96-2-1

SUMMARY OF AGENDA ITEM:

This was the fifth report to the Board on the status of California's cleaner-burning gasoline program implementation efforts. Status reports were also provided in June 1994, and February, September, and December, 1995.

This was the first status report to the Board after the March 1, 1996, compliance date for refiners. The Board was briefed on the three major implementation efforts by the cleaner-burning gasoline Advisory Committee and the three subcommittees on performance, supply, and public education and ARB and California Energy Commission (CEC) staff.

The Performance Subcommittee has released its report evaluating the performance and compatibility of cleaner-burning gasoline with gasoline-powered on-road and off-road vehicles, engines, and equipment. In the report, the Performance Subcommittee found no problems associated with the use of cleaner-burning gasoline and that cleaner-burning gasoline performs as well as current gasolines.

Staff informed the Board that in many areas of the State, cleaner-burning gasoline is available to the public. To date, no performance problems have been found to be directly attributable to the use of cleaner-burning gasoline by the general public. Staff will continue to monitor the State closely for any potential performance problems in the field.

All of the major refiners met the March 1, 1996 compliance date to produce and ship cleaner-burning gasoline. About 35 million gallons of cleaner-burning gasoline are being produced and shipped daily. Inventories are at or above historic levels. Refiners are almost universally taking advantage of the flexibility authorized in the regulations to produce cleaner-burning gasoline.

Since the middle of February 1996, average retail prices in California have increased about 10 cents per gallon. However, during this time, crude oil prices have also increased about seven cents per gallon. Nationally, prices have also gone up by a similar amount due to crude price and seasonal swings. It appears that most of the recent price increase is attributable to factors other than California's requirement for cleaner-burning gasoline.

The outreach program has been very effective in providing information on cleaner-burning gasoline to the general public. Virtually every legislator or their staff has been briefed. In addition, editorial boards of the State's major papers have been briefed and have expressed near universal support for the program. Briefing materials have been sent to the State's newspapers and television and radio stations, and over 200 briefings have been conducted with key organizations. Over 1,500 calls have been received on the Air Resources Board toll-free information line since November 1, 1995. In early April, staff will distribute information to over 50,000 auto technicians in California. The outreach program will continue with its ongoing efforts and be adjusted to meet program needs as necessary.

In summary, the transition to cleaner-burning gasoline is proceeding smoothly with no performance problems. Supply is adequate to meet anticipated demand, and price is within the expected range.

ORAL TESTIMONY:  None

FORMAL BOARD ACTION:  None

RESPONSIBLE DIVISION:  SSD

STAFF REPORT:  No

SUMMARY OF AGENDA ITEM:

At the public meeting held December 14, 1995 and continued to December 21, 1995, the staff presented to the Board three main concepts that had emerged for modifying the existing Zero-Emission Vehicle (ZEV) program. The staff recommended the concept that would suspend the ZEV requirements for the 1998 through 2002 model years and create a technology development partnership to foster continued ZEV-related research and development consistent with the findings of the Battery Technology Advisory Panel. In response, the Board directed the staff to begin the regulatory process to modify the ZEV program consistent with the staff recommendations.

At this Board hearing, the staff proposed regulatory amendments that would eliminate the 1998 through 2002 model year ZEV requirements and provide additional credits for the introduction of ZEVs prior to 2003. The multiple ZEV credits would be provided for vehicles that have greater range or use advanced batteries.

The staff also proposed that the Board enter into separate Memoranda of Agreements (MOAs) with each of the seven automakers subject to the 1998 ZEV requirement. Under the MOAs, the automakers would commit to certify, produce, and sell nationwide cleaner light-duty vehicles beginning in the 2001 model year. The MOAs would further commit the signatory automakers to continue ZEV-related research and development, participate in ZEV demonstration programs beginning in 1998, and introduce ZEVs based on market demand.

Major stakeholders who presented comments to the Board on March 28 included automakers, representatives of legislators, the oil industry, environmental groups, California businesses, electric utilities, research groups, and citizens. The proposal was supported by automakers and auto dealers and opposed by legislative and oil industry representatives due to the 2003 percentage requirement. In general, environmental advocacy groups were concerned about the modifications, due to a perceived weakness in enforceability and potential loss of air quality benefits, but expressed a desire to move forward together on implementation issues. Battery developers were generally supportive, provided California's policy signals on proceeding with ZEV implementation remain strong. The Advanced Lead Acid Battery Consortium (ALABC) proposed a new measure of battery performance which considers cost and cycle life.

The Board committed to establishing an implementation committee consisting of representatives of the Board, the public, and the affected industries to continue monitoring the status of the ZEV program. The committee and ARB staff will provide annual reports to the Board on the status of ZEV development and supporting infrastructure. Staff was directed to use ALABC's battery performance measure in future reports. Staff was also charged with tracking fuel cell progress.

ORAL TESTIMONY:

Valory Brown                                   Assemblyman Steve Baldwin

John Grimley                                     Senator Ray Haynes

John Schutz                                       Nissan Motor Limited

Jerome F. Cole                                 Advanced Lead-Acid Battery Consortium

Janet Hathaway                                 Natural Resources Defense Council

Andrew A. Frank                              University of California, Davis

Cecile Martin                                     Cal/Electric Transportation Coalition

Eric Ridenour                                     Chrysler Corporation

Judy Mikels                                        So. Cal. Association of Governments

Lloyd Dixon                                        RAND

Tim Carmichael                                   Coalition for Clean Air

Dave Hermance                                  Toyota

Joe Caves                                           Union of Concerned Scientists

Marc Chytilo                                       Environmental Defense Center/CalPIRG

Stephen Heckeroth                              Mendo Motive

Doug Henderson                                  Western States Petroleum Association

Dr. Larry L. Berg                                 Ballard Power Systems

Ben Knight                                           Honda

Jamie Phillips                                        Planning and Conservation League

Ed Maschke                                         CALPIRG

Tohru Aihara                                        Mazda

Paul Haluza                                          MEMA

Daki Venetolis                                      Citizen

Charles Hooper                                    Citizen

Pam Leeper                                          Project California

Mark Stout                                           Citizen

Barbara George                                    Peoples Energy Matters

Richard E. Wilmshurst                           Forty-Niner Sierra Resources, Inc.

Anita Mangels                                       Californians Against Hidden Taxes

Samuel A. Leonard                               General Motors

Paul Knepprath                                     American Lung Association of CA

Jerry Mader                                          Advanced Battery Task Force

Mike Miller                                           California Motor Car Dealers Assn.

Bill Wason                                            BAT International

John W. Burton                                     Integral Design

Jason Grumet                                        NESCAUM

V. John White                                       Sierra Club California

Rock Zierman                                       Assemblyman Tom Bordonaro

Paul Edison Pulliam                               Citizen

FORMAL BOARD ACTION:

Approved Resolution 96-12 by a vote of 11-0.

RESPONSIBLE DIVISION:  MSD

STAFF REPORT:  Yes (67 pages)