community came 18 together and decided to do something about a growing 19 threat? 20 And you've heard all of the science. I'm not 21 going to go back over all of the reasons why this is an 22 important issue. You already know that. I won't waste 23 your time. 24 But I think I do want to just touch on one thing, 25 that perhaps others in their testimony so far have not, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 82 1 that has troubled me about this debate. I've seen in the 2 papers recently quotes and discussion of -- actually it's 3 gone on over the last many months -- about the fact that 4 California's contribution of greenhouse gases overall to 5 the world problem is not that much; it's a very small 6 percenta