pic BOARD MEETING STATE OF CALIFORNIA AIR RESOURCES BOARD JOE SERNA, JR. BUILDING CALIFORNIA ENVIRONMENTAL PROTECTION AGENCY CENTRAL VALLEY AUDITORIUM, SECOND FLOOR 1001 I STREET SACRAMENTO, CALIFORNIA THURSDAY, MARCH 25, 2004 9:00 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 Dr. William Burke Mr. Joseph Calhoun Ms. Dorene D'Adamo Supervisor Mark DeSaulnier Professor Hugh Friedman Mr. Matthew McKinnon Mrs. Barbara Riordan Supervisor Ron Roberts BOARD MEMBERS EXCUSED Dr. William Friedman Supervisor Barbara Patrick 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 PETERS SHORTHAND REPORTING CORPORATION (916) 362- 2345 iii APPEARANCES CONTINUED STAFF Mr. Richard D. Bode, Chief, Health And Exposure Assessment Branch Mr. Richard Corey, Chief, Research and Economics Studies Branch Mr. Bart Croes, Chief, Research Division Mr. Bob Cross, Chief, Mobile Source Control Division Ms. Cynthia Garcia, Research Division Ms. Lisa Jennings, Air Pollution Specialist Ms. Renee Kemena, Manager, Planning & Regulatory Development Section Mr. Jack Kitowski, Chief, On-Road Controls Branch Ms. Annmarie Mora, Air Pollution Specialist Mr. Peter Venturini, Chief, Stationary Source Division Dr. Barbara Weller, Manager, Population Studies Section ALSO PRESENT Ms. Diane Bailey, NRDC Mr. Todd R. Campbell, Coalition for Clean Air Mr. Dalbir S. Dhaliwal, Punjali Truck Association Ms. Rebecca Flournoy, Community Action to Fight Asthma Ms. Bonnie Holmes-Gen, American Lung Association Mr. Kean Kitak Mr. Jed Mandel, Enginer Manufacturers Association Ms. Patricia Monahan, Union of Concerned Scientists Mr. Mike Neuenburg, Sacramento AQMD PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 iv APPEARANCES CONTINUED ALSO PRESENT Ms. Kathryn Phillips, CEERT Ms. Stephanie Williams, California Trucking Association PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 v INDEX PAGE Pledge of Allegiance 1 Roll Call 1 Item 04-3-1 3 Chairperson Lloyd 3 Executive Officer Witherspoon 3 Staff Presentation 4 Board Discussion and Q&A 8 Item 04-3-2 10 Chairperson Lloyd 10 Executive Officer Witherspoon 10 Staff Presentation 10 Board Discussion and Q&A 16 Motion 24 Vote 25 Closed Session 25 Item 04-3-3 26 Chairperson Lloyd 26 Executive Officer Witherspoon 28 Staff Presentation 30 Ombudsman Tschogl 45 Board Q&A 46 Jed Mandel 71 Stephanie Williams 92 Bonnie Holmes-Gen 111 Patricia Monahan 133 Diane Bailey 140 Mike Neuenburg 143 Todd R. Campbell 148 Rebecca Flournoy 160 Kathryn Phillips 166 Dalbir S. Dhaliwal 177 Dean Kitak 180 Board Discussion 185 Motion 192 Vote 192 Adjournment 193 Reporter's Certificate 194 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 1 1 PROCEEDINGS 2 CHAIRPERSON LLOYD: Good morning. The March 3 25th, 2004, public meeting of the Air Resources Board will 4 now come to order. 5 Mr. Calhoun, would you please lead us in the 6 pledge. 7 (Thereupon the Pledge of Allegiance was 8 Recited in unison.) 9 CHAIRPERSON LLOYD: Thank you. 10 Clerk of the Board, please call the roll. 11 BOARD CLERK ANDREONI: Dr. Burke? 12 BOARD MEMBER BURKE: Here. 13 BOARD CLERK ANDREONI: Mr. Calhoun? 14 BOARD MEMBER CALHOUN: Here. 15 BOARD CLERK ANDREONI: Ms. D'Adamo? 16 BOARD MEMBER D'ADAMO: Here. 17 BOARD CLERK ANDREONI: Supervisor DeSaulnier? 18 Professor Friedman? 19 Dr. Friedman? 20 Mr. McKinnon? 21 Supervisor Patrick? 22 Mrs. Riordan? 23 BOARD MEMBER RIORDAN: Here. 24 BOARD CLERK ANDREONI: Supervisor Roberts? 25 BOARD MEMBER ROBERTS: Here. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 2 1 BOARD CLERK ANDREONI: And Chairman Lloyd? 2 CHAIRPERSON LLOYD: Here. 3 BOARD CLERK ANDREONI: Professor Friedman? 4 BOARD MEMBER WILLIAM FRIEDMAN: Here. 5 Thank you. 6 CHAIRPERSON LLOYD: Thank you. 7 We should have a relatively short Board meeting. 8 What we're going to do, we're going to take the first two 9 items, on the public health update and research proposals. 10 And then we're going to go in to a private session -- 11 closed session, say a little bit more about that. 12 First of all, I would -- again, we hope that our 13 colleague, Dr. Friedman, may be listening to us or 14 watching us on the web. And if you are, Bill, we miss 15 you. And hopefully we'll perform up to the standards you 16 hope that we should perform here. 17 Also, I'd like to also congratulate Analisa and 18 Garrett Bevan, the adoption of their baby boy, Alexander 19 Kenneth Bevan, born 3/19, weighing, 6 pounds 7 ounces, 20 20 inches long, on Sunday, March the 21st. I know that's 21 meant a lot to both of those. So we congratulate Annalese 22 and Garrett very heartily. 23 So with that we'll start on the first item, 24 Agenda item 04-3-1. 25 Also, I'd like to remind people that if they have PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 3 1 any -- want to testify on today's Board items, please sign 2 up with the Clerk of the Board. And if they have any 3 written testimony, provide 30 copies of that to the clerk. 4 And the first item on the agenda today is 04-3-1, 5 our monthly public health update. Today's update will 6 present findings from the ARB-funded pilot study that 7 examines the health effects of volatile organic compounds, 8 VOCs, on a group of Hispanic asthmatic children living in 9 East Los Angeles. The information presented today will 10 contribute to our knowledge of the adverse effects of VOCs 11 on public health, another dimension there. 12 So with that, I'd like to turn it over to Ms. 13 Witherspoon to introduce the item and begin staff 14 presentation. 15 EXECUTIVE OFFICER WITHERSPOON: Thank you, Dr. 16 Lloyd and members of the Board. 17 Understanding the health impacts of exposure to 18 VOCs is critical to ARB's mission. Although we have some 19 understanding of criteria pollutants for which we set 20 standards, very little information exists about the health 21 effects of VOCs, particularly in a potentially vulnerable 22 population. The results from the study today are 23 important because they provide a critical link between 24 exposure to VOCs and health effects in susceptible 25 asthmatic children in Los Angeles. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 4 1 Cynthia Garcia of our Research Division will 2 present the study findings and their implications. 3 (Thereupon an overhead presentation was 4 Presented as follows.) 5 MS. GARCIA: Thank you, Ms. Witherspoon, and good 6 morning, Chairman Lloyd and members of the Board. 7 Today's health update will focus on the results 8 of a study co-funded by the Air Resources Board and the 9 South Coast Air Quality Management District to investigate 10 respiratory health effects from exposure to toxic air 11 pollutants on a population of Hispanic asthmatic children. 12 This is a study that adds needed information to 13 our understanding of the effects of volatile organic 14 compounds on a potentially susceptible population of 15 asthmatic children. 16 In addition, this study contributes to the 17 Board's environmental justice mission in that it provides 18 much needed data on exposure to and health effects from 19 air pollutants in a heavily traffic-impacted community. 20 --o0o-- 21 MS. GARCIA: The objective of this study under 22 the direction of Dr. Ralph Delfino of the University of 23 California at Irvine was to evaluate the association 24 between health outcomes and VOCs of 26 Hispanic asthmatic 25 school children, ages 10 to 16, who resided in the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 5 1 Huntington Park area of East Los Angeles County. This 2 study resulted in two peer review papers as well as a 3 final report, which is available on our website. 4 Subjects completed a short daily diary each 5 evening. Information on asthma symptoms and medication 6 use as well as the time activity diaries were collected 7 each day. Measures of lung airway function were collected 8 both in the morning and at night. The children were also 9 instructed to breathe in to special canisters during 10 asthma symptom episodes and during symptom-free periods to 11 measure VOCs in the breath. 12 The study period ran from November 1999 to 13 January 2000, during which time the South Coast Air 14 Quality Management District operated air monitoring 15 stations at two neighborhood schools. 16 In addition to monitoring VOCs during this time, 17 the stations also monitored criteria air pollutants. The 18 investigators also carried out a detailed exposure 19 assessment study for four of the children. 20 --O0o-- 21 MS. GARCIA: Although the exposure assessment was 22 completed for a very small sample of the children, the 23 results provided a number of insights in to the 24 relationship between breath, personal, indoor and outdoor 25 exposures to VOCs. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 6 1 Personal and indoor VOCs were highly correlated. 2 However, personal and outdoor concentrations were 3 generally not. 4 Breath VOC concentrations were lower than indoor 5 VOC concentrations. Investigators indicated that these 6 results suggest, as other studies have found, that the 7 VOCs were produced outside the body and that air was the 8 predominant pathway for exposure. 9 For most of the target compounds breath 10 measurements did not correlate with outdoor measurements. 11 However, outdoor benzene and metaparaxylene of the 12 previous two days appeared to be correlated with current 13 day breath measurements. This suggests a possible outdoor 14 source for these chemicals. 15 --o0o-- 16 MS. GARCIA: Investigators reported significant 17 associations between asthma symptoms and some of the VOCs 18 measures outdoor. 19 In sub-analysis breath concentrations of VOCs 20 were not associated with asthma symptoms with the 21 exception of breath benzene. This secondary analysis 22 should be interpreted with caution, as the sample size was 23 very small for this analysis. 24 The investigators also reported significant 25 associations between asthma symptoms and ambient levels of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 7 1 criteria pollutant, including ozone, PM10, nitrogen 2 dioxide, and sulfur dioxide. No significant associations 3 were reported between carbon monoxide and asthma symptoms. 4 Measures of organic carbon and elemental carbon were also 5 associated with asthma symptoms. 6 Although deficits in airway function measurements 7 of the lungs were reported in relation to increases in 8 some ambient VOCs, most of the findings were not 9 statistically significant. PM10 was associated with 10 significant airway function deficits in the morning, with 11 particularly large deficits for one-hour PM10. 12 --o0o-- 13 MS. GARCIA: An important contribution of this 14 study is that it provides preliminary evidence of acute 15 adverse associations of VOC with asthma in children. 16 These findings, along with other epidemiological evidence 17 from the Netherlands, suggest that the pro-inflammatory 18 and irritant nature of traffic-related pollutants can lead 19 to adverse health effects in asthmatic children. VOCs may 20 not be the cause but rather a marker for general traffic 21 emissions. 22 Past and future control programs including 23 catalytic controls and fuel reformulations have reduced 24 the toxic VOCs and criteria pollutants emitted by mobile 25 sources. The Air Resources Board will continue to look PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 8 1 for new emission control programs to reduce exposure to 2 air toxics as well as criteria pollutants. 3 This concludes my presentation. I will be happy 4 to answer any questions. 5 CHAIRPERSON LLOYD: Thank you very much. 6 Any questions there? 7 Are we going to follow this up with a greater 8 sample than we had in the 26 people? 9 POPULATION STUDIES SECTION MANAGER WELLER: 10 There are no plans at this time to actually look 11 at VOCs in asthmatic children in the exact same way that 12 this study was done. But VOCs are being examined in the 13 faces study in asthmatic children there. 14 CHAIRPERSON LLOYD: Okay. That's in Central 15 Valley? 16 POPULATION STUDIES SECTION MANAGER WELLER: 17 That's in Fresno. 18 CHAIRPERSON LLOYD: Okay. 19 EXECUTIVE OFFICER WITHERSPOON: Dr. Lloyd, one of 20 the things we promised to do is tell you the implications 21 of the study and what it might mean for our programs. The 22 highlight on VOCs nd traffic-related exposure suggests we 23 need to do everything possible to reduce the existing base 24 of VOC emissions. And from our analysis, it appears that 25 the largest quantity is coming from the older automobiles. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 9 1 We have constant enhancements to smog check underway. We 2 also are attempting to initiate a major scrappage program 3 in California, which of course is heavily dependent on 4 funding. Funding is the key question -- the key issue we 5 have to resolve before we can launch that program. But 6 it's very much a part of the SIP you adopted last October 7 for the South Coast. It will be a feature of the San 8 Joaquin Valley SIP. And it's a persistent problem that 9 we're trying to address. 10 CHAIRPERSON LLOYD: Yeah, though, the point is 11 it's not just tailpipe. Because if you look at the 12 benzene and the substituted benzene, the xylenes, they're 13 all -- some of those are compounds of whole gasoline. So 14 it's the whole issue of getting gasoline into the -- 15 exposure to gasoline both from tailpipe evaporative, other 16 sources. As we saw some of the work down at Beverly 17 Hills, some of the concentrations there are not dissimilar 18 from what we have here at the high school. 19 EXECUTIVE OFFICER WITHERSPOON: That's absolutely 20 correct. And that's why scrappage is so important and the 21 parts of smog checks that are about evaporative emissions, 22 not just about tailpipe. 23 CHAIRPERSON LLOYD: Okay. Thanks very much. 24 Thank you. 25 So that's -- I guess we don't have to take any PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 10 1 action on that item. And since it's not a regulatory 2 item, we don't have to close the record. 3 So we move on to Agenda Item 4-3-2. It's on 4 research proposals. 5 We have five projects that have been reviewed and 6 approved by the Research Screening Committee. Two of the 7 projects will investigate the health impacts of long- and 8 short-term exposures to air pollution. And the other 9 three are related to emissions reductions. 10 Staff will now give us more details on those. 11 And I'll turn it over to Ms. Witherspoon to begin the 12 staff presentation. 13 EXECUTIVE OFFICER WITHERSPOON: Annmarie Mora 14 will make the presentation for Research. 15 AIR POLLUTION SPECIALIST MORA: Thank you, Ms. 16 Witherspoon. 17 Good morning, Chairman Lloyd and members of the 18 Board. 19 (Thereupon an overhead presentation was 20 Presented as follows.) 21 AIR POLLUTION SPECIALIST MORA: Today we are 22 presenting to you five research proposals that have been 23 reviewed and approved by ARB staff and the Research 24 Screening Committee. 25 Each proposal will provide timely scientific and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 11 1 technical information to develop and support the public 2 policy decisions required for an effective air pollution 3 control program. 4 --o0o-- 5 AIR POLLUTION SPECIALIST MORA: The first project 6 is the effect of GSTM1 Genotype on ozone-induced allergic 7 airway inflammation. Epidemiological data suggests that 8 asthmatics may be more sensitive to ozone than 9 non-asthmatics. Animal studies provide evidence that 10 ozone can enhance allergic inflammatory responses in the 11 lungs. Controlled studies of the airway inflammatory 12 responses of allergic asthmatics to ozone suggests that 13 ozone enhances responses to inhaled allergen in some, but 14 not all, allergic asthmatics. 15 Data also indicates that genetic variability 16 between individuals may explain the wide range of 17 responsiveness to ozone exposure in both healthy and 18 asthmatic people. 19 One particular gene, GSTM1, has been implicated 20 as a candidate gene possibly influencing responsiveness to 21 ozone. This study will determine whether ozone exposure 22 enhances airway inflammatory responses of asthmatic 23 subjects and whether GSTM1 genotype is an important 24 predictor of susceptibility to adverse effects with ozone 25 exposure. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 12 1 The results of the study are critical to the 2 development of ambient air quality standards that are 3 protective of allergic asthmatics. 4 --o0o-- 5 AIR POLLUTION SPECIALIST MORA: The second 6 project is determination of reactive oxygen species 7 activity in PM and enhanced exposure assessment for the 8 NIH/NIEHS study entitled: Ultrafine PM in 9 Cardiorespiratory Health. 10 We brought this project to you in January. As 11 you may remember, a $3.3 million study is being funded by 12 the National Institute of Health and the National 13 Institute of Environmental Health Sciences. It will study 14 impacts of air pollution on the elderly with 15 cardiovascular disease. 16 The Board approved an allocation of 175,000 to 17 the project. At that time, we indicated that we expected 18 the South Coast Air Quality Management District to 19 contribute approximately $500,000 to the project. 20 Subsequently, the District has elected to 21 transfer their funds to the Board for oversight. We are 22 now asking for your approval for a combined project that 23 will total $676,814. 24 The District's proposal will provide funds to 25 expand the nature of the air pollution data available as PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 13 1 well as add collection and evaluation of the chemical and 2 biological characteristics of the PM samples. 3 Mechanistic studies related to reactive oxygen 4 species are also included. This joint project will 5 enhance the likelihood of finding pollutant associations 6 and will expand investigations to possibly explain the 7 biological mechanisms by which effects may occur. 8 --o0o-- 9 AIR POLLUTION SPECIALIST MORA: The next project 10 is development of a micro air particulate analyzer for 11 ubiquitous deployment in air quality monitoring and 12 epidemiological studies, and is being co-funded by the 13 California Energy Commission. 14 The commercially available instruments for 15 characterizing ambient particulate matter are not well 16 suited for wide-spread deployment by persons who are not 17 highly trained to use them and backed by considerable 18 resources. 19 Undesirable aspects of the existing instruments 20 include high cost, need for laboratory support, poor 21 portability, need for calibration, and need for 22 attendance. This project is intended to develop an 23 affordable, portable, easy-to-use instrument to measure 24 the size distribution of PM smaller than one micron. This 25 would be useful to researchers who study PM, their PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 14 1 combustion sources and indoors. 2 The device would also be useful to persons or 3 organizations that need to characterize ambient PM on a 4 fine spacial scale that cannot be provided by the fixed 5 ambient monitoring stations, especially for areas where 6 environmental justice is a concern. 7 --o0o-- 8 AIR POLLUTION SPECIALIST MORA: The fourth 9 project is evaluation of mechanisms of exhaust intrusion 10 into school buses and feasible mitigation measures. 11 As was reported in our November health update, 12 recent tests of in-cabin air pollution concentrations on 13 board school buses indicate a bus's own exhaust may be 14 infiltrating into the bus cabin in significant quantities 15 under some conditions. This self-pollution can lead to 16 high exposures for children with long commutes on older 17 and/or dirtier buses, particularly when the bus windows 18 are closed and ventilation is reduced. 19 This study will characterize the phenomenon of 20 school bus intrusion in terms of where it occurs, why, and 21 to what extent it occurs under different conditions. 22 Because it is costly to replace buses, it will also 23 determine what can be done to reduce or eliminate 24 intrusion and how effective these methods should be at 25 reducing exposure. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 15 1 This information will be disseminated to school 2 districts and fleet managers. 3 --o0o-- 4 AIR POLLUTION SPECIALIST MORA: The fifth project 5 is evaluation of the heavy-duty diesel engine not-to 6 exceed regulation. 7 Heavy-duty diesel engines and vehicles are 8 substantial contributors to the on-road emissions 9 inventories for NOx and particulate matter. In the 1990s 10 is was found that seven of the largest heavy-duty diesel 11 engine manufactures violated certification requirements by 12 turning off or defeating emission control devices during 13 highway operation. 14 As a consequence, in the late 1990s U.S. EPA and 15 ARB signed consent decrees and settlement agreements 16 respectively with these engine companies that required a 17 supplemental test for certification of heavy-duty diesel 18 engines, including the in-use not-to-exceed test 19 procedure. 20 The not-to-exceed regulation requires measurement 21 of in-use NOx emissions using on-board emission 22 measurement systems. The not-to-exceed requirements are 23 expected to result in compliant in-use heavy-duty diesel 24 engines, but this has not been independently verified by 25 the ARB. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 16 1 On-board measurement systems also have 2 applicability for collecting in-use emissions data for 3 emissions inventory development purposes. The results of 4 this project will provide data to determine the 5 effectiveness of the not-to-exceed regulation in ensuring 6 that emissions from heavy-duty diesel engines are 7 controlled to their certification levels. 8 We request that you approve these projects for 9 funding. 10 This completes the presentation. We'll be happy 11 to answer any questions. 12 CHAIRPERSON LLOYD: Thank you very much. 13 Again, I'd like to thank the South Coast and CEC 14 for cost sharing on some of these proposals. 15 And thanks, staff, for working with our 16 colleagues there. That really helps. 17 Dr. Burke, do you want to say something? 18 BOARD MEMBER BURKE: Other than the 500,000 that 19 we put up for the Item No. 2, what other proposals do we 20 have funds in South Coast. 21 RESEARCH DIVISION CHIEF CROES: Currently, that's 22 the only project that the South Coast has funds in. But 23 certainly we've been long-time collaborators with the 24 South Coast, and you've put in lots of funds in prior 25 projects. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 17 1 BOARD MEMBER BURKE: Well, I understand. It was 2 just a question. 3 My other question is: How does UC Riverside end 4 up with both of the -- Items 4 and 5? I mean is it just 5 that they applied? Or is it that they're uniquely 6 qualified? Or is it because Jim Lents works there? 7 RESEARCH DIVISION CHIEF CROES: No, in both cases 8 they were uniquely qualified. We get a very low overhead 9 rate with UC Riverside -- ten percent. And they're also 10 uniquely qualified in that they have prior experience with 11 the school bus study and then -- 12 BOARD MEMBER BURKE: Well, isn't the school bus 13 study a replication of the study done by NRDC? 14 RESEARCH DIVISION CHIEF CROES: No. The prior 15 study that we funded with UC Riverside and UCLA in a 16 sense -- 17 BOARD MEMBER BURKE: Are you familiar with the 18 NRDC study? 19 RESEARCH DIVISION CHIEF CROES: Yes. The NRDC 20 study was one bus. So our prior study was seven buses. 21 Both studies identified this problem with high exposures 22 of children. This follow-on project is to actually solve 23 the problem by identifying measures that can be taken to 24 reduce the exposure. 25 BOARD MEMBER BURKE: So the 2 -- $300,000 now PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 18 1 is -- I love it when it's $299,999.99. Why is that? Is 2 there some threshold at $300,000? 3 RESEARCH DIVISION CHIEF CROES: In the research 4 plan -- 5 BOARD MEMBER BURKE: Because there's no way in 6 the world you're going to convince me that the actual cost 7 of the study is $299,999.99. 8 RESEARCH DIVISION CHIEF CROES: We gave -- in the 9 annual research planning process that we do, the Board 10 adopts limits to the funding that's provided for these 11 individual projects. So this is a funding that we 12 identified those available to the contractors. 13 BOARD MEMBER BURKE: Okay. 14 CHAIRPERSON LLOYD: I would say, Dr. Burke, I 15 think when the Riverside program was set up, they invested 16 heavily, as did the State I think, and I'm not sure about 17 South Coast, in to hardware actually which is necessary to 18 do these type of tests. And so as a result, you don't see 19 that sort of expertise duplicated throughout the state. 20 And think this is where -- this particular Board meeting 21 when we're looking at those items, I think that's -- 22 BOARD MEMBER BURKE: But as you recall, I think 23 you and I went out there when you were still at South 24 Coast. And some of that equipment wasn't functioning 25 properly. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 19 1 CHAIRPERSON LLOYD: That was a while ago. But -- 2 no, I have confidence in seeing what they've done and what 3 they've been able to do. And they work on, for example, 4 the measurement techniques they've had on super clean 5 cars, the work on the particular trailer that they've got 6 there, I think it's -- that's where we see in this time 7 going there for heavy-duty testing. 8 On the other hand, if you go in to some of the 9 health effects, if you've looked in the last few years the 10 amount of money we spent at UCLA and -- no, San Francisco 11 it's been -- the nice thing is we have such a great 12 university system, obviously in addition to the UC, to Cal 13 Tech as well, as well as the other campuses there. We're 14 lucky with the UC system we have that expertise scattered 15 throughout the state, and that they give us a good rate. 16 Any other questions or comments from the Board? 17 BOARD MEMBER CALHOUN: Yes, I have one question, 18 Mr. Chairman. 19 CHAIRPERSON LLOYD: Mr. Calhoun. 20 BOARD MEMBER CALHOUN: I think someone on this 21 Board has asked this question before, but I'll ask it 22 again. 23 I want to go to Item 2 -- no -- yes, Item 3, 24 development of a micro air particulate analyzer. 25 If the investigator is successful in developing PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 20 1 the analyzer ultimately, this analyzer would probably be 2 going to market. Who would benefit from this particular 3 work? Obviously, the people of the State of California. 4 But I'm looking at the business aspect of it now. 5 RESEARCH AND ECONOMICS STUDIES BRANCH CHIEF 6 COREY: This is Richard Corey with the Research Division. 7 The university has a group charged with pursuing 8 patents for technology that's developed. But outside of 9 the university the project has the potential to reduce 10 costs of a technology -- the monitoring technology by 11 20-fold, to put something -- it's in the tens of thousands 12 of dollars -- in the hundreds of beneficiaries. One of 13 the key beneficiaries are the potential users in 14 communities that have a technology that's affordable, easy 15 to use and provides RealTime results. 16 CHAIRPERSON LLOYD: Can you speak up a little 17 bit, Richard, I guess. 18 BOARD MEMBER HUGH FRIEDMAN: I couldn't hear you. 19 RESEARCH AND ECONOMICS STUDIES BRANCH CHIEF 20 COREY: Sure. 21 What I said was that the university does have a 22 group that develops -- pursues patents, owns patents for 23 technologies that are developed, and pursues the 24 commercialization, and benefits partly from the 25 commercialization of technologies. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 21 1 But what I said was, in addition to that, the 2 objective of this was to develop a technology that's 3 currently on the order of tens of thousands of dollars, a 4 much larger, to drive it down to something along the lines 5 of several hundred dollars to make it affordable for 6 communities and others to have a technology that measure 7 particles and provide RealTime results, which they don't 8 have that available now. It's not available. 9 BOARD MEMBER BURKE: But that's not what he's 10 asking. He's asking, who gets the financial benefit of 11 this money? 12 RESEARCH AND ECONOMICS STUDIES BRANCH CHIEF 13 COREY: And my response was that the university would be 14 the owner of the patent rights. 15 BOARD MEMBER BURKE: That's the question. 16 Because, you know, I have a real problem with 17 some of this, and we're fighting it out at South Coast. 18 As you remember, we were the first people to contribute to 19 Ballard. And we got nothing but gratification that we 20 contributed to Ballard making $46 million when he sold 21 out. 22 So we're going through the process now, because 23 there's -- in our health program we have a foundation 24 which has discovered that lung cancer leads to brain 25 cancer, that 80 percent of the brain cancer in America is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 22 1 caused by -- it started in the lungs. 2 And there is now potentially a process by which 3 non-invasive, by just putting a needle in you, you can 4 detect, if you want, if you have cancer of the lung. Two, 5 it can radiize the bad tissue and leave the good tissue, 6 just with a needle. And it's going to revolutionize the 7 whole biopsy theory, because no longer will you have to 8 cut stuff out. 9 So we're all prepared to go forward and fund some 10 more of this research. But my attitude is, with the 11 budget cuts that all of us are facing, why should we put 12 this research money in and get no financial benefit? So 13 the entire Board agreed with me. But then legally, they 14 say you can't do that. It just doesn't make sense to me. 15 But, you know, I think that's something the Legislature 16 needs to address. 17 CHAIRPERSON LLOYD: Yeah. It's unfortunate on 18 that, on the latter point, Dr. Burke, that Dr. Friedman 19 isn't here so he could expand on that discussion you had 20 there, which was important. 21 I would say on another part of it two comments to 22 Mr. Calhoun's question. And I think that Richard said it. 23 But I think I can't sufficiently stress how important it 24 is for these communities, particularly some of the low 25 income communities to have instrumentation which you can PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 23 1 deploy there relatively cheaply and you can get high 2 quality data. We need that badly. So I think there's an 3 example where that can be developed. 4 The other part Dr. Burke mentions was -- and I 5 very well remember when I was running the program down 6 at -- we looked at this many times of, how do you capture 7 some of those costs? One of the stumbling points we came 8 across is that you have to figure out when a company is 9 actually making money. I don't know to date whether 10 Ballard is actually making money. 11 Jeff Ballard made a lot of money. But if you 12 look at the corporation, I think they're still losing. So 13 as a result, you know, the investment they still wouldn't 14 be collecting. And how long can you keep that on the 15 books? It's a tough question, but a very relevant one, I 16 agree. 17 Ms. Witherspoon. 18 EXECUTIVE OFFICER WITHERSPOON: One additional 19 point, and it's not immediately related. But we've looked 20 in to questions of keeping some activities in the public 21 domain, so that people don't unnecessarily profit from our 22 regulatory activities or some of the things, the tools we 23 need innovated, be they photochemical models, fuel 24 formulations, et cetera. 25 So it's not so much about ourselves gathering PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 24 1 profits as making the product affordable to everyone. And 2 so that's been the extent. 3 BOARD MEMBER BURKE: No question that's -- but on 4 the Ballard thing, we would have had stock. When he sold, 5 we would have sold. We would have made when he made. So 6 if it didn't make any, we wouldn't have cared. But that's 7 water under the dam. 8 CHAIRPERSON LLOYD: Also, by the way, let the 9 record show that when I was talking about other campuses 10 besides the UC system, how could I have forgotten USC, 11 University of Southern California. Obviously, they have 12 done a wonderful job with our children health studies. So 13 before somebody comes back to me and says not only Cal 14 Tech but USC, I wanted to make sure. That was a complete 15 oversight. And they've done a wonderful and continue to 16 do wonderful work on children's health. And I'm very 17 proud that ARB was the initiator of that study in the 18 early nineties. 19 So any other questions? 20 So we have got a motion to approve the proposals. 21 No, we've got a motion, we got the resolution 22 there to approve for the proposals. 23 BOARD MEMBER HUGH FRIEDMAN: Motion. 24 BOARD MEMBER RIORDAN: Do you have a motion? 25 I'll second the motion if you have -- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 25 1 CHAIRPERSON LLOYD: All in favor say aye. 2 (Ayes.) 3 CHAIRPERSON LLOYD: Anybody against? 4 Thank you very much. 5 So with that we will -- as indicated earlier and 6 as announced, we will in fact adjourn to a closed session 7 of the Board. And this was noticed earlier. 8 The purpose of the closed session is for the 9 Board members to confer or receive advice from legal 10 counsel concerning the public hearing on heavy-duty diesel 11 engine software upgrade regulations or so-called chip 12 reflash. 13 And so we will take the time. And then we will 14 come back after the closed session and we will reconvene 15 to take up the item on chip reflash. 16 Thank you for your patience. See you then. 17 (Thereupon the Board recessed in to 18 closed session.) 19 CHAIRPERSON LLOYD: The meeting of the Air 20 Resources Board is now in session. So please come to 21 order. 22 I'd like to turn it over to our General Counsel, 23 Diane Johnston, to summarize what we heard in closed 24 session. 25 GENERAL COUNSEL JOHNSTON: Thank you, Dr. Lloyd. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 26 1 The Board met in closed session to confer with 2 legal counsel. And we advised them regarding the public 3 hearing on the heavy-duty diesel engine software upgrade 4 regulations, also known as chip reflash. No action was 5 taken be by the Board. 6 Thank you. 7 CHAIRPERSON LLOYD: Thank you very much. 8 So we come to the main event of the day, Agenda 9 Item 04-3-3, the proposed regulation to require the 10 installation of low NOx software on heavy-duty diesel 11 trucks, also known as chip reflash. 12 This item has drawn an incredible amount of 13 public interest from all sides: 14 From the engine manufacturers, who believe 15 they've been honoring the original settlement agreements 16 and who are concerned by the proposed change to their 17 operations and to their legal and economic standing. 18 From the California and American Trucking 19 Associations, who do not object to software upgrades per 20 se, but who have a strong legal issue about a 21 California-only rule versus the proposed applicability to 22 out-of-state vehicles as well. 23 Now, from all the major environmental groups in 24 the state who are angry at the engine manufacturers for 25 installing defeat devices in the first place, but just as PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 27 1 angry at the EPA and the Air Resource Board for not 2 remedying this problem sooner than we have. 3 So we have quite a situation to deal with at this 4 meeting. 5 For my own part, I have to admit that I feel the 6 same dismay that we aren't further along by now. I know 7 what the consent decrees and settlement agreements say and 8 what they don't say. That's the history that brought us 9 here and we have to knowledge that. But I'm simply 10 unwilling to say it's enough, because clearly it's not. 11 Right or wrong, settled or not, Californians need 12 and deserve to be protected from unnecessary excess 13 emissions, particularly from diesel PM, which pose among 14 the highest risks of all from both a toxic and mortality 15 perspective. To sit by idly when an inexpensive, readily 16 available solution is at hand, is really unforgivable. 17 Also, I think with the challenge that the 18 Governor has set for us to reduce pollution by 50 percent 19 by 2010 has added an even more, I think, urgent need upon 20 all of us. 21 We recognize that we need the engine 22 manufacturers' cooperation to make this work. And I 23 understand their point of view about this whole issue. 24 We're clearly asking more of them than they signed up for 25 the agreements and consent decrees in the nineties. We PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 28 1 have the benefit of this Board here that -- many of us 2 weren't here when this consent decree was put in to 3 effect. And I understand that in fact Jed was not 4 involved with the negotiations, or we'll hear direct from 5 him. 6 Again, I'm going to ask of them anyways because 7 it's the right thing to do. We raised this issue last 8 year and I've been encouraged by the change in tone from 9 the industry since our last meeting since I think the 10 feelings of the Board were clearly expressed. 11 I'm looking forward clearly to what the industry 12 will say once we get the public testimony. 13 I'm also encouraged by the proactive stance of 14 the California Trucking Association by CTA's efforts to 15 have their members be first in line for chip reflashes, 16 providing that we can give a voluntary effort for a 17 change. Clearly it's much easier to work with CTA than 18 have them on opposing sides. And we really appreciate 19 that very much. 20 Neither CTA or EMA has changed their position as 21 to the regulatory approach, and remain opposed to staff's 22 main proposal. 23 But before we get in to any of these issues any 24 deeper, I would like to turn this over to staff, Ms. 25 Witherspoon, to introduce the item and begin staff's PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 29 1 presentation. 2 EXECUTIVE OFFICER WITHERSPOON: Thank you, Dr. 3 Lloyd and members of the Board. 4 At the December Board hearing you expressed a 5 strong desire for us to solve this problem as quickly as 6 possible. And at that time we talked to you about the 7 possibility of a voluntary agreement with the 8 manufacturers. And you instructed us to go ahead and hear 9 them out, but not lose any tons. You still wanted to 10 accomplish the maximum degree of emission control. 11 Since December, staff has met extensively with 12 engine manufacturers and others. And we come back to you 13 today with a two-part proposal: One that you adopt a 14 backstop regulation, virtually identical to the one you 15 heard in December, with the time lines adjusted to reflect 16 the delay from the regulatory review process; and, second, 17 that you consider a voluntary agreement with engine 18 manufacturers in the meanwhile and you hold in abeyance 19 that backstop regulation until the performance of the 20 engine manufacturers has been given a time to run and be 21 evaluated by your staff. And we have specific milestones 22 laid out and performance targets for your consideration. 23 I'd now like to turn the presentation over to 24 Lisa Jennings, who will present the details of the base 25 regulation and then the components of the voluntary PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 30 1 program as we've negotiated it with engine manufacturers. 2 (Thereupon an overhead presentation was 3 Presented as follows.) 4 AIR POLLUTION SPECIALIST JENNINGS: Thank you, 5 Ms. Witherspoon. 6 Good day, Chairman Lloyd and members of the 7 Board. 8 Today we are re-proposing an engine software 9 upgrade regulation that will significantly reduce NOx 10 emissions through the installation of low NOx software in 11 eligible heavy-duty diesel engines used in trucks, school 12 buses, and motor homes. 13 --o0o-- 14 AIR POLLUTION SPECIALIST JENNINGS: In my 15 presentation to you today I will discuss the background 16 for this proposal, including a brief history of the 17 federal consent decrees and California-specific settlement 18 agreements; the regulatory proposal, highlighting the 19 changes from the proposal presented in December; the 20 voluntary program that staff is proposing for the Board to 21 consider approving with the regulation as a backstop; and 22 our recommendation. 23 --o0o-- 24 AIR POLLUTION SPECIALIST JENNINGS: First, I will 25 review the background information to set the stage for the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 31 1 regulatory proposal. 2 --o0o-- 3 AIR POLLUTION SPECIALIST JENNINGS: Engine 4 manufacturers introduced electronically controlled diesel 5 engines in the 1990s. Software programming used by the 6 manufacturers allowed their engines to comply with 7 emission limits under engine certification conditions. 8 However, this programming also increased NOx emissions 9 during on-highway driving. 10 The software programs used by the engine 11 manufacturers are sometimes called defeat devices. These 12 defeat devices cause the engines to emit two to three 13 times more NOx under certain driving conditions than they 14 did during engine certification tests, although the 15 emissions vary by manufacturer. Another name for these 16 excess NOx emissions or high NOx emissions is off-cycle 17 NOx. 18 --o0o-- 19 AIR POLLUTION SPECIALIST JENNINGS: In December, 20 we showed you this graph of an actual emission test from 21 the ARB's Inspection and Maintenance Development 22 Laboratory in Stockton. The testing was done on a 1998 23 model year truck and demonstrates the NOx emissions 24 increase that occurs when an engine switches to high NOx 25 mode. In this example the NOx emissions nearly double PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 32 1 after 220 seconds of operation. 2 --o0o-- 3 AIR POLLUTION SPECIALIST JENNINGS: After the 4 problem of high NOx emissions was discovered, the U.S. 5 EPA, the ARB, the U.S. Department of Justice negotiated 6 legally binding agreements with the affected engine 7 manufacturers in 1998. 8 The federal agreements are called consent 9 decrees, while the California-specific agreements are 10 called settlement agreements. These agreements include a 11 number of mitigating provisions. One of the provisions is 12 the Low NOx Rebuild Program that requires the engine 13 manufactures listed on this slide to partially mitigate 14 the high NOx caused by their engines. 15 --o0o-- 16 AIR POLLUTION SPECIALIST JENNINGS: The Low NOx 17 Rebuild Program requires the engine manufacturers to 18 provide a fix to the high NOx problem created by their use 19 of computer-based strategies. This fix is a low NOx 20 software upgrade. Under the Low NOx Rebuild Program the 21 software is to be installed at the time of engine rebuild 22 or upon request. 23 During the time that the consent decrees and 24 settlement agreements were negotiated, the U.S. EPA and 25 the ARB anticipated engine rebuilds occurring at 350,000 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 33 1 miles nor line hauls and 300,000 miles for non-line haul 2 trucks. However, engines are lasting up to 750,000 and 1 3 million miles before a rebuild is necessary. Relatively 4 few software upgrades have been installed so far. 5 Therefore, many of the 1993 to 1998 eligible vehicles 6 continue to emit high NOx. 7 --o0o-- 8 AIR POLLUTION SPECIALIST JENNINGS: The solution 9 of the high NOx emissions is to require the low NOx 10 software to be installed on every eligible engine soon. 11 With that, I'd like to present to you our regulatory 12 proposal. We are proposing that you adopt this regulation 13 as a backstop to a voluntary program that I will describe 14 later. 15 --o0o-- 16 AIR POLLUTION SPECIALIST JENNINGS: Our proposed 17 regulation is applicable to 1993 through 1999 model year 18 heavy-duty diesel trucks, school buses, and motor homes 19 that are equipped with specific 1993 through 1998 model 20 year engines that have high NOx emissions. We are 21 including 1999 model year vehicles because some of these 22 used 1998 model year engines. 23 The specific heavy-duty diesel engines that our 24 proposal applies to are the engines for which the engine 25 manufacturers have already developed low NOx software PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 34 1 under the Low NOx Rebuild Program in the consent decrees 2 and settlement agreements. The proposed regulation does 3 not impose requirements for low NOx software on engines 4 that are not included in the Low NOx Rebuild Program. 5 Finally, the proposed regulation would apply to 6 all heavy-duty diesel vehicles with applicable engines 7 that operate in California. This includes vehicles 8 registered out of state that travel into and within 9 California. 10 --o0o-- 11 AIR POLLUTION SPECIALIST JENNINGS: We have 12 modified the proposed implementation schedule to allow for 13 adequate time to comply from today's Board meeting date. 14 These dates are listed on the slide and reflect an 15 additional year from the proposal presented in December. 16 The proposed implementation dates are: April 17 30th, 2005, for '93 and '94 model year engines; August 18 31st, 2005, for '95 and '96 engines; and December 31st, 19 2005, for '97, '98 model year engines. 20 We are also proposing to give a full additional 21 year for compliance to the '97 and '98 medium heavy-duty 22 engines. These engines travel fewer miles and would not 23 yet have needed engine rebuild under the assumptions in 24 1998. These engines account for fewer of the NOx 25 emissions, so this proposed change does not impact our PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 35 1 overall air quality goals significantly. We are proposing 2 a phased-in compliance schedule in order to minimize the 3 workload for engine dealers and distributors. 4 --o0o-- 5 AIR POLLUTION SPECIALIST JENNINGS: When 6 implemented this regulation will reduce NOx emissions by 7 13 tons per day statewide from both California registered 8 vehicles and out-of-state registered vehicles in 2006, 32 9 tons per day statewide in 2007, and 21 tons per day 10 statewide in 2010. 11 Reducing NOx emissions from these trucks, school 12 buses, and motor homes is a critical component of the 13 state implementation plan. Reductions in NOx improve air 14 quality and provide the health benefits associated with 15 decreased smog and secondary particulate matter formation. 16 NOx and the ozone and fine particulate matter forms are 17 especially damaging to children, contributing to slower 18 lung growth and development and decreased lung 19 functioning. 20 --o0o-- 21 AIR POLLUTION SPECIALIST JENNINGS: Now, I will 22 summarize the regulatory proposal. 23 The low NOx software is already available. The 24 software is installed in 15 to 30 minutes, with 25 approximately two hours total vehicle downtime. The PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 36 1 software reduces NOx emissions by about 25 percent for 2 each vehicle. And enforcement can be implemented through 3 the existing Smoke Inspection Program. 4 --o0o-- 5 AIR POLLUTION SPECIALIST JENNINGS: In December, 6 I presented issues with the chip reflash proposal. One of 7 the issues presented was: Who pays for reflash? ARB 8 believes that the low NOx software is to be provided at no 9 cost at time of engine rebuild and upon request. The 10 engine manufacturers agree with the staff that the 11 software's free at time of rebuild, but disagree with 12 staff that the software is free upon request. 13 Unfortunately, resolution would come through the 14 court system, delaying the implementation of the reflash 15 regulation we estimate by about two years. 16 To avoid this delay in cleaning up these trucks, 17 school buses, and motor homes, we worked with the engine 18 manufacturers to obtain agreement that they will pay for 19 installation of low NOx software any time an eligible 20 engine is serviced at a dealership. They agreed to do 21 this only under the construct of a voluntary program. We 22 think this is a good approach that will get us NOx 23 reductions faster than any other option. 24 --o0o-- 25 AIR POLLUTION SPECIALIST JENNINGS: After the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 37 1 Board meeting -- after the December Board meeting, where 2 the Board expressed its desire to get started on reflash 3 now, ARB and the engine manufacturers began discussing the 4 concept of a voluntary program. 5 The benefits to a voluntary program include 6 greater near-term emission benefits, equivalent emission 7 benefits in 2010, and greater overall emission benefits as 8 well as removing the uncertainty of who pays for the low 9 NOx software installations and removing the uncertainty of 10 potential litigation with the engine manufacturers and the 11 subsequent delays in low NOx rebuild software 12 installations. 13 --o0o-- 14 AIR POLLUTION SPECIALIST JENNINGS: In the 15 discussions between ARB and the engine manufacturers, the 16 engine manufacturers expressed their willingness to 17 support and provide at no charge the low NOx rebuild 18 reflashes on California registered vehicles if ARB did not 19 mandate chip reflash. The engine manufacturers have 20 agreed to notify their authorized dealers that reflashes 21 are to be installed at any service event or upon request 22 of the vehicle owner/operator under a voluntary program. 23 ARB staff is still proposing that the Board adopt 24 the proposed regulation as a backstop to the voluntary 25 chip reflash program. Then if the Board finds that the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 38 1 voluntary program is not satisfactory, the regulatory 2 package would be filed with the Office of Administrative 3 Law in December. I will explain this concept further 4 later in the presentation. 5 --o0o-- 6 AIR POLLUTION SPECIALIST JENNINGS: The final 7 determination of the success of the voluntary program will 8 be up to the Board. Staff will be tracking reflashes and 9 doing additional analysis to help the Board determine if 10 the voluntary program has met the reflash targets and is 11 sustainable. The targets are listed on this slide. 12 These targets are primarily emissions based and 13 secondarily vehicle number based. The first target is 35 14 percent of the emissions by October 28th, 2004. Staff is 15 including the population of vehicles already reflashed in 16 the 35-percent target so that the manufacturers get credit 17 for those reflashes. Even if the first target of 35 18 percent of the California reflashable population is met, 19 staff would continue to track and evaluate the voluntary 20 program. 21 If the 60-percent or 80-percent target is not 22 reached and a regulation is necessary, then a regulation 23 will be reproposed restarting the regulatory time line. 24 Under the voluntary program the ultimate goal of 25 100 percent of the reflashable population getting low NOx PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 39 1 software installed is the same as under the regulatory 2 program, but with more time to accomplish the goal. Low 3 NOx rebuild software would continue to be installed 4 whenever a vehicle comes in for service unless the owner 5 or operator declines. 6 --o0o-- 7 AIR POLLUTION SPECIALIST JENNINGS: Staff is 8 proposing that the Board adopt the proposed regulation as 9 a backstop to the voluntary program. We are proposing 10 that the Board direct the executive officer to withhold 11 filing the regulation with the Office of Administrative 12 Law until we assess the success of the voluntary program 13 in December. 14 At the December Board meeting the Board can 15 decide whether the reflash results warrant continuing the 16 voluntary program or not. If the Board determines that 17 the voluntary program is successful, then the voluntary 18 program continues. If not, the Board can direct the 19 executive officer to file the adopted regulation with the 20 Office of Administrative Law. That can occur quickly, and 21 will occur no later than February 2005. 22 --o0o-- 23 AIR POLLUTION SPECIALIST JENNINGS: At the 24 December 2003 Board meeting, staff reported that there are 25 about 100,000 heavy-duty diesel vehicles with 1993 through PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 40 1 1998 model year diesel engines registered in California. 2 Roughly 50,000 are heavy heavy-duty vehicles and 50,000 3 are medium heavy-duty vehicles. However, some of those 4 vehicles are not eligible for low NOx rebuild software. 5 Some 1993 model year engines do not have software 6 because the manufacturer chose the option under the 7 consent decree to only make low NOx rebuild software for 8 the '94 through '98 model year engines. 9 Some engines do not have software because the 10 engine was produced in low volumes and the manufacturer 11 used the low-volume exemption allowed under the consent 12 decree. 13 Mechanical 1993 through 1998 model year engines 14 and engines manufactured by non-consent decree signing 15 engine manufacturers are not eligible for low NOx rebuild 16 software. 17 After refining the original estimate for all 1993 18 through 1998 model year engines, staff estimates that 19 there are 42,000 heavy heavy-duty diesel engines and 20 between 8 and 15 medium -- 15,000 medium heavy-duty diesel 21 engines that are eligible for reflash registered in 22 California. 23 There is also a larger number of out-of-state 24 vehicles that travel in California. However, these 25 vehicles travel few miles in California on a per vehicle PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 41 1 basis and quickly go in to local service in their own 2 state as they age. They are not part of the voluntary 3 agreement. 4 The emission benefit from reflashing the 5 out-of-state eligible vehicles is estimated at 6 to 9 tons 6 per day NOx in 2006, but drops to about 1.6 tons per day 7 NOx by 2008. 8 --o0o-- 9 AIR POLLUTION SPECIALIST JENNINGS: As I stated 10 before, the engine manufacturers have agreed to pay for 11 low NOx rebuild reflashes on California registered 12 vehicles under a voluntary program. But they did not 13 agree to reimburse their dealers for low NOx rebuild 14 software installation on vehicles registered outside 15 California. 16 Under the voluntary program no credit is given to 17 the engine manufacturers for an out-of-state registered 18 vehicle reflash until after the 60-percent target is met. 19 Even then, the out-of-state vehicle reflash is only 20 credited as 3 percent of an in-state registered vehicle 21 reflash credit. 22 The out-of-state vehicles will go into local 23 service in their own state soon. Eventually those 24 vehicles will be reflashed when the engine is rebuilt. 25 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 42 1 AIR POLLUTION SPECIALIST JENNINGS: This graph 2 quantifies what I just said, that very few 1993 through 3 1998 model year out-of-state registered vehicles are 4 expected to be traveling in California in the future; and 5 that the 1993 through 1998 model year vehicles registered 6 in-state will continue traveling in California for longer 7 and in higher numbers. Thus, our focus on the California 8 registered vehicles. 9 --o0o-- 10 AIR POLLUTION SPECIALIST JENNINGS: This slide 11 shows that the voluntary program is expected to reduce NOx 12 by 11 tons per day in 2004 and 21 tons per day in 2005, 13 while the regulatory program would not achieve the same 14 near-term benefits. 15 The regulatory program, even with the delay in 16 implementation, is estimated to achieve greater benefits 17 in 2008 of 27 tons per day NOx from both in-state and 18 out-of-state registered vehicles, compared to 23 tons per 19 day NOx from in-state registered vehicles only. 20 By 2010 the emission benefits of the two programs 21 is the same. 22 --o0o-- 23 AIR POLLUTION SPECIALIST JENNINGS: This slide 24 shows that the cumulative emission benefits from the 25 voluntary program over the time period of 2004 to 2010 are PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 43 1 greater than the emission benefits from the proposed 2 regulation even though the voluntary program does not 3 include the out-of-state registered vehicles. 4 --o0o-- 5 AIR POLLUTION SPECIALIST JENNINGS: Staff 6 believes that there are significant benefits to the 7 voluntary program. 8 First, the reflashes will be installed right 9 away. This is especially critical to areas like 10 Sacramento that have 2005 attainment dates. 11 Second, the voluntary program approach removes 12 the uncertainty regarding the cost of the low NOx software 13 owner and removes the uncertainty surrounding legal 14 disputes between ARB and the engine manufacturers. 15 We have built in a security measure by proposing 16 that the Board adopt the proposed regulation and proposing 17 that board review the voluntary program in December prior 18 to the regulatory clock ending in February of 2005. 19 Meanwhile, we achieve reductions even if the 20 voluntary program fails the December review. We will not 21 achieve these benefits if only the regulatory proposal is 22 adopted. 23 Because the voluntary program is something that 24 both the engine manufacturers and the trucking 25 associations support, we believe that there is a high PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 44 1 likelihood of success through a cooperative effort. 2 --o0o-- 3 AIR POLLUTION SPECIALIST JENNINGS: Staff plans 4 to mail notifications of the outcome from this Board 5 meeting of the chip reflash item to the California 6 registered vehicle owners. Whether a voluntary program is 7 adopted or the proposed regulation, the notification will 8 let vehicle owners know the details of getting low NOx 9 rebuild software installed in their eligible engines. 10 Staff will also post similar notices of either the 11 regulatory measure or the voluntary program on our website 12 as well. 13 Under a voluntary program California Trucking 14 Association has agreed to host reflash fairs and other 15 outreach events to encourage installation of low NOx 16 rebuild software. Their testimony will elaborate on this. 17 --o0o-- 18 AIR POLLUTION SPECIALIST JENNINGS: Staff 19 recommends that the Board endorse the voluntary software 20 upgrade program. Staff also recommends that the Board 21 adopt the proposed heavy-duty diesel engine software 22 upgrade regulation as a backstop and direct our executive 23 officer to withhold filing in order to give time for the 24 engine manufacturers and the California Trucking 25 Association to go forward with a voluntary reflash PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 45 1 program. 2 That concludes my presentation. Thank for your 3 attention. 4 CHAIRPERSON LLOYD: Thank you. 5 Madam Ombudsman, would you describe the public 6 participation process that was followed during the 7 development of this regulation and share with us any 8 concerns or observations you may have. 9 OMBUDSMAN TSCHOGL: I will. 10 Chairman and members of the Board, I would in the 11 interests of time like to skip right to the outreach that 12 took place after December 25th. 13 CHAIRPERSON LLOYD: That's fine. 14 OMBUDSMAN TSCHOGL: But if you want the other 15 part, I can provide it. I have it with me. But I'll 16 start with this. 17 Staff met with the Cleaner Air Partnership on 18 January 30th, 2004, which included environmental 19 representatives, businesses, EMA, and local air district 20 representatives to explain why ARB staff are considering 21 proposing a voluntary program. 22 On February 19th, 2004, staff met with a 23 representative of the California Department of Education 24 to discuss reflash for school buses. In addition, staff 25 met with several environmental representatives on February PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 46 1 25th, 2004. These meetings had between 2 and 14 2 participants. 3 The proposed heavy-duty diesel software upgrade 4 regulation was noticed via U.S. mail and E-mail. Several 5 mailing lists and list serves were utilized to notify the 6 stakeholders, and these lists comprised roughly 3,000 7 names and addresses. A list was developed to notify 8 owners of California registered 1993 through 1999 year 9 trucks and motor homes. This list has approximately 10 40,000 names and addresses. 11 The original notice was dated August 26th, 2003, 12 and mailed by September 5th, 2003. The notice for this 13 Board meeting was dated January 28th, 2004, and mailed 14 February 6th, 2004. 15 The list serve notice announced via E-mail that 16 the hearing notice had been posted on our website and was 17 broadcast on February 9th, 2004. 18 Thank you. This concludes my comments. 19 CHAIRPERSON LLOYD: Thank you very much. 20 One question -- Supervisor Roberts. 21 BOARD MEMBER ROBERTS: Before you went to public 22 testimony, I wanted to -- I had a question to staff. 23 CHAIRPERSON LLOYD: Yeah, I have a question, too. 24 So ask it, yeah. 25 BOARD MEMBER ROBERTS: Is it appropriate now? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 47 1 CHAIRPERSON LLOYD: Yes. 2 BOARD MEMBER ROBERTS: Okay. One of the things 3 that I'm having trouble understanding, it seems to have 4 been left out but also seems to be important in terms of a 5 predictor of how these approaches might work. When you 6 showed us the graph of how the NOx increased -- and we've 7 got this software that was put in that was basically 8 designed to defeat the pollution controls, what is the 9 perceived benefit from doing that? What were the 10 manufacturers -- there's got to be a reason why they did 11 it other than just adding pollution to the air. I don't 12 want everybody -- 13 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: The 14 motivation for the programming which increased NOx at -15 typically at highway modes was to improve the fuel economy 16 of the truck. 17 BOARD MEMBER ROBERTS: To improve the fuel 18 economy? 19 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Right. 20 Fortunately the software to fix that problem has been much 21 more sophisticated and does not have the impact of 22 reducing the fuel economy of the vehicles as well. So it 23 has a very minor to zero impact on fuel economy. 24 BOARD MEMBER ROBERTS: And that -- that's 25 something we know for certain or -- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 48 1 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: That's 2 what we know from information that -- test data that was 3 provided by the engine manufacturers when they, you know, 4 would run an engine and then put this new reflash software 5 in it. 6 BOARD MEMBER ROBERTS: Well, I'm going to hold my 7 comment to the end here. But my concern is that in a 8 voluntary approach you're asking people who -- to bring in 9 their trucks and have this work done, work that there's a 10 perception at least is going to cause a loss of fuel 11 mileage. And somehow we have -- we are armed with the 12 truth now that doesn't do that except for the fact that 13 the manufacturers sure spent a lot of money putting these 14 systems in to defeat the pollution control so they would 15 save the mileage. 16 I'm having trouble believing that the average 17 trucker is going to perceive that he ought to bring his 18 truck in because the California Air Resources Board now is 19 telling them, "You're not going to lose any fuel mileage 20 even though there was this enormous program designed to 21 put these systems in to save fuel mileage." 22 I may be the only one in here who's a little 23 cynical, but I'm having trouble with this, you know, 24 perception that voluntarily everybody -- you know, 25 everybody's going to come in, it's all going to be PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 49 1 wonderful, and that we're furthermore depending on a 2 voluntary agreement with a group of people that a) have 3 deliberately ignored the rules at one time and then, 4 secondly, at best probably acquiesced in an agreement that 5 they knew was flawed, based on the 300,000 mile overall. 6 So I'm going to listen intently. But I'm having 7 a little trouble thinking that this is going to work. 8 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Just 9 one comment on that. I think this really points out the 10 importance of having the California Trucking Association 11 and other truck operators involved in promoting this 12 program, because I think they'll have obviously more 13 credibility with their peers than we do. And they believe 14 this, so I believe that they will be able to command the 15 outreach. I don't pretend to say that we'll convince 16 everybody, but we hope most people will see it. 17 Of course the regulatory backstop -- 18 BOARD MEMBER ROBERTS: I'm just having -- Mr. 19 Cackette, I'm having a little trouble because I'm thinking 20 if I'm a truck driver out there, I'll wait to 2009 or 2010 21 and let everybody else do theirs first. 22 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: I think 23 the other motivational factor is that with a regulatory 24 backstop and the uncertainty about who pays under a 25 regulatory program, you know, one of the messages was you PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 50 1 can get it free now, but we can't guarantee that you're 2 going to get it free forever. And so there's some 3 incentive to come in. 4 BOARD MEMBER ROBERTS: But the cost is not 5 terribly significant here. 6 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Yeah, a 7 few hundred dollars. 8 BOARD MEMBER ROBERTS: The actual cost is not 9 what is so significant. I mean if I thought I was saving 10 a little bit of gas mileage, I wouldn't worry about the 11 cost of the retrofit, if I could go on for another five or 12 six, seven years. So I'm just -- again, I just wanted to 13 understand because it seemed to me there was something 14 missing from the presentation. 15 ON-ROADS CONTROLS BRANCH CHIEF KITOWSKI: 16 Supervisor Roberts, may I make a comment? 17 CHAIRPERSON LLOYD: Yes. 18 ON-ROADS CONTROLS BRANCH CHIEF KITOWSKI: One of 19 the things also to keep in mind is that there has been 20 already nationwide about 90,000 reflashes done with no 21 sort of overwhelming fleet backlash that they're seeing a 22 decrease in fuel economy. 23 So there's a lot of these that have been 24 conducted, no performance issues, no fuel economy issues 25 in use. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 51 1 But I think, as Mr. Cackette said, that the 2 perception could be a lot worse. And having CTA and EMA 3 on our side willing to sign up to brochures and outreach 4 that indicates this and reaffirms this is a much better 5 position to be in moving forward. 6 CHAIRPERSON LLOYD: Again, I would hope that's 7 the case, Jack. And I think that's a good data point. I 8 think hopefully during also this trial period here at the 9 first part that we'd be able to look at any feedback we 10 get. Because clearly it was very disheartening to see 11 truckers standing idle because of the high price of 12 diesel. And we certainly wouldn't want to be seen as 13 exacerbating that issue. 14 Ms. D'Adamo. 15 BOARD MEMBER D'ADAMO: Just as follow-up to the 16 point made by Mr. Kitowski. 17 Ninety thousand trucks have been reflashed 18 nationwide over what period of time? 19 ON-ROADS CONTROLS BRANCH CHIEF KITOWSKI: Since 20 the initiation of the program. It's at -- so I guess that 21 would have been over the last several years. And that is 22 the amount that's much lower than we indicated. That's, 23 you know, about ten percent of the fleet. But yet it's 24 significant enough that if there were fuel economy issues, 25 I think we would have seen them. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 52 1 BOARD MEMBER D'ADAMO: Right. And during the 2 next six months we expect that how many vehicles would 3 have to be reflashed in order to meet the target? 4 ON-ROADS CONTROLS BRANCH CHIEF KITOWSKI: About 5 20,000 within California over the next six months. 6 CHAIRPERSON LLOYD: Maybe following up on that 7 just -- on that topic, Dede. 8 But we're talking now in terms of vehicles and 9 then in the table we've got percent of emissions. So 10 we're targeting 35 percent of the emissions by the end of 11 that year. But where are we as of the end of this month? 12 So in fact what are we really looking for from this 13 program from here, between now and the end of the year? 14 ON-ROADS CONTROLS BRANCH CHIEF KITOWSKI: Yeah, 15 we're approximately at ten percent now. 16 CHAIRPERSON LLOYD: So we're looking at another 17 25 percent in emissions by the end of this year? 18 ON-ROADS CONTROLS BRANCH CHIEF KITOWSKI: In 19 emissions, which does not directly translate in to number 20 of vehicles. 21 CHAIRPERSON LLOYD: No, I understand. 22 ON-ROADS CONTROLS BRANCH CHIEF KITOWSKI: We were 23 doing that off the top of our heads. 24 BOARD MEMBER D'ADAMO: But you're saying roughly 25 20,000 vehicles that -- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 53 1 ON-ROADS CONTROLS BRANCH CHIEF KITOWSKI: Yeah, I 2 think it will be less, as the Chairman indicated. If the 3 manufacturers are focusing on the heavy heavy-duty 4 engines, which accumulate more mileage, it will be a lower 5 number than that. But as a ballpark, it's a good starting 6 point. 7 BOARD MEMBER D'ADAMO: See, what I'm concerned 8 about is -- I agree with Supervisor Roberts -- what's 9 going to get these people to come in? And maybe the good 10 deed doers have already reflashed. And hopefully with 11 outreach, we can get the word out to those that want to be 12 good deed doers. But once we get those individuals to 13 come in, I'm concerned that our success rate is -- or the 14 success rate of the manufacturers, since this is a 15 voluntary program for them, that it's going to be harder 16 and harder for them to achieve. 17 EXECUTIVE OFFICER WITHERSPOON: Well, I think the 18 answer is that it's not so much good deed doers so far; 19 it's who's come up for a normal rebuild cycle, and it's 20 just happened that way. 21 And the proof will be in the pudding. And the 22 Board under our proposal has the opportunity to evaluate 23 and decide in December: Was it just low hanging fruit, is 24 it sustainable, do you have any reason to believe that the 25 next increment will be accomplished or not? And we'll try PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 54 1 and evaluate that for you, and then you can apply your own 2 judgment. 3 BOARD MEMBER D'ADAMO: I'm just wondering what 4 factors will the staff be looking at in order to determine 5 whether or not those easy cases came in or it's going to 6 be a similar rate that will occur in the future. What are 7 we going to ask of the engine manufacturers additionally 8 in terms of reporting? What can we do so that when this 9 comes back to us, we can make an accurate -- we can have a 10 more accurate understanding of what the future success 11 would look like? 12 EXECUTIVE OFFICER WITHERSPOON: Well, we'll be 13 looking at who responded to the advertisements that these 14 chip reflashes are available; and was it just concentrated 15 fleets, or were we picking up the onesese, twosese, 16 threesese, which are the biggest problem, widely 17 distributed, and hard to track down and hard to motivate? 18 And both we and the engine manufacturers are worried about 19 how to reach out to those people. 20 Also, we'll know what techniques the 21 manufacturers ultimately employed. They haven't said 22 exactly what they intend to do. We know what we intend to 23 do. We're going to use our mailing lists to reach out to 24 these people and communicate through our website. And 25 then CTA has efforts it's going to undertake. And like I PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 55 1 said, we'll see who came in. And that will give us some 2 clue of whether we just got big concentrated fleets that 3 had a strong champion on site and ease of mobilizing, or 4 if we were getting a reasonable percentage of the more 5 widely distributed smaller players and some indication 6 that they're using a technique or were using a technique 7 that's bringing people in. 8 CHAIRPERSON LLOYD: Yeah -- Dede, did you have 9 any more questions? 10 BOARD MEMBER D'ADAMO: I did have a few more. 11 But if you want to follow up on that -- 12 CHAIRPERSON LLOYD: Well, no -- well, I was just 13 going to say, I heard the response. I'm not -- I would 14 agree with Ms. D'Adamo. I'm certainly not convinced 15 that -- that I've got any confidence that unless we have 16 some more detail, which I hope we'll get from maybe staff 17 and then from Jed and more from staff in terms of being 18 able to gauge whether we're doing -- whether we're on 19 track at the end of December or not, because it assumes so 20 many loopholes there. And if we look at our enforcement 21 staff, they're limited staff. And so I think that's an 22 area we're going to have to shore up. 23 But I agree that, Catherine, that again working 24 with the industry, we're going to have to work on this 25 altogether, and with the NGOs to see -- to help us -- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 56 1 sorry -- and I know Professor Friedman also -- 2 BOARD MEMBER D'ADAMO: I have here a letter that 3 was submitted by a number of environmentalist 4 associations. And they raise on the last page, page 3 of 5 the letter, strict oversight and reporting requirements. 6 And I'm sure that they'll be testifying in more detail as 7 to their concern. 8 But what are we doing? What do we have in the 9 voluntary program regarding reporting deadlines? 10 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: We have 11 four different reporting dates between now and 2006 where 12 data will come in. There's two of them before the Board's 13 first review in December. 14 And so we hope to have an early look at how the 15 program's going in the next, you know, five months or so 16 and then the submission that will cover data through 17 November. And then we'll have other reporting every six 18 months for the next year, at which point we should be at 19 the eighty percent level. And we'll be reporting back to 20 you again on the success, or lack thereof, of meeting 21 those targets. 22 So I think we have enough information coming in 23 to know the trend and the progress of the voluntary 24 program. 25 BOARD MEMBER D'ADAMO: Okay. And then PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 57 1 regarding -- I think staff mentioned something about 2 school buses being reflashed. I'm always -- I've always 3 thought of this program in terms of the private fleet. 4 But what about the municipal fleet? And what can we do 5 regarding our outreach efforts? I'm assuming we probably 6 have a little more credibility with that sector. 7 EXECUTIVE OFFICER WITHERSPOON: Yeah, school 8 buses and motor homes are also part of this, along with 9 on-road trucks. 10 And with -- Kathleen Tschogl mentioned a meeting 11 that already happened with the Department of Education. 12 We do of course have large mailing lists of school buses 13 and school districts, school bus manufacturers, et cetera, 14 because of our grant program. And so we intend to use 15 that and do whatever outreach we need to to make sure the 16 schools are aware of this problem and the availability of 17 free reflashes. 18 With motor homes, we've just been chatting about 19 how to reach that group of people. And I was speaking 20 with one of the environmental representatives before the 21 hearing who had an idea of using the Triple A, using 22 different kinds of organizations to reach out to them. 23 And the Air Resources Board staff thinks it's our 24 responsibility to find them. 25 The engine manufacturers don't know where they PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 58 1 are, because they sell the engine and then it goes into 2 these applications, and then off they are in the market. 3 So we've got to figure out the right venues of locating 4 the owners of these engines and bringing them in as well. 5 They are medium heavy-duty engines though, so 6 they're a tiny fraction of the emissions. The heavy-duty 7 are far more significant in terms of total tonnage. But 8 we're not going to neglect them. We're going to go look 9 for them, too. 10 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Yeah, 11 our success in this will be largely dependent on whether 12 we can identify and get reflashed the large fleets and 13 then the many independent owner-operators of trucks that 14 are registered in California. Those are the two key, 15 because those heavy, heavy vehicles make up the vast 16 majority of the benefit that we're looking for. 17 BOARD MEMBER D'ADAMO: Okay. And then one last 18 question or maybe more, just a point to make. 19 We came on pretty strong at the last hearing. 20 And I take it that the engine manufacturers took what we 21 said very seriously; and that's why we're looking now at 22 this voluntary approach, which is a carrot. I'm concerned 23 about the stick. What do we have -- we've got that 24 backstop, the regulatory approach that's always sitting 25 there ready to go. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 59 1 I want to have some assurances that when the 2 timeframe runs out for the reg that's before us, there's 3 always one ready to go. And I know -- I've had 4 discussions with staff. I just want to make sure it's 5 noted on the record that there would always be a reg ready 6 to go once we get beyond that six-month period. So that's 7 question number 1. 8 Question number 2: What do we have in the reg 9 that is a real stick? And I'm assuming that we can even 10 toughen it up at any point when it comes back before us, 11 so that it becomes a more powerful tool. 12 EXECUTIVE OFFICER WITHERSPOON: In response to 13 your first question: Yes, the reg will always be kept 14 live. We will keep renoticing it as we need to, not to 15 have it expire by virtue of the 12-month clock running 16 out. So you will always have the ability to pull the 17 trigger and say, "I don't think it's working. Let's do 18 the regulatory approach instead." 19 With respect to the second, I want to remind the 20 Board that the regulation applies to the owners of the 21 vehicles, not to the engine manufacturers. So the 22 discussion of sticks has to be framed in that context. 23 And what we are asking them to do by a deadline 24 certain is to bring their vehicles in and have them 25 reflashed. And the penalty that they would be subject to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 60 1 is notice of violations and monetary fines if they failed 2 to bring their truck in for that service. And the way we 3 would know that is if we pulled their truck aside through 4 our roadside inspections and discovered that the chip had 5 not been installed and it was one of the vehicles that was 6 eligible and required to have that chip installed. 7 But it doesn't put any greater burden on the 8 engine manufacturers per se, except to stipulate our 9 belief that it is their obligation to pay once we've 10 directed the truck owners to their dealerships. 11 BOARD MEMBER D'ADAMO: Or we could change the 12 dates. 13 EXECUTIVE OFFICER WITHERSPOON: Well, we can 14 change the dates. But then we have to always maintain 15 some practicality in how many vehicles we're moving 16 through the chain of dealerships that exist. And there 17 was a lot of testimony at the December hearing about our 18 institutional capacity to move how many vehicles through. 19 And it was widely exaggerated. 20 But there is a legitimate issue there in the 21 core. And so we'd always need to be mindful of what is 22 the date upon which you're triggering it and how much time 23 is reasonable and appropriate given the start and how fast 24 can you move, just as a practical question. And we will 25 go as fast as we humanly can. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 61 1 CHAIRPERSON LLOYD: Professor Friedman, 2 Supervisor DeSaulnier. 3 BOARD MEMBER HUGH FRIEDMAN: Is November -- or 4 our December meeting the earliest practicable time that we 5 can get a preliminary assessment and get a report and do 6 an evaluation as to how it's working? That's a long way 7 off. 8 EXECUTIVE OFFICER WITHERSPOON: Well, staff 9 believes it is because we've got -- the engine 10 manufacturers have not yet notified their dealerships they 11 intend to pay. So there is a warm-up period of getting 12 everybody notified that this is available and starting. 13 And then there needs to be reasonable enough time to 14 process trucks to know you made a dent. And we were going 15 for the first big slug of 35 percent. Were we going to 16 look for some interim target of 10 percent, 25 percent, 17 that would be possible and sooner. But it is not an 18 insignificant effort to track all the data points and have 19 them gather up what's been accomplished. 20 So staff felt it was the most reasonable to do, 21 looking for a full third by the end of the year. 22 BOARD MEMBER HUGH FRIEDMAN: What role, if any, 23 will we be playing -- by that, I mean through the staff -24 in the informational campaign that aid and facilitate the 25 truckers' efforts and the manufacturers' efforts to get PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 62 1 the word out and get the trucks to come in? 2 EXECUTIVE OFFICER WITHERSPOON: Our principal 3 tactic at the Board will be to use our mailing lists and 4 send out notices. However, we will also appear at any 5 event that the trucking association wants us to join them 6 at. We've talked about schools and motor homes and 7 tracking those down, and any other way that EMA thinks we 8 might help. But we've been focusing on how to drive the 9 truck owners to them. And that will be our strategy, is 10 bringing them in, and then EMA and its dealerships paying 11 for the reflashes once they arrive. 12 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: And one 13 key aspect is that these trucks getting older now do 14 require service frequently, and they do go to dealerships. 15 And the way this is going to work is when you go to the 16 dealership, it will be written down on your repair order, 17 "Do the reflash. No charge." So only if the operator 18 says, "No, I don't want that," would it be rejected. 19 So it's not like -- for the average 20 owner-operator I think we are depending on them coming in 21 for some other service, and then this will just happen 22 automatically. And that's programmed in to the various 23 targets. And that will be supplemented then with trying 24 to get large fleets, these reflash fairs, other things 25 which will help make it even happen quicker. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 63 1 But it's not like we have to get the -- you know, 2 the large number of independent operators to, say, take a 3 day off, make no money, come on in here, get a reflash. 4 Most of them will happen in conjunction with other service 5 they need. 6 BOARD MEMBER HUGH FRIEDMAN: Is there any way 7 to -- practically speaking, to require a more frequent 8 periodic reporting than -- could we do it quarterly? I'm 9 talking about after -- next year and beyond. 10 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Again, 11 I guess for now till December. And we'll get 12 information -- 13 BOARD MEMBER HUGH FRIEDMAN: By require, I mean 14 could we agree and would that work? Could -- 15 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: I think 16 in this first increment we're going to get information in 17 September. And we're getting that largely to make sure 18 that we know how to analyze it so that when we get data on 19 November, we can still do the work and report to you in 20 time for a December Board meeting. So I think in that 21 period and given that there's a time lag to get this 22 started after the Board decides how it's going to act 23 today, it probably doesn't make any sense to have more 24 frequent reporting in that period. It's something I think 25 we could discuss again. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 64 1 BOARD MEMBER HUGH FRIEDMAN: What about after 2 2006, are there any reporting -- matter of fact that's the 3 out of state, I guess, the 20 -- the remaining balance. 4 That isn't even specifically covered in the agreement, is 5 it? 6 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: We felt 7 that if we hit 35, 60, and 80 -- so you've got a curve 8 that's going up like that -- that we would be on a glide 9 path towards 100 percent. And eventually of course all 10 these engines will be rebuilt one way or the other. So we 11 think the number will keep going above 80 percent. 12 But when we report to you in -- probably in -- it 13 would be January or February of '06 on whether we'd made 14 the 80-percent number, we'll be looking at -- at each 15 point that we'll be looking at sustainability. If the 16 curve was going up and then went flat, then we've got a 17 problem and we're going to have to come up with a 18 solution. 19 Data reporting might help us understand that. 20 But I think in general if we got a whole bunch more data 21 more frequently, I don't know that it helps us advise you 22 any better. 23 BOARD MEMBER HUGH FRIEDMAN: But there's nothing 24 to preclude staff from making more frequent evaluations or 25 seeking -- or providing more frequent reports if they PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 65 1 wish; it's just that "not now" is built in to the 2 voluntary program as presented? 3 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Right. 4 BOARD MEMBER HUGH FRIEDMAN: In other words, we 5 have flexibility here? 6 7 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Right. 8 We can ask if -- you know, if this is all -- a lot of this 9 is happening electronically, I don't see why engine 10 manufacturers wouldn't agree to send it more frequently if 11 it was usable for us. 12 But they have -- but beyond '06 they -- part of 13 the agreement is that we think we're on enough of a glide 14 path towards the ultimate 100 percent that we don't need 15 any more reporting at that time. 16 BOARD MEMBER HUGH FRIEDMAN: Finally, you're 17 proposing under the voluntary program that before any 18 credit can be given for out-of-state reflashes -- or 19 out-of-state vehicle reflashes there have to be at least 20 60 percent in-state. How was that number arrived at? 21 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: What we 22 were trying to do is -- we looked at -- as part of the 23 agreement was to focus on the California vehicles, the 24 issue came up, "Well, what happens if somebody either 25 wants to reflash out-of-state vehicles or they get PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 66 1 reflashed? Shouldn't there be some credit for their 2 portion of California operation?" And in general, you 3 know, I think we said probably there should be if we can 4 characterize it properly. The problem was we didn't want 5 to get -- because of the short timeframe to achieve 80 6 percent or 60 percent, we didn't want to get in to a 7 position where we could end up with a bunch of 8 out-of-state trucks being the ones that are reflashed, not 9 the California trucks, and it seemed to take away focus 10 from the main program getting going. 11 And so that's why we said, "Let's leave them off 12 the table until some later date." At some later date, and 13 we just happened to pick 60 percent, it seemed reasonable 14 that if an out-of-state truck got reflashed, we'd count 15 it, as what turns out to be -- you know, you have to do 30 16 some of those to equal one in California truck in order to 17 get the same emission impact, that would be okay. 18 But early on we're just concerned that it would 19 detract from the ultimate goal. 20 BOARD MEMBER HUGH FRIEDMAN: Did you consider 21 making that threshold 80 percent? 22 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: We 23 picked 60. I don't think there was a huge amount of 24 thought into the difference -- 25 BOARD MEMBER HUGH FRIEDMAN: Was that a -- I just PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 67 1 wondered whether that -- I mean we're talking about -- 2 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: At that 3 point we're on the -- 4 BOARD MEMBER HUGH FRIEDMAN: -- our state being 5 the remaining 20 percent. So -- 6 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: We 7 figured we're on the steep part of the curve there for the 8 California trucks, and we could take a look at -- you 9 know, if those occurred on the last increment, that we 10 could probably figure out how to quantify those and let 11 you know what the impact of them is. But there was not 12 a -- I mean there wasn't an analytical thing that got us 13 to 35 versus 60 versus -- just don't do it up front where 14 it will confuse the program. 15 BOARD MEMBER HUGH FRIEDMAN: Thank you, Tom. 16 CHAIRPERSON LLOYD: Supervisor DeSaulnier. 17 BOARD MEMBER DeSAULNIER: Thank you, Alan. 18 In answer to Ron's question, I don't think you're 19 the only one who's cynical. I guess I've moved from 20 cynical to skeptical about the success of people coming 21 in. And I think you've really tried. And I think, you 22 know, from December -- and I think for Jed too -- I get 23 the spirit that staff has really tried, and you have tried 24 too. 25 But in terms of -- but I'm struggling with the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 68 1 other part of it, is much of this should have already been 2 done, at least -- and I'm not a lawyer -- from the spirit 3 of the original action. So -- maybe it's because I'm in 4 the perception business. 5 I heard my colleagues basically ask questions on 6 the environmental letter for three of the four 7 suggestions. Could you respond to number 2, Catherine, 8 the full compliance issue. 9 EXECUTIVE OFFICER WITHERSPOON: You mean the 80 10 versus 100 percent? 11 BOARD MEMBER DeSAULNIER: No, actually number 2 12 on the list. I think Hugh already covered that. 13 So the full compliance -- disappointed that the 14 original timeframe proposed by staff in the December Board 15 hearing for full compliance by 2004 has now been expanded 16 to 2006, a loss of two years. Full compliance should be 17 required within at least two years of rule adoption. 18 You want to respond to that one? 19 EXECUTIVE OFFICER WITHERSPOON: Sure. That's 20 that issue of practicality we spoke about a moment ago, 21 based on whenever you turn to the reg you have to provide 22 a reasonable amount of time to comply. And the chip 23 reflash regulation was very late in reaching you. At the 24 time you had it in December, it required 100 percent 25 compliance by the end of '04, which we subsequently PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 69 1 realized it was not feasible given everything we knew 2 about the capacity and the turnover and the rest of it, 3 just the practicality of moving those trucks through. 4 And then we had the Governor's temporary 5 moratorium on rule making that put us further behind. So 6 we just attempted to adjust the rule-making schedule to 7 match what was now a reasonable expectation of the truck 8 owners, how fast they should bring everything in. We just 9 shifted everything by the delay and what we thought was 10 reasonable. 11 And I guess staff just disagrees with 12 environmentalists about the practicality of how fast you 13 can move the trucks through. But we weren't trying to 14 weaken it. We were just trying to retain the original lag 15 time between adoption, effective date. Because if you 16 adopt the reg today and were we to process it immediately, 17 it wouldn't become effective till about the end of this 18 year, and then you have '05 -- end of '05 as your first 19 major milestone for compliance and then '06, et cetera. 20 BOARD MEMBER DeSAULNIER: Okay. Well, just as we 21 go through the public hearing, what I'm struggling with 22 is -- if the voluntary program is successful, that's what 23 everybody wants -- but how to make certain -- and it's 24 made certain is as strong as possible without making the 25 whole deal collapse. And I reserve judgment I guess until PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 70 1 I hear from all the public commenters. 2 Thank you. 3 CHAIRPERSON LLOYD: Thank you. 4 Mr. McKinnon. 5 BOARD MEMBER McKINNON: Yeah, this is also for 6 staff. 7 I'm still pretty angry about this and -- but I am 8 willing to consider the idea of a voluntary program. 9 But I sort of want to send a message and then ask 10 a question. And the message is that we're not afraid of a 11 lawsuit, we're not afraid of pushes and delays. But 12 here's my question: 13 If there's delays, do we have the ability to 14 change this regulation -- if we have to implement a 15 regulation, do we have the ability to change it to catch 16 up for the delays? I mean because the bottom line to me 17 is that Californians are breathing this air. And to the 18 extent we're trying to work out a problem together, if it 19 doesn't get worked out, do we have the ability to toughen 20 it up when we do have to regulate it, if we have to? 21 EXECUTIVE OFFICER WITHERSPOON: You have the 22 ability at any hearing to adopt the most expeditious 23 schedule that you, the Board, believe is feasible for 24 truck owners and operators to abide by. And we'll advise 25 you on what we think is practical, but you have the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 71 1 ultimate decision. 2 And so if you choose to shorten the timetable, 3 you can do that at any regulatory proceeding. You also 4 can, through emergency rule making, hasten the time for 5 your own deliberation. And then we clean it up later 6 through a normal 45-day notice. But you can pull the 7 trigger expeditiously with just 10-days notice instead of 8 a full 45. 9 BOARD MEMBER McKINNON: Thank you. 10 CHAIRPERSON LLOYD: Thank you. 11 So with that I'd like to move ahead to call up 12 the first three public witnesses: Jed Mandel, Stephanie 13 Williams, Bonnie Holmes-Gen. 14 MR. MANDEL: I'm looking at the clock to see if I 15 can still say good morning. I think I can. 16 Good morning. I'm Jed Mandel. I'm here today on 17 behalf of the Engine Manufacturers Association. 18 Just about 100 days ago I appeared before you 19 suggesting that a voluntary reflash program was a better 20 way for California to achieve NOx reductions than through 21 the proposed software upgrade regulations. Several 22 factors contributed to our belief, several of which have 23 already been discussed this morning: 24 The Governor's temporary regulatory stay order; 25 the Board's inability to take action last December; the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 72 1 unrealistic projected benefits associated with the 2 proposed regulation; the certainty of litigation over a 3 regulatory approach; and the strong support for a 4 voluntary program expressed by the California Trucking 5 Association. 6 The Board challenged us to work with staff and 7 come back with a credible, workable proposal for a 8 voluntary program. We have done so. EMA and its members 9 have worked diligently to address the problems associated 10 with any reflash program, voluntary or otherwise, and to 11 develop the construct for a voluntary program that meets 12 the state's needs. 13 The first and highest hurdle that had to be 14 overcome was to determine who would pay for the reflash. 15 I am pleased to announce that EMA's members have 16 committed to provide the reflash software and pay the 17 associated labor rates associated with its installation 18 without charge for reflashes done at their dealers, if 19 such reflashes are done under the proposed voluntary 20 program and even if the reflashes are not done as part of 21 a rebuild. 22 That is an extraordinary offer by engine 23 manufactures and one that they are not required to make. 24 Given the various misstatements and misrepresentations 25 that have been made about the reflash issue, I do feel PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 73 1 it's important to remind the Board that engine 2 manufacturers have lived up to all of their obligations 3 under the settlement agreement with the Air Resources 4 Board. 5 Their willingness to do more and their offer to 6 pay for reflashes as outlined in the voluntary program is 7 very significant and positive. It is an offer that we are 8 willing to make to help California address its unique air 9 quality problem provided it is part of a voluntary 10 program. 11 By voluntary program, we mean a program under 12 which engine manufacturers pay for reflashing engines at 13 times other than rebuild. At the same time the voluntary 14 program recognizes that engine manufacturers are not 15 ultimately responsible for assuring that some specified 16 number or percentage of reflashes actually take place. 17 We are committed to pay for the reflash, 18 irrespective of numbers or percentages, for any trucker 19 that brings an eligible California vehicle to an 20 authorized dealer. 21 But we cannot make them come in. That is not in 22 the manufacturers' control. In other words, achievement 23 of the program's goals will require the active support and 24 participation of all stakeholders. 25 The benefits of the voluntary program are PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 74 1 significant. Voluntary reflashes will result in NOx 2 reductions sooner than under a regulatory program; will 3 benefit from widespread support of truckers, dealers and 4 manufacturers; will avoid litigation that would certainly 5 delay and, in our view, preclude regulatory reflashes and 6 would likely make the later implementation of a voluntary 7 program impossible. We think voluntary reflashes also 8 will focus on getting the biggest, fastest, least 9 expensive, most beneficial reflashes done first. 10 I want to note there that all reflashes cost the 11 same. But some provide ten times the benefit of others. 12 The regulatory program does not prioritize reflashes. The 13 voluntary program can. 14 And, lastly, voluntary reflashes will show that 15 the affected stakeholders can work together cooperatively 16 with ARB on a program that provides real measurable 17 benefits and avoids unnecessary litigation. 18 EMA and its members have worked extremely hard in 19 the last 100 days, both to make a voluntary program 20 possible through their willingness to pay for reflashes 21 even without a rebuild, and to make a voluntary program 22 workable through the extensive discussions we have had 23 with the ARB staff. 24 Several significant data analysis efforts still 25 are being finalized that will help assure, as we must, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 75 1 that the potential administrative burdens associated with 2 reporting and tracking reflashes are kept to a minimum and 3 that the benefits are accurately measured. 4 We believe that the voluntary program as it has 5 been outlined provides an enormous opportunity for 6 California and will provide benefits beyond that which 7 could be obtained under a regulatory program. We remain 8 committed to working with ARB on such a program. 9 I suspect that you will have questions. And I'm 10 going to be pleased to try to answer them to the best of 11 my ability. 12 CHAIRPERSON LLOYD: Thank you very much, Jed. 13 Questions from my colleagues? 14 I was going to ask -- you've seen some of the 15 comments from the environmental community and some from 16 the Board on skepticism of EMA continuing to live up to 17 what we hope will be a successful voluntary program. 18 Have you met with the environmental groups on 19 this issue at all? 20 MR. MANDEL: No, we've not. But we'd be happy to 21 talk to anybody about implementing a program, and we'd 22 look for all the help we can get to doing it. 23 CHAIRPERSON LLOYD: Yeah, I would again stress 24 the comment made earlier. I think a lot of progress has 25 been made. I think interesting you use 100 days here to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 76 1 characterize what has been done. 2 I think it's also very important, as we stressed 3 at that time, that I think we do have an opportunity with 4 this administration to work together cooperatively. But 5 if it doesn't work, it's going to set things back and 6 obviously going to make us even more committed to the 7 regulatory side. So we really hope that this will work. 8 What about nationally? What's happening on the 9 national front? Is EPA equally trying to work with you to 10 do this on a national basis? 11 MR. MANDEL: No, they're not. And, again, 12 without making this come across as a negative, the 13 Environmental Protection Agency -- for which we also have 14 consent decrees with the Department of Justice. When I 15 say, "we," there is a certain number of engine 16 manufacturers. It's not with the industry or with the 17 Association. But EPA believes that manufacturers 18 absolutely are living up to their obligations under the 19 consent decree, or I suspect we would have heard from EPA 20 and the Department of Justice, which we've not. And I 21 mention that because it's the same obligations that we're 22 living up to under the settlement agreements. 23 Having said that -- and, again, I want to 24 emphasize, and I don't feel I can do it too many times, 25 that engine manufacturers have lived up to those PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 77 1 obligations and have not failed to do so, or I trust that 2 your lawyers would be the first ones in line at the 3 courthouse to enforce those settlement agreements. 4 Having said that, we heard this Board loud and 5 clear in December. We heard the staff previous to 6 December. We have tried to work very hard and make what 7 I'd characterize as an extraordinary offer -- and I don't 8 think that's an unfair characterization -- for engine 9 manufacturers to willingly, voluntarily do more than they 10 otherwise are obligated to do under those settlement 11 agreements. Because we understand that there is an air 12 pollution problem in this state and understand that 13 California has unique authority to regulate mobile 14 sources. And we do want to work with you to do so. 15 We think the regulatory program as it was 16 originally outlined in December and obviously as modified 17 and still presented before you today as a backstop, does 18 have enormous problems. And it is problems that would 19 lead to certain litigation. And that's not meant to be 20 threatening. And I respect Mr. McKinnon's comments that 21 this Board should never be threatened. I mean you have 22 good lawyers and have your own views. 23 But this -- when I say it's not meant to be 24 threatening, the signers in the consent decrees and the 25 settlement agreements have already gone on notice under PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 78 1 those documents, you know, noticing the likelihood of 2 litigation, as those settlement agreements call for, 3 because the concerns under the regulatory program. Win or 4 lose or otherwise, litigation will delay the benefits 5 associated with the regulatory program. 6 And we're not doing this to delay a program. 7 That's why we make this extraordinary offer to work 8 outside the regulatory construct, to work outside and 9 beyond the settlement agreements that manufacturers have 10 already signed, in order for this state to get additional 11 benefits sooner. And that's a guarantee. There will be 12 additional benefits sooner under the voluntary program 13 than would ever happen under a regulatory program even if 14 the various goals and deadlines and dates are missed, 15 because of no fault of anyone, but because the program 16 doesn't turn out to be as successful as the staff hopes it 17 to be, as you hope it to be, as we hope it to be. 18 Even if that doesn't happen, there is no 19 question -- I don't think anybody can question that the 20 voluntary program does provide more benefits early than 21 the regulatory program because it's going to start 22 happening right away. 23 CHAIRPERSON LLOYD: When you mention right away, 24 supposing today we go along with a voluntary program. How 25 quickly will the dealers be able to offer cost-free PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 79 1 reflashes? 2 MR. MANDEL: Engine manufacturers have already 3 drafted letters to their dealers -- we've shared them with 4 the staff -- in which they notify the dealers of their 5 intent to reimburse them for labor costs and the software 6 associated with the reflashes. So the real question -- 7 and I think it is one which we have a shared 8 responsibility -- is how quickly will the first trucker 9 pull into their authorized dealer and ask for the reflash? 10 We'll be ready to go. 11 CHAIRPERSON LLOYD: By the way -- and before I 12 get to Mr. McKinnon, I had a question -- do you find it 13 somewhat ironic that at the same time there's concern at 14 the federal level about the durability of 2007 engines, 15 we're now complaining that the engines we're talking about 16 last too long before rebuild? 17 MR. MANDEL: Well, there's an irony in there 18 somewhere. But I do want to point out that it's not 19 engine manufacturers who are questioning the durability of 20 the 2007 engines. As you know, and I think as Board 21 members know, and certainly as the staff knows from our 22 work with them, part of the -- one of the characteristics 23 of a commercial product as a heavy-duty truck engine, 24 which is a capital investment by the customer, is its 25 performance, is its durability. And that's something that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 80 1 engine manufacturers have long built in to their products. 2 And I know that there is an issue, it's been 3 already referred to several times this morning, as to 4 whether there was some misunderstanding, some purposeful 5 misdirection as to what the useful life and rebuild point 6 of heavy-duty trucks in the '93 through '98 period is. 7 Again, just to remind you -- it's a comment I 8 made last December, but there were a lot of things last 9 December that you may not recollect -- but posted on the 10 ARB's website and referenced in many other ARB documents 11 is the acknowledgement of these long useful lives, longer 12 than 300,000 miles. 13 So while I understand and I don't doubt for a 14 second that there are -- that the ARB felt the rebuilds 15 would have happened sooner, there certainly was no 16 misrepresentation about the long life of '93 through '98 17 truck engines. No surprises there. 18 CHAIRPERSON LLOYD: Mr. McKinnon. 19 BOARD MEMBER McKINNON: Yeah, I just -- Jed, I 20 was going to leave you alone. But I -- somewhere in 21 your -- 22 MR. MANDEL: I would be disappointed. I would be 23 disappointed. 24 BOARD MEMBER McKINNON: Somewhere in your 25 testimony you said we would have been in court by now. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 81 1 Let me tell you something. I wish we were. Okay? 2 I think there's restraint being used by this 3 Board. And that restraint is out of respect for getting 4 this done faster and it's out of respect for the people 5 that own and drive trucks in this state. And I think you 6 can sum it up, at least for me, you can sum it up there. 7 So don't underestimate our resolve if this 8 doesn't happen. Really don't. I mean it -- well, I'm not 9 going to go on. I think I've said what I got to say about 10 it. Don't underestimate where we're going to be if this 11 doesn't happen. 12 CHAIRPERSON LLOYD: Ms. D'Adamo. 13 BOARD MEMBER D'ADAMO: I couldn't have said it 14 any better. I was going to speak next, but I'm just going 15 to say ditto. 16 And I also want to indicate that -- I know you 17 were talking about the benefit of the emission reductions. 18 But you said even if this doesn't work, even if the staff 19 turns out to be wrong and you turn out to be wrong and we 20 all turn out to be wrong, we're still going to have 21 emission benefits. What we're also going to have is a 22 regulation if it doesn't work. And I know that that's not 23 where you want to head because -- for a variety of 24 reasons. But I just want to echo what Mr. McKinnon just 25 said. That's exactly where we're going to be. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 82 1 MR. MANDEL: Let me make one comment. And I 2 understand fully where the Board members are. And I think 3 the Board members understand fully where the affected 4 engine manufactures are, that, you know, if those 5 regulations should come, that would be the point at which 6 we'll reframe up a litigation. And I hate to have us, you 7 know, both retreat to our respective forts and start 8 shooting at each other because I think there is an 9 opportunity for cooperation, which is certainly the spirit 10 of my comments. 11 But I guess your comment does cause me to say one 12 thing in terms of the previous colloquy between Board 13 members and staff, that I do find a little alarming, 14 because it's not what I understood the staff proposal to 15 be. The staff proposal is that there is a regulatory 16 backstop in place through the end of this year 17 essentially, triggered off of the success rate for the 18 program in meeting the initial goal of 35 percent. And I 19 heard your comment, Ms. D'Adamo, that you would like to 20 continue to see the regulation framed up. That is not the 21 staff's proposal, that is not what engine manufacturers 22 agreed to. 23 One of the things that -- you know, I have a 24 constituency that I represent as well. I think they're 25 all probably watching on that camera to make sure that I PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 83 1 don't unfairly represent their interests. One of the 2 things that we agreed to as part of this program was that 3 the regulatory backstop would go away. Obviously this 4 Board always has the opportunity to reframe up a 5 regulatory proposal. We understand that. 6 The concern here is that manufacturers frankly 7 don't want to be lulled in to the false sense of agreeing 8 to do more than they have to and then even after they've 9 done more than they have to, even after the program has 10 met its initial goal and subsequent goals, still have a 11 regulatory program forced upon them for which there would 12 be substantially diminished returns but would set a 13 terrible precedent. 14 So in somewhat, you know, in-depth discussions 15 with the staff on this point, we understood fully the 16 import of making sure that this program was working and 17 have agreed from our perspective to do this even with your 18 threat, and that I think an important threat of having 19 that regulatory backstop in place. But at some point that 20 goes away. 21 Otherwise, manufacturers will make this 22 commitment and there will be some modest diminishing 23 benefit of a few medium-duty vehicles that may not have 24 been reflashed and the Board will still force a regulation 25 that I think would be very disruptive. And, as I said, at PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 84 1 some point the concept was the regulatory backstop would 2 go away. 3 So I think it's -- that was our understanding and 4 that's what we've agreed to. 5 BOARD MEMBER D'ADAMO: Well, and perhaps you've 6 had discussions that -- well, in fact, I know you've had 7 discussions that I haven't participated in. But what's 8 crucial to me is that it's always there. And there are 9 ongoing milestones. And in light of the fact that there 10 are ongoing milestones, there needs to be that ongoing 11 backstop -- regulatory backstop. 12 One other thing that I would just suggest, maybe 13 overshoot -- overshoot your goals. If it's at 35 percent, 14 shoot for 40, because it's got to be 35 percent. 15 MR. MANDEL: One of the things that I underscored 16 in my testimony, it may have been a little nuance for all 17 of you, our agreement as engine manufacturers is to pay 18 for every single reflash that comes in. We don't have a 19 goal. Our goal is to pay for every one. The program has 20 goals. And we understand the staff and the Board are 21 putting program goals in place against which the success 22 of the voluntary program will be measured. 23 But if 100 percent of the trucks come in before 24 November, we'll reflash every single one of them. That's 25 our agreement. So we don't have a goal that we're going PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 85 1 to all of a sudden stop the program if we're under a 2 certain success rate. We'll do every single one. 3 And I do think in the staff's report, in the 4 staff's presentation of the voluntary program, it was 5 quite explicit in the presentation that the regulatory 6 backstop was in place through December, and that 7 thereafter measured against the 60 and the 80-percent 8 goals there was the opportunity for the Board to very 9 quickly put back in place a regulatory program, but it 10 would not be continually rolled over. And that was -11 again, that -- I believe it was in Lisa's report. 12 EXECUTIVE OFFICER WITHERSPOON: Well, just to 13 clarify. We certainly did in our conversations with the 14 engine manufacturers indicate that the most crucial test 15 is the first one, whether the Board decides the targets 16 are met and, even more importantly, that they're 17 sustainable. Because the further you go out, the less 18 return there is on a reg, given all the problems we've 19 talked about so far today. 20 But what has happened in the interim is we've 21 gotten a lot of comments from other stakeholders that 22 they're concerned about the loss of months were we 23 happening to renotice at the time we decided there was 24 failure or later on and a desire to keep the regulation 25 live. Staff believes that doesn't fundamentally change PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 86 1 the jeopardy to manufacturers. It's really just playing 2 with the clocks. 3 And we would never move to the regulatory phase, 4 you know, absent a Board direction to do so, a hearing, 5 and an order from you. And then there'd be a process 6 after that. But what we would be shortening is how much 7 notice was required before you could make that decision. 8 And we would also be avoiding the expiration of a reg just 9 because it had been noticed 12 months prior. So that it 10 wouldn't just disappear. And I don't think substantively 11 that changes the status between us and the manufacturers. 12 CHAIRPERSON LLOYD: Yeah, I think it would be 13 important that we do hear also from CTA, because it's very 14 apparent that this is really a team effort here and 15 actually a partnership amongst ourselves, CTA, and EMA in 16 order to get this done. 17 And I think -- I was pleased to hear you say, 18 Jed, that clearly -- you know, as far as you're concerned, 19 you're willing to make this even faster. 20 And the other part of it, your comment vis-a-vis 21 threats from the Board, in this case, you know, you have a 22 lot of that in your hands. You know, your fate is in your 23 own hands more than ours at this time. If everything goes 24 according to plan or faster than planned, then hopefully 25 this will set the stage for just a wonderful relationship PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 87 1 in the future. If it doesn't, then we're going to go on 2 with business as usual. 3 MR. MANDEL: And I appreciate your comments, Dr. 4 Lloyd. And I said threats by the Board because I think 5 that's what -- and, again, it's maybe a pejorative term. 6 I think -- I've listened to you all very carefully. I 7 think you want us to come away from this feeling that you 8 are serious about this and you have every intent to 9 ultimately pursue a regulatory program if the voluntary 10 program doesn't work. So I didn't mean it in any way 11 other than we're listening to you, we understand you want 12 the sword of Damocles hanging over our head. It is. 13 But, again, to Catherine's point, we have not 14 agreed that we will do this program with a regulatory 15 backstop that continually rolls, that could be dropped on 16 the engine manufacturers or their customers or anyone else 17 essentially at any time even if there's at that point what 18 I'll call the diminishing returns of a regulatory program. 19 And that's a new piece of information. It wasn't even in 20 the staff's report this morning. And I just -- I have to 21 tell you that that's not what we agreed to. And it is 22 significant. 23 CHAIRPERSON LLOYD: Professor Friedman. 24 BOARD MEMBER HUGH FRIEDMAN: Well, I'm not privy 25 to what you agreed to, and I take you at your word if PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 88 1 that's what you don't think you agreed to. But as far as 2 I'm concerned, we're here to enact a rule, a rule that is 3 in some respects overdue because of various circumstances 4 that have been described. 5 Now, I want to give this voluntary program, so 6 called, every chance. I want to give peace a chance -- 7 (Laughter.) 8 BOARD MEMBER HUGH FRIEDMAN: -- love a chance, 9 everything a chance. I think it's a wonderful program. I 10 think -- I'm delighted that you've all worked it out, 11 you've come to the table with the staff. And I think it 12 makes a lot of sense. And if it works, the way everyone's 13 hoping it will and is going to try in good faith to make 14 it work, then there should never be a need, it seems to 15 me, for us to trigger a rule, a regulation that we've 16 adopted, and file it and make it effective, which then 17 gives you standing to sue if you want or do whatever you 18 want to do. 19 But I don't see any reason why it should become 20 obsolete or simply because of the passage of time for us 21 to go back to the drawing board. And I think you're going 22 to need to trust us a little bit. And I don't know that 23 we've ever betrayed or breached any agreements. And we 24 certainly never have deceived in our relationship, you 25 know, going back. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 89 1 So I'm hoping that won't be ultimately a problem, 2 if you need to go back to your people and explain that's 3 what we're doing, and you will. But I hope that won't in 4 any way be diminishing your ardor and your willingness to 5 do this, which is the right thing to do. And that's why 6 we -- and I for one recognize that and that's why I like 7 the approach we're taking. 8 MR. MANDEL: Well, we certainly support the 9 voluntary approach. And I appreciate your calming words. 10 I just have to emphasize again that we understood and have 11 always understood that this Board has regulatory 12 authority, and at any time it may change its mind and 13 proceed with a regulatory program. But we had very 14 carefully worked out, as our commitment to do a voluntary 15 program, an opportunity for this Board to quickly retreat 16 to a regulatory backstop and implement it with very short 17 notice as part of the pressure on all of us working 18 cooperatively and collaboratively to implement a voluntary 19 program as an important need. 20 But that was going to go away at some point, 21 because the biggest benefits of this program will happen 22 early. And if engine manufacturers, if the truckers in 23 California, if dealers or others then face a regulatory 24 program at diminishing returns, it is little disingenuous 25 on the Board's part. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 90 1 And I've heard the Board say, "We want every last 2 truck reflashed." They all will be under the settlement 3 agreements. It's a question of time. And after we've 4 already invested the money, which we don't feel we have 5 any obligation to invest, but we're clearly willing to, 6 and the Board would still proceed with a regulatory 7 program, it would be disingenuous to our discussions. 8 And that's why the regulatory backstop had a 9 particular date to it. And obviously the Board can always 10 come back with a regulatory program. But it would give us 11 a lot more time and a full rule-making process to develop 12 a record and work with you through that administrative 13 process. So it's really a process issue, a timing issue. 14 EXECUTIVE OFFICER WITHERSPOON: We weren't 15 meaning to spring anything on the engine manufacturers 16 that was different than we've talked about substantively. 17 And we did convey to Jed prior to the hearing that there 18 was concern on the part of some Board members and of 19 environmental groups that should the second milestone not 20 be met, that there'd be a desire then to move in to a 21 regulatory mode. 22 And so I do think this is a procedural question. 23 And as I listened to Jed's testimony, I'm struck by his 24 desire that if the first phase is successful, that the 25 current noticed reg be gone, and that if the second phase PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 91 1 is not successful, that a new reg be noticed at that time. 2 And our chief counsel was explaining to me we 3 have the option to do that without the reg living between 4 December and June. There are procedural ways of providing 5 the notice at the time you make the decision and not 6 losing any time on the staff's part in the processing of 7 an actual regulation. 8 So if that is going to resolve this difference, I 9 think that that can be worked out. 10 But, again, to restate it, the idea was not to 11 lose the Board's discretion or to unduly delay it if at 12 the second milestone or even the third you still felt the 13 need to move to a regulation. 14 MR. MANDEL: And I appreciate that clarification. 15 We were never suggesting the Board couldn't move to a 16 regulatory program. It was a process issue. 17 Thanks, Catherine. 18 CHAIRPERSON LLOYD: Okay. Thank you, Catherine. 19 That was good. 20 Any other questions? 21 And, Jed, if you would, stay around just in case 22 there are other clarifications and you kind of need to -23 and you need to come back. 24 MR. MANDEL: I would be happy to do so. And, 25 again, I appreciate all of your time. And I look forward PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 92 1 to working with you on a voluntary program. 2 Thank you. 3 CHAIRPERSON LLOYD: And a voluntary program, by 4 the way, is it with the EMA or with the individual 5 manufacturers? 6 MR. MANDEL: It's a program in which the 7 individual manufacturers, the ones subject to the 8 settlement agreements, are making this commitment. But 9 obviously I'm speaking on their behalf today. And I will 10 tell you that as an industry association, we're committed 11 to do our part, as we have, to try to facilitate this 12 process. 13 CHAIRPERSON LLOYD: Okay. Thank you. 14 MR. MANDEL: Thank you. 15 CHAIRPERSON LLOYD: We've got Stephanie Williams, 16 Bonnie Holmes-Gen, Patricia Monahan. 17 (Thereupon an overhead presentation was 18 Presented as follows.) 19 MS. WILLIAMS: Good morning. My name is 20 Stephanie Williams. I'm Senior Vice President of the 21 California Trucking Association. And we're here to 22 support the voluntary program. 23 I'd just like to clarify the record. We're not 24 opposed -- we were not opposed to the regulation. We were 25 opposed to the interstate commerce portions of the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 93 1 regulation, which were removed. 2 --o0o-- 3 MS. WILLIAMS: The trucking industry has decided 4 to embrace this program. It was approved by our board at 5 the November board hearing. And we've integrated it in to 6 our business plan this year with our own unit set-ups. 7 And I'll explain that further. 8 We think that a no-litigation strategy is a good 9 strategy because -- just like we're here today because 10 there was an agreement that we weren't at the table. We 11 could have told you how many miles we go. We have all 12 that information handy. When we're not at the table, bad 13 things happen to us, and that would be us having to pay 14 for something that really isn't our fault. 15 People are talking about litigation between the 16 engine manufacturers. But don't forget that we have a 17 class of vehicles that we bought under good faith, and 18 that could be a class action suit from the trucking 19 industry against the engine manufacturers, which would not 20 be a two-year suit. It would be a five-year suit. 21 CARB, we need you to partner with us on this. We 22 want to do it. It's a difficult task to do because the 23 engine manufacturers don't know where the engines are; the 24 truck manufacturers know, and they're not here at the 25 table. The dealers are fragmented, franchised from the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 94 1 original engine manufacturers. So we have to get 2 everybody together on the same page so we can figure out 3 where this targeted universe of vehicles are so we can ask 4 them to do this. And believe the truck industry will step 5 forward and do this if we can identify these targeted 6 vehicles. 7 We need to help with the Air Resources Board to 8 provide press materials and evaluation. We are looking at 9 a goal by geographical unit, which is how we separate our 10 organization out. And I'll go in to that further. 11 We'd like to have kind of an update on a drive 12 poster. You've seen those kind of -- those churches and 13 different organizations where they raise money and they 14 have a thermometer going up. That's how we see -- 15 envision this happening by geographical area. 16 We'd like CARB to help handle mailing information 17 to the trucking industry. We don't represent every 18 trucking company in the fleet. We'd like to, but we 19 don't. And so we would need help. You have probably a 20 larger list than ours. 21 In-kind programs. We're doing this for free. 22 It's pushed into our business plan. We'd like to invite 23 environmental groups -- and we called Tim Carmichael, but 24 he's on vacation -- to help us on the press side of it. 25 We think it's important that the general public believe PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 95 1 this isn't cheating by business groups, but it's a bona 2 fide effort at trying to get clean air fast and there's a 3 broad coalition doing this. 4 And we do not have contacts with motor homes and 5 buses and would need someone else to handle that. Not 6 that we wouldn't invite them to our mobile events, but we 7 don't have a way to reach them and want you to understand 8 up front that we can't be held accountable for that. 9 We also have -- right now we're looking for 10 sponsors. We have two major sponsors, one oil company and 11 one truck manufacturer. We're also looking -- we're going 12 to look for an air district and hopefully get federal EPA 13 to help sponsor this. We're going to need to pay for 14 these rural areas. We'll need mobile units and we want to 15 try to purchase different engine manufacturers to go 16 through the state and do these at truck terminals so they 17 could maximize fleet exposure. 18 So that's kind of what we think is the advantages 19 to this voluntary program. 20 --o0o-- 21 MS. WILLIAMS: Program goals. We want to flash 22 every eligible truck in every one of our geographical 23 units. We want to start -- and there may be some 24 discrepancies with our numbers, and I'd like to get those 25 clarified today too, because we see a bigger -- a larger PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 96 1 group of trucks and we don't want you to miss out. 2 Intrastate first. There's 370,000 intrastate 3 registered diesel trucks. 4 California interstate next. And I don't know 5 that you look at interstate the way that we do. But 6 California interstate are fleets that -- this is their 7 home base. There's 44,000 of those vehicles registered. 8 It's probably about 25 percent of them that will be in 9 this category. And those are California interstate 10 trucks. They're based here. They go 70 percent of their 11 IRP miles here -- between 70 and 85 percent. You don't 12 want to miss that section of the trucking industry. 13 And the out-of-state registered trucks are not 14 part of this program. Although based on IRP data for the 15 last year, they go six percent -- an average of six 16 percent of their miles here instead of three percent. So 17 you might want to adjust the credit to six percent because 18 that's the number that's used by IRP. 19 We're going to prioritize in order of attainment 20 date for ozone. We're going to conduct the program 21 consistent with the drive, the thermometer-type progress 22 being unit competitions, awards for our units who meet the 23 objectives first, awards for engine manufacturers -- and 24 we mean dealers when we're talking about the engine 25 manufacturers -- but our dealers with the highest PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 97 1 percentage of eligible trucks flashed. 2 We have -- you can see our flasher track is 3 our -- we've got this little cartoon. We've got decals 4 that will go on trucks once they're flashed for our press 5 supplies. And then we're -- we're talking about putting 6 together a live person, you know, like the Barney guy that 7 goes around, it's a live -- so there's somebody -- there's 8 a visual there. And at truck shows we'll have the little 9 guy running around the truck show. 10 We also -- along with you are mobile teams, we're 11 going to create an education format at the International 12 Truck Show. I don't know how many of you know about the 13 International Truck Show. It's been in Las Vegas for a 14 number of years. We moved it back to California. There's 15 30,000 people -- truck sponsors that go through that a 16 year. And we think that's a great opportunity to move 17 forward. 18 --o0o-- 19 MS. WILLIAMS: Here's what we need. We need CARB 20 to identify the targeted vehicles. We need to coordinate 21 that. We need help through your -- you have seven teams, 22 the smoke teams. We're hoping that they would be the 23 people enforcing the rules. So if we weren't being -- if 24 we weren't moving towards a voluntary role, you would have 25 them out in the field enforcing. We're hoping you'll PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 98 1 allow them to come out in the field and help us. So 2 that's what we would request. 3 We would like to write a joint letter. The 4 trucking industry is -- you know, they're not real warm 5 and fuzzy about CARB. No offense. But I think if you 6 sent a letter out to them, it would alienate them. So we 7 would like to do some kind of a joint letter or just us 8 send a letter -- but that would be important -- and to 9 talk about if they don't do it now, they're going to have 10 to pay for it. Because trucking companies, they care. 11 That's a real incentive. And we would need to do that. 12 We would not be writing to buses and motor homes. 13 We don't want to be -- we don't want to do that. 14 We'll establish the universe of authorized 15 dealers by unit, by our geographical area, because that's 16 where we're really going to have to concentrate, as where 17 the dealers are, what the throughput could be. We'll 18 conduct with you the press events. But we have a press 19 team that we can put things together. You do too, so we 20 can coordinate with that. 21 Joining with the authorized dealers, our mobile 22 teams in the rural areas will also invite the bus and 23 motor home people to come to the rural events, but you'd 24 have to contact them. 25 We want to submit reports to CARB after each PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 99 1 graphical unit is completed because we want to have you do 2 those drive materials so our members can see how far they 3 are away from their goal. So as far as the data, we're 4 open to a lot more data sharing than is in this actual -- 5 your document. And we'd like you to create the drive 6 posters. 7 So where do we start? And I think it's important 8 for you to understand CTA a little bit better to 9 understand how we're going to get this done, because we 10 believe we can. 11 --o0o-- 12 MS. WILLIAMS: We are located in these 13 geographical units. You can see Sacramento, Central 14 Valley -- these are all by county. And we have ordered 15 them by ozone-attainment date. And we want to start with 16 Sacramento and move forward down our list. 17 --o0o-- 18 MS. WILLIAMS: This is our -- oops, that's not 19 right. 20 Sorry about that. 21 --o0o-- 22 MS. WILLIAMS: Here's our geographical units. 23 You can see the colors. And we'll start, like I said, in 24 Sacramento. We're going to do Los Angeles in conjunction 25 with the truck show because it's in Anaheim and we're PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 100 1 going to have so many trucking people there, we have a 2 huge opportunity to do a big outreach and get a lot of 3 trucks flashed. 4 --o0o-- 5 MS. WILLIAMS: I want to show you our 6 organizational chart so you can understand how we're 7 moving this through our organization. 8 I'm purple here, a senior vice president. And 9 I'm in charge of Policy Implementation, Grass Roots, and 10 our Political Action committees. 11 And I have with me today Tom Wolfe I'd like to 12 introduce to you. Tom Wolfe is our Vice President of 13 Sales and Marketing. 14 And we have a grounded -- a deployed field staff. 15 And our field staff handle our unit operations. And you 16 can see the people in the yellow are available to 17 integrate this program statewide, which is why we think we 18 can hit the most people having it integrated through our 19 association. 20 --o0o-- 21 MS. WILLIAMS: These are the policy people that 22 work under us. You see, we have a lot of people in the 23 environmental staff. These people that report to me are 24 all going to be involved in the implementation of this. 25 We have people that do highway policy work with CalTrans, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 101 1 people that work with the CHP and safety. And we're 2 integrating this through our organization because 3 everybody touches a lot of fleets every day. 4 --o0o-- 5 MS. WILLIAMS: And then Tom, our Vice President 6 of Field Operations, has deployed sales staff. And they 7 have a lot of support. So we're going to be able to make 8 this part of our organization. So we'll be destined to be 9 successful. 10 --o0o-- 11 MS. WILLIAMS: We also have a lot of conferences 12 and specialized carriers. And these are staff people that 13 are responsible for different areas. As you can see, we 14 have a border crossing conference, bulk carriers, hay and 15 forest products, agriculture conference, heavy 16 specialized, tow trucks, waste, petroleum, ports. 17 So we have -- we hit a lot of trucking companies 18 in a lot of different meetings, not just in their local 19 geographic units, but in meetings on like subjects. 20 And also our policy committees, we meet 21 regularly: Workers'compensation; public affairs; safety; 22 environment; highway policy; a kingpin policy, which is 23 our lobbying group; our grassroots members. So there's a 24 lot of companies that are going to be touching this 25 program. And they will go out into their areas and be PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 102 1 promoting it too. So it's just not CTA staff; it's the 2 leadership of our organization promoting this to other 3 truckers that are non-members and members of CTA. 4 --o0o-- 5 MS. WILLIAMS: Just to let you know, our big 6 event will be at our Los Angeles/Orange Unit. And it is 7 in conjunction with the International Truck Show. We have 8 a press budget with the International Truck Show. It's a 9 million dollar show. It was the first trucking exhibition 10 show in the nation. Now, there's one in Louisville that's 11 a little bigger than ours, but most of the trucks are on 12 that side of the Mississippi. 13 So it's at the Anaheim Convention Center. It's 14 at the meeting of our CTA Board of Directors. We have 108 15 owners that sit on that board. 16 We'll have mobile teams in the parking lot at 17 Disneyland. The reason we're having the truck show at 18 Disneyland is because we have truck parking. It's in 19 September. Kids aren't there. 20 We're going to do California intrastate and 21 California interstate flashes. No interstate registered 22 vehicles. Large scale press event. We're going to invite 23 the Governor to flash the first truck and cut the ribbon 24 for bringing the truck show back to California, which is a 25 significant amount of money coming back in to our state. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 103 1 And we're going to integrate reflash in to a 2 retrofit forum at ITS. And what we're doing is we're 3 inviting the retrofit manufacturers to come in. And we're 4 going to have a mini-world truck conference, which is this 5 special retrofit symposium. And ITS is going to sponsor 6 it. We're not going to come asking for money, Catherine, 7 in case you were wondering. 8 And it's September 22nd and 23rd. The 23rd is 9 the opening. And then we'll have our special retrofit 10 forum at the demonstrations. 11 --o0o-- 12 MS. WILLIAMS: And I just want to give you -- 13 we'll go back to the slides that I got out of order. 14 This is the floor plan for truck show. If you 15 can see all the blue in the front, that's where the big 16 truck manufacturers are and -- all the big booths. It's 17 huge. 18 --o0o-- 19 MS. WILLIAMS: And if you look to the next slide, 20 this is -- you can see the flasher truck demonstrations in 21 the back of the room. We're going to have a truck there 22 to actually do the flashes. 23 Then we have retrofit exhibition space right 24 there. There's a big -- all the retrofit manufacturers 25 that we bring in. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 104 1 And then in the front of the convention center 2 where the glass windows are we'll have the ribbon cutting 3 and the flasher truck press conference. 4 So we're hoping that we can move ahead with the 5 voluntary program. We believe this is the best way to get 6 it done. 7 We didn't oppose the regulation. And I just want 8 to clarify with Jed -- I tried to get him as he walked 9 away -- but I need to know, because I want to make sure 10 that I'm not getting my members in to something they 11 didn't sign up for. 12 We are willing to do this as long as the engine 13 manufacturers pay for it. And the regulatory backstop is 14 not as important to us. We don't really care if there's a 15 regulatory backstop because we're going to do it anyways. 16 But we want to make sure that they don't -- if we don't 17 make our goal in December and there's a regulatory 18 backstop, we want to make sure -- we're going to keep 19 doing it because we'll eventually make our goal -- but 20 will they still pay for it? That's what's important here 21 today. Because if they don't pay for it, we can't do it. 22 So we're hoping that they're going to keep open 23 to pay for it. We're committed to do it. 24 And there's ways to do it. You could -- we may 25 need a regulatory backstop in some way. Not the way PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 105 1 you're talking about, but you may need to send notice of 2 violations out so we can follow up with people. And that 3 would be okay with us. We're committed to getting this 4 done. But not fines and not, you know, the confrontation 5 between truck and industry and the Air Resources Board. 6 So we're hoping that they'll stay available to 7 pay for it. 8 CHAIRPERSON LLOYD: I think Jed wanted to say 9 something. 10 MS. WILLIAMS: Come on up, Jed. 11 MR. MANDEL: This is a photo-op for Stephanie 12 and -- 13 (Laughter.) 14 MR. MANDEL: No, I just wanted to make sure for 15 CTA's benefit and for the Board members' benefit that we 16 have said from day one on this program that we will pay 17 for these reflashes beyond 2005, beyond 2006, so long as 18 it's a voluntary program. 19 But whenever a regulatory program kicks in, 20 unfortunately, at that point, we feel that that's without 21 authority. We would -- there likely would be litigation. 22 But certainly we would stop paying for the reflashes. And 23 I think that was appropriately noted in the staff's 24 presentation, that frankly one of the incentives for 25 truckers to try to get the reflashes done now and early is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 106 1 it avoids the uncertainty as to who will pay for them, 2 because we're making it explicitly clear who pays for it 3 now. And you sort of take your chances later under a 4 regulatory program as to whether it will get paid for by 5 the engine manufacturer or not. 6 Thanks for the opportunity. 7 CHAIRPERSON LLOYD: Thank you. 8 MR. MANDEL: Did you get your pictures? 9 CHAIRPERSON LLOYD: Yes, Ms. D'Adamo. 10 BOARD MEMBER D'ADAMO: Well, if you could just 11 come back for the next photo-op, I think both of you need 12 to come back at the next hearing, dressed like this, with 13 a little -- that says yes. 14 (Laughter.) 15 MR. MANDEL: You're not going to get me to agree 16 to do that. 17 (Laughter.) 18 CHAIRPERSON LLOYD: One of the things -- this is 19 for Stephanie. I was impressed on the part of your 20 members yesterday morning at an event at the Capitol. And 21 they were aware of this program. I was very impressed. 22 But they also indicated -- and this is something you could 23 comment on. They didn't -- they didn't see it was 24 difficult to get people in for reflashes. One of the 25 things they said, that every three months there has to be PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 107 1 a DOT inspection, a safety inspection. Is that true? 2 MS. WILLIAMS: Kind of. It's a self-inspection. 3 But, yes. We're in there a lot. I mean we maintain our 4 vehicles. And we like to -- we separate ourselves. We 5 have a best-practices program. So the people that are 6 members of the California Trucking Association concentrate 7 on safety, accidents. And they're with the organization 8 because they want to be a cut above the rest. And so 9 we're going be able to do a lot. And we have a lot of the 10 fleets that you're looking for. Our average member is 11 five to ten trucks. And we also have all the big fleets. 12 CHAIRPERSON LLOYD: Although you're losing a lot 13 of members, you've still got enough there? 14 MS. WILLIAMS: We have a lot of members that have 15 left the state, but they still pay dues. They pay a 16 portion to the vehicles that they have here. We like the 17 whole amount. We don't like the smaller amount. 18 The one thing I would like to point out though is 19 when we -- we took this to our board. We had a number of 20 dealers there that did not know about this program. So I 21 think that education of the dealers is where we need to go 22 next, because I mean there was a lot of controversy and 23 "What do you mean they're suppose to" -- "We're not doing 24 this." So I think the communication hasn't been there 25 with the dealers as it should be, and we need to fix that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 108 1 first. 2 CHAIRPERSON LLOYD: But just clarification again, 3 back on the safety issue. How does that work? Your 4 members go in for a voluntary safety check every three 5 months? 6 MS. WILLIAMS: We do it ourselves. 7 CHAIRPERSON LLOYD: What do you mean by that? 8 MS. WILLIAMS: It's called our bit inspection. 9 Well, the bit inspection is the big one that happens every 10 25 months. So the CHP comes out and they check over and 11 make sure that we're -- you know, our tires work and our 12 brakes are okay and -- 13 CHAIRPERSON LLOYD: But this man implied that 14 every three months he goes and has his -- to some location 15 for a safety check. That's -- 16 MS. WILLIAMS: Well, most people have maintenance 17 people on site. Maybe this particular person doesn't have 18 a maintenance facility. But you have to do a -- every 19 three months you have to do a self-inspection on your 20 truck. You have to make sure the tires have air in them. 21 You've got to check the brakes. There's a lot of things 22 on trucks that can go wrong. And we're strictly 23 regulated, especially in California. 24 CHAIRPERSON LLOYD: And so if that's done on a 25 central set, this would be another opportunity for PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 109 1 reflashing. 2 MS. WILLIAMS: Right. And we're going to be able 3 to -- we're going to send the mobile teams to the fleets. 4 And everyone's excited about it. This is a PR thing for 5 us right now. I mean they're going to get this sticker on 6 their trucks. So people are excited about it, and that's 7 where we need to leave it. 8 CHAIRPERSON LLOYD: Then the other view -- you 9 asked a question of staff if in fact the people who would 10 enforce a rule would be available to work with you on the 11 voluntary program. 12 EXECUTIVE OFFICER WITHERSPOON: Yeah, we want to 13 avoid the appearance that we're enforcing something that's 14 voluntary. But certainly our staff will be available to 15 help at these fairs and explain and get the word out. And 16 make the posters of the rising thermometers. It's not a 17 problem. 18 CHAIRPERSON LLOYD: Okay. Thank you. 19 CHAIRPERSON LLOYD: Mrs. Riordan. 20 BOARD MEMBER RIORDAN: Just a quick comment. 21 Obviously you've really organized this on paper. 22 And the real issue is going to be: Now, can we put the 23 right people together at the right time to carry this out? 24 And so I'm looking for everybody's cooperation. Because 25 clearly you've got it well organized; and the fact that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 110 1 there's this big trucking show down in Anaheim, that's a 2 perfect opportunity, as well as some of these other, you 3 know, side opportunities. And so I think we need to 4 coordinate immediately very well. 5 And then with Jed and his organization to get to 6 the dealers. I think, Stephanie, you're probably right, 7 because looking at the letters -- and they are in a draft 8 form. And I am assuming if the Board approves a voluntary 9 program, these will go out very, very soon. But I think 10 there needs to be some follow-up that makes it so that -11 the worst thing that could happen would be that a trucker 12 go into one of the dealerships and the dealership not know 13 what they're talking about when they came in. And we've 14 got to be sure that that does not happen in the initial 15 few -- first few months. 16 MS. WILLIAMS: I think my membership's a little 17 different. We're not very successful in writing. We have 18 to call them. We'd probably be scheduling the 19 appointments. That's how we see the role. We'll be 20 queuing up areas, getting with the dealers, and we'll be 21 setting the appointments up. Otherwise we won't be 22 successful. 23 CHAIRPERSON LLOYD: Yeah, the other part I liked 24 about your proposal there, I think it's critical, as part 25 of the overall stakeholders, we have the environmental PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 111 1 community. They're probably most skeptical this is going 2 to work. And I think it's very important that the process 3 is transparent to them and they get a chance to really see 4 what's going on so we see the process evolve and be 5 successful. 6 MS. WILLIAMS: Right. And that's why -- we want 7 to include them. So you're all welcome. 8 CHAIRPERSON LLOYD: And we'll ask the same 9 question when they come up. 10 Any other questions? 11 Again, thank you very much for working with us. 12 And it would be a pleasure to get that letter out 13 together. Maybe it shouldn't go on ARB envelopes so in 14 case they'd not open it. 15 (Laughter.) 16 CHAIRPERSON LLOYD: Thank you very much. 17 Bonnie Holmes-Gen, Patricia Monahan, Diane Daily. 18 MS. HOLMES-GEN: Good morning -- good afternoon. 19 My goodness. 20 I'm Bonnie Holmes-Gen with the American Lung 21 Association of California and also representing the 22 California Thoracic Society. 23 And our position today is that we are urging you 24 to adopt the mandatory regulation for chip reflash which 25 is before you because we believe it is the only way to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 112 1 truly hold the engine manufacturers fully accountable for 2 correcting the illegal actions and the reprehensible 3 behavior that has resulted in over 12 years of excess 4 emissions and lung damage and lung illnesses. 5 As you know, there have been millions of tons of 6 excess NOx -- nitrogen oxide emissions from the defeat 7 devices. And the EPA estimates have shown a public health 8 toll of 2,500 premature deaths, 5,000 hospitalizations, 9 and public health costs of $6 to $21 billion over the 10 lives of these vehicles with the defeat devices. 11 So our position is that adopting the mandatory 12 regulation is the only way to truly hold the engine 13 manufacturers fully accountable for correcting their 14 illegal actions. It's the only way to ensure that the 15 emissions reductions will be achieved with absolute 16 certainty, and without reliance on good faith efforts of 17 engine manufacturers that unfortunately are proven bad 18 actors. 19 I just noted in the slide shows that the staff 20 presented to you that the comparisons of the time lines of 21 the voluntary program versus the regulation are all based 22 on the regulation being delayed by two years -- and I 23 think you've discussed this -- and then the voluntary 24 program being implemented completely on schedule, with no 25 delays, no problems, you know, no issues. And I just -- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 113 1 you know, I think that's not a correct assumption. 2 It's one scenario. But it's certainly not the 3 only scenario about what could happen. And I don't think 4 that it's really fair to compare the two approaches based 5 on that kind of comparison, of assuming delay in 6 regulation and assuming no delay in voluntary. I don't 7 think we can assume everything will go off without a 8 hitch. Certainly that would be nice if that would happen, 9 but I don't know that we can assume that. 10 So, again, we believe that the mandatory 11 regulation is the only way to truly hold the engine 12 manufacturers accountable, to ensure with absolute 13 certainty that those emissions reductions will be achieved 14 finally, and to -- and it's the only way to appropriately 15 deal with a bad actor. And of course the engine 16 manufacturers with their history of flagrant disregard for 17 pollution control laws certainly makes them one of the 18 most blatant bad actors that you've dealt with. And I 19 know you've made those comments. 20 And we need to remember that this program, the 21 chip reflash program, is critical to reaching our 22 statewide SIP requirements. Thirty to forty tons per day 23 is huge -- thirty to forty tons per day of NOx is huge 24 compared to other regulations that you're going to be 25 considering over the next few months. As you know, your PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 114 1 staff is looking for a ton here and a half a ton here and 2 a quarter ton there, everything from consumer products to 3 vehicle regs and fuels. You're looking everywhere for 4 tons of emissions reductions. 5 And I noted that in the recent SIP summit 6 discussion in January here at the Board, where there was a 7 really intensive discussion of potential future measures 8 to try and make up the black box that you're facing, the 9 San Joaquin and the South Coast. There is a discussion of 10 course of light-duty scrappage, which is, you know, a 11 topic of much discussion these days. And we're looking at 12 potentially $500 million of costs to generate 15 to 20 13 tons per day of ROG plus NOx reductions from a light-duty 14 scrappage program. 15 And I just think it's important to keep these 16 things in perspective. We're looking at a virtually no 17 cost program, extremely cost effective, at the same -- to 18 get more tons than we're going to get through a huge 19 investment, a potentially public or some mix of 20 public/private dollars to try to get vehicles scrapped. 21 So this underscores the need to move quickly and with 22 certainty to get emissions reductions. 23 You have our letter and you know our concerns 24 with the voluntary approach. And you've discussed many of 25 those concerns. We're concerned of course that it does PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 115 1 not include out-of-state trucks, that only 80 percent of 2 the trucks are covered with that final target in January 3 '06. 4 And that honestly -- you know, there should -- 5 you know, if you are going to consider a voluntary 6 approach, it should get the same emissions reductions in 7 the same timeframe as the mandatory regulation. And even 8 though the staff paper talks about getting a hundred 9 percent of the emission reductions by 2010, there's no 10 targets, there's no checking in, there's no oversight of 11 that final 20 percent. And so I don't think we can assume 12 that's going to happen unless you add in those 13 requirements and targets. 14 The voluntary agreement relies on owners to 15 voluntarily bring their vehicles to the dealership instead 16 of providing services at truckstops or other areas. You 17 know, we're pleased to hear that the trucking association 18 is going to be doing a lot of outreach. But we think we 19 need to have something written in to the agreement in 20 terms of exactly what kind of outreach is going to occur. 21 We don't like the idea that engine manufacturers 22 get to count the 10 percent of trucks they've already 23 reflashed toward the first goal. We think that's too 24 lenient. 25 And we're concerned about having too few PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 116 1 checkpoints. There's only one target and checkpoint in 2 2005. After assuming they make the first initial 35 3 percent cut, then we go another six months before there's 4 a review. And, as we've stated, there's no explicit 5 requirement now that there's going to be this regulatory 6 hammer hanging -- continuing to hang over their head. 7 I hope that you do make that explicit if you are 8 going to go this route, because that certainly is just a 9 minimum -- you know, bottomline minimum requirement -10 minimum from our perspective that you absolutely have to 11 have a constant regulatory backstop. It doesn't make 12 sense to have this backstop go away after six months at 13 all, after they essentially have had the opportunity to 14 get potentially the easiest round of emission reductions 15 from the fleets and other truckers -- trucks that are 16 easiest to get in to get reflashed. 17 So we want to make sure there's a constant 18 regulatory backstop, and that the Board has an opportunity 19 at any point along the way that those targets are not met 20 to come back immediately and adopt the regulation. In 21 fact, you know, I'm just wondering if you can't just -22 instead of holding the regulation in abeyance, just adopt 23 the regulation with some require -- with some provision 24 that at any time that the targets are not met that a 25 regulation would go in to effect. And, you know, anything PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 117 1 you could do to not hold the regulation in abeyance but 2 try to move on that today would of course be our strong 3 recommendation. 4 Finally, we're here today again to urge adoption 5 of the mandatory rule. But at a minimum, the voluntary 6 agreement must be tightened up. You should tighten the 7 goals to include the full 100 percent of vehicles. You 8 should tighten the reporting requirements and the 9 oversight provisions. You should make sure you've got a 10 constant regulatory backstop. And, you know, we just -11 we don't want the Board -- we don't believe the Board 12 should be held back from adopting a regulation because of 13 fear of litigation, especially in the case of a bad actor 14 like the engine manufacturers. We believe the Board 15 should be ready to regulate if that is merited, and we 16 believe today that is the best recommendation for you. 17 CHAIRPERSON LLOYD: Thank you, Bonnie. 18 Ms. D'Adamo. 19 BOARD MEMBER D'ADAMO: Could we explore your 20 suggestions regarding oversight and reporting a little bit 21 further. And maybe we could have staff participate in 22 this as well. This is very important to me because if we 23 go with the regulatory -- or the voluntary approach, I 24 know that in the interim I'm going to be following it very 25 closely before it comes back to us, and I'm going to be PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 118 1 relying on your organization, Bonnie, and others to keep 2 the pressure on. So I think it's important that we all 3 have as much information as possible in order to make the 4 best decision when it comes back in December. 5 So, first of all, if you have any specific 6 suggestions. 7 MS. HOLMES-GEN: Yes, I think from the Lung 8 Association -- I know other groups are going to speak to 9 this also -- that we've asked for a quarterly reporting 10 requirement throughout the course of the program until the 11 full 100 percent of the emissions reductions are achieved. 12 And we're concerned that every six months is just too long 13 a time period, that we need to be on top of it on a 14 quarterly basis. 15 CHAIRPERSON LLOYD: I thought I heard staff say 16 they were going to come back in September timeframe, which 17 would be roughly a -- 18 MS. HOLMES-GEN: I think that was the first round 19 though. 20 EXECUTIVE OFFICER WITHERSPOON: Yeah, the first 21 round's roughly six months out, and then a more detailed 22 report for your December meeting. 23 Tom's checking with staff on -- in the consent 24 decree itself on settlement agreements, if there is a 25 reporting requirement. And we used the national data to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 119 1 derive our estimate of 10 percent of vehicles in 2 California -- well, of the national vehicles we flashed, 3 10 percent of them are in California. And Tom was just 4 checking whether that's annual. 5 It is quarterly. 6 Okay. So we have national data coming in. But 7 this will be on rebuild cycles, which are naturally 8 occurring. The difference in California will be tracking 9 who comes in over and above a rebuild event, and how often 10 it's reasonable to try and get that data and from whom 11 we're gathering it. 12 And I'm going to ask Tom to jump in on -- 13 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Yeah, 14 our reason for the less frequent was just that we didn't 15 think we could really, you know, process the information 16 every quarter and see a whole bunch of meaningful 17 information. We thought six months was just fine because 18 we're in sort of a two-year cycle to get from -- well, 19 sort of a two-year cycle to get from zero -- or where we 20 are -- 10 percent now to 80 percent. And we saw a 21 couple -- only a couple times coming back to report to 22 you. So it looked to us like every six month reporting 23 was going to be adequate to support your needs. And we 24 just didn't press for anything more frequently than that. 25 CHAIRPERSON LLOYD: But why not try a quarter. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 120 1 And if we find it's working well or if it's found as not 2 workable, I'd rather start off that way. 3 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: But we 4 have one -- the first one comes in in September? -- 5 September. So I guess that's, you know, six -- well, I 6 guess that's almost six months from now. Be less than six 7 months from the time the program actually starts. 8 BOARD MEMBER D'ADAMO: Well, then presumably the 9 information could be utilized by staff, the Board, and 10 others even if they're in the interim, between Board 11 hearings. In other words, it would be available to the 12 stakeholders so that they could in turn get back to us. 13 I'd feel more comfortable -- 14 CHAIRPERSON LLOYD: Yeah, I agree. In fact, I 15 was going to suggest at the end here that we create a 16 little group, an informal group that the staff could work 17 with, where we have representatives from the various 18 stakeholders, including the environmental community, so 19 that that could be going on, you know, essentially on an 20 ongoing basis. 21 BOARD MEMBER RIORDAN: Mr. Chairman. 22 CHAIRPERSON LLOYD: Mrs. Riordan. 23 BOARD MEMBER RIORDAN: But let me understand. 24 It's not for that first year? The first year -- 25 CHAIRPERSON LLOYD: No, we'd start right away. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 121 1 BOARD MEMBER RIORDAN: Start right away? 2 I think your information's going to get very 3 skewed if you do that, because you have start-up time, you 4 have a whole lot of things happening. I would leave the 5 first year just as staff has proposed it. And then if you 6 want to change after that first -- but you're not going to 7 have good information -- 8 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: No, the 9 first year is actually -- you know, probably is almost 10 quarterly by the time the program starts. We get one in 11 September, we get another one in November. That's only 12 two months apart. 13 But then after that it was only -- 14 BOARD MEMBER RIORDAN: I'd leave the first year 15 alone. 16 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: 17 -- every six months till next year. 18 CHAIRPERSON LLOYD: I think the critical thing 19 though is to -- 20 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Point's 21 valid. 22 CHAIRPERSON LLOYD: What we see happening here is 23 this -- is everybody going to be acting in good faith. 24 And unless we demonstrate that in the first month of the 25 program, I think we're off to a bad start. Hopefully that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 122 1 won't be the case. 2 Supervisor -- I'm sorry. 3 EXECUTIVE OFFICER WITHERSPOON: Just a follow-up. 4 The way that the State is coming in is that the 5 dealerships are reporting serial numbers of engines and 6 vehicles. And we're trying to match them to be sure we're 7 getting the right engines as we go. And we spent a lot of 8 time figuring out how to track what was being done and 9 what counted and what didn't count. But to the extent 10 that that's electronic and it's not a problem for EMA to 11 forward it to us more frequently, I don't see any reason 12 why we can't do that. But -- 13 CHAIRPERSON LLOYD: Recognize just last month 14 we'd lost 15,000 portable engines throughout the state. 15 So we'd have to have a bit more confidence here that we 16 know what's happening. 17 EXECUTIVE OFFICER WITHERSPOON: Yeah. And if 18 they're able to give it to us, I'm sure that they will. 19 CHAIRPERSON LLOYD: Got it. 20 Supervisor DeSaulnier. 21 BOARD MEMBER DeSAULNIER: I was just going to 22 suggest -- I don't see -- I actually think it's more 23 important up front. And I am a little bit concerned that 24 there wasn't -- and Stephanie did mention she called the 25 Coalition for Clean Air -- but there wasn't more outreach PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 123 1 particularly from Jed's group to the environmental 2 community, because a lot of the problem here -- and I 3 believe in redemption, particularly this time of year. 4 But -- he's not talking -- he's talking to someone else. 5 I was also going to make an analogy to marriage. But 6 representing San Francisco, I don't know if that's 7 appropriate right now -- 8 (Laughter.) 9 BOARD MEMBER DeSAULNIER: -- where we're at just 10 to date. 11 But I would suggest what, Dede and Alan, you're 12 suggesting, is, you know, that maybe we convene some kind 13 of oversight committee so that we're at the table. 14 Because so much of this is just communication. I 15 think the numbers are important, but I think there's a 16 certain amount of intuitive human nature to this that 17 we'll feel better if everybody's in the same room. And 18 you might actually be able to anticipate some of the 19 outreach problems. 20 I haven't decided, by the way, how I'm going to 21 vote for this. But at the very least I think there has to 22 be better communication. 23 CHAIRPERSON LLOYD: Yeah. Well, you and Jed are 24 playing the same game, I can see that. 25 BOARD MEMBER DeSAULNIER: Well, I'm worried about PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 124 1 what his bosses are watching on the TV camera. 2 CHAIRPERSON LLOYD: Professor Friedman. 3 BOARD MEMBER HUGH FRIEDMAN: I'm hearing the 4 statement that the current voluntary program does not -- 5 well, only includes 80 percent of California registered 6 trucks. Is that true? 7 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: We have 8 a -- we have targets of 35, 60 and 80, with that last 9 target being January of '06. 10 BOARD MEMBER HUGH FRIEDMAN: But you have a 100 11 percent target by 2010. 12 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Right. 13 And we have agreement that the engine manufacturers will 14 continue to pay for the reflashes. So we think as we go 15 up that curve and hit 80 percent, that successful, that 16 we'll be on a glide slope towards a hundred percent. 17 BOARD MEMBER HUGH FRIEDMAN: And you addressed 18 that earlier. But when -- so are we -- is there a 19 disconnect here? 20 MS. HOLMES-GEN: There's no -- there's no targets 21 in this voluntary agreement for anything after 80 percent. 22 So from our perspective -- I appreciate the discussion of 23 the glide path, and that would be nice to assume that 24 would happen. But I think that, again, we're in this 25 trust and verify situation and that we can't trust unless PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 125 1 we have actual verification built in to this regulation, 2 whatever you pass -- regulation -- 3 EXECUTIVE OFFICER WITHERSPOON: We were making 4 the judgment that you, the Board, would not want to move 5 to a regulation to capture the last 20 percent; that if we 6 in fact captured 80 percent voluntarily, we would, as Tom 7 said, be on that glide path, and the settlement decrees 8 and the momentum and the rest would take care of the rest. 9 Because these are issues over when you will pull the 10 regulatory trigger or not. And so even if we spelled out 11 a hundred percent in the voluntary agreement, I think the 12 engine manufacturers have said, candidly, you can't, in a 13 voluntary scenario, guarantee a hundred percent of 14 anything, you know, because some people just won't -- will 15 choose not to come in. And were we in a regulatory 16 regime, it would be ARB's job to go out and find the 17 scofflaws and find them and drive them in. 18 But we have undergirding this entire effort the 19 original consent decree and settlement agreements that 20 says everybody get reflashed upon rebuild, and that will 21 take care of the problem in the end. 22 BOARD MEMBER HUGH FRIEDMAN: But is there a 23 potential gap here where they have -- the engine 24 manufacturers have said they're willing to pay for anybody 25 who comes in. And we're in the last 20 percent. And PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 126 1 there's no -- whatever the glide path, people stop their 2 efforts to bring them in, those who want to come in no 3 longer have a commitment that the engine manufacturers 4 will pay for it -- 5 EXECUTIVE OFFICER WITHERSPOON: Well, that 6 doesn't lapse. 7 BOARD MEMBER HUGH FRIEDMAN: Or they will pay for 8 it for a hundred percent as long -- 9 EXECUTIVE OFFICER WITHERSPOON: That's right, 10 that's right. 11 So that offer remains. 12 BOARD MEMBER HUGH FRIEDMAN: Well, then why not 13 have the program continue even for the dribbles, I mean 14 even -- I mean not that we -- 15 EXECUTIVE OFFICER WITHERSPOON: Well, the issue 16 is what you do. The issue -- the program -- 17 BOARD MEMBER HUGH FRIEDMAN: Well, we always have 18 the right to trigger the rule. But I can't imagine 19 people of -- Board members of common sense would pull it 20 as long as there's still an effort ongoing. 21 EXECUTIVE OFFICER WITHERSPOON: Well, that's what 22 we thought. 23 BOARD MEMBER HUGH FRIEDMAN: What would be the 24 point? It would be a cost benefit analysis that would -25 EXECUTIVE OFFICER WITHERSPOON: That's right. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 127 1 And we were saying to the engine manufacturers we believe 2 that once we've hit 80 percent, that there will be that 3 much momentum in play, that much good faith in play that 4 you, the Board, are not going to pull the regulatory 5 trigger, that the rest will take care of itself. 6 BOARD MEMBER HUGH FRIEDMAN: Well, you're saying 7 you, the staff, would not recommend it. 8 Right. Well, but also that's -- if you embraced 9 the voluntary agreement, you, the Board, will be saying it 10 also to Jed and his clients that you will not be pulling 11 the regulatory trigger if they get to 80 percent by the 12 milestone date. 13 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: I think 14 what we were thinking -- 15 BOARD MEMBER HUGH FRIEDMAN: Part of this it 16 sounds like we're leaving the field, we're quitting at 17 80 -- 18 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: No. 19 No, I don't think so. 20 EXECUTIVE OFFICER WITHERSPOON: No, because you 21 have the other agreement to pick up the last -- 22 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: We have 23 the agreement that they will continue to pay for every 24 truck that comes in and gets service. And we are 25 committed to continue to have the outreach efforts going PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 128 1 on beyond 80 percent to get as many of the last -- 2 BOARD MEMBER HUGH FRIEDMAN: -- to get 100 3 percent by 2010. 4 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: -- as 5 many of those as we can get. And we think we'll get them 6 all one way or the other by 2010 because they're going to 7 go through rebuilds. But we'll still be trying to get 8 them closer to 2006 than 2010. 9 The only thing that was dropped off the plate at 10 all was, you know, as we go through that last four years, 11 do we need to have quarterly or semiannually reporting and 12 accounting or not and, you know, is it significant to know 13 whether we're at 83 or 86. 14 BOARD MEMBER HUGH FRIEDMAN: We no longer would 15 need the mandate. 16 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Yeah. 17 We just think at that point, you know, we're going to get 18 as close as we possibly can to 100 percent. And, you 19 know, it's partly going to be the momentum. Everyone's 20 still going to be playing the game, you know, outreach, 21 paying for the reflashes. We can audit whether that's 22 happening, you know. So -- 23 BOARD MEMBER HUGH FRIEDMAN: So it's not 24 something that any of the stakeholders are objecting to? 25 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: The PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 129 1 only objection I think on the part of the negotiation for 2 the voluntary program agreement was that the engine 3 manufacturers didn't want to continue to have to report, 4 report, report for another four years over what is a 5 diminishing number of vehicles. That was the, I think, 6 only pragmatic consideration. You can ask Jed, if you'd 7 like, what his thoughts were. But -- 8 CHAIRPERSON LLOYD: Okay. But the other part I 9 had a concern there, that since the Governor's action plan 10 requires 50 percent reduction by 2010, I would be much 11 more comfortable to see that 2010 be 2008. And since Jed 12 said that no matter when they're reflashed, he'll pay for 13 it, why can't we do that? Why can't we make every effort 14 to get a hundred percent by 2008? 15 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: We can 16 make every effort to get it as soon as possible. I think 17 the question is: What's in the written agreement and do 18 the other parties think that that, in any way, weakens 19 their resolve to be a part of this partnership? We'll 20 certainly push for it as soon as we can get it. 21 CHAIRPERSON LLOYD: But Jed already said earlier 22 to him it doesn't matter if they're all done next week. 23 He'll have the money, he'll pay for them. 24 So then getting the trucks in there, I guess, or 25 whatever. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 130 1 EXECUTIVE OFFICER WITHERSPOON: What we could do 2 is state it's the Board's intent to strive for a 100 3 percent compliance in the resolution, and you're directing 4 your staff, you know, to use every tool at our disposal. 5 But, you're right, Jed said, "Bring 'em to me and I'll 6 reflash them." What he's not going to go do is chase them 7 down. 8 And I think Bonnie's testimony is to the effect 9 she wishes you would set a target of a hundred percent 10 tied back to the regulation. And you are going to have to 11 decide between 80 and 20 if it's worth it to you to pull a 12 regulatory trigger at that time or just to keep leaning on 13 us, your staff, to do what we can to accelerate the rate 14 of reflash. 15 BOARD MEMBER CALHOUN: Mr. Chairman? 16 CHAIRPERSON LLOYD: Yes, Mr. Calhoun. 17 BOARD MEMBER CALHOUN: I don't think you will 18 ever get a hundred percent of the people in. So the 19 business of triggering a mandatory program starting at 80 20 percent or some other predetermined number I think is -21 I'm not so sure that that's something that we ought to 22 jump into at this particular time. Getting the 23 information out to the right people or the people who are 24 affected by the program, I think, is very, very important. 25 And I thought I heard Stephanie or maybe Jed say -- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 131 1 mention the environmental groups and asked if they could 2 participate in this. And if they can, I think that would 3 be worthwhile. 4 But I don't think we ought to be hung up on this 5 business of getting 90 or 100 percent out there. The goal 6 is to try and strive to get 100 percent; but not say, 7 well, we're going to keep this regulatory hammer out there 8 if we don't get 90 percent by a certain date. 9 BOARD MEMBER D'ADAMO: Can I make one brief -- 10 BOARD MEMBER CALHOUN: I think the history will 11 show that even with -- that these mandatory recalls by EPA 12 in California, you've never gotten a hundred percent. I 13 don't know that to be a fact, but I'd almost bet you that 14 you never got a hundred percent. 15 CHAIRPERSON LLOYD: And also we've -- we could 16 do -- a better chance in December to see again how things 17 are going, so we don't have to decide this really today. 18 Ms. D'Adamo. 19 BOARD MEMBER D'ADAMO: Well, I agree with 20 Professor Friedman's points that he raised earlier about 21 80 percent, 100 percent. And the only other point that I 22 might add is that my concern is that once we get closer to 23 80 percent, 75 percent, 70 percent, maybe this Board is 24 going to -- "Wow, we're so close to 80 percent." That's 25 why I like, you know, a hundred percent. And then we can PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 132 1 always back off from that. 2 Recognizing what Mr. Calhoun is saying that, you 3 know, at some point you don't really want to use the 4 hammer. But I think that it's best to start out strong, 5 and then we can -- we have the discretion at any point to 6 determine whether or not to back off on renotice of the 7 reg or whatever it is that we're doing to keep it out 8 there. 9 EXECUTIVE OFFICER WITHERSPOON: Could I clarify 10 whether you mean a hundred percent by '08 or a hundred 11 percent by '06? 12 BOARD MEMBER D'ADAMO: Oh, the earlier the better 13 as far as I'm concerned. But I wasn't involved in 14 the discussion. So -- 15 EXECUTIVE OFFICER WITHERSPOON: Well, the reason 16 I'm asking the question, if it's a hundred percent in '06, 17 the date by which the current voluntary agreement says 80 18 percent, then you do jeopardize the agreement itself. If 19 you add yet one more target at a later date, you probably 20 don't jeopardize the agreement because we'll just keep 21 watching as we go along. And so that would be our 22 recommendation. 23 BOARD MEMBER D'ADAMO: Yes, I'd be fine with 24 that, just as -- you know, getting as much as possible as 25 soon as possible without unraveling the whole deal. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 133 1 CHAIRPERSON LLOYD: I'm going to, by the way -- 2 Thank you, Bonnie. I know we've got a group of 3 environmental people to testify, groups and various 4 representatives. I would sure appreciate it if you could 5 highlight the key issues and how they differ from Bonnie's 6 or add to Bonnie's, because I'm worried about Board 7 members -- it's going longer than I expected. 8 So if you can, just -- sorry, Patricia, to start 9 that now. But I just wanted to -- otherwise we run the 10 risk of not having a quorum, and that's not where we want 11 to be. 12 So Patricia Monahan, Diane Bailey, Mike 13 Neuenburg. 14 MS. MONAHAN: Good afternoon. Again, my name is 15 Patricia Monahan. I'm with the Union of Concerned 16 Scientists where I'm a senior analyst. 17 And I'm trying not to take it personally, Dr. 18 Lloyd, that I'm the one being castigated to -- or warned 19 at least to control my remarks. 20 I will indeed try to be pithy and succinct and 21 not repetitive. 22 But I do need to congratulate staff on tackling 23 this issue. We're seeing EPA completely ignoring this 24 critical issue. And I want to give kudos to the staff for 25 taking this on. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 134 1 I'd also like to congratulate CTA for its really 2 progressive efforts to try to get its members to reflash 3 their trucks. We're really impressed with the plan that 4 they've laid out, and want to give them their just due. 5 That said, I do have considerable -- while I 6 strongly support the mandatory program, I do have serious 7 concerns about the voluntary program. And the statements 8 by Mr. Mandel serve to increase my level of skepticism, 9 particularly two remarks that he made: 10 First, the question about if there were a 11 continual regulatory backstop, that it sounds as though 12 the voluntary agreement would not be -- that they would 13 not agree to that voluntary agreement. Now, that was my 14 interpretation of Mr. Mandel's remarks. Perhaps it's a 15 too negative interpretation. But from what I heard, if 16 there were a continual regulatory backstop, the voluntary 17 agreement would be negated. 18 And on that point I do have a question for staff, 19 which is -- we have heard sort of contradictory things 20 about whether a continual regulatory backstop could in 21 fact be developed. We heard in earlier conversations that 22 that would not be possible. Now I seem to be hearing that 23 that is possible. And my question is: Since it is 24 possible, what is the timeframe once you've come to the 25 Board and said, "Okay, they're not meeting their targets. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 135 1 Here's this regulation."? How long would the process be 2 once we realized that they don't meet their targets? 3 GENERAL COUNSEL JOHNSTON: Would the Board like 4 me to respond? 5 BOARD MEMBER HUGH FRIEDMAN: Yes, could you 6 respond, Ms. Johnston? 7 MS. MONAHAN: Yeah, that's a question. 8 GENERAL COUNSEL JOHNSTON: Okay. What can happen 9 is at these various milestones that we have beyond 10 December, and even at the December, for the December 11 review, we would notice this program as the -- the 12 voluntary program as a non-regulatory item for the Board's 13 consideration at the December meeting and at the 14 subsequent meetings. 15 And so it would be -- there would be a 45-day 16 notice for the item as a non-regulatory item. And 17 depending on, you know, where staff viewed the progress, 18 you know, and even if we viewed the progress as well, we 19 would have -- you know, the regulations can be ready to go 20 at any time. 21 And so if the Board at the December meeting or at 22 a subsequent review meeting determined that the progress 23 was not appropriate and the Board wished to impose a 24 regulatory program, staff would be able to do that at the 25 Board's direction very quickly through an emergency PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 136 1 regulation, which the Board could follow-up with a 2 subsequent 45-day notice for the program and have a full 3 discussion at that. 4 So that could happen, you know, within a matter 5 of weeks after the Board, you know, told the staff, I mean 6 even days after -- 7 BOARD MEMBER HUGH FRIEDMAN: Well, Ms. 8 Johnston -- Yeah, but a 45-day notice is more than -- more 9 than a month, and we meet monthly except in August. And 10 so -- 11 GENERAL COUNSEL JOHNSTON: Right. But an 12 emergency regulation takes effect within ten days of when 13 it's filed with the Office of Administrative Law. So 14 within ten days of the Board's determination that the rate 15 of progress was not sufficient, you would have the 16 regulatory program in place. So it -- really at most it 17 would be maybe two weeks after the Board met and 18 determined that the rate of progress was not sufficient 19 that the Board could have a regulation in place. And then 20 it's just a procedural matter to do the 45-day notice. 21 That's required under the California Administrative 22 Procedures Act to notice the regulatory program 23 subsequently. 24 BOARD MEMBER HUGH FRIEDMAN: Okay. Thank you. 25 MS. MONAHAN: Thank you. That's reassuring. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 137 1 My next issue that's been raised from these 2 discussions is the exclusion of out-of-state trucks. It 3 seems as though the early Board report didn't highlight 4 the assumption that the out-of-state trucks would be 5 having a sort of rapid drop-off in terms of their 6 emissions impact on the state. And it does seem as though 7 there's considerable uncertainty with those numbers. 8 But when I did a back-of-the-envelope calculation 9 considering the tremendous cost effectiveness of this 10 regulation for in-state California trucks, I did come out 11 with a number that was well below the amount that we're 12 asking of other industries that we regulate. 13 And so what I would ask the staff is: Have you 14 done a cost effectiveness analysis for these out-of-state 15 trucks? And if so, what numbers? Because mine are back 16 of the envelope. You guys have the real data. 17 EXECUTIVE OFFICER WITHERSPOON: Including any 18 vehicles in this program would be cost effective, so that 19 wasn't the issue. It was what the engine manufacturers 20 were willing to agree to as a matter of voluntary 21 compliance and our desire to concentrate on the biggest 22 bang for the buck in California and chase the heavy 23 heavies accumulating most of their miles in the state, so 24 that we could be meeting those targets on a tonnage basis 25 as opposed to just counting numbers of vehicles reflashed. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 138 1 And there is still an underlying requirement in 2 the consent decrees and settlement agreements nationwide 3 that every vehicle will ultimately be reflashed on 4 rebuild. This was for accelerated activity we 5 concentrated on in-state. 6 But if we go to regulation, we will include out 7 of state in the regulation of the Air Resources Board. 8 MS. MONAHAN: Okay. It did state in the 9 voluntary agreement that one of the reasons for the 10 exclusion of out-of-state trucks was that the per-vehicle 11 benefit was small. So that's why I bring that up. 12 Let me just make sure. 13 Again, I don't want to belabor points. I think 14 Bonnie touched on all the key points that we're concerned 15 about. 16 We do feel strongly that, you know, one of the 17 justifications for this voluntary program is the early 18 emission reductions that are coming. But the early 19 emissions reductions are coming because the program has 20 been pushed out further than the original September 21 proposal. So it's a numbers game here. 22 If you push out the deadline for the mandatory 23 compliance, you're going to push out the emissions 24 reductions, and that's why you're getting -- it's not 25 because the voluntary program is so much better. It's PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 139 1 because you're pushing out the regulatory deadlines. And 2 I think it's important to be clear on that point. 3 You know, I'd like to say, in conclusion, that 4 you are faced with a difficult choice. I mean I think 5 what you're seeing is, you know, a good faith effort by 6 CTA; you're seeing EMA coming forth and willing basically 7 to do what they should have done all along, which is pay 8 for reflashes, and not question who pays for the 9 reflashes, which I find just completely reprehensible that 10 there's any discussion over who pays for this. 11 We look at -- you know, Bonnie was saying that 12 2,500 premature deaths were attributed to this regulation. 13 And that was actually early EPA estimates. 14 BOARD MEMBER HUGH FRIEDMAN: Ms. Monahan, I'm 15 going to say this because it affects me. I'm leaving 16 in -- I've got to leave, catch a plane in 50 minutes. 17 This meeting was noticed till noon. Unfortunately, we 18 always seem to be pushing the envelope. 19 I would appreciate it if you'd -- any addition 20 that you feel hasn't been said that you want to 21 underscore, say again, I welcome it. But I wanted to make 22 it clear that we're running out of time and we have about 23 eight more people to hear before we can make a decision. 24 And I really want to make a decision. I very much want to 25 be involved in voting on this. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 140 1 MS. MONAHAN: Well, I appreciate the time 2 constraints you're operating under, and I'll just conclude 3 my comments there. 4 BOARD MEMBER HUGH FRIEDMAN: And I apologize 5 because you come at the end and that affects you. It's 6 too bad. 7 MS. MONAHAN: Okay. Actually, I'm coming at the 8 beginning since there's a ground swell behind me. 9 Anyway, thank you very much. 10 BOARD MEMBER HUGH FRIEDMAN: Well, thank you. 11 Thanks for your understanding. 12 Ms. Bailey and then Mr. Neuenburg and then Mr. 13 Campbell. 14 MS. BAILEY: Good afternoon, Board members and 15 staff. My name is Diane Bailey and I'm a scientist with 16 the Natural Resources Defense Council. 17 Thanks for the opportunity to speak here today. 18 And I'll keep my comments brief. 19 We are extremely concerned over this issue, as 20 you well know. But I want to take a step back for a 21 minute and commend you all for three very important 22 measures that you passed last month. And those are the 23 stationary engines, the portables, and the TRU's. And 24 we're very appreciative of those efforts, and they will 25 have a great impact on public health in California. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 141 1 The chip reflash rule could also have an enormous 2 positive impact in the state, reducing up to 49 tons of 3 NOx. And that's equivalent to one of the largest SIP 4 measures in the state, and so it's very significant. And 5 we should not be giving away some of those tons so easily. 6 As Patty already mentioned to you, this is one of 7 the most cost-effective rules that you're dealing with. 8 It's about $100 per ton, compared to other rules which are 9 several thousands of dollars per ton of NOx reduced. And 10 this is particularly important for the various 11 nonattainment areas throughout the state. 12 You're faced with a tough decision today of 13 accepting a weaker voluntary approach that can only 14 achieve two-thirds of the emission reductions of the 15 mandatory rule, at best. Or you can support the mandatory 16 approach that will assure 100 percent compliance, yet risk 17 legal action. 18 We urge you to stand up to the intimidating legal 19 threats of the engine manufacturers and move forward with 20 the strong mandatory rule that will ensure Californians 21 the pollution reductions that they deserve and that should 22 have occurred years ago. 23 The legal threats from the engine manufacturers 24 are truly reprehensible, and I won't rehash the details. 25 However, this voluntary approach that you're PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 142 1 faced with today has many flaws, and we have elaborated on 2 those flaws in our written comments. 3 So I just want to sum up the greatest flaw that 4 we have, and this is trust; that we can't be expected to 5 trust an industry that has cheated and has not truly 6 demonstrated their commitment to this voluntary approach 7 by doing many of the chip reflashes ahead of time and 8 coming to you and proving that today. We have seen less 9 than ten percent of chip reflashes performed, and we still 10 don't know how many of those have been performed in 11 California exactly. 12 Even if the engine manufacturers come through 13 with their obligations under the voluntary approach, this 14 program would still shortchange the public by one-third of 15 the expected emission reductions. And those are many tons 16 of NOx, which come at an expensive price through other 17 rules. And those are in the form of the 20 percent of 18 in-state compliance that is waived, as has already been 19 discussed, as well as the out-of-state vehicles that are 20 not falling under this approach. 21 Finally, whether the Board adopts the mandatory 22 rule either as a regulatory backstop or as a stand-alone 23 rule today, it is very important that that rule is kept 24 alive as an emergency measure, as the Board sees fit; and 25 also that the rule retains the original time frames PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 143 1 delayed only by six months, which is the time between the 2 original October 2003 Board hearing and today, and not the 3 elongated time frames in the currently proposed mandatory 4 rule. Especially in the event that you adopt the 5 voluntary approach today, those expedited time frames are 6 very important to keep. 7 So I thank you for your time today. 8 CHAIRPERSON LLOYD: Thank you. Diane, would you 9 be willing to serve on this implementation committee? 10 So -- 11 MS. BAILEY: Absolutely. 12 CHAIRPERSON LLOYD: Again, I think trust is a key 13 issue. And if you're willing to be there as part of it. 14 Would Patricia be willing to do that as well? 15 MS. MONAHAN: (Ms. Monahan nods head.) 16 CHAIRPERSON LLOYD: Thank you. 17 Thank you, Diane. 18 Mike Neuenburg, Todd Campbell, Rebecca Flournoy. 19 MR. NEUENBURG: Good afternoon. I'd like to 20 thank you for the time that you're taking to listen to us. 21 My name is Mike Neuenburg. I'm the Program Coordinator 22 for the Vehicle and Engine Technology Section at the 23 Sacramento Metropolitan AQMD. 24 Just want to reference a letter that we had sent 25 to the Board here within the last couple of days. And we PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 144 1 have three key points that we would like to discuss or at 2 least bring up to the attention of the Board today. 3 First off, we would like to support the volunteer 4 approach that's being discussed today and the need for a 5 regulatory backstop. We do believe it's vital for us at 6 this time as we continue to work towards reducing 7 emissions that we have here in the State of California. 8 What I'd also like to just add, that really this 9 regulatory backstop that we're talking about today really 10 does become moot as long as the volunteer approach is 11 effective. So despite all this talk that's going on with 12 the regulatory backstop, you know, if everything is 13 successful, all of this talk goes down by the way side. 14 We do also believe that if we end up reaching 15 this 80-percent achievement, that does affect most of the 16 urban areas, and as a result it's probably close to a 17 hundred percent compliance for the urban cities such as 18 the Sacramento area. And so we wouldn't necessarily feel 19 that there would be a need for a regulatory backstop at 20 that point in time. 21 One of the things that we would like to talk 22 about is, we'd like to request that if the Board does 23 adopt this voluntary approach today, that we would 24 consider moving up that 80-percent target goal to the same 25 date as the 60-percent target that's at May 31st of '05, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 145 1 next year. 2 So in other words, we're saying we'd like to move 3 that up about six months quicker. As all of you know, the 4 Sacramento nonattainment region is in the process of -- by 5 2005 we have a nonattainment deadline that we have to meet 6 for SIP credit goals. We need these emissions as soon as 7 we can possibly get them. There's no questions on that. 8 And we -- because of this deadline, we need to get these 9 emissions as soon as possible, and that's part of why 10 we're requesting that we move this up as quickly as 11 possible. 12 One of the things that we have as our goals for 13 the 2005 is that we do have a three-ton goal for on-road 14 emissions that we need to reduce by next year. This was 15 based on the 1994 on-road model. And on that model, all 16 these trucks that we're talking about here were expected 17 to be at a much lower emission level than what they're 18 currently at. 19 And so as a result, this has really hurt our 20 attainment efforts here in the region. It's probably 21 along the tune of about 1.57 tons, which actually would 22 make a big difference towards us trying to reach our goal 23 of three tons for next year on that attainment goal. 24 Another thing to keep in mind is that one and a 25 half tons actually relates to about 150,000 cars and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 146 1 light-duty trucks that would be effectively removed off 2 the road if we were to adopt this regulation -- volunteer 3 requirement and if we were to move quicker on it. 4 We'd also just like -- the CTA we understand has 5 informed us that really most of these trucks could also be 6 flashed or reprogrammed even by the end of this year if 7 this volunteer approach is adopted. And I think -- that's 8 correct, okay. And as a result, it appears that really 9 there's no reason why we couldn't actually try to achieve 10 the 80-percent goal by May of next year based on that 11 understanding right there. 12 And it could be done, as we've talked about 13 before, during the reasonable -- during the times where 14 trucks come in for the normal maintenance schedules, 15 whether it's an oil change or annual maintenance-type 16 checkups or even during a downtime for these trucks. So 17 there's really no additional cost to the truckers at this 18 point in time. They can come in during the normal 19 maintenance service intervals and get these -- the 20 reprogramming done. 21 Last off, I would like to talk about, also just 22 for our own region -- we have done about a thousand trucks 23 at this time in the Sacramento region for the reflash 24 program. One of the things that we're concerned about a 25 little bit as a district is just -- or at least would like PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 147 1 to make the Board aware of is that we would like to go to 2 claim our local SIP credit for this measure as well or at 3 least for the efforts that we have done at this point in 4 time, so that we can claim these for our 2005 SIP credit. 5 We've had -- we've been very effective on these 6 programs. And of course we did an incentive approach for 7 this area. But it turned out from our history that these 8 trucks were done very fast. It really didn't take much 9 time at all for them to actually have them done. And it 10 was, you know, pretty painless for the truckers to come in 11 here. 12 We did manage to get the message out to everybody 13 through whether newsletters or just by notifying fleets 14 that we knew of in the area. And so the notification 15 process was pretty easy to do that. 16 Really that's the main things we have right here, 17 is we wanted to make sure -- the three key points were, as 18 we said: We support this volunteer approach; we'd like to 19 bump the 80 percent up to the May deadline; and we would 20 like to make sure that we can claim credit for the efforts 21 that we have. 22 If you have any questions, I'd be more than happy 23 to entertain them. 24 CHAIRPERSON LLOYD: Yeah, and thank you. We're 25 clearly sensitive to your closer deadline, 2005, and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 148 1 anything we can do to help you make attainment by that 2 time. I think one of the other ways of doing that, if the 3 date can't be changed, is basically to focus on this area. 4 And I see Stephanie working on that, because she had on 5 her map nicely located areas. So some focus on that would 6 be very good. 7 MR. NEUENBURG: Yeah, that's a good point. And I 8 commend you for that, as well as Stephanie, because I did 9 see that on the chart as well. But we were first on that 10 chart to be able to try and reach those goals. So we 11 can -- 12 CHAIRPERSON LLOYD: And we want you to be 13 successful, too. 14 MR. NEUENBURG: All right. Thank you. 15 CHAIRPERSON LLOYD: Thank you very much. And 16 congratulations on the program you've already done. Maybe 17 we can learn something from that as well. Look forward to 18 sharing that information. 19 MR. NEUENBURG: Thank you for your kind comments. 20 CHAIRPERSON LLOYD: Thank you. 21 Todd Campbell, Rebecca Flournoy, Kathryn 22 Phillips. 23 MR. CAMPBELL: Good afternoon, members of the 24 Board and Lloyd. Todd Campbell, Coalition for the Clean 25 Air. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 149 1 CHAIRPERSON LLOYD: And so the whole Coalition is 2 not on vacation. So Tim doesn't represent the whole 3 coalition. So you can volunteer the help of the coalition 4 to Stephanie. 5 MR. CAMPBELL: Well, I am very impressed with 6 what Stephanie has brought before you today. And I 7 certainly think that that's a great commitment by someone 8 who I think has become a victim of this situation. 9 BOARD MEMBER DeSAULNIER: Relax, Stephanie. It's 10 okay. 11 (Laughter.) 12 MR. CAMPBELL: Yeah, you know, I don't think this 13 issue ever was with the truckers. It has to deal with the 14 engine manufacturers. And, you know, I thought that I was 15 going to be a lot more calm up here. I'm very angry, you 16 know. 17 Mr. McKinnon, you're angry. I am steaming, for 18 two reasons: One reason is -- you know, you guys may have 19 flights at 1:30, but that's fine. I have an equal right 20 to be up here just like Mr. Mandel does. And if you have 21 a flight at 1:30, I'm sorry you don't have a quorum. But 22 as a councilmember for the City of Burbank, I don't make 23 plans when I have obligations. I have a land-use 24 settlement committee meeting at 6 o'clock. I'm going to 25 be late because I planned to be here and represent my PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 150 1 organization on a measure that's going to have 49 tons per 2 day. 3 CHAIRPERSON LLOYD: We have a quorum. 4 MR. CAMPBELL: Well, you know, if this gets put 5 off, then too bad. You have to hear what I have to say. 6 I have an equal right. And it just upsets me. It's not 7 fair. 8 BOARD MEMBER HUGH FRIEDMAN: And you're quite 9 right, and I do apologize. And your comments are well 10 taken. 11 MR. CAMPBELL: Thank you, sir. 12 Well, let's get angry at the real people I'm 13 angry about. 14 The message that you hear today is: "Trust us. 15 You know, we're going to pull through this time. The 16 voluntary agreement is better than the regulatory 17 agreement. But don't force us to go down the road of a 18 regulatory agreement, because we're going to throw you in 19 court. And don't hold it in abeyance, because then you're 20 disingenuous." I'm sorry, folks, I don't buy it. 21 The reason why we're here is because the engine 22 manufacturers were disingenuous to us. We strongly 23 support the mandatory heavy-duty diesel software upgrade 24 regulation developed by the Air Resources Board staff in 25 December. We do not support the voluntary agreement. And PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 151 1 I'm really going to ask you to reconsider. 2 If I cheated on an exam at a university, and you 3 were my peers, would I be expelled, would I be failed for 4 the course, or would you slap me on the hand? 5 If I put someone at risk, caused premature death, 6 or caused cancer on anyone, would you slap me on the hand, 7 would you negotiate with me, or would you put me in jail. 8 I would prefer that if I ever did such a thing, 9 you would punish me, because that's what I would expect. 10 The issue at hand here is that emissions 11 standards are set for one very clear and basic reason: It 12 protects public health. The engine manufacturers were a 13 part of the process. They were well represented, just 14 like they are today. And they sold a product that they 15 made you believe, they made the truckers believe, that 16 they made Californians and the entire United States 17 believe that they were going to meet those standards. 18 Truth be known, it is a product that emits 19 millions of NOx tons in our state since 1993. 20 The engine manufacturers now are trying -- are 21 trying to sell you this voluntary program and are asking 22 you for fairness. Tell that to the community members who 23 have lost loved ones through respiratory disease or who 24 have come down with lung cancer. Tell that to the 25 communities of Wilmington, San Pedro, Boyle Heights, all PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 152 1 the communities that are lined up and down trade corridors 2 or harbored depots. Tell that to them. Tell that to our 3 school kids. Tell that to our local regulators who've 4 spent millions of dollars trying to clean up school buses, 5 trash trucks, vehicles of all sorts, to achieve clean air. 6 Tell that to regulators who -- whether you 7 believe the number or not, 80 percent of the emissions in 8 the region, in the South Coast, are attributed to mobile 9 sources. Two percent of the vehicles on California's 10 roads are responsible for 40 percent of the NOx emissions 11 in California. And we wonder why. We wonder why we have 12 a black box. 13 Tell that to Californians who want to achieve 14 clean air by 2010 and are being put on the chopping block 15 by the federal government for billions of dollars of 16 transportation funds. Tell that to them. 17 Let's talk about fairness because I like that 18 issue a lot. 19 What you have before you is probably the most 20 cost-effective decision in Board history. The Board has 21 an opportunity to adopt it, and it saves a tremendous 22 amount of lives, and it restores a promise made from day 23 one by the manufacturers. 24 The manufacturers point to the settlement stating 25 that the proper time for reflash is at time of rebuild, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 153 1 not now. That's their position. They're telling you, 2 "The reason why we're here now is because we all agreed to 3 rebuild as a starting point." The agencies during the 4 negotiations -- I just have to believe this -- had to be 5 under the understanding that rebuild would occur around 6 400 -- 300 to 400,000 miles. It had to be so. Not 7 750,000, not more than that. 8 So you cannot tell me that the manufacturers 9 actually did not know their own product, that they did not 10 have any understanding that it could be much longer than 11 the 300 or 400,000 miles. And it just hits me strongly 12 that these negotiations were never negotiated in good 13 faith. 14 I would further submit that if it is possible or 15 it could be possible that agency negotiators, considering 16 how cost effective this is, might have asked for the 17 reflash upgrade to occur during each truck's next 18 scheduled maintenance. I mean it seems reasonable. As 19 soon as you bring your truck in, you would do the half an 20 hour reflash. We would be done. 21 However, I have a feeling that the engine 22 manufacturers said that they wouldn't be up and running at 23 that time, that they needed more time to do the reflash 24 properly. And I just feel like -- just like in 1999, 25 where you were basically sold a bill of goods, here we are PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 154 1 in 2004 and you're asking -- you're being asked to buy 2 that same bill of goods in the form of a voluntary 3 agreement, but to accept a program that is 20 percent less 4 effective, with less oversight and fewer reporting 5 requirements, and -- oh, by the way -- add four years to 6 achieve less than the mandatory deadline originally 7 proposed before you in December. 8 Ladies and gentlemen, staff, you know, part of 9 the reason why unfortunately we're in this position is 10 because there was a closed session, and I'm pretty sure -11 you know, I know what closed sessions are about. I'm 12 pretty sure that they laid out a case for you that you 13 should accept the voluntary agreement because it's in the 14 best interests of Californians. 15 And I'm almost positive that they painted a 16 scenario that left you with a perception that you have no 17 reasonable option but to forego regulation today and trust 18 the manufacturers one last time and get the upfront tons, 19 but nonenforced upfront tons, voluntary upfront tons under 20 the voluntary program. You were probably also told that 21 if the manufacturers default, then you can go and use this 22 backstop. 23 Of course you were told you -- if you did, 24 they're not going to pay for the reflash and the deal's 25 off and we're going to go to litigation. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 155 1 I submit to you that it is time to stop relying 2 on the promises of the engine manufacturers and to start 3 standing up for California's communities. Let them take 4 you to court. You cannot afford to give up six to nine 5 tons per day. That's what the 20 percent is. If you give 6 that up, that's what you're giving away. You know, I 7 can -- you know, I respect Board Member Calhoun entirely. 8 But the whole point or rationale behind staff on 9 this issue is they accepted 80 percent because they didn't 10 think that they could achieve a hundred percent. Give me 11 one regulation where you think you can -- you get a 12 hundred percent compliance. There's no way, enforcement 13 wise, money wise. You can never get a hundred percent 14 enforcement. 15 But that doesn't mean you don't go for the brass 16 ring. That doesn't mean that you set your standards high. 17 You know, it's like accepting a C instead of 18 going for an A, you know. You don't put C's on your 19 refrigerator. You go for the A. You try to go for the 20 highest level. 21 So there's the old saying, "A bird in the hand is 22 worth two in the bush." The way I see this, you have two 23 birds in each hand, and you're being asked today to go for 24 the one in the bush. Stand up to these guys. These guys 25 don't own you. You're the Air Resources Board. You're PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 156 1 looking out for people's health. You have the power to 2 say no to someone who's telling you that they're going to 3 litigate against you if you don't agree with them. It's 4 like a deal that you can't refuse. I feel like it's Don 5 Mandel. And, I'm sorry, I just don't think that as an 6 acceptable way to do business with an industry that has 7 done so much damage to us already. 8 Thank you. 9 CHAIRPERSON LLOYD: Thank you, Todd. 10 Questions? 11 Just to ask staff, just to paint the picture 12 again. Do we get more tons sooner or later with this 13 approach? 14 EXECUTIVE OFFICER WITHERSPOON: We absolutely get 15 more tons sooner because reflashes happen immediately 16 based on who responds to the overtures for voluntary 17 reflash and they're paid for. If the Board does not 18 embrace the voluntary agreement at all, instead moves to 19 regulate, at the time that regulation -- nothing will 20 happen in the interim in the months it takes to process 21 the reg. And at the time the reg takes effect, litigation 22 is expected. 23 And it won't be until the conclusion of that 24 litigation that we can implement the regulation and 25 proceed to the hundred percent compliance. It will be PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 157 1 sometime in '06, '07, '08. 2 So staff did express a preference for earlier 3 tons, more certain tons now, with the recognition we may 4 not be identical to the regulatory targets, but we don't 5 have a great certainty of being able to implement that reg 6 as quickly as we would like. 7 MR. CAMPBELL: Mr. Chairman, can I respond? 8 It may be true that you'll get reductions sooner. 9 But the question is: What are the quantity of those 10 reductions? And hopefully we can monitor the situation. 11 I know that we have a very talented staff here. I know 12 that they have the resources to do a lot of good. My 13 question here is: They claim to say that they're going to 14 do more than the 80 percent. What's the problem with 15 requiring it to be a hundred percent? And why not 16 establish a hundred percent by 2008? Or 2010? 17 You know, there's a reason why they're not 18 pursuing the regulatory approach. And they're trying to 19 force you -- or encourage you to move away from the 20 regulatory approach by saying that, "If you do that, we're 21 going to punish the people who bought our product." And I 22 have a real tough time understanding that if I was a 23 customer and this was my manufacturer, and it was their 24 fault, they're going to tell me to pay for something. I 25 think that you have an opportunity to get everything you PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 158 1 want before 2010 at a hundred percent. 2 It's the cheapest, most cost-effective thing 3 that's come before this Board in a long time. I hope you 4 move ahead. 5 CHAIRPERSON LLOYD: I think I understand a lot of 6 where you're coming from, Todd. The settlement agreement, 7 unfortunately, is there. That's a reality. And also, as 8 we heard from Sacramento, they need these tons sooner 9 rather than later. 10 So we have a delicate balancing act, and I think 11 as Mr. McKinnon described some of the sentiments earlier. 12 We clearly -- you know, to deliberate very carefully. And 13 I think probably we'll end up typing some of these 14 requirements. And I think your offer to work with us, and 15 your colleagues -- because we have an offer in this by the 16 end of the year to make sure this is really working. 17 MR. CAMPBELL: I'm extremely sensitive to 18 Sacramento and their needs. But I'm also sensitive to the 19 people where I live. I cannot tell you -- I cannot 20 exercise during the day. I have to wait either in the 21 morning or in the very evening. I don't think that's 22 fair. I think that there's a lot of people in this state 23 that are not being considered to meet one area's 24 attainment area. And I think we should be meeting 25 everyone's attainment area. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 159 1 CHAIRPERSON LLOYD: I beg to differ on that. Our 2 job is to protect the health of all Californians. 3 MR. CAMPBELL: I agree. 4 CHAIRPERSON LLOYD: And including balancing the 5 environment with the economy as well. We have to look at 6 the truckers here too. So it's an important thing to try 7 to balance, you know. 8 I appreciate your zeal. I understand how 9 committed you are. And I appreciate very much and 10 congratulate you on that, with the work you're doing in 11 Burbank. 12 It's a tough decision for us. It's really tough, 13 as you heard from the discussions here. And, 14 unfortunately, as you say, it's cost effective; but with 15 the settlement agreement there, it's not as 16 straightforward. If we had a clean sheet of paper, it 17 would be much easier. Unfortunately, we don't have that. 18 MR. CAMPBELL: I understand you're under a 19 tremendous amount of pressure. And there's no easy 20 decision. There's -- 21 CHAIRPERSON LLOYD: And I appreciate that you -- 22 you taking the time also to come up here. We didn't -- as 23 Professor Friedman said, we didn't want to shortchange 24 that. It was the idea if you're going over some of the 25 same issues, that was the only thing. But I don't think PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 160 1 you've ever found this Board trying to shortchange the 2 environmental community. 3 MR. CAMPBELL: And I don't believe that's the 4 intent either. But I guess my feeling is on that issue 5 that when I commit to be somewhere, I'm going to be there. 6 CHAIRPERSON LLOYD: It was probably my fault as 7 much as anybody on the Board here, because I assumed this 8 was going to be over relatively quickly. I should know 9 better from history it never happens that way. 10 MR. CAMPBELL: Hey, none of us are perfect, none 11 of us are perfect. 12 CHAIRPERSON LLOYD: I'll bear the responsibility 13 for that. 14 So thank you very much, Todd. 15 MR. CAMPBELL: Thank you. 16 Rebecca Flournoy, Kathryn Phillips, Dalbir 17 Dhaliwal. 18 MS. FLOURNOY: Good afternoon. 19 I am here today representing Community Action to 20 Fight Asthma, which is a network of 12 coalitions across 21 the State of California, four regional centers, and a 22 state coordinating office. And our coalitions are trying 23 to reduce environmental triggers of asthma for school-age 24 children in California. 25 Our coalition membership is pretty broad. In PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 161 1 these different coalitions we've got parents, teachers, 2 environmental justice groups, school administrators, 3 nurses, physicians. We have truckers on some of our 4 coalitions. It's a very broad-based group. 5 CHAIRPERSON LLOYD: Is this a new group? 6 MS. FLOURNOY: It's been around for two years 7 now. And most of the funding is coming from the 8 California Endowment. 9 And just to let you know, that these community 10 members are very concerned about diesel. And we're 11 pleased to see that the Air Resources Board is working to 12 address these issues. And we appreciate the hard work 13 that the -- that the -- that they say -- and I don't 14 know... 15 CHAIRPERSON LLOYD: We'll just recess until 20 16 minutes of on that clock. 17 (Thereupon a recess was taken.)[To accommodate the witness.] 18 CHAIRPERSON LLOYD: We'll recommence the Board 19 meeting. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 162 8 I was just mentioning that I'm with Community 9 Action to Fight Asthma, which is this network of 10 coalitions focused on reducing environmental triggers of 11 asthma. 12 And these coalitions have chosen -- they're doing 13 a lot of programs and policies at the local level. But 14 they've also been looking at ways that state policies can 15 make changes in the communities where they live in ways 16 that would reduce triggers of asthma for these kids that 17 they work with. 18 And a lot of our communities are near freeways. 19 They're near ports, truck stops. And so there's a lot of 20 concern about diesel. I mean we're certainly glad that 21 the Air Resources Board is addressing this issue. And we 22 understand the hard work that the staff has done to put 23 together this voluntary agreement. 24 As I think we mentioned, we have some truckers on 25 our coalitions. And we want to make sure that whatever PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 163 1 agreement is put in place, that it will not be the cost to 2 truckers because clearly it's not their fault. 3 But it's also not the fault of these communities 4 either, and they shouldn't have to bear the burden for 5 this -- for what the manufacturer has done. 6 And so I just want to let you know that we have a 7 lot of concerns about the voluntary program that you're 8 proposing. And we request that you go back to the table 9 to renegotiate this, to make this stronger, to work it 10 out. And if it can't be worked out, we request that you 11 seriously consider returning to a mandatory regulation. 12 A number of different groups have highlighted 13 some of the problems with the voluntary program. And I'll 14 just highlight a couple of those. We think it's very 15 important to set the goal at a hundred percent. Certainly 16 you may not achieve that and no one would expect that you 17 would, but you want to set that goal and keep your eye on 18 that. Because if we set it at 80 percent, as soon as we 19 take our eye off the ball, I think it doesn't continue to 20 increase, but it actually will stop at that point or will 21 not increase very much more. So we want to set a high 22 standard, work as hard as we can to get to that point. 23 And we assume that the Board has a lot of 24 discretion here and would not put a mandatory regulation 25 in place if there's a good-faith effort on the part of the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 164 1 manufacturers and the truckers to make this happen and 2 make this voluntary program work. 3 We also think it's very important to have the 4 stick ready, to have this backstop measure in place, so 5 that there is always some threat, if the manufacturers are 6 not doing enough in working with the dealers and doing 7 outreach to the truckers, to get this met. We think you 8 always need to have the option to return to that and go to 9 the mandatory regulations very quickly. 10 We also think it's important to cover out of 11 state as well as in-state and not at the expense of fixing 12 in-state vehicles. We want to try and see a hundred 13 percent of those in-state vehicles fixed. 14 And I guess, finally, again, I just wanted to 15 reiterate that this problem was created by the 16 manufacturers and it's a very large problem, huge problem 17 for our communities in these areas. There's been lots of 18 research. I think you heard some this morning. And I'm 19 sure you're aware of the research on the connection 20 between diesel pollution and asthma. And we're really 21 concerned about this issue in our communities. 22 We know that there's connection there, and we 23 want to see these reductions to the greatest extent 24 possible. And so we ask that you put in place the 25 strongest regulations or program you possibly can to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 165 1 reduce the burden on these communities in California, to 2 reduce the burden on truckers to make sure that they don't 3 have to pay for this because this isn't their fault 4 either, but that you hold the manufacturers responsible. 5 They created this problem. They should really fix it. 6 CHAIRPERSON LLOYD: Thank you very much. 7 Just a clarification. You recognize a lot of the 8 health problems that people have identified with diesel 9 being from diesel particulate. That was the ones 10 identified as a TAC. This is to reduce the NOx out there. 11 Clearly that's also a significant issue for ozone 12 particulates as well. But -- 13 MS. FLOURNOY: Exactly. And, you know, I know 14 there's a lot of good research being done by Dr. Rob 15 McConnell in southern California and a number of different 16 researchers. And I think at this point there's a lot that 17 we don't know. But we're trying to look at both 18 particulate issues and ozone and trying to address that to 19 reduce asthma. 20 CHAIRPERSON LLOYD: And you heard from the first 21 item this morning, VOCs and asthma. So, you know, it's a 22 complex mix out there. We have to cut everything back to 23 the maximum extent possible. 24 But thank you very much. 25 Any questions or comments? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 166 1 Thank you. I'm glad you're feeling better. 2 MS. FLOURNOY: Thank you. 3 CHAIRPERSON LLOYD: Kathryn Phillips, Dalbir 4 Dhaliwal, and Dean Kitak. 5 MS. PHILLIPS: Kathryn Phillips with the Center 6 for Energy Efficiency and Renewable Technologies. 7 I just wanted to make a couple of quick sort of 8 clarifying comments about why -- and one of those is about 9 why it's important to have more regular check-ins with the 10 industry, more regular monitoring, especially in that 11 period between 2006 and whenever it is that you're 12 anticipating the end of this program. I know 2010 has 13 been mentioned. 14 And in my previous life I was an independent 15 contractor, a sole proprietor, and I dealt -- did business 16 with a lot of national companies. And I know that smaller 17 companies tend to be the ones that are paid last. I think 18 it's really important to ensure for this program to be 19 successful, if you do a voluntary program, that the 20 dealers are actually being reimbursed in a timely manner 21 over the long term of this program. 22 That's why you need to have these check-ins, so 23 that you can anticipate -- you can see some trends, you 24 might be able to pick up some indication whether or not 25 the manufacturers are following through. Because if the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 167 1 dealers don't get paid, they will not do the reflashes. 2 That's just what will happen. 3 So, again, I'm encouraging you to do this 4 quarterly reporting if you go with the voluntary. 5 Another thing is that -- back to the issue of 6 when do you count out of state or do you not count out of 7 state. On the specific point of whether you start 8 counting out-of-state credits for the credit purpose at 60 9 percent or 80 percent, it really doesn't sound like it 10 makes any sense to start counting out-of-state credits at 11 60 percent when what you've decided in this regulation is 12 that you can really only go after the in-state or that's 13 the ones that you can force -- or that the manufacturers 14 have agreed to pay for. 15 So it makes sense, to get the full benefit of 16 this effort by this agency, to go as -- to get the full 17 benefit within the state as much as you can. So until 18 you've met at least that 80 percent you shouldn't be 19 counting those out-of-state credits because, as Tom was 20 saying earlier, it sounds like you'd only get like three 21 percent of a benefit from each of those out-of-state 22 vehicles. So, you know, I don't understand why staff put 23 it at 60 percent. It sounds like it wasn't analyzed or 24 anything. But it makes sense to go with 80 percent. 25 And then, finally, I'm still confused, and my PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 168 1 concerns -- I think my confusion was enhanced by some of 2 the remarks Jed made earlier about what the backstop 3 means. And I think one of the key problems with the 4 negotiations that occurred in '98, '99 was apparently 5 there was a lack of proper communication and everybody was 6 talking about something different even though they were 7 using the same words. And I would feel more comfortable 8 and I would think it would be helpful to the Board if 9 before this -- before you make a decision about this, if 10 there was clear understanding of whether or not -- what 11 this backstop means. And I'd appreciate that. 12 So thank you. 13 CHAIRPERSON LLOYD: I'm sure Catherine can 14 explain what we understand by that. 15 Catherine. 16 Or, Tom, did you want to -- 17 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Well, 18 I'm not sure where the misunderstanding is. But the 19 general idea in simplest terms, the backstop is that if we 20 find out that the voluntary program doesn't work -- and 21 there's obviously some risk that it might not work the way 22 we hope -- then we would have a regulation that could go 23 in to effect quickly, not in a typical year to get one 24 developed to the Board and through the OAL process, but 25 one that could go in to place very quickly. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 169 1 So we're doing two things here: One is holding 2 the initial regulation that's also in front of you today, 3 that you may choose to adopt or may not -- holding that in 4 a way that you could act on it very quickly in December. 5 And then after that, assuming that you haven't done that 6 and the voluntary program goes forth, Diane has laid out a 7 process by which using emergency procedures you could 8 impose another regulation and put the due process part to 9 the end. 10 But either way you could act in a very timely 11 manner by saying, "Gee, this isn't working. And we need 12 to have a regulation." And I just want to point out one 13 more time, is that -- maybe for the audience more than the 14 Board -- but in one year from now in December we're not 15 going to have any more significant number of reflashes 16 under the current status quo. And we're going to -- even 17 if it's not 35 percent under the voluntary program, it's 18 gong to be a lot more. So, at that point, we'll have 19 achieved some benefits even if the voluntary program 20 doesn't look like it's sustainable, and it will be a 21 victory. And then you can do the regulation at that time 22 with just minimal delay compared to adopting it only 23 today. 24 So that's why we call it a no-loss or no-regrets 25 policy, is we think we'll win either way. We're confident PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 170 1 the voluntary program will work. But there's really 2 nothing to be lost here by giving it a try for the next 3 nine months. 4 CHAIRPERSON LLOYD: I thought where Jed -- and 5 maybe correct me if I'm wrong here -- or Jed will, I'm 6 sure -- but I thought there was a difference, is that, as 7 you described the process, Tom, we would basically pull 8 the trigger not at the end of this year. And then if 9 everything was going smoothly, we would remove the threat 10 of the reg at that time. But the Board reserves the right 11 at any point to come back rapidly to correct a situation 12 which is not panning out in the future years the way we 13 stated it. But when there was the impression that this 14 reg would be continued, sort of a continued threat there, 15 that's where I understand where Jed had a problem. 16 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Yeah. 17 And I think -- you know, we did -- 18 CHAIRPERSON LLOYD: Was that correct, Jed? 19 MR. MANDEL: I'll try and be brief. But I think 20 you have it absolutely right, Dr. Lloyd. 21 Our big concern and our understanding is that in 22 December if this program is unsuccessful in the Board's 23 eye, that regulation automatically gets presented to OAL 24 and gets put in effect. There's no more hearing, no more 25 testimony. Our concern was not that there not be some -- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 171 1 again, pejorative term -- threat of regulation, but that 2 we have a process. And if we'd been working towards it, 3 that we have that process and would have an opportunity to 4 appear before the Board and explain to you why a 5 regulatory program may or may not be at that point in the 6 best interests of the State, maybe diminishing returns. 7 So it really is that process issue. And I 8 thought Catherine in her comments earlier did capture 9 that. And I think you've done it absolutely correctly. 10 GENERAL COUNSEL JOHNSTON: And if I may add one 11 more thing, just as a point of clarification either to the 12 Board members or to the audience. 13 When the Board adopts an emergency regulation, 14 the regulation goes in to effect immediately. There's no 15 delay and implementation. 16 CHAIRPERSON LLOYD: Yes. 17 Supervisor DeSaulnier. 18 No, I guess we've got Kathryn -- did you finish, 19 Kathryn. 20 MS. PHILLIPS: Yeah, with the exception of one 21 more thing that I thought of. 22 The manufacturers have presented CARB with 23 letters that you're going to be -- that are the letters 24 they're basically going to be sending out to the dealers. 25 And I think it would be helpful if as this -- when they're PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 172 1 required to report or CARB is required to do its analysis 2 of how this reg is going, if correspondence specifically 3 on this from the dealers could be made available by EMA, 4 that would also help CARB measure whether or not the 5 dealers are actually performing the work or are clear 6 about what their reimbursement is or what they're allowed 7 to be reimbursed and maybe anticipate any controversies 8 that could stand in the way of it being successful. 9 CHAIRPERSON LLOYD: Okay. Good point. 10 I presume -- Jed, are these going to be sent out 11 in Spanish as well as English or -- 12 MR. MANDEL: I honestly don't know the answer to 13 that. 14 Is that -- I mean I don't think the dealers have 15 a problem with reading English other than the way -- 16 English that we speak it, but -- 17 CHAIRPERSON LLOYD: I was just asking a question 18 because we're sensitive to that. But I don't know whether 19 it's germane to this particular item or not. 20 MR. MANDEL: Again, these are business 21 communications between engine manufacturers and their 22 dealers. There are a relatively small number of them. 23 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Yeah. 24 We're talking about in this case I think the 25 correspondence to dealers, which is probably, I don't PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 173 1 know, a hundred or less in the state. But I think the -- 2 Kathryn's sort of indicated that they wanted to see what 3 came back from the dealers. I don't think there will be 4 anything, you know, back from the dealers. I mean they're 5 going to get a letter from the engine manufacturers 6 saying, "We're asking you to do this, and we'll pay for 7 it." And I don't think there'll be a letter back saying, 8 "Yes. Thank you for that." 9 But what we will do I think is important, and 10 maybe this is what she was getting at, is that we want to 11 go out and look at the dealership records and make sure 12 that when trucks came in, it was written on there "due to 13 the reflash", and that the dealers weren't deciding it 14 was, you know, more profitable to do something else than 15 what the engine manufacturers were asking them to do. 16 CHAIRPERSON LLOYD: Thank you. 17 BOARD MEMBER RIORDAN: Mr. Chairman, if I heard 18 her correctly, I think what she was also asking was that 19 if there was correspondence between the dealers and the 20 manufacturers of some sort of perhaps lack of payment or 21 any other thing that was causing a difficulty, that we 22 might know about this. And I don't know whether that is 23 a -- if you can ask for that kind of information. But 24 it's anticipating a difficulty which may or may not 25 happen. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 174 1 I don't know what the relationship between 2 manufacturers and dealers are. But conceivably you could, 3 under some circumstances, have either lack of payment or 4 timing of payment that works a real hardship on a 5 dealership. Therefore, a dealership's not necessarily 6 wanting to participate with the aggression that we want to 7 have happen. 8 MS. PHILLIPS: That's absolutely what I meant. 9 And then I would suspect that Jed would be able to comment 10 now on whether that's something that's possible for them 11 to do, because it seems a fairly minor agreement. 12 MR. MANDEL: I'll be happy to try and answer. 13 First of all, I think we don't -- I mean perhaps 14 we don't understand the relationship always between the 15 engine manufacturer and their dealer. In some cases the 16 dealers are substantially bigger businesses or more 17 profitable businesses than the engine manufacturers are. 18 This is a healthy business-to-business relationship. And 19 I don't think we can possibly envision a scenario where 20 the dealer is not getting reimbursed by the engine 21 manufacturer and somehow doesn't have leverage over the 22 engine manufacturer to assure it. That has never been an 23 issue that I've heard about. And I would be stunned if 24 that became a problem under this program. If anything, 25 it's quite the opposite in terms of, again, kind of who PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 175 1 rules that relationship. 2 In terms of a program that would specifically 3 require divulging that correspondence or that payment 4 scheme, I think that there actually will be some 5 push-back, only because of the proprietary nature of that 6 and the business relationship, which I think the market 7 place will well take care of, as I said, in terms of 8 dealers being assured that they're not going to do these 9 without getting paid for them and that they'll squawk to 10 the engine manufacturer well before they'd have to squawk 11 to anybody else. 12 CHAIRPERSON LLOYD: Thank you. 13 Next we have -- 14 BOARD MEMBER DeSAULNIER: Mr. Chairman? 15 CHAIRPERSON LLOYD: Oh, sorry. 16 BOARD MEMBER DeSAULNIER: I just have a question, 17 Jed. 18 I don't want to put you in -- but I'm having a 19 hard time really understanding this 500 pound elephant 20 that's in the room. 21 You said you understood that if the process 22 doesn't work, the regulation would go in effect at the end 23 of the year. And then what would happen? 24 MR. MANDEL: Well, unfortunately, I think we're 25 at the place that none of us want to be, which is there's PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 176 1 likely to be litigation at that time over the 2 litigation -- over the regulation. I do think that the 3 point that Tom Cackette made a moment ago, which I tried 4 to make earlier and, again, may have been lost on the 5 Board, is that even if that were to happen, there are 6 benefits under the voluntary program. 7 I mean you saw a pretty impressive presentation 8 by CTA in terms of the programs that they have in place 9 right now ready to go. You've heard my representation in 10 terms of our ready and willing and ableness to reimburse 11 our dealers. Those draft letters are, as I said, set to 12 go. We think that there will be reflashes between now and 13 the end of the year. I mean there's no question about it. 14 If, in fact, the voluntary program's initial goal 15 is unsuccessful and the regulatory program essentially 16 automatically goes in to place, we've put off to tomorrow 17 what we didn't want to do today, which is to end up 18 litigating that regulatory program. But from the Board's 19 perspective, it does so with -- again, picking up on Tom's 20 words -- a sort of no-regrets approach because you've got 21 benefits that in the meantime that you never would have 22 gotten. 23 And from a engine manufacturers' perspective, 24 honestly there are some regrets, because we wouldn't do 25 this program if we thought that, you know, it's PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 177 1 automatically going to trigger a regulatory program. So 2 we have a healthy sense of optimism that with the efforts 3 that we've seen from CTA, with the support from the Board, 4 hopefully with the support from other stakeholders 5 including environmental organizations, truckers will 6 really bring their vehicles in, and we absolutely will pay 7 for the reflash, again, authorized vehicle -- authorized 8 dealer, et cetera. 9 So we're hopeful the program works. And it's no 10 success for us to pay for these for six or nine months and 11 then faced with a regulatory program and feel that we have 12 to defend again what was done previously, the settlement 13 agreements, the Board's authority to do the regulatory 14 program. Again, we hope that never happens. 15 BOARD MEMBER DeSAULNIER: Okay. 16 CHAIRPERSON LLOYD: Thank you. So do we. 17 Dalbir Dhaliwal, and Dean Kitak. 18 MR. DHALIWAL: Good afternoon. I think I'm the 19 only one person from the trucking owner/operators. But 20 many people can't afford to come over here. I agree with 21 you, that we like clean air. That's a very good thing. 22 But I don't want you guys put all the ordinance 23 on those owner/operator. They are at the end. They are 24 just surviving. They are not living. You can see their 25 broken truck. Nobody like to run a broken truck, because PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 178 1 they don't have money in their pocket. 2 I want -- if you want to pass this law, ask those 3 people who made this mistake. This mistake made by the 4 company who made the trucks or the chips 13 years ago. 5 And now they telling us to replace this chip. Because by 6 you guys pushing these people, like let me give you the 7 example for the inspection. 8 We are picking up a trailer from the Union 9 Pacific Railroads. The guys don't do the inspection. But 10 are we going to find -- there's no inspection, we need to 11 find their mechanic. This take one hour for nothing. We 12 don't get paid for this. 13 Then the people start to give the black pens in 14 their pocket. Whenever they see the trailer, there's no 15 inspection on that. 16 They ride into the state, take it to there, and 17 release the tractor -- I mean release the trailer. And 18 they just get stop on this scale, the guys pay the price 19 instead of the Union Pacific. 20 Please do not target the truckers. You might see 21 the railroad -- Union Pacific Railroads. They make more 22 smoke than the truckers, maybe more than bond-holding 23 trucks. After you go like this, please take your dose 24 smoke, too. It doesn't make the truckers are bad because 25 nobody like to be stuck on the highways. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 179 1 So we don't want that we need to keep the old 2 chip in our pocket while we go across the scale. We open 3 the window and show the CHP, we just done this yesterday. 4 Because the people are going to get stuck in there. So 5 this is the only way to hide the truth. So I don't want 6 to hide the truth. 7 I just want -- take the responsible people for 8 that. Because while we talking to the dealers, they are 9 taking half an hour to one hour to fix this chip. We need 10 to leave our trucks over there for a day or more. This is 11 the truth. Anybody can go there and see. All they got is 12 dealing with these people. 13 So the problem is voluntary or whatever it is, we 14 don't hesitate to go over to the lot. The only problem is 15 take the right position. I don't want -- we're going to 16 set on the branch, going to cut it down ourselves. 17 So please take care. We can do the right thing. 18 This is the right thing that we can take the responsible 19 people. If we're going to say after one year we need to 20 go to the inspection, and are they going to blame it and 21 going to charge the more money because they expend zero 22 money last time. 23 So the problem is, if this is wrong, they need to 24 refix it as long -- like you going to buy a truck from one 25 dealer, you go there, they present to the -- the truck is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 180 1 passed. You take this truck to the other dealer, the 2 truck is failed because they have their own mechanics, own 3 machines, they can do whatever they want. 4 That's all I want to tell you. Thank you very 5 much. 6 CHAIRPERSON LLOYD: Thank you. 7 Dean Kitak. 8 MR. KITAK: Hi. I'm Dean. How are you? 9 I'm glad I get to speak here. I was talking to 10 the gentleman from the engine company. I was just -- I 11 asked him how much it cost for a dealership -- or for an 12 individual to come in and do the engine reflash. 13 And what did you state, it was nothing? It 14 didn't cost anything to do the reflash? 15 MR. MANDEL: Cost who? 16 MR. KITAK: Cost the engine company or the 17 dealership. 18 MR. MANDEL: Oh, no, no. 19 CHAIRPERSON LLOYD: Are you addressing the Board? 20 Or now is Jed taking over here? 21 MR. KITAK: Jed -- come on over, Jed. 22 Is that okay if he comes over? I just want to 23 ask a few questions. 24 CHAIRPERSON LLOYD: Okay. 25 MR. MANDEL: There is a cost to the reflash. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 181 1 There's a set labor rate that the engine manufacturer pays 2 for the reflash. As we talked about in December, when 3 that reflash is done in the context of a much larger 4 rebuild, it's a relatively minor cost because there's lots 5 of other labor, lots of other things that are being done 6 in the context of that. 7 But there is a set labor rate. And that's the 8 agreement that -- the commitment that we're making in 9 terms of these voluntary reflashes that the engine 10 manufacturer would reimburse the dealer for. 11 One of the other things that we have to recognize 12 is when a truck is brought in for the service, there's 13 also a -- what I'll call a soft cost. It's not 14 insignificant, we're just not measuring it, which is the 15 time that that truck is out of service and having to be, 16 you know, in the shop to be reflashed. And that's a time 17 that we can't necessarily control. 18 MR. KITAK: So we're not talking about a rebuild; 19 we're talking just to get reflashed, that there's a 20 charge? 21 MR. MANDEL: Yes. 22 MR. KITAK: Okay. But outside you said there 23 wasn't a charge. 24 MR. MANDEL: Well, I -- 25 MR. KITAK: I'm just, you know -- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 182 1 MR. MANDEL: No, I didn't, but -- 2 MR. KITAK: Okay. 3 MR. MANDEL: I'm clarifying it now on the record, 4 for the work -- 5 MR. KITAK: Okay. Now, the thing is is on the 6 reflashing -- okay. I just wanted to ask -- I don't -- 7 since -- I just wanted to ask on the reflash, how long 8 does this usually take to do? He's stating that it is a 9 cost for the engine companies to do the reflash. 10 Pretty much what's it consist of is you go over 11 to the truck, get the engine number. You call Detroit or 12 Cummins or Cat, whatever engine manufacturer, you know, 13 any engine company. And then what they do is after you 14 give them a call they E-mail you back -- this all takes 15 15, 20 minutes. And then you have a mechanic download it. 16 And this is all done within an hour. 17 This gentleman that works and has a trucking 18 company, he could call in the engine serial number in 19 advance to where he wouldn't be down one or two days. 20 CHAIRPERSON LLOYD: At the last Board meeting we 21 had a demonstration of -- 22 MR. KITAK: Oh, good. So you're familiar with 23 the ECM and how they have to go into the computer and 24 everything? 25 CHAIRPERSON LLOYD: Yes. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 183 1 MR. KITAK: Okay. The dealership that I work, 2 I've got probably -- see, on the incentive programs that 3 the gentleman from the AQMD spoke of -- I've been taking a 4 lot of the older trucks off the road and putting into 5 newer trucks. And a lot of them had to be reflashed. And 6 I've got probably -- in POs I've paid about $30,000 over 7 the last year to engine manufacturers, which this is 8 coming off the top of individuals that want it done, 9 either incentive, that is, State money. 10 It's gotten to the point to where the engine 11 companies -- I've been working around them for 18 years. 12 I've been in this business for a long time. And they do 13 change their mind like they change their underwear. I 14 mean they do. I've been around it a long time. So -15 BOARD MEMBER DeSAULNIER: That often? 16 (Laughter.) 17 MR. KITAK: That often, yeah. 18 But you know what? If it wasn't for them, we 19 wouldn't have any of this. Everything's moved by a truck. 20 We wouldn't have anything there. 21 So you got to give the engine companies -- I just 22 feel that -- how many cars are in California, five 23 million? And we'd smog them. Why don't we smog the 24 trucks with the reflash? Why don't we have it to where 25 it's, okay, two years; you have half of them in one year, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 184 1 half in the other year. And you can't register your truck 2 until you get it reflashed. We'll have them all done in 3 two years, a hundred percent. 4 I don't know. 5 CHAIRPERSON LLOYD: Thank you. 6 MR. KITAK: Thank you. 7 CHAIRPERSON LLOYD: Thank you very much indeed. 8 Yes, Mr. McKinnon. 9 BOARD MEMBER McKINNON: Yeah. 10 Sir, sir, sir. 11 And we have to move, because we're -- we're going 12 to lose somebody? 13 MR. KITAK: I have to cram everything in like 14 five minutes -- 15 BOARD MEMBER DeSAULNIER: -- change my underwear. 16 MR. KITAK: Yeah, there you -- 17 (Laughter.) 18 BOARD MEMBER McKINNON: You work in one of the 19 shops, right? 20 MR. KITAK: I'm a salesman, yeah. And I deal 21 with the people, the individuals out there. I deal with 22 the derating. I take care of it all. 23 BOARD MEMBER McKINNON: But you don't work in one 24 of the shops. Never mind. 25 MR. KITAK: I do. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 185 1 BOARD MEMBER McKINNON: You do? 2 MR. KITAK: Oh, yeah, I do that. I've been a 3 mechanic. 4 BOARD MEMBER McKINNON: This is not a full-blown 5 diesel mechanic job. I mean this is something an 6 apprentice could do. This is something -- this is quick 7 and dirty and -- 8 MR. KITAK: -- real easy. 9 BOARD MEMBER McKINNON: I may want to have diesel 10 mechanics around if something goes wrong. But this is not 11 a high dollar thing to do that -- 12 MR. KITAK: You hook up a little computer to -- 13 excuse me. You hook up a little computer to the truck. 14 You sit there, you program it, and you download what the 15 engine companies send you. You're done. 16 BOARD MEMBER McKINNON: Thanks. 17 MR. KITAK: You're welcome. Thank you. 18 CHAIRPERSON LLOYD: Thank you very much. 19 Ms. Witherspoon, you don't have any other 20 questions, do you? Comments? 21 EXECUTIVE OFFICER WITHERSPOON: No. 22 CHAIRPERSON LLOYD: Thank you. 23 I will now close the record on this agenda item. 24 However, the record will be reopened if and when the 25 15-day notice of public availability is issued. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 186 1 Written or oral comments received after this 2 hearing date but before the 15-day notice is issued will 3 not be accepted as part of the official record on this 4 agenda item. 5 If and when the record is reopened for a 15-day 6 comment period, the public may submit written comments on 7 the proposed changes which will be considered and 8 responded to in the final statement of reasons for the 9 regulation. 10 And my colleagues, any ex parte communications to 11 report? 12 Yes, Mr. McKinnon. 13 BOARD MEMBER McKINNON: On March 16th at 3 p.m. I 14 met with Bonnie Holmes-Gen of the American Lung 15 Association, Diane Bailey of NRDC, and Patricia Monahan of 16 the Union of Concerned Scientists at 801 K Street. All 17 three of them testified today. Our conversation, for 18 brevity, was very similar to their testimony today. 19 CHAIRPERSON LLOYD: Supervisor DeSaulnier, do you 20 have any -- 21 BOARD MEMBER DeSAULNIER: Yes, Mr. Chairman. 22 Yesterday, I met with Diane Bailey of NRDC, Linda 23 Weiner of the American Lung Association, Don Anair from 24 the Union of Concerned Scientists, and Joel Ervice from 25 RAMP, a regional asthma group at my office in Concord. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 187 1 And the conversation was consistent with the testimony we 2 heard from NRDC today. 3 CHAIRPERSON LLOYD: Ms. D'Adamo. 4 BOARD MEMBER D'ADAMO: Mr. Chairman, on March 5 9th, in Sacramento, I met with Diane Bailey, NRDC; Bonnie 6 Holmes-Gen, American Lung Association; and Patricia 7 Monahan with the Union of Concerned Scientists. 8 Additionally, today I had a discussion with those 9 same individuals, along with Todd Campbell, Coalition for 10 Clean Air. And the discussions mirrored their testimony 11 of today. 12 CHAIRPERSON LLOYD: Thank you. 13 I know we've got a resolution before us. And, 14 again, we've debated this a long time, as you've seen. 15 A couple of things I'd like to state, and my 16 colleagues can add to that. A few important things, what 17 I figure to. 18 Quarterly reporting with an implementation 19 oversight group, if you like. That could be informal, 20 but -- and so that can be reporting back to the Board. 21 Looking at -- they set the goal at 100 percent. 22 And recognizing that's probably not -- we'll come as close 23 as possible. But, you're right, and I think it was right 24 talking about that. And I really did like to see the 2010 25 brought to 2008, recognizing these are targets at this PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 188 1 time we're looking at. 2 Whether my colleagues have got any other 3 suggestions there, or any comments back from staff on that 4 as to whether that's -- whether you see a significant 5 issue there in terms of your discussions with EMA and with 6 CTA. 7 EXECUTIVE OFFICER WITHERSPOON: I think all of 8 those are fine. 9 CHAIRPERSON LLOYD: Okay. Any additions? 10 BOARD MEMBER D'ADAMO: Well, just the regulatory 11 backstop, I think that it's important to keep that in the 12 regulation as outlined by Ms. Johnson. 13 CHAIRPERSON LLOYD: Yeah, I think that -- I 14 assumed that was the case, definitely. 15 And, again, we all hope -- I think you heard 16 sentiment today -- we really hope this will work. I 17 think -- I've not seen so much good will of trying to work 18 together with the stakeholders. I think we all have a 19 tremendous lot to lose, more so I think than the regulated 20 industry here. 21 But I think we need to give this a chance. We 22 need to make sure that we're trying to work and be 23 sensitive to the economic impact. We heard one of the 24 truckers. And Stephanie's recounted for her members. So 25 I think we've got a balance here. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 189 1 But we clearly have the heavy ax waiting there if 2 this does not work. And we don't have to wait until 3 September. We've got a feeling of how this is working a 4 long time. 5 Supervisor DeSaulnier. 6 BOARD MEMBER DeSAULNIER: Yeah, Mr. Chairman, I 7 know you're worried about time. But I'm having a really 8 difficult time. I've gone back and forth a few times just 9 during the testimony. And I do want to recognize the real 10 great opportunity from Stephanie and Jed. I think you 11 both have worked really hard. And I could be -- it really 12 could change the dynamics I think between us and you if 13 it's successful. However, if it's not, it's going to make 14 it -- and it's hard to believe, the moments that I've been 15 on the Board, for seven or eight years, it could get worse 16 than some of the moments we've had. 17 So even right now I'm having a problem with it. 18 I'm going to most likely go along with the vote. But I 19 would like the -- I think we should convene this oversight 20 group right away, because I'm worried about -- I think 21 that the environmental community, if there's any 22 opportunity to build trust, will know within three months 23 from personal relationships, and intuitively will know, 24 even before when we start getting numbers. If it's going 25 to have any promise, that's where my hope is. We'll know PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 190 1 very quickly. And I'd rather rely on that to some degree 2 than the numbers, because the numbers will tell us what's 3 happening later. 4 The biggest thing I'm concerned about, other than 5 the message we're sending, is that you just won't get the 6 truckers in. I think everybody said that, that for 7 multiple reasons you won't be -- if they don't come, we 8 won't get the emissions. I mean for all the safeguards 9 you've got in there -- and it seems to make sense that 10 they will come, but there's a lot of reasons, as 11 Supervisor Roberts said, that they may not in spite of all 12 of our best efforts. So we ought to be able to know that 13 fairly quickly, but even before the numbers. 14 But I really -- I really hope it works, for all 15 of us. 16 CHAIRPERSON LLOYD: I Agree. And think we 17 should -- as part of that we should invite CAPCOA as part 18 of that team, and particularly Sacramento because they've 19 had experience here. And working with them would be good. 20 So unless there are more additions, we've got the 21 motion before us with the additions we've just talked 22 about. 23 Oh, Mr. McKinnon. Sorry. 24 BOARD MEMBER McKINNON: Yeah, I'm going to vote 25 in support, which is sort of remarkable for me, given this PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 191 1 issue. This is probably -- I think of myself as being, 2 you know, well, one of the folks who's probably the 3 strongest at sort of being fuel neutral and making sure 4 there's a place for diesel. 5 And I want to say that, Stephanie, you did a 6 really fine job making this happen. And I also want to 7 recognize that had the environmental movement not pushed 8 here over and over again, you know -- there's no 9 discounting that it took everybody to get here. And if it 10 doesn't work out, I think I've probably made my thoughts 11 pretty darn clear today, that we're -- you know, if we can 12 avoid an all-out battle and get something done here -- and 13 in my mind part of what sways me towards it is that I 14 think we get cleaner air faster this way. And to me the 15 responsibility isn't to -- sort of the political debate 16 between the different parties. The bottom line is: What 17 happens for Californians that breathe the air? And I 18 think that if this works, it meets that test. 19 Californians get better air faster. 20 If it doesn't work, shame on us, shame on us, and 21 we'll have to deal with it. 22 Thanks, Mr. Chairman. 23 CHAIRPERSON LLOYD: Thank you very much, Matt. 24 So seeing there's no more discussion here, we 25 have, like I say, the resolution and we have the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 192 1 amendments there. 2 Ms. Johnston. 3 GENERAL COUNSEL JOHNSTON: Again, are you going 4 to amend the resolution, or are you just going to give 5 direction to the staff? 6 CHAIRPERSON LLOYD: Give direction I think to 7 staff. 8 GENERAL COUNSEL JOHNSTON: Okay. Thank you. 9 CHAIRPERSON LLOYD: So with that, I guess on this 10 one, any -- do I get a motion? 11 BOARD MEMBER D'ADAMO: Moved. 12 CHAIRPERSON LLOYD: A second? 13 BOARD MEMBER CALHOUN: Second. 14 CHAIRPERSON LLOYD: Mr. Calhoun. 15 All in favor say aye. 16 (Ayes.) 17 CHAIRPERSON LLOYD: Anybody against? 18 Thank you very much. 19 And thank you, staff. 20 And thank you, Stephanie and Jed and all the 21 people that have testified. 22 Say we'll soon find out whether this is going to 23 be really working. 24 Seeing no other items, nobody else signed up, 25 I'll officially close the March 25th meeting of the Air PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 193 1 Resources Board. Bring it to a close. 2 Thank you. 3 (Thereupon the California Air Resources 4 Board meeting adjourned at 2:20 p.m.) 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 194 1 CERTIFICATE OF REPORTER 2 I, JAMES F. PETERS, a Certified Shorthand 3 Reporter of the State of California, and Registered 4 Professional Reporter, do hereby certify: 5 That I am a disinterested person herein; that the 6 foregoing California Air Resources Board meeting was 7 reported in shorthand by me, James F. Peters, a Certified 8 Shorthand Reporter of the State of California, and 9 thereafter transcribed into typewriting. 10 I further certify that I am not of counsel or 11 attorney for any of the parties to said meeting nor in any 12 way interested in the outcome of said meeting. 13 IN WITNESS WHEREOF, I have hereunto set my hand 14 this 2nd day of April, 2004. 15 16 17 18 19 20 21 22 JAMES F. PETERS, CSR, RPR 23 Certified Shorthand Reporter 24 License No. 10063 25 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345