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, MAY 20, 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 Dr. William Friedman Mr. Matthew McKinnon Mrs. Barbara Riordan STAFF Ms. Catherine Witherspoon, Executive Officer Mr. Tom Cackette, Chief Deputy Executive Officer Mr. Michael Scheible, Deputy Executive Officer Ms. Lynn Terry, Deputy Executive Officer Ms. Diane Johnston, General Counsel Ms. Kathleen Tschogl, Ombudsman Mr. Steve Albu, Chief, Engineering Studies Branch Mr. Richard Bode, Chief, Health and Exposure Assessment Branch, RD Mr. Robert Cross, Chief, Mobile Source Control Division Ms. Cynthia Garcia, Air Pollution Specialist PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 iii APPEARANCES COTNINUED STAFF Mr. Dean Hermano, Air Resources Engineer, Aftermarket Parts Section Ms. Peggy Jenkins, Manager, Indoor Health Exposure Assessment Section Mr. Jack Kitowski, Manager, On-Road Control Regulation Branch, Mobile Source Control Division Mr. Allen Lyons, Chief, Mobile Source Operations Dvision, Mobile Source Control Division Mr. Mike McCarthy, Manager, Advanced Engineering Section Ms. Annmarie Mora, Air Pollution Specialist, Research Division Mr. Mike Terris, Senior Staff Counsel Ms. Eileen Tutt, Air Pollution Specialist, Mobile Source Control Division Dr. Barbara Weller, Manager, Population Studies Section ALSO PRESENT Dr. Shannon Baxter, Advisor to Secretary Tamminen, CalEPA Mr. John Cabral, Blue Streak Electronics Mr. Robert Clarke, Truck Manufacturers Association(TMA) Mr. David Darge, Powertrain Electronics, LLC Mr. Steve Douglas, Alliance of Automobile Manufacturers Mr. David Ferris, Powertrain Mr. Steve Hoke, NorthState Truck Equipment, Inc Mr. Frank Krich, DaimlerChrysler Mr. Aaron Lowe, Automotive Aftermarket Industry Association PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 iv APPEARANCES CONTINUED ALSO PRESENT Mr. Jed Mandel, Engine Manufacturers Association(EMA) Mr. Pete Meier, Honda Mr. Mark Saxonberg, Toyota Mr. Russ Schinizing, Cardone Mr. Lisa Stegnik, Engine Manufacturers Assocation (EMA) Mr. Kerby Suhre, Consultant, EEPod LLC PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 v INDEX PAGE Opening Remarks by Chairperson Lloyd 1 Roll Call 1 Pledge of Allegiance 1 Item 04-5-1 2 Chairperson Lloyd 2 Executive Officer Witherspoon 3 Staff Presentation 3 Item 04-5-2 10 Chairperson Lloyd 10 Executive Officer Witherspoon 10 Discussion and Q&A 14 Motion 14 Discussion and Q&A 15 Vote 15 Item 04-5-3 16 Chairperson Lloyd 16 Executive Officer Witherspoon 22 Dr. Baxter 23 Staff Presentation 26 Discussion and Q&A 37 Item 04-5-4 47 Chairperson Lloyd 47 Executive Officer Witherspoon 49 Staff Presentation 50 Discussion and Q&A 56 Ombudsman Tschogl 62 Mr. Jed Mandel 64 Mr. Robert M. Clarke 68 Motion 72 Vote 72 Item 04-1-04 72 Chairperson Lloyd 72 Executive Officer 73 Staff Presentation 74 Discussion and Q&A 83 Mr. Steve Douglas 90 Mr. Kerby Suhre 92 Mr. Steve Douglas 97 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 vi INDEX CONTINUED PAGE Item 04-1-04(continued) Mr. Kerby Suhre 102 Mr. Aaron Lowe 103 Mr. John Cabral 106 Mr. Russ Schinizing 108 Mr. David Darge 109 Mr. Frank Krich 115 Mr. Pete Meier 115 Ms. Lisa Stegink 116 Mr. Steve Hoke 119 Mr. David Ferris 120 Mr. Mark Saxonberg 121 Adjournment 128 Reporter's Certificate 129 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 1 1 PROCEEDINGS 2 CHAIRPERSON LLOYD: Good morning. The May 20th, 3 2004, public meeting of the Air Resources Board will come 4 to order. 5 Dr. Friedman, 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: Present. 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: Professor Friedman? 18 BOARD MEMBER HUGH FRIEDMAN: Here. 19 BOARD CLERK ANDREONI: Dr. Friedman? 20 BOARD MEMBER WILLIAM FRIEDMAN: Here. 21 BOARD CLERK ANDREONI: Mr. McKinnon? 22 BOARD MEMBER McKINNON: Here. 23 BOARD CLERK ANDREONI: Supervisor Patrick? 24 Mrs. Riordan? 25 BOARD MEMBER RIORDAN: Here. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 2 1 BOARD CLERK ANDREONI: Supervisor Roberts? 2 Chairman Lloyd? 3 CHAIRPERSON LLOYD: Here. 4 Supervisor DeSaulnier is running late. He got 5 caught in traffic. He's taking the meaning of bike to 6 work seriously. 7 We're on fast track today since we have another 8 meeting starting at 1 o'clock. So I know my colleagues 9 would like to see that we move through this as 10 expeditiously as possible. So I don't have any opening 11 statement. 12 I'd just like to remind anyone in the audience 13 who wishes to testify on today's agenda items, please sign 14 up with the Clerk of the Board. And if they have copies 15 of written presentations, to provide 30 copies to the 16 Board Clerk. 17 And the first item on the agenda today is 04-5-1, 18 our monthly public health update. 19 (Thereupon an overhead presentation was 20 Presented as follows.) 21 CHAIRPERSON LLOYD: Although the Board is very 22 familiar with associations between particulate air 23 pollution and mortality in the general population, there 24 is much less information about that experience with 25 interest. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 3 1 Today we're going to hear about a South Korean 2 study which I understand that Dr. Friedman worked with 3 staff to identify. 4 So with that, I would like to turn it over to Ms. 5 Witherspoon to complete the item and begin staff 6 presentation. 7 EXECUTIVE OFFICER WITHERSPOON: Good morning, 8 Chairman Lloyd, members of the Board. 9 The Health Study staff is about to present and 10 evaluate the association between infant mortality and 11 particulate exposures in Seoul, South Korea. Although the 12 levels of particulate pollution are much higher in that 13 country than in the United States, there is literature 14 here that supports the association between particulate 15 exposure and the risk of infant mortality as well. 16 Ms. Cynthia Garcia will make today's 17 presentation. 18 MS. GARCIA: Thank you, Ms. Witherspoon. 19 Good morning, Chairman Lloyd and members of the 20 Board. 21 In today's health update we will discuss the 22 results of two studies evaluating the possible 23 associations between particulate air pollution and infant 24 mortality in Seoul, South Korea, and the United States. 25 Although several studies have recorded elevated PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 4 1 incidents of mortality in the elderly in relation to 2 particulate pollution, much less information exists on 3 adverse effects of particulate pollution in infants. 4 Understanding the relationship between 5 particulate pollution and infant mortality is very 6 important, since infants may be especially vulnerable to 7 air pollution. 8 The first study is "Infant susceptibility of 9 mortality to air pollution in Seoul, South Korea." The 10 purpose of this five-year study was to compare to effects 11 of air pollution on mortality among three groups: 12 Infants, defined as babies aged 1 month to 1 13 year; 14 Individuals aged 2 to 64 years old; and 15 The elderly aged 65 and over. 16 Investigators defined infants in this study as 17 age 1 month to 1 year in order to limit the effects of 18 pregnancy outcomes on mortality. However, conditions 19 during pregnancy can influence mortality outcomes after 20 one month of age. In addition, this study did not 21 differentiate between low and normal birth weight. 22 Premature birth and other risk factors were also not 23 accounted for. 24 Seoul is the largest metropolitan city and the 25 major air pollution sources are automobile exhaust and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 5 1 domestic heating. 2 Pollutant measurements were taken from 27 3 monitoring sites, which represent all of the 4 administrative zones in the city. Meteorological data 5 were collected from a station in the central part of 6 Seoul, and included temperature and relative humidity. 7 The investigators calculated the relative risk of 8 respiratory mortality for changes in the level of air 9 pollution on the same day as the mortality event. 10 As is the case in many studies of this type, the 11 investigators also looked at air pollution levels up to 12 seven days before the mortality event and determined that 13 using the air pollution data on the day of the mortality 14 event gave them the most consistent and robust results. 15 --o0o-- 16 MS. GARCIA: The air pollution data for the time 17 period of the study are presented here. Although data 18 were collected on an hourly basis, 24 hour averages were 19 constructed for PM10, nitrogen dioxide, sulfur dioxide, 20 and carbon monoxide. For ozone, daily 8-hour averages 21 were constructed. The data shown are the mean, median, 22 minimum, and maximum 24-hour levels of pollutants, except 23 for ozone, which relates to an 8-hour level. 24 In mean PM10 level in Seoul is higher than the 25 mean in the Los Angeles air basin of California, although PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 6 1 the range in the Los Angeles air basin is larger. 2 --o0o-- 3 MS. GARCIA: The investigators found that 4 exposures of PM10 was associated with increased 5 respiratory mortality in infants 1 month to 1 year old. 6 Infant mortality increased by 102 percent for each 43 7 micrograms per cubic meter increase in PM10. Although 8 mortality in other age groups was significantly associated 9 with PM10, the effect size was smaller, 6.6 percent in 10 persons aged 2 to 64 and 6.3 percent in those over 65. 11 The advantage of this study was that the authors 12 were able to compare the association between respiratory 13 mortality and PM10 across the population. The findings 14 that infants were most at risk of respiratory mortality 15 from increased exposure to PM10 relative to other age 16 groups lends credence to the idea that infants may be 17 especially vulnerable to the adverse effects of air 18 pollution. 19 --o0o-- 20 MS. GARCIA: Now, I would like to change our 21 focus to a study concerning air pollution and infant 22 mortality conducted in the United States. 23 Woodruff and colleagues conducted a study to 24 evaluate the relationship between infant mortality and 25 particulate pollution in several metropolitan areas across PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 7 1 the United States. 2 Infants born between 1989 and 1991 were eligible 3 for the study. As in the paper from Seoul, an infant was 4 defined as babies between 1 month and 1 year old. For 5 this study, an infant's exposure was considered to be the 6 mean of the PM10 levels for the first 2 months of life. 7 The range of PM10 exposure in this study was from 11.9 to 8 68.8 micrograms per cubic meter. 9 Because it is known that many factors may 10 influence an infant's risk of mortality, the authors took 11 into account the effects of maternal education, marital 12 status, maternal race, maternal smoking during pregnancy, 13 average temperature, and year and month of birth when they 14 built their models for statistical analysis. Even with 15 adjustment for all these factors, infant mortality 16 increased with increasing PM10 levels. Infant respiratory 17 mortality among normal birth weight infants increased 20 18 percent per 10 micrograms per cubic meter increase in 19 PM10. 20 --o0o-- 21 MS. GARCIA: The main conclusion of both studies 22 is that PM10 is significantly related to infant mortality 23 due to respiratory causes even in the United States. 24 These studies add to our knowledge of the significant 25 health effects of PM10 in infants. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 8 1 There are several limitations to both of these 2 papers that should be noted. The authors in the Seoul 3 paper did not take into account important factors such as 4 maternal smoking or education. Neither study considered 5 exposure to environmental tobacco smoke, or ETS. 6 Another limitation that should be addressed is 7 the fact that both studies looked at only outdoor 8 concentrations of pollutants. Infants, especially infants 9 less than a year old, spend most of their time indoors. 10 It is unclear, therefore, how representative the outdoor 11 concentrations of pollutants were of the infant's true 12 exposure. 13 Future investigators need to take these important 14 limitations into account when designing and conducting 15 studies to understand the relationship between infant 16 mortality and air pollution. 17 This concludes my presentation. I'll be happy to 18 answer any questions. 19 CHAIRPERSON LLOYD: Thank you very much indeed. 20 Dr. Friedman. 21 BOARD MEMBER WILLIAM FRIEDMAN: Well, both these 22 studies are of interest and they offer some provocative 23 findings. But they're both flawed in a couple of 24 different ways. 25 In neither the American study or the Korean study PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 9 1 is a count taken of the common causes of infant mortality: 2 Prematurity and malformations, which by themselves are 3 responsible for the bulk of infant mortality. And none of 4 the data is corrected for or normalized for those very, 5 very important factors. 6 The indoor air quality issue is very important. 7 And it was very interesting because the Research Division 8 did a great job. When I spoke to them by phone and raised 9 the issue, they went and they contacted Kirk Smith, the 10 professor from Berkeley who gave us the indoor air talk a 11 few weeks ago actually. And he provided some references 12 about indoor air quality in urban Korea, where the cooking 13 is, you know, with kerosene and some barbecues and so 14 forth and so on. And the apartments tend to be small and 15 very underventilated. 16 It was interesting that in Korea tobacco smoke 17 was not particularly important as an indoor pollutant 18 compared to the American study. 19 But you're right, I mean infants spend that first 20 year of life indoors. And the usual source of 21 pollution -- the indoor pollution is the outdoor motor 22 vehicles and so forth and so on both in Korea and in 23 America. 24 So the studies are interesting. They're 25 provocative. There undoubtedly is an association between PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 10 1 PM10 and mortality. But what the real numbers are can't 2 be known until they take into account the usual causes of 3 infant mortality. And in neither study was that done. 4 CHAIRPERSON LLOYD: Thank you very much. 5 Any other comments? 6 Thank you. 7 Since it's not a regulatory item it's not 8 necessary to officially close the record, so we'll move on 9 to the next item. 10 The next item is research proposal, Item 04-5-2. 11 This project has been reviewed and approved by 12 the Research Screening Committee and will further analyze 13 the results from the California portable classroom study. 14 Our colleagues at the CEC are funding the analysis of 15 ventilation and other energy-related factors, while we 16 added funding to examine the relationship between 17 socioeconomic indicators and environmental conditions in 18 both portable and traditional classrooms. 19 Mr. Bode, does the Research Division staff have 20 anything additional they want to say on this proposal? 21 HEALTH AND EXPOSURE ASSESSMENT BRANCH CHIEF BODE: 22 Actually would you like Annmarie to go though and 23 do a little presentation? 24 CHAIRPERSON LLOYD: Just very quickly maybe for 25 our colleagues. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 11 1 AIR POLLUTION SPECIALIST MORA: Thank you, 2 Chairman Lloyd. 3 As mentioned, we have one research proposal today 4 that was reviewed and approved by ARB staff and the 5 Research Screening Committee. 6 (Thereupon an overhead presentation was 7 Presented as follows.) 8 As you may recall, the Air Resources Board and 9 the Department of Health Services recently conducted a 10 study to assess environmental health conditions in 11 California's portable classrooms as required by the 12 California Health and Safety Code. 13 A great deal of new data were collected for the 14 portable classroom study. However, detailed analyses of 15 some of these data were not funded in the initial study. 16 The ARB needs further analysis of the PCS data to help 17 refine specific recommendations to schools and guide 18 further activities for preventing indoor environmental 19 quality problems in schools. 20 The California Energy Commission is also 21 interested in further analysis of the data in order to 22 obtain information needed for updating their building 23 energy efficiency standards for schools. A public 24 solicitation was issued for this follow-on work, and 25 Westat was the selected contractor. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 12 1 The Commission is providing the major funding for 2 this effort, with a nominal contribution by the ARB. 3 --o0o-- 4 AIR POLLUTION SPECIALIST MORA: The objective of 5 this study is to further analyze variables on ventilation, 6 other energy-related factors, and socioeconomic 7 indicators, and examine relationships with indoor air 8 quality and other environmental characteristics. 9 Specifically, the contractor will characterize 10 the distribution of energy and comfort-related 11 characteristics of portable and traditional classrooms in 12 a statewide representative sample of kindergarten through 13 12th grade public classrooms from the portable classroom 14 study. 15 --o0o-- 16 AIR POLLUTION SPECIALIST MORA: They will also 17 describe in detail the relationships between key building 18 variables such as building age and the type of condition 19 of ventilation systems and indoor environmental quality 20 measures in the portable classroom study data set. 21 This work will include an environmental justice 22 aspect which includes the analysis between pollutant 23 levels and a school's socioeconomic indicators such as 24 student body ethnicity and proximity to nearby pollutant 25 sources. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 13 1 --o0o-- 2 AIR POLLUTION SPECIALIST MORA: The ARB and other 3 agencies need the results of the proposed study within the 4 next 18 months. School construction and renovation have 5 accelerated due to recent passage of large state bond 6 issues and growth in the state population. The ARB is 7 advising school groups, architects, manufacturers, and 8 others on design and construction approaches for improved 9 indoor environmental quality. 10 The Commission will begin revising its building 11 energy efficiency standards again next year and must have 12 new information by mid-2005 to be used in their next 13 review. 14 The Department of General Services is also 15 revising state standards for state-leased portable 16 classrooms in the next one to two years and would like to 17 benefit from the additional analyses. 18 --o0o-- 19 AIR POLLUTION SPECIALIST MORA: The portable 20 classroom study data offer an opportunity to gain insight 21 on various energy-efficiency measures, the impacts of 22 those measures on indoor environmental quality and 23 comfort, and the specific causes of and solutions to those 24 impacts. Therefore, we request that you approve this 25 follow-on project. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 14 1 This completes the presentation. Do you have any 2 questions? 3 CHAIRPERSON LLOYD: Thank you. 4 Any questions? 5 BOARD MEMBER WILLIAM FRIEDMAN: Well, I would -- 6 CHAIRPERSON LLOYD: Dr. Friedman and Mr. 7 McKinnon. 8 BOARD MEMBER WILLIAM FRIEDMAN: I think this is 9 an eminently approvable proposal. It's funded by the CEC, 10 so you can't beat the price. 11 (Laughter.) 12 BOARD MEMBER WILLIAM FRIEDMAN: I mean the 13 portable classroom study accumulated a tremendous amount 14 of data. And it really does need to be looked at in a 15 sophisticated statistical way, and that's what this 16 proposal is all about. I frankly -- since there's a bit 17 of a fishing expedition, taking all this data and just 18 subjecting it to that kind of statistical approach, I 19 thought it was perfectly appropriate to add the 20 environmental justice notion that perhaps using the school 21 data, which is available to us, to see if questions can 22 arise from the analysis, that can then be approached more 23 scientifically. 24 So I think the proposal is eminently approvable 25 and I would so make a motion. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 15 1 CHAIRPERSON LLOYD: Thank you. 2 Mr. McKinnon. 3 BOARD MEMBER RIORDAN: I'll second the motion, 4 Mr. Chairman. 5 CHAIRPERSON LLOYD: Thank you. 6 Mr. McKinnon. 7 BOARD MEMBER McKINNON: Yeah, I also support the 8 proposal. 9 And as someone who grew up in an urban school 10 district in a very fast growing city, my recollection is 11 the funds were flowing to the outer suburbs to build new 12 schools and the urban schools were receiving portable 13 classrooms. And I can well tell you that I spent most of 14 elementary school with asthma because of the heaters in 15 those classrooms. And I think there are definite 16 demographic links, urban and suburban, certainly in our 17 older neighborhoods and in many cases the EJ 18 neighborhoods, and I compliment staff for adding sort of 19 that analysis to this. And I think we should do well to 20 support the motion. 21 CHAIRPERSON LLOYD: Thank you very much. 22 Seeing no other comments, we've got a motion, a 23 seconder. 24 All in favor of approving the research proposal 25 say aye. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 16 1 (Ayes.) 2 CHAIRPERSON LLOYD: Anybody against? 3 No. 4 Thank you very much. 5 Thank you, staff. 6 We'll take a moment while we move on to the next 7 agenda item, 04-5-3, an update to the Board on the 8 Governor's hydrogen vision for California. 9 I mentioned this is to give the Board an update 10 on the view of the Governor's vision for hydrogen for 11 California. The vision was outlined in Executive Order 12 S-7-04, signed by Governor Schwarzenegger a month ago 13 today. The Executive Order directs CalEPA in concert with 14 the State Legislature and consultation with relevant state 15 and local agencies to develop a plan for the transition in 16 California to a hydrogen economy. 17 And I thought, given the amount of publicity this 18 had, it would be good to provide an update from my 19 colleagues, an overview of how this fits in and what we're 20 doing, what's ARB's involvement. 21 Secretary Tamminen will direct the effort to 22 develop a hydrogen blueprint plan, along with two 23 distinguished advisors, Dr. Shannon Baxter, leading the 24 governmental or "internal" stakeholders, and Daniel Emmet 25 of Energy Independence Now leading the external PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 17 1 stakeholder side. 2 I am also honored to be a member of the advisory 3 panel being chaired by Secretary Tamminen. 4 Fortunately we have Dr. Baxter here today. Thank 5 you for taking your time from your spin class so we can 6 come here today. 7 (Laughter.) 8 CHAIRPERSON LLOYD: Is Daniel going to come? 9 CAL EPA SECRETARY'S ADVISOR BAXTER: I think he's 10 upstairs. 11 CHAIRPERSON LLOYD: I would like to maybe -- I'd 12 like to introduce him as well. 13 But for those of you who know, Shannon worked 14 with us for many years as representative of ARB on 15 hydrogen and as a representative to the fuel cell 16 partnership. And we have now put her on loan to the 17 Secretary to implement this program. So we're delighted 18 to have that linkage being continued -- linkage there. 19 And then we have Eileen who is taking over from 20 that will be giving the presentation today. 21 I think the hydrogen fuel offers California both 22 environmental and economic benefits. I think it also 23 provides a way to move away from our nearly total 24 dependence on petroleum as a transportation fuel. 25 As the Governor and Secretary Tamminen both PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 18 1 stressed, none of this will be easy and none of this will 2 be rapid. But we must begin the transition towards a more 3 diverse fuel sector now, as it will take considerable 4 time. I think it will take a decade or two no matter when 5 you start. So I think given the run-up in gas prices, 6 given the environmental footprint of petroleum, given the 7 recommendation that the ARB and CEC made in AB 2076 to 8 reduce dependence on petroleum, I think it's very 9 important, and I think it's wonderful that in fact we have 10 this vision before us. 11 I think the other thing, that public policy will 12 be poorly served were we to wait for a problem to occur 13 before we take action, whether the causes be 14 environmental, such as an abrupt climate change event, or 15 economic, such as a disruption in our oil supply. And I 16 think we've just got to look back to the events of the 17 last month to see what the impact of the breakage of the 18 pipeline north of San Francisco both in terms of gas 19 prices, but also the impact of the environment and the 20 adverse impact on air quality, the killing of wildlife, et 21 cetera. So I think it's very important that we look at 22 other ways of providing some energy here as well. 23 Last month I was pleased to participate with 24 about a thousand colleagues in the National Hydrogen 25 Association's 15th annual conference, which for the first PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 19 1 time ever was hosted in California rather than Washington 2 DC. The conference generated excitement as we all began 3 to realize we are on the cusp of a national effort, and 4 really international effort, to diversify energy resources 5 and to move towards a hydrogen-based economy. 6 I will also say at this point -- and maybe at the 7 end of my comments offer Dr. Burke the opportunity, 8 because I know he's organizing and staff organizing a 9 major international conference. So at the end of this, 10 Dr. Burke, maybe you'd like to say a few words on that 11 part of it. 12 During the NHA conference we were honored by the 13 presence of the U.S. Secretary of Energy, Spencer Abraham, 14 who just the day before attending the conference had 15 announced $350 million in awards for hydrogen research 16 projects. Many of these projects will occur in 17 California. Included in the awards were several of our 18 elite universities, national laboratories located in 19 California, and California industries. The research 20 efforts supported by the Department of Energy will further 21 the goal of making the hydrogen economy a reality. 22 Recognizing this is not a short term, but again 23 we can see a lot of this money is coming here. We're 24 delighted again with the Governor's efforts to get money 25 to California and the administration to push it here. And PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 20 1 so I think this is a wonderful opportunity to work in 2 conjunction with efforts at the federal level. 3 Because, as you will recognize, President Bush 4 made the announcement looking for hydrogen and fuel cell 5 vehicles in the next decade. And then he announced the 6 IPHE, International Partnership for Hydrogen Economy, 7 which again is pulling nations together worldwide. 8 I think the other piece -- and I guess I don't -- 9 maybe I could ask staff if we could provide the Board 10 members the document we put together for the unveiling of 11 the executive order. And that is the key piece here, that 12 hydrogen in California also means business. There's also 13 tremendous opportunities going on, action that's going on. 14 So I don't know if we have a copy of that. Maybe before 15 the Board meeting we can see that. 16 I think the other piece of it that we should 17 indicate -- because we read many articles now also about 18 the concern that we're focusing too much on the long term 19 and not enough on the short term. And I think it's 20 important to recognize that the hydrogen highway network 21 effort is part of the Governor's ambitious environmental 22 action plan, which commits to a whole complement of air 23 quality improvement measures. Likewise, the Air Resources 24 Board will continue in our efforts to protect public 25 health to the maximum extent feasible in the near-, mid-, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 21 1 and long-term. 2 And we will not back down from any of our 3 commitments and, in fact, we will redouble our efforts to 4 ensure that our actions provide the greatest benefits 5 possible to protect our children, other sensitive groups, 6 and broader population. For example, we have the efforts 7 going on in the super-clean cars; the efforts under the 8 ZEV program; the pushing hybrids of all kinds; the zero 9 emissions goal, both battery and fuel cells; the reduction 10 in petroleum dependency on AB 2076; the upcoming 11 regulation which we will consider in September as a result 12 of the AB 1439 to reduce greenhouse gases, which again 13 will provide some push in technology. So I think that 14 will continue, as well as our efforts to reduce exposure 15 to diesel particulate, working also with EPA on new 16 engines. So we're not sacrificing anything here. In fact 17 we're going even stronger. 18 And this administration very clearly recognizes 19 actions taken today must support clean air now and clean 20 the air for future generations. So we would be very 21 remiss, and it won't happen, to lose site of one, 22 sacrificing the other. We need to do both. And in fact 23 it's possible to do both. And I think the Governor and 24 Secretary Tamminen will also be looking at some of the 25 short-term measures in the future. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 22 1 So to me it's particularly exciting to see the 2 challenge we have ahead of us. I'm looking forward to the 3 presentation. And I think -- I think we will see there 4 that this is not going to be easy. But, on the other 5 hand, not responding to this challenge, not looking to the 6 future, not trying to change the paradigm here I think 7 would be not commensurate with Californians' capabilities 8 and vision and global leadership. 9 So with that I would like to turn it over to our 10 Executive Officer to introduce the item and begin staff 11 presentation. 12 EXECUTIVE OFFICER WITHERSPOON: Thank you, 13 Chairman Lloyd. 14 Since the signing of the Executive Order one 15 month ago today, staff has been working closely with 16 CalEPA on the administrative policy and potential 17 regulatory steps we need to take to implement the 18 Governor's vision. We are committed to supporting this 19 effort because it enhances our own programs for the 20 deployment of zero-emission technologies, and because it 21 is a step towards successful introduction of non-petroleum 22 alternatives in the transportation sector. 23 This update will highlight the progress made so 24 far and the planned actions for the development of 25 California's Hydrogen Economy Blueprint Plan. Staff will PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 23 1 also discuss other aspects of Secretary Tamminen's near-, 2 mid-, and long-term strategy to lead California to energy 3 independence. Finally, staff will briefly summarize other 4 activities that are supportive of the Governor's hydrogen 5 initiative. 6 Dr. Shannon Baxter, Director of the Governor's 7 team for the hydrogen initiative and on loan from ARB to 8 CalEPA, has joined us today to provide her perspective on 9 where we're headed and to respond to questions the Board 10 may have. Staff thanks her very much for coming, 11 particularly in light of her incredibly hectic schedule. 12 I'd now like to ask Dr. Baxter to set the stage 13 before we proceed with staff presentation, which will be 14 made by Eileen Tutt. 15 CAL EPA SECRETARY'S ADVISOR BAXTER: Thank you, 16 Catherine. 17 First, on behalf of Secretary Terry Tamminen, I 18 would like to thank you for inviting me to participate in 19 this update on California -- 20 CHAIRPERSON LLOYD: Can you speak a little bit 21 more into the mic please. 22 CAL EPA SECRETARY'S ADVISOR BAXTER: Really 23 close, huh? Sort of like on American Idol. 24 Okay. On behalf of Agency Secretary Terry 25 Tamminen, I would like to thank you for inviting me to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 24 1 participate in this update on the California Hydrogen 2 Highway Network Initiative. 3 I would also like to take the time to thank Dr. 4 Lloyd for inviting me to work for him over the last four 5 years that I served as the alternative energy specialist 6 in the Chair's office. I can tell you from experience 7 that he's truly a visionary, a statesman, and is 8 delightful to work for as alongside. 9 CHAIRPERSON LLOYD: Take the rest of the day off. 10 (Laughter.) 11 BOARD MEMBER HUGH FRIEDMAN: There's nowhere to 12 go but downhill. 13 (Laughter.) 14 CAL EPA SECRETARY'S ADVISOR BAXTER: Finally, 15 thank you to ARB's management and staff for their support 16 on the California Hydrogen Highway Network Initiative and 17 the California Hydrogen Blueprint Plan. 18 Of course the Air Resources Board is known 19 throughout the world for setting precedence and reducing 20 emissions from vehicles. This Board and the ones that 21 came before it has a pioneering spirit and dedication that 22 has been instrumental in bringing us to this pivotal point 23 in time. 24 As a former advisor to Chairman Lloyd and now 25 advisor to Agency Secretary Tamminen on hydrogen issues, I PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 25 1 look forward to continuing to work with ARB as we enter 2 into a new era in which we will strive to accelerate the 3 use of hydrogen, particularly renewable hydrogen, to power 4 the buildings where we live and work as well as the 5 vehicles that carry us between them. 6 You will hear from Eileen Tutt's presentation 7 that there is a great need to move towards hydrogen as the 8 state's energy carrier. California has the type of 9 top-down government support that experts agree is 10 essential to the success of a transition to a sustainable 11 future. And industry is poised to bring hydrogen efforts 12 to our state using federal dollars leveraged with private 13 sector investment. 14 Industry, government, enviros, and academics 15 agree that while there is much work to be done, there are 16 no show-stoppers to hydrogen power. However, they do 17 point to a chicken or the egg problem: Who will 18 manufacture the hydrogen cars without hydrogen fueling 19 stations, and who will build the hydrogen fueling stations 20 if there are no vehicles to use them? We can address this 21 issue in California. 22 Although the problem exists with most other 23 alternative fuels, hydrogen is different. Hydrogen allows 24 for the prospects of distributed power generation 25 alongside vehicle fueling in the form of energy stations, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 26 1 home fueling that is safe and convenient, vehicles that 2 use skateboard chassis platforms that are easily converted 3 from a family sedan to a roadster, vehicles that are not 4 only safe for the driver but also for the people in the 5 other vehicles around him, transportation that is clean 6 and quiet, personal vehicles that can serve as backup 7 power during times of crisis, energy independence for 8 California, the U.S., and every other sovereign land. All 9 of these things are possible. We are only limited by our 10 imagination. 11 I am very happy to be serving Secretary Tamminen 12 and the Governor and the State of California in this 13 effort. Thank you for your attention. 14 Ms. Eileen Tutt, will please give the staff 15 presentation now. 16 AIR POLLUTION SPECIALIST TUTT: Yes. Thank you, 17 Dr. Baxter. 18 (Thereupon an overhead presentation was 19 Presented as follows.) 20 AIR POLLUTION SPECIALIST TUTT: I'll start with a 21 few slides to demonstrate why we need the hydrogen highway 22 and provide some context for this effort. I will then 23 highlight the Governor's hydrogen economy blueprint plan 24 and describe briefly some of the recent announcements that 25 will support this plan. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 27 1 --o0o-- 2 AIR POLLUTION SPECIALIST TUTT: There are a 3 number of reasons why California once again must take a 4 leadership role and move our state towards a 5 hydrogen-based economy. 6 First, our near total dependence on petroleum in 7 the transportation sector results in deleterious effects 8 on our environment, sending our children to school with 9 inhalers, and threatening our vast natural resources. 10 Every year 1.7 million Californians go to the hospital for 11 respiratory illnesses and 6,500 deaths attributed to air 12 pollution. 13 The damages to public health and the environment 14 provide a compelling case in and of themselves. But there 15 is also a clear economic downside if we continue with 16 business as usual. A stable economy in this state is 17 dependent on a stable fuel supply from sustainable 18 sources. We cannot continue our dependence on petroleum 19 from politically unstable regions in a time when worldwide 20 demand for petroleum continues to increase and supply is 21 uncertain. 22 Finally, given our recent experience with 23 electricity shortages and our history of gasoline 24 shortages and price spikes, it would be prudent for 25 California to develop renewable energy resources and look PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 28 1 to distributed generation that is energy production that 2 is independent of the electricity grid. 3 --o0o-- 4 AIR POLLUTION SPECIALIST TUTT: Governor 5 Schwarzenegger and Agency Secretary Tamminen are committed 6 to moving our state towards an environmentally superior 7 and sustainable fuel for the transportation sector. 8 In the near term the focus will be on public 9 education and awareness, with a concerted effort to 10 empower each of us to be more responsible as we consider 11 our transportation needs. 12 In the mid term the focus will be on improved 13 vehicle fuel economy and hybridization. The long-term 14 goal will be the California hydrogen highways, which will 15 be a part of the larger movement towards a hydrogen 16 economy. 17 The focus of today is the California Hydrogen 18 Economy Blueprint Plan. 19 --o0o-- 20 AIR POLLUTION SPECIALIST TUTT: But I'd like 21 first to point out the steps that the state has taken to 22 reduce emissions from vehicles and move California away 23 from total petroleum dependence. 24 As Dr. Lloyd mentioned earlier, the Air Resources 25 Board's low emission vehicle and zero emission vehicle PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 29 1 regulations, which took effect in 1994, will result in 2 about a 90-percent reduction in criteria and toxic 3 emissions from cars and trucks by 2010 and help to 4 accelerate the commercialization of zero-emission advanced 5 technologies such as hydrogen fuel cell vehicles. 6 Staff is currently developing regulations that 7 would result in significant reductions in greenhouse gas 8 emissions from vehicles. These proposed regulations will 9 be presented for your consideration in September of this 10 year. 11 In July of last year this Board and the 12 California Energy Commission jointly approved 13 recommendations to the Governor and Legislature that would 14 result in reductions in petroleum usage to 15 percent 15 below current levels in the 2020 timeframe. Those 16 recommendations were presented to the Governor and the 17 Legislature in the form of a joint report by the 18 California Energy Commission and the California Air 19 Resources Board, whose staff worked very closely for two 20 years to evaluate specific options that would reduce 21 California's dependence on petroleum. 22 --o0o-- 23 Finally, the California Energy Commission 24 released its integrated energy policy report in December 25 of last year. This report stressed that unless California PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 30 1 acts aggressively to change the energy usage trends in 2 transportation, this state will face further supply 3 disruptions and price volatility. 4 --o0o-- 5 AIR POLLUTION SPECIALIST TUTT: In addition to 6 the actions taken by the state above, California's local 7 and state government actions -- governments are members of 8 public/private partnerships that have long advocated for 9 hydrogen vehicles and hydrogen as an energy resource. 10 California is home to the California Fuel Cell 11 Partnership, which was created in 1999 and whose members 12 include the fuel cell and vehicle manufacturers, energy 13 providers, and government agencies. The partnership will 14 play a critical role in the development of the hydrogen 15 highways plan. 16 --o0o-- 17 AIR POLLUTION SPECIALIST TUTT: The California 18 Stationary Fuel Cell Partnership, which was formed in 2001 19 and consists of 20 member agencies and organizations at 20 all levels of government and non-governmental 21 organizations, will be key to the success of the hydrogen 22 highways effort as well. 23 --o0o-- 24 AIR POLLUTION SPECIALIST TUTT: The hydrogen 25 highway is one of the top priorities of Governor PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 31 1 Schwarzenegger. On January 6, 2004, in his State of the 2 State address, the Governor said, "I am going to encourage 3 the building of a hydrogen highway to take us to the 4 environmental future. I intend to show the world that 5 economic growth and the environment can coexist. And if 6 you want to see it, then come to California." 7 The Governor's vision is to make hydrogen 8 available to consumers in the 2010 timeframe. A 9 public/private partnership would be created to provide up 10 to 200 stations along California's interstate highways. 11 This vision is intended to ensure that the infrastructure 12 is in place for future hydrogen vehicles. 13 Most experts agree that the infrastructure 14 vehicle chicken-and-egg problem that Dr. Baxter mentioned 15 is one of the biggest obstacles keeping us dependent on 16 petroleum in the transportation sector. The 17 infrastructure to fuel these vehicles will likely be 18 multi-use; that is, unlike a gasoline station that can 19 only be used to refuel gasoline vehicles, most early 20 hydrogen fuel stations would be energy stations. These 21 stations' primary use in the early years may be providing 22 power to a building or industrial purposes. 23 --o0o-- 24 AIR POLLUTION SPECIALIST TUTT: The Governor's 25 vision included a hydrogen highways plan with significant PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 32 1 numbers of hydrogen fueling and energy stations in place 2 along California's interstate highways by 2010. Depending 3 on the location of these energy stations, the emphasis 4 would be on using renewable sources such as farm waste, 5 green waste, solar or wind to generate power. 6 --o0o-- 7 AIR POLLUTION SPECIALIST TUTT: This map from the 8 fuel cell partnership indicates where stations are located 9 currently. It is likely that future stations would be 10 located in clumps around urban centers and then linked 11 together along the interstate highways. 12 --o0o-- 13 AIR POLLUTION SPECIALIST TUTT: So how are we 14 going to get from the Governor's vision to implementation? 15 To this end, the Governor signed Executive Order S-7-04, 16 of which you all have a copy. 17 This Executive Order designates California's 21 18 interstate highways as the California Hydrogen Highway 19 Network. 20 This Executive Order further directs the 21 California Environmental Protection Agency in concert with 22 the State Legislature and in consultation with the 23 Resources Agency and other relevant state and local 24 agencies to develop a California Hydrogen Economy 25 Blueprint Plan for the rapid transition to a hydrogen PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 33 1 economy in California. This plan is due to the Governor 2 and the Legislature in January of 2005. 3 The blueprint plan must include financing 4 mechanisms, encourage public/private partnerships, promote 5 environmental and economic benefits, and ensure the lowest 6 possible greenhouse gas and other pollutant emissions. 7 --o0o-- 8 AIR POLLUTION SPECIALIST TUTT: Dr. Shannon 9 Baxter lead the effort to put together an executive level 10 panel that will direct the development of the hydrogen 11 economy blueprint plan. This panel will be chaired by 12 Agency Secretary Tamminen and will be advised by teams of 13 experts on various relevant topics. 14 The panel will report to a senior review 15 committee that consists of cabinet members and 16 legislators. 17 --o0o-- 18 AIR POLLUTION SPECIALIST TUTT: This slide lists 19 the panel members, all of which whom have committed to the 20 development of the blueprint plan, and many of whom are 21 contributing staff to the expert topic teams that will 22 advise them. 23 Our chairman will be on the panel, along with 24 other distinguished public and private leaders. The 25 environmentalist interests are recognized by two PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 34 1 representatives. And we have Mr. Luis Arteaga from the 2 Latino Issues Forum representing the concerns of low 3 income and minority communities. 4 The panel will meet for the first time this 5 afternoon to kick off this effort. 6 --o0o-- 7 AIR POLLUTION SPECIALIST TUTT: As this panel 8 moves forward, the efforts of all our partners currently 9 working together to bring hydrogen vehicles to consumers 10 will be included. The public sector, from local agencies 11 to international agencies, will be consulted. Fuel 12 suppliers and auto makers will be key. 13 All those who can help to increase the use of 14 renewable sources of hydrogen in energy and fueling 15 stations, including the biomass industry and big-box 16 retailers with energy needs that are large enough to 17 benefit from hydrogen fuel cell energy stations and 18 refueling operations, all will be critical to our success. 19 --o0o-- 20 AIR POLLUTION SPECIALIST TUTT: How are we going 21 to pay for this -- for the development of the California 22 Hydrogen Highways Network as called for by our Governor? 23 There is a ground swell of support for the hydrogen 24 highways network from all sectors of the economy. And the 25 recognition that we simply must move away from petroleum PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 35 1 as the only fuel used for transportation has benefited in 2 this regard. 3 The partners in this effort are contributing most 4 of the cost as well as most of the human resources. 5 CalEPA and the Air Resources Board, along with the 6 California Energy Commission and other state and local 7 agencies, will provide human resources and some of the 8 costs. Federal funds will be essential during the 9 implementation phase of the blueprint plan, and in the 10 early stages of commercialization some revenue bonds will 11 be necessary. 12 However, in the long term it will be essential 13 that the marketplace take over and the California economy 14 reap the benefit of being the technological leader in 15 innovative environmentally friendly solutions. 16 --o0o-- 17 AIR POLLUTION SPECIALIST TUTT: Federal funds 18 have already begun to flow towards this effort, as just 19 last month the Department of Energy awarded $350 million 20 in hydrogen research projects. Four of the five 21 demonstration awards were given to demonstration projects 22 that will take place in California. Six California 23 universities were awarded as centers of excellence for 24 their individual efforts in specific areas for 25 infrastructure and demonstration, education, and/or PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 36 1 research projects. 2 Additionally, national labs and private sector 3 firms located in California won awards as centers of 4 excellence for individual efforts, for infrastructure and 5 demonstration, and research and education projects. 6 We have the support of the federal government 7 already as this state moves towards the hydrogen highway 8 and hydrogen-based economy. Our tremendous efforts are 9 likely to bring more. 10 --o0o-- 11 AIR POLLUTION SPECIALIST TUTT: We also have 12 industry support. What makes the move towards hydrogen as 13 a transportation fuel unique relative to other alternative 14 fuels that have achieved only marginal success is that 15 both the auto and the oil industry have aligned up in 16 support of hydrogen-powered vehicles. All of the five 17 major auto makers as well as four of the major petroleum 18 suppliers received Department of Energy grants for 19 hydrogen vehicle demonstration projects. 20 BMW has announced that they will have hydrogen 21 internal combustion engine vehicles commercially available 22 in 2007. 23 --o0o-- 24 AIR POLLUTION SPECIALIST TUTT: In the end we 25 must continue to act to address both the near- and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 37 1 mid-term need to protect public health and the environment 2 and to diversify our energy needs. There is no intention 3 to sacrifice any of our current programs or move away from 4 the long-term vision this agency has always had. Hydrogen 5 allows us to move away from a single source of energy in 6 the transportation sector and provides us with an 7 opportunity to take full advantage of renewable sources of 8 energy. 9 It may also be a solution that will protect us 10 from the adverse impacts of global warming, ensure clean 11 air for all, and help keep our economy strong. 12 CHAIRPERSON LLOYD: Thank you very much indeed. 13 Mrs. Riordan. 14 BOARD MEMBER RIORDAN: I have a request, not a 15 question. 16 I'd like to have at your convenience a little bit 17 more information about the grants that are awarded here in 18 the project description. And you can just send that to me 19 at a later date whenever it's compiled. 20 Thank you. 21 CHAIRPERSON LLOYD: Professor Friedman. 22 BOARD MEMBER HUGH FRIEDMAN: I just wanted to 23 thank you for a very clear and well articulated 24 presentation. It was easy to hear and to understand it. 25 So I thank you, Eileen. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 38 1 CHAIRPERSON LLOYD: Thank you. 2 Ms. D'Adamo. 3 BOARD MEMBER D'ADAMO: I have a question about 4 what is envisioned in terms of distance between stations. 5 What would be an ideal distance between stations versus 6 what is feasible on a short term? 7 CAL EPA SECRETARY'S ADVISOR BAXTER: Currently 8 the automotive manufacturers like to have stations at 9 least 70 miles -- not more than 70 miles apart. And 10 that's partly due to the challenges associated with 11 hydrogen storage on board the vehicles. And quite a bit 12 of the money out of this DOE award went to centers of 13 excellence at the national laboratories to develop low 14 pressure hydrogen storage. So they're working on that 15 issue. 16 The proposal that you've seen that came from the 17 Governor's office and Secretary Tamminen, those -- when it 18 talks about 150 to 200 stations along California's 19 interstate freeways, that's at an interval of about every 20 20 miles. This was actually a proposal I think to get 21 people thinking about the possibility what really can be. 22 I think in reality when we start putting in 23 stations, we'll start in the urban areas and they'll be 24 much closer than that. And then we'll start to link the 25 urban areas in California north to south and so forth, and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 39 1 hopefully all the way up into British Columbia by the year 2 2010 for their Olympics. 3 CHAIRPERSON LLOYD: I'd also like to again 4 applaud the efforts of Dr. Burke and his colleagues at 5 South Coast. Because if you look at the preponderance of 6 proposed stations, they are clustered in the L.A. area. 7 And I think that's due to the support that you've 8 provided, Dr. Burke, for this network and looking ahead to 9 build those out. So I think we really like and appreciate 10 what you've done. And obviously South Coast is going to 11 be a key player as we move ahead down this road. 12 BOARD MEMBER WILLIAM FRIEDMAN: Just a question. 13 Are there theoretical estimations of what volume 14 of hydrogen gets you how many miles and what volume is a 15 refill for a vehicle? 16 CAL EPA SECRETARY'S ADVISOR BAXTER: Presently 17 the vehicles have about five kilograms of hydrogen on 18 board. And a kilogram of hydrogen has about the energy 19 equivalence of a gallon of gasoline. 20 BOARD MEMBER WILLIAM FRIEDMAN: So then very few 21 people are going to travel 70 miles to get a fill-up 22 without running out of hydrogen? 23 CAL EPA SECRETARY'S ADVISOR BAXTER: Well, no, 24 the efficiency of a fuel cell vehicle can be up to two 25 times that of an internal combustion engine vehicle. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 40 1 BOARD MEMBER WILLIAM FRIEDMAN: So 35 miles? 2 CHAIRPERSON LLOYD: No. If you're carrying five 3 kilograms on board times -- 4 BOARD MEMBER WILLIAM FRIEDMAN: So it would be 5 about 40 miles per kilogram? 6 CHAIRPERSON LLOYD: No, it -- well, it depends on 7 what your -- if you're looking maybe about 50 miles a 8 gallon, 40 miles a gallon, you've got five times that. So 9 you're looking at 150 to 200 miles, something like that. 10 BOARD MEMBER WILLIAM FRIEDMAN: Just trying to 11 get some notion of how long when I have my hydrogen 12 vehicle it's going to take me to go to someplace to get a 13 refill. 14 CAL EPA SECRETARY'S ADVISOR BAXTER: If you just 15 want to talk about range -- they can get 70 miles. That's 16 why the auto makers like the stations to be every 70 miles 17 right now. But the range right now is probably about 200 18 miles per fueling. But of course what people expect is 19 over 300 miles, which has been the issue in the past with 20 some of the low emission vehicles. So, again, that's the 21 hydrogen storage issue and getting enough hydrogen on 22 board at low pressures. 23 CHAIRPERSON LLOYD: I think the key thing is, you 24 know, you can get ranges up to 250 miles. But some come 25 down to 150. It depends on whether you use high pressure PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 41 1 storage of 10,000 PSI or 5,000 PSI. So I think, as 2 Shannon mentioned, these are some of the key issues that 3 have to be worked on for public acceptance. 4 But, no, they're far more than -- you know, they 5 can go reasonable distances. And to put that in context, 6 remember what we had with the battery electrics. And the 7 other piece of that, now one of the ways they've been able 8 to extend some of the range, all the fuel cell vehicles 9 are hybrids of different kinds -- they're mostly battery 10 hybrids, with the exception of Honda, which has got an 11 ultra capacity. 12 So another example where the work that I think 13 the Board has basically promoted, encouraged are electric 14 drive, it's a direct carryover to these fuel cell 15 vehicles. So I think that's the nature of that. 16 Mr. McKinnon. 17 BOARD MEMBER McKINNON: Yeah, sort of picking up 18 where you were on -- the whole question of technology 19 being driven by moving on something. While I'm probably a 20 skeptic on how long it's going to take to get there with 21 hydrogen, because of the energy conversion questions, I do 22 see -- and I think we learned last night about technology 23 that's developing and in fact the reformer technology that 24 may help us with cleaning up diesel. 25 So, you know, I look forward to sort of -- you PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 42 1 know, it take courage to move forward over sort of a long 2 initiative. And while you can be skeptical, there are 3 rewards along the way. And just as there were with the 4 electric car, I'm sure there will be with the fuel cell. 5 CHAIRPERSON LLOYD: Good context. 6 I'd also like to recognize another key person in 7 the implementation of this, is Ann Baker, a Deputy 8 Secretary of Cal EPA for External Affairs. Ann came over 9 from working with Assemblywoman Fran Pavley. And so she's 10 a key member of the team now. Not -- obviously in 11 hydrogen, but also looking into the clean gas regulations. 12 So I just wanted to mention that. 13 Dr. Burke, did you want to mention also your 14 conference coming up in -- 15 BOARD MEMBER BURKE: Rather than talk about the 16 conference, which is going to be in August in Palm Springs 17 so I can come down and get a tan and think about hydrogen, 18 I'd like to ask the doctor a question about what she 19 thinks the impact of the proposed terminal at Long Beach 20 will have on this overall program? 21 CAL EPA SECRETARY'S ADVISOR BAXTER: I'm sorry. 22 I had a little bit of trouble hearing you. 23 BOARD MEMBER BURKE: I have a little cold. I'm 24 sorry. 25 EXECUTIVE OFFICER WITHERSPOON: The effect of the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 43 1 LNG terminal on hydrogen deployment in California. 2 CAL EPA SECRETARY'S ADVISOR BAXTER: Oh, I have 3 to tell you I'm not up to speed on that issue. I 4 apologize. 5 BOARD MEMBER BURKE: I had a meeting on that 6 yesterday with the -- people. And they obviously have the 7 corner worldwide on hydrogen. And it was very exciting 8 what they said because what they are planning on doing is, 9 in addition to providing the gas for commercial purposes, 10 they're providing one percent of the gas for 11 transportation purposes, which will be available at 12 fueling stations possibly even closer than 20 miles. 13 And so we're really excited about that down in 14 the South Coast. And I think that that is right, you 15 know -- the timeframe is really a skeptical thing. But 16 something like this can compress the timeframe 17 significantly. So that's -- it's an interesting 18 development. 19 CHAIRPERSON LLOYD: I think the other -- the 20 other piece of it I think is that people ask, "Okay. 21 What's different? Why do we think that this effort may be 22 different from the effort to promote methanol in 23 California or to get battery electric vehicles?" 24 And I think one of the key things from my mind is 25 that, as we saw in the presentation, all of the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 44 1 stakeholders, the auto companies, the energy companies, 2 everybody has got major programs, major investments 3 working here. Nobody doubts that this is not -- going to 4 take a long time. And so it's not a short-term fix. 5 But everybody's recognizing more and more that 6 something has to be done. With what's going on in the 7 rest of the world, going on in the Middle East, with the 8 competition -- those of you who saw the Financial Times 9 this week, the competition for more scarce petroleum from 10 the growth in India, China and other areas, it stands to 11 reason that we really have to look at these -- some of 12 these alternatives. 13 You know, is it a given that we'll get where we 14 want to go? No. But on the other hand, if we don't have 15 that objective, we'll never get anywhere. So I'm excited 16 that we're starting on a long path. But on the other 17 hand, I think we've got short-term, medium-term objectives 18 which will set us on a -- I think a truly exciting path. 19 And as you said, Mr. McKinnon, we're going to see some 20 spinoffs here that we probably don't recognize. And we're 21 encouraging all the other technology. We're not 22 abandoning anything. 23 Dr. Burke. 24 BOARD MEMBER BURKE: I just got back from a fuel 25 conference in Belgium. And it seems like we're totally PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 45 1 out of step with Europe at this point, because they have 2 minimal, if any, interest in hydrogen or alternative 3 fuels. They're really trying to clean up diesel. And 4 it's their wave of the future. So I was just shocked at 5 how little interest there really was in any alternative 6 fuels on the international scene. 7 CHAIRPERSON LLOYD: Yeah. Although I think from 8 our impression dealing with the people over there on the 9 partnership, you know, I think -- some areas may be that 10 way, but I think there's other areas that have got a lot 11 of interest. Although they probably got more interest in 12 some of the bio-fuels, the bio-diesel and the alternatives 13 there, and with their big emphasis on climate change 14 issues. And I think they see hydrogen as further off and 15 they see a role more before hydrogen in the stationary 16 sector. 17 Any other comments from -- Mr. McKinnon. 18 BOARD MEMBER McKINNON: Yeah, I just -- I want to 19 sort of reaffirm something. I think that getting to the 20 point where we produce it in a sustainable fashion is 21 really, really important to get what matters about moving 22 to hydrogen. But I think what's been good is the Board 23 has stayed and the -- everybody working on it has sort of 24 stayed open to any approach to get there. And I think we 25 wouldn't have got the reformers had that not -- had there PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 46 1 not been an openness. So there's sort of a balancing act 2 I think towards getting to a sustainable way of getting 3 hydrogen and making sure that technology sort of is left 4 open to develop. 5 CHAIRPERSON LLOYD: We're fortunate enough to 6 have a growing interest towards natural gas, which can be 7 reformed to hydrogen. And we've the electrolysis as well 8 as the renewable. And I think, as was indicated in the 9 presentation, different ways of generating hydrogen 10 throughout the state from renewable resources using 11 agriculture, using waste, I think is a tremendous 12 opportunity. 13 And I'm also aware, Supervisor DeSaulnier, of 14 significant effort now growing up in the Bay Area to pull 15 together the various activities going on there to join up 16 with the active work at South Coast and over with the 17 partnership. 18 BOARD MEMBER DeSAULNIER: Yeah, since right now 19 we can't compete with Dr. Burke's athletic teams, I think 20 we'll try to compete north/south with -- and try to catch 21 up with you on hydrogen. We are behind, but I know 22 there's a commitment from our new air pollution control 23 officer, who we got from the South Coast. And I think in 24 the next five years we'll catch up to you. And it'll 25 probably take longer for the Giants to catch up to the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 47 1 Dodgers. So -- 2 (Laughter.) 3 CHAIRPERSON LLOYD: Thank you. 4 BOARD MEMBER BURKE: I'm not saying anything 5 about athletic teams today. You know, Matt's in mourning. 6 So I'm, you know, I'm trying to be considerate. So, you 7 know, it is what it is. 8 BOARD MEMBER McKINNON: You're so kind. 9 CHAIRPERSON LLOYD: On the other hand, the Bay 10 Area does have two football teams. 11 BOARD MEMBER DeSAULNIER: I'm not sure we're 12 ahead in that category either. 13 CHAIRPERSON LLOYD: Anyway, with seriousness, 14 again, I'd like to thank staff very much. 15 Did I get a positive response in providing us 16 with some of the booklets on the business aspects of that. 17 And, please, pass on to Daniel -- again, I wish 18 he was here because Daniel Emmet from Energy Independence 19 Now was key, together with Rick Margolis -- Margolan, 20 working with Terry before he joined CalEPA. So that was 21 very important. 22 So with that, since it's not a regulatory item, 23 not necessary to officially close the record, I'd like to 24 take a minute while we move on to the next agenda item, 25 which is 04-5-4, Engine Manufacturer Diagnostic System PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 48 1 Requirements. 2 As I indicated, move ahead to Agenda Item 04-5-4, 3 Engine Manufacturer Diagnostic System Requirements. 4 The Air Resources Board and the U.S. EPA have 5 been working long and hard to reduce emissions from new 6 heavy-duty engines. At last, success appears to be right 7 around and corner. And it's really pleasant to report 8 that. 9 Also referring back to Mr. McKinnon's point, 10 we -- some of us had the benefit of an excellent 11 presentation from MEEKA and its members yesterday. And I 12 think we all came away tremendously encouraged by the 13 progress in reducing both PM and NOx from the heavy-duty 14 sector. And I think it restores our faith. I think that 15 we're heading the right way and that we can keep pushing 16 ahead for tougher and tougher standards. And the 17 industry's doing its very best and it's succeeding in 18 getting to lower and lower emissions so that in fact we 19 can see clean diesel -- clean diesel engines there. 20 I think starting in the 2007 to 2008 model year 21 timeframe the emission standards for heavy-duty gasoline 22 and diesel engines will become much more stringent, as 23 we're aware of. We're shifting to a brand new world of 24 sophisticated engine controls, with more advanced on-board 25 computers, the use of after-treatment devices, and with PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 49 1 feedback groups to make sure the entire systems function 2 as they should. 3 And I think it's -- as we've seen the evolution 4 in the automobile as we look under our hood from the '70s 5 or the '60s to today and recognize what we have under 6 there or what -- how difficult it is to address that, I 7 think we're seeing the same thing migrating to the 8 heavy-duty sector particularly with the reduction in 9 sulfur in the fuels. 10 I think today staff is bringing forward because 11 they see this evolution and to start phasing in heavy-duty 12 diagnostic systems so that they can help ensure that the 13 engines meet the standards in-use and remain clean for 14 their entire life. 15 And, again, it's my understanding that Europe is 16 already making strides in this direction. So I think that 17 again maybe we see some more of a global effort here to 18 address this issue and make sure that the emission control 19 systems stand up for the period of time. 20 So with that I'd like to turn it over to Ms. 21 Witherspoon to provide us with an overview of what staff 22 will be covering today. 23 EXECUTIVE OFFICER WITHERSPOON: Thank you, 24 Chairman Lloyd and members of the Board. 25 As your own statement just indicated, staff PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 50 1 believes that the stringent heavy-duty emission standards 2 taking effect in between 2007 and 2010 would be 3 facilitated by the side-by-side introduction of diagnostic 4 systems. These systems would enable vehicle 5 manufacturers, vehicle drivers, and vehicle mechanics to 6 know quickly when an emission control component is 7 malfunctioning and will provide information to help them 8 make the proper repairs. 9 The proposed requirements will have a secondary 10 benefit of encouraging manufacturers to make their 11 emission control components as durable as possible, which 12 is beneficial to the consumers and assist in in-use 13 compliance. 14 I will now turn the presentation over to Mr. Mike 15 McCarthy of the Mobile Source Control Division. 16 (Thereupon an overhead presentation was 17 Presented as follows.) 18 ADVANCED ENGINEERING MANAGER McCARTHY: Thank 19 you, Ms. Witherspoon. 20 Good morning, Chairman Lloyd and members of the 21 Board. 22 Today I would like to present staff's proposal 23 for a new regulation that would apply to heavy-duty 24 engines and would require all engines to be equipped with 25 an engine manufacturer diagnostic system, also known as an PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 51 1 EMD system. 2 --o0o-- 3 ADVANCED ENGINEERING MANAGER McCARTHY: As you 4 probably recall, the concept of vehicle diagnostic systems 5 is fairly simple. The diagnostic system is comprised of 6 an on-board computer, input and output components such as 7 sensors and valves, and software routines to carry out the 8 diagnostics. 9 The system uses information from various input 10 components to detect malfunctions of emission controls on 11 the vehicle. The system also illuminates a warning light 12 to alert the vehicle driver and stores fault information 13 for repair technicians. On-board diagnostic systems known 14 as OBD II have already been in place since the 1996 model 15 year for all light- and medium-duty vehicles. 16 --o0o-- 17 ADVANCED ENGINEERING MANAGER McCARTHY: The 18 reason we are here today is heavy-duty trucks. On-road 19 heavy-duty diesel trucks account for a substantial portion 20 of oxides of nitrogen, or NOx, and particulate matter, PM, 21 emissions. 22 --o0o-- 23 ADVANCED ENGINEERING MANAGER McCARTHY: As you 24 can see from these pie charts, on-road trucks account for 25 approximately 20 percent of both NOx emissions and diesel PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 52 1 PM emissions projected for the 2010 year. 2 --o0o-- 3 ADVANCED ENGINEERING MANAGER McCARTHY: And as 4 you are probably aware, more stringent emission standards 5 for on-road heavy-duty engines have already been adopted 6 and are being phased in starting with the 2007 model year. 7 The primary method that will be used to get to 8 those 2007 standards is using new or improved emission 9 control technologies. 10 --o0o-- 11 ADVANCED ENGINEERING MANAGER McCARTHY: From this 12 chart, you can see there's a substantial reduction in PM 13 standards that first applies in 2007 and the incremental 14 NOx reductions that take place in 2007 and then further in 15 2010. Engine manufacturers are continuing to work on 16 improvements to new and existing emission controls to meet 17 these standards. 18 --o0o-- 19 ADVANCED ENGINEERING MANAGER McCARTHY: At this 20 time, however, there are no diagnostic system requirements 21 for heavy-duty vehicles or engines. The EMD system staff 22 is proposing today would help ensure that these new and 23 improved emission controls continue to work properly 24 throughout the life of the engine. 25 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 53 1 ADVANCED ENGINEERING MANAGER McCARTHY: 2 Accordingly, the proposed EMD regulation would 3 apply to on-road diesel and gasoline engines and would be 4 required in all 2007 and subsequent model years. The 5 requirements are designed to target the major emission 6 control components expected to be used for the 2007 model 7 year. The system would also build upon the existing 8 diagnostics that manufacturers have voluntarily 9 implemented over the years to help repair technicians fix 10 vehicles with drivability or performance problems. 11 --o0o-- 12 ADVANCED ENGINEERING MANAGER McCARTHY: Under the 13 proposal engine manufactures would be required to equip 14 all engines with an EMD system that performs functional 15 monitoring of the fuel system, the exhaust gas 16 recirculation, or EGR, system, and the PM trap. These are 17 the three major emission controls that will be used to 18 satisfy the 2007 emission standards. The monitors for 19 these systems would be calibrated and designed to detect 20 malfunctions that cause the system to operate outside of 21 design limits rather than prescribed emission thresholds. 22 --o0o-- 23 ADVANCED ENGINEERING MANAGER McCARTHY: Engine 24 manufacturers would also be required to monitor any other 25 electronic input or output components that are emission PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 54 1 related or are used for the other EMD system monitors. An 2 example of such a component could be an exhaust 3 back-pressure sensor that is used to monitor the PM trap. 4 As it is used for another EMD system monitor or PM trap, 5 the back-pressure sensor would also need to be monitored. 6 Monitoring for these components would be limited to 7 detection of electrical circuit faults and proper 8 function. 9 --o0o-- 10 ADVANCED ENGINEERING MANAGER McCARTHY: Lastly, 11 the EMD system would also be required to alert the vehicle 12 operator of a detected malfunction by illuminating a 13 warning light, and would be required to store fault 14 information about detected malfunctions to assist repair 15 technicians in finding and fixing the problem. 16 --o0o-- 17 ADVANCED ENGINEERING MANAGER McCARTHY: Regarding 18 cost effectiveness, today's regulation is expected to 19 result in virtually no additional cost to engine 20 manufacturers. The primary reason is that the EMD system 21 will make use of hardware such as sensors that the 22 manufacturer will already be adding to meet the 2007 23 emission standards. 24 The cost for that added hardware has already been 25 accounted for when the 2007 standards were adopted. The PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 55 1 only remaining cost will be for the development of 2 software routines in the on-board computer. Given the 3 limited number of diagnostics required and the ability to 4 spread the cost out over each engine, the incremental cost 5 per engine is virtually zero. 6 It should also be noted that the expected 7 additional costs are so low because the engine 8 manufacturers have indicated that they were already 9 planning on implementing many of these diagnostics. As 10 such, today's proposed requirement ensures that engine 11 manufacturers follow through on those commitments. 12 Given that the primary purpose of the EMD system 13 is to help make sure we retain the emission benefits 14 projected for the 2007 tailpipe standards, the cost 15 effectiveness was calculated by combining the EMD system 16 with the 2007 emission standards, resulting in a cost 17 effectiveness of $.42 per pound of NOx plus NMHC and $3.42 18 per pound of PM. 19 Again, the primary benefit of EMD is to protect 20 the emission benefits already projected from the '07 21 tailpipe standards. 22 --o0o-- 23 ADVANCED ENGINEERING MANAGER McCARTHY: One of 24 the important things to note about today's proposal is 25 that it really is the first step towards a comprehensive PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 56 1 heavy-duty diagnostic regulation. Staff is planning on 2 coming back to the Board next year with another regulation 3 for Board consideration. 4 It will be structured more like the current OBD 5 II regulation for light-duty vehicles and will require 6 comprehensive monitoring of all emission control 7 components and systems instead of targeting only the major 8 ones. It will also require malfunctions to be detected 9 before prescribed emission levels are exceeded, and will 10 require a standardization of several aspects, including 11 the warning light and the method for communicating fault 12 information to repair technicians. 13 --o0o-- 14 ADVANCED ENGINEERING MANAGER McCARTHY: Which 15 brings us to a summary of today's item. 16 Heavy-duty diesel trucks account for a 17 significant portion of NOx and PM emissions, and more 18 stringent emission standards are beginning in the '07 19 model year. Along with those standards is increased 20 reliance on emission controls. And an EMD system is the 21 necessary first step to ensure those emission controls are 22 working properly to maintain low emission levels in use. 23 Staff is continuing to work on a second 24 generation of more comprehensive requirements and 25 anticipates being back to the Board next year with a new PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 57 1 proposal. 2 This concludes the staff's presentation. Thank 3 you. 4 CHAIRPERSON LLOYD: Thank you. Any questions? 5 Mr. Calhoun. 6 BOARD MEMBER CALHOUN: Mike, did I understand you 7 to say that most of the components required for the 8 monitoring are present in the plan to be placed on these 9 engines any way? 10 ADVANCED ENGINEERING MANAGER McCARTHY: In 11 discussions with the engine manufacturers, they've 12 planned -- indicated that they had planned to monitor most 13 of these components on their own, primarily for service 14 reasons, for drivability or performance problems. 15 BOARD MEMBER CALHOUN: Over the years the federal 16 government has sort of taken a lead on heavy-duty engines 17 in both gasoline and diesel. Where is EPA relative to 18 this particular issue? 19 ADVANCED ENGINEERING MANAGER McCARTHY: They 20 participated side by side with us during the discussions 21 and negotiations that went on for this rulemaking. And we 22 met with the engine manufacturers several times. Again, 23 it was jointly EPA and ARB meeting at the same time. 24 So what they've indicated is they'd like to adopt 25 the same regulation or the similar regulation in this PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 58 1 calendar year, put out a notice of proposed rulemaking and 2 do the same. So I think we really have in -- closer than 3 we have in past, is worked together to come up with a 4 proposal that's going to work for both agencies so we can 5 apply it to both -- to all 50-state trucks. 6 BOARD MEMBER CALHOUN: Thank you. 7 CHAIRPERSON LLOYD: Professor Friedman. 8 BOARD MEMBER HUGH FRIEDMAN: To what extent have 9 you accommodated the concerns of diesel -- of Detroit 10 Diesel and of the EMA, specifically with respect to 11 limiting this to engines? It looks like your amendment -- 12 your amended -- or modification to the proposed 13 regulations seeks to address some of those concerns. And 14 I was unfortunately out, and I tried to hear, but -- 15 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: The EMD 16 proposal is limited to the engine itself except where 17 there might be a sensor located on the truck or on another 18 part of the drive train that is necessary to initiate the 19 engine monitors. So if it needed some information from 20 something on the transmission in order to cause the engine 21 monitor to run, then that would have to be monitored. 22 But this is a fairly big issue. And when we come 23 back with a full OBD program, this is going to be an issue 24 of contention of where does the responsibility of the 25 engine manufacturer stop vis-a-vis the whole truck. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 59 1 BOARD MEMBER HUGH FRIEDMAN: Okay. 2 CHAIRPERSON LLOYD: What about the alt fuel issue 3 that was raised by EMA? 4 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: The 5 proposal you have in front of you today does not apply to 6 alt fuel engines. It just -- in the timeframe that we're 7 looking at, it just did not appear to us that it was 8 reasonable to have resources put on OBD for alt fuel 9 engines and -- or EMD for alt fuel engines. But we will 10 consider that when we do the full proposal for you next 11 year, which right now would be targeted for the 2010 model 12 year when the next phase of emission standards go into 13 place. 14 CHAIRPERSON LLOYD: So this was just an alert 15 from them that they have some concerns? 16 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Yeah. 17 And I think it's just simply that most of the alt fuel 18 engine models are relatively low-volume models. It takes 19 resources to develop an OBD system, and resources are 20 short. So in this short timeframe here of '07, it could 21 have resulted in some of the alt fuel engines not being 22 available. So we just didn't think it was essential to do 23 it at this time. 24 BOARD MEMBER CALHOUN: I have one more question, 25 Mr. Chairman. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 60 1 Tom, Mike stated earlier and you sort of 2 reiterated what he just said, that next year or 2005 you 3 plan to come back with a comprehensive set of regs. 4 Do you think you're allowing yourself enough time 5 to learn the things that you need to know in order to be 6 able to develop a complete set of OBD regs by that time? 7 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: From 8 the staff's viewpoint, we do think that's the case. I 9 think you might get a different answer from the engine 10 manufacturers. But we believe we have a vision of what a 11 full OBD system for a heavy-duty diesel truck or a gas 12 truck would look like. And, you know, the difference is 13 that what we're proposing today kind of finds the parts 14 that have short circuits, have open circuits on the 15 sensors where the control system is completely at one end 16 of this limit versus the other end. 17 What we propose to develop for the 2010 timeframe 18 would be one like we have on cars, where the drifting or 19 the deterioration of any of the components can be tied to 20 the level of emissions and the warning light goes off 21 that. And we have a vision of how that would work. 22 BOARD MEMBER CALHOUN: Yeah, but what are the 23 limits though? That's the thing I guess I'm really 24 focusing on. You want to be certain that wherever these 25 pass/fail limits, if you want to design them that way, are PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 61 1 set that you don't have false failures and that type of 2 thing. 3 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Right. 4 BOARD MEMBER CALHOUN: So do you think you will 5 have acquired enough experience in such a short period of 6 time to do that? 7 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: The 8 answer is yes. We think we have a good vision of it. And 9 in the one year that follows roughly from now we'll be 10 working with the engine manufacturers to try to narrow 11 down what exactly those limits are. But in our mind the 12 importance is to get to that concept. And the exact level 13 of the trigger for the diagnostic is something that we 14 certainly will learn more in the next year on. 15 CHAIRPERSON LLOYD: Thank you. 16 Any other questions? 17 Yes. 18 BOARD MEMBER HUGH FRIEDMAN: What -- maybe I 19 missed this, too. What would be the effect on fuel 20 efficiency or economy of this regulation? I mean would 21 there be any incentives to treat -- to go back to defeat 22 devices? I don't want to open up an old wound, because 23 we've addressed that. But when we get the full regs 24 coming along. So I'm just wondering what is the impact on 25 fuel efficiency? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 62 1 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: I don't 2 think there's any direct impact of fuel efficiency on EMD. 3 It's just software and sensors. But clearly to the extent 4 that it or the follow-on OBD proposal do a better job at 5 detecting faults which may have an impact on fuel 6 efficiency and those get corrected by the trucker and 7 their mechanics, then it would have a positive effect 8 on -- could have a positive effect on fuel efficiency. 9 But in terms of the reference back to the 10 off-cycle emissions and stuff, I think we have that 11 controlled by the 2007 -- in fact, 2004 standards, which 12 have provisions in it and standards that essentially don't 13 allow these off-cycle or -- off-cycle conditions that 14 create high emissions. 15 CHAIRPERSON LLOYD: Thank you. 16 Madam Ombudsman, would you please describe the 17 public participation process which occurred during the 18 development of this item, and share any observations or 19 concerns you have with us at this time. 20 OMBUDSMAN TSCHOGL: Thank you. 21 Mr. Chairman and members of the Board. The 22 Advanced Engineering Section started work on the Engine 23 Manufacturer Diagnostic System, EMD, Regulation in late 24 2002. Since then staff has had numerous meetings, both 25 teleconferences and face-to-face meetings with the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 63 1 individual engine, transmission, and major vehicle 2 manufacturers and coach builders. 3 Staff also has met with EMA, TMA, and their legal 4 counsel. The meetings were held in El Monte and Chicago. 5 Additionally, staff has met with the American 6 Trucking Association, which nationally represents owners 7 and operators of the affected heavy-duty vehicles. 8 To ensure that all affected parties were notified 9 of the regulation, staff attempted to identify and 10 estimate the smaller vehicle manufacturers and coach 11 builders that are not represented by TMA and repair 12 technicians and owners and operators of heavy-duty 13 vehicles including transit buses. Staff contacted various 14 associations related to the heavy-duty industry for this 15 information and was unable to obtain much information. 16 In July 2003, staff published the draft staff 17 report and regulation, subsequently held a public workshop 18 last October. 19 The notice for this public hearing was posted on 20 the official EMD regulatory website as well as mailed out 21 to all known interested parties on April 2nd, 2004. 22 Thank you. This concludes my remarks. 23 CHAIRPERSON LLOYD: Thank you very much. 24 We have two witnesses signed up. I'd like to 25 call them up. Just a reminder, if they have written PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 64 1 copies of the testimony, to provide it to the Clerk of the 2 Board. 3 First is Jed Mandel and then Robert Clarke. 4 MR. MANDEL: Good morning. 5 Am I on here? 6 CHAIRPERSON LLOYD: Yes. Well -- 7 MR. MANDEL: More or less, right? 8 I was giving you an opening, Chairman Lloyd. 9 CHAIRPERSON LLOYD: Closer, closer. 10 Yeah, don't faint on us. 11 MR. MANDEL: I'm Jed Mandel, speaking on behalf 12 of the Engine Manufacturers Association. 13 Today marks another example of an ARB rule that 14 EMA and its members are able to support. This has become 15 a much more frequent occurrence of late, probably as a 16 result of two significant factors: The engine 17 manufacturers represented by EMA are following through on 18 their commitment to reduce emissions significantly from 19 the products they make. And the staff has committed to 20 work with us to implement programs that reduce unnecessary 21 regulatory cost and burdens so long as the overall 22 effectiveness of ARB's emissions reduction programs are 23 not compromised. 24 We think that the proposed EMD rule is a good 25 example of the staff's commitment, and we acknowledge and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 65 1 thank the staff for their efforts. We in turn have 2 committed to working with ARB and EPA on the 3 implementation of on-board diagnostic requirements for the 4 heavy-duty engine industry. 5 The EMD rule is just the first step. It has been 6 developed to minimize the likelihood that there will be 7 any adverse impact on the real prize: Timely compliance 8 and marketplace acceptance of the stringent 2007 9 heavy-duty engine tailpipe standards. 10 The proposed EMD rule and the ultimate adoption 11 of additional on-board diagnostic requirements also should 12 be adopted in coordination with EPA to assure a harmonized 13 nationwide program. It is critical to engine 14 manufacturers that there be a single uniform set of 15 on-board diagnostic requirements applicable nationwide to 16 heavy-duty engines. 17 In working with the staff on the EMD proposal, we 18 have emphasized, and the staff has agreed, that the 19 heavy-duty engine industry cannot and should not be 20 responsible for any diagnostic and monitoring requirements 21 that go beyond the engine and after-treatment system. The 22 EMD rule should explicitly exclude from its coverage any 23 requirements for monitoring or reporting on transmission 24 or other power-train components. We believe that the 25 language in the proposed EMD rule is not as clear on that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 66 1 point as it should be. 2 We also believe that the EMD rule should not 3 apply to alternative fueled heavy-duty engines. The staff 4 agrees with us. And I know in the back of the room is now 5 proposed 15-day language changes, and we support those 6 changes. And those changes fully address the concerns 7 that I've just shared with you. 8 As a result, we ask the Board to direct the staff 9 to work with us through the 15-day notice process to 10 clarify the scope of the EMD rule, to make sure that it's 11 limited to the engine and after-treatment system of 12 gasoline- and diesel-fueled engines. 13 If you have any questions, I'd be pleased to 14 answer them. 15 CHAIRPERSON LLOYD: Thank you very much, Jed. 16 Again, really appreciate those words. And, again, I 17 congratulate staff on working with you and congratulate 18 your members on the, you know, huge investment, 19 significant progress that's being made to reduce 20 emissions. So we really applaud that and it's really nice 21 to hear that. 22 MR. MANDEL: We appreciate that. And as was 23 noted in the staff presentation, there is some heavy 24 lifting yet to be done. We will probably be back before 25 you, and we know we'll be working with the staff in the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 67 1 coming year. There are going to be some difficult issues. 2 But we are committed to working with the staff to try and 3 address them. And we will share with you our concerns if 4 they haven't been addressed. 5 CHAIRPERSON LLOYD: And I know we can count on 6 you to ensure that there's no slippage of the 2007 and 7 2010 implementation dates. 8 MR. MANDEL: You can count on us. You have heard 9 that commitment from engine manufacturers before. 10 CHAIRPERSON LLOYD: Yes. I think that's very 11 important. So we're delighted to hear that. 12 MR. MANDEL: Good. 13 CHAIRPERSON LLOYD: And I understand from your 14 comments there that the 15-day notice will address those 15 issues. And so clearly that's right on board there. 16 Any other questions, comments? 17 We're going to let you off lightly. Thank you 18 very much indeed, Jed. 19 MR. MANDEL: I won't know what to do without a 20 question from, you know, Matt McKinnon or others. 21 He's smiling at me. But I -- that's good. 22 That's a good thing. 23 CHAIRPERSON LLOYD: You're baiting him. 24 MR. MANDEL: No, I'm teasing -- I'm just teasing 25 him. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 68 1 (Laughter.) 2 BOARD MEMBER McKINNON: I'm with Jed on this one. 3 CHAIRPERSON LLOYD: Okay. 4 MR. MANDEL: Thank you very much. 5 CHAIRPERSON LLOYD: Thank you. 6 Next we have Robert Clarke. 7 MR. CLARKE: Mr. Chairman and members of the 8 Board. Good morning. I am Robert Clarke, President of 9 the Truck Manufacturers Association. 10 We appreciate the opportunity to present to the 11 Board the views of the North American Truck Manufacturing 12 community on this very important issue. 13 TMA represents the major North American 14 manufacturers of medium- and heavy-duty trucks with gross 15 vehicle weight ratings of 19,500 pounds and greater. 16 TMA members are Ford Motor Company, Freightliner, 17 General Motors Corporation, International Truck and Engine 18 Corporation, the Isuzu Commercial Truck of America, Mack 19 Trucks, PACCAR, and Volvo Trucks of North America. 20 Over the past 16 months TMA and its member 21 companies have appreciated the opportunity to work and 22 comment directly with the CARB staff during the 23 development of these engine diagnostic requirements. 24 On February 25th of last year we presented 25 information to the staff and showed them five different PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 69 1 medium- and heavy-duty trucks which exemplified the 2 variety of vocations in which trucks are used and the 3 resulting wide range of equipment and features that are 4 installed to perform the functional requirements 5 associated with those applications. 6 A copy of that presentation is included with the 7 statement. We highlighted the importance of flexible 8 requirements, especially as it related to electronic 9 communications or architectures and protocols. 10 On October 16th of last year and again in January 11 of this year we presented information and views to the 12 staff in response to the proposal they published in July 13 of last year. We noted the extensive research, 14 engineering, and testing resources TMA members and their 15 engine suppliers were and are expending to make certain we 16 can deliver reliable, cost effective and fully 17 emissions-compliant products to our customers in 2007 and 18 beyond. 19 We emphasized at that meeting the 2007 standards 20 was our highest priority, one that should not be undercut 21 by having to spread our resources over too many project 22 areas. We cautioned that attempting to ingrate elaborate 23 OBD systems into our products now would compromise our 24 ability to integrate, test and produce vehicles that meet 25 the stringent 2007 prime engine emissions requirements. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 70 1 Those presentations are also attached to the statement. 2 TMA is pleased that CARB heard our comments and 3 factored them into the proposed requirement that is before 4 the Board today. The new requirement mirrors the 2007 and 5 2010 engine standard in that it embodies a multi-step 6 building-block approach that will enable engine and truck 7 chassis manufactures to produce greatly simplified yet 8 very capable engine diagnosis systems for 2007. More 9 sophisticated systems will follow in the future. 10 Engine and truck manufacturers will now have the 11 time needed to focus our full attention and resources on 12 the successful introduction of our 2007 products. 13 Equally important, motor carriers, engine 14 servicing, and compliance auditing personnel will have the 15 ability to confirm that the new emissions reducing systems 16 are functioning properly. We believe this is a reasonable 17 approach to accomplishing our shared goal of a cleaner 18 environment. 19 Finally, we concur with the comments that Jed and 20 our colleagues at the Engine Manufacturers Association 21 just made about limiting the scope of this rule and, 22 therefore, encourage the Board to adopt the staff's 23 proposal modified on that basis. 24 Thank you, Mr. Chairman and members of the Board. 25 CHAIRPERSON LLOYD: Thank you very much. Again, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 71 1 thank you for those positive statements, too. 2 I thank staff for working with the Truck 3 Manufacturers Association. 4 Any comments from the Board? 5 Thank you very much. 6 MR. CLARKE: Thank you. 7 CHAIRPERSON LLOYD: I will now close the record 8 on this agenda item. However, the record will be reopened 9 if and when the 15-day notice of public availability is 10 issued. Written or oral comments received after this 11 hearing date but before the 15-day notice is issued will 12 not be accepted as part of the official record on this 13 agenda item. If and when the record is reopened for a 14 15-day comment period, the public may submit written 15 comments on the proposed changes, which will be considered 16 and responded to in the final statement of reasons for the 17 regulation. 18 Any ex parte communications from my colleagues on 19 the Board? 20 Seeing none. 21 We have a resolution before us, with a 22 clarification that was put forward by staff on the 15-day 23 changes to accommodate some of the concerns of EMA and so 24 forth. 25 BOARD MEMBER McKINNON: Mr. Chairman, I'd like to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 72 1 move the resolution -- 2 BOARD MEMBER D'ADAMO: Second. 3 BOARD MEMBER McKINNON: -- with the 15 day. 4 CHAIRPERSON LLOYD: Good. 5 All in favor say aye. 6 (Ayes.) 7 CHAIRPERSON LLOYD: Anybody against? 8 No. unanimous. 9 Thank you very much indeed. 10 And thank you, staff. It's always, by the way, a 11 pleasure to see you come up from El Monte with so much of 12 the good work going on down there. So I really appreciate 13 it. 14 Where are we going to be next month? In El 15 Monte? 16 Yes. So we look forward to -- yes. 17 What I'd like to do is take a ten-minute break to 18 give the court reporter time. 19 We're actually -- I won't say ahead of schedule. 20 But we're in good time here. I don't want to tempt fate. 21 But why don't we -- by quarter of by that clock, give us 22 ten minutes to take a break for the court reporter and 23 change staff. And then we will continue with the final 24 agenda item. 25 (Thereupon a recess was taken.) PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 73 1 CHAIRPERSON LLOYD: The last agenda item today is 2 04-1-4, an update from staff on amendments to the 3 California Motor Vehicle Service Information Regulation 4 that the Board approved in January. 5 As you may recall, the rule amendments expanded 6 the applicability of the regulation to cover heavy-duty 7 vehicles and address an outstanding issue related to 8 access to anti-theft system information. 9 Two issues came up in January that the Board 10 directed staff to report back on. We also left the 11 rulemaking record open at that time so we could receive 12 and consider comments related to the linkage between the 13 service information access requirements and the heavy-duty 14 engine diagnostic proposal we just received -- just 15 considered. 16 I'd like to turn it over to Ms. Witherspoon to 17 introduce the item and begin staff presentation. 18 EXECUTIVE OFFICER WITHERSPOON: Thank you, 19 Chairman Lloyd. 20 As you indicated, the staff presentation today 21 will focus on work done to address remaining service 22 information issues from the January hearing. 23 As directed by the Board, staff's continued to 24 work closely with the stakeholders to determine whether 25 our proposed solution to the ongoing issue of access to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 74 1 immobilizer initialization information can be further 2 refined or improved. 3 The staff was also asked by the Board to evaluate 4 vehicle manufacturers potential legal liability resulting 5 from the use of diagnostic tools and information provided 6 to the aftermarket. 7 Staff's ready to present the result of these 8 efforts and how it plans to bring closure to these issues. 9 At this point I'll turn the presentation over to 10 Mr. Dean Hermano of the Mobile Source Operations Division 11 to explain staff's findings in more detail. 12 (Thereupon an overhead presentation was 13 Presented as follows.) 14 AIR RESOURCES ENGINEER HERMANO: Thank you, Ms. 15 Witherspoon. 16 And good morning to you, Chairman Lloyd and 17 members of the Board. 18 Today I will update you on the staff's findings 19 in regards to the recently approved amendments to the 20 Motor Vehicle Service Information Regulation. 21 --o0o-- 22 AIR RESOURCES ENGINEER HERMANO: I'll begin with 23 a brief overview of California's Motor Vehicle Service 24 Information requirements. The Board originally adopted 25 this regulation in December 2001 as required by Health and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 75 1 Safety Code Section 43105.5, a new section created by 2 Senate Bill 1146 in September 2000. 3 The intent of this regulation -- or Legislation 4 is to ensure that independent service facilities and 5 aftermarket part companies have access to the same 6 information and tools available to franchise dealerships. 7 The includes service manuals, wiring diagrams, and 8 diagnostic tools. Making this information available 9 allows independent service providers to be better equipped 10 to effectively carry out emission-related repairs and give 11 vehicle owners greater options regarding where their 12 vehicles can be serviced. 13 The requirements apply to all 1994 model year and 14 later motor vehicles equipped with on-board diagnostic 15 systems. 16 This regulation is very similar to federal 17 provisions for service information access, with both rules 18 requiring direct access through the Internet or on-line 19 viewing or downloading of service information. 20 --o0o-- 21 AIR RESOURCES ENGINEER HERMANO: This past 22 January the staff provided the Board with an update on the 23 Service Information Program and proposed a few amendments 24 to improve and clarify the regulation. The two most 25 notable proposed amendments were: PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 76 1 One, requirement for light-duty manufacturers to 2 develop and provide a mobilizer anti-theft system 3 initialization procedures based on the use of low-cost 4 tools and hardware. 5 This requirement currently contained in the 6 federal regulation would reduce the costs associated with 7 the replacement of on-board computers in the field and the 8 quality control testing of remanufactured on-board 9 computers. 10 Secondly, the staff proposed to extend the 11 regulation's applicability to cover heavy-duty vehicles 12 once they are equipped with on-board diagnostic systems. 13 Amendments were approved at the hearing, but all 14 issues related to each of these proposals were not 15 completely resolved. The Board thus directed staff to 16 look into continued remanufacture concerns with time 17 delays associated with some of the service-based 18 immobilizer procedures already available for immobilizer 19 initialization and 2) what liability issues heavy-duty 20 manufacturers may face in making their tools and related 21 information available for purchase to the aftermarket. 22 Lastly, the Board asked staff to keep a service 23 information rulemaking record open until the Engine 24 Manufacturers Diagnostic Regulation was considered in 25 order to provide heavy-duty manufacturers with an PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 77 1 additional opportunity to comment on any concerns related 2 to the impact of the EMD proposal on these requirements. 3 --o0o-- 4 AIR RESOURCES ENGINEER HERMANO: In regards to 5 computer remanufacturers the Board asked the staff to meet 6 again with affected stakeholders to see if a solution 7 facilitating the testing of immobilizer-equipped on-board 8 computers can be found that better addresses 9 remanufacturers means. 10 The staff met with vehicle manufacturers and 11 computer remanufacturer representatives on April 21st of 12 this year. At that meeting the remanufacturer 13 stakeholders proposed that a more efficient solution to 14 the problem would be for vehicle manufacturers to design a 15 special bench test software routine into their on-board 16 computers. Issues of cost and security regarding this 17 proposal were discussed. 18 The vehicle manufacturers opposed the idea of 19 special software to disable the immobilizer for testing 20 purposes because there is no incentive for them to expend 21 resources creating software changes for the benefit of 22 their competition and because such software could 23 potentially create immobilizer security issues. 24 They also reiterated their view that the cost and 25 time delay issues that result from using service equipment PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 78 1 and procedures to test remanufactured computers are 2 manageable by the aftermarket. 3 --o0o-- 4 AIR RESOURCES ENGINEER HERMANO: This table 5 compares key aspects of the two computer testing solutions 6 discussed. 7 Staff estimates that the service-procedures-based 8 solution in the first column favored by the vehicle 9 manufacturer should not increase the cost of replacement 10 computers by more than $2.50 per unit. The estimates for 11 a vehicle software change is less than $1 per vehicle. 12 Both estimates are based on cost figures provided by the 13 affected stakeholders. 14 Use of the vehicle manufacturers' service 15 procedures for initialization does not raise new system 16 security issues because the procedures are already 17 available to the service industry. Vehicle manufacturers 18 are concerned, however, that software changes to create a 19 mode for bench testing computers could be exploited. 20 The staff believes that while security problems 21 may arise, it should be possible for manufacturers to 22 minimize such problems through the design process. 23 The vehicle manufacturers have consistently been 24 opposed to changing vehicle software and, therefore, will 25 not do so voluntarily. Therefore, further regulatory PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 79 1 amendments would be needed to bring a vehicle software 2 solution to fruition. 3 The service procedure solution does not require 4 additional revision to the regulation. 5 Lastly, staff continues to believe that a special 6 requirement specifically intended to benefit on-board 7 computer remanufacturers goes against the language and 8 intent of Health and Safety Code 43105.5. No such concern 9 exists for the solution based on immobilizer service 10 procedures. 11 --o0o-- 12 AIR RESOURCES ENGINEER HERMANO: Overall the 13 staff has concluded that both of the solutions are 14 technically feasible in facilitating continued testing of 15 remanufactured on-board computers. Furthermore, the staff 16 believes that either solution can be implemented without 17 creating major costs or business process issues for the 18 affected industries. Notwithstanding, the staff continues 19 to hold that from a regulatory point of view, reliance on 20 the service procedure solution best balances stakeholders' 21 concerns and issues for the following reasons: 22 One, the solution can be used to facilitate 23 testing of both existing and future vehicles. 24 It does not create any conflict with the intent 25 of Senate Bill 1146 as it pertains to remanufacturers. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 80 1 And, third, it won't raise new security issues 2 for vehicle manufacturers. 3 --o0o-- 4 AIR RESOURCES ENGINEER HERMANO: Another 5 immobilizer-related issue raised at the January hearing 6 was a request from Honda Motor Company for additional lead 7 time to comply with the requirement for immobilizer 8 initialization procedures that are based on low-cost 9 tools. Honda has asked to extend the lead time through 10 the 2009 model year to address needed hardware and 11 software changes on some of its models. 12 Honda is currently still working with the ARB 13 staff, the United States Environmental Protection Agency, 14 which also has a 2007 model year deadline for this 15 requirement, and with aftermarket stakeholders to address 16 concerns and questions associated with the request for 17 added lead time. Based on the outcome of these 18 discussions the staff can amend the regulation if 19 appropriate to provide for the extra lead time through the 20 15-day regulatory change process. 21 --o0o-- 22 AIR RESOURCES ENGINEER HERMANO: Another question 23 raised at the January Board hearing was whether heavy-duty 24 vehicle manufacturers can be held liable should the 25 diagnostic and reprogramming tools and information they PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 81 1 make available be misused. 2 For example, if a technician uses a tool to 3 improperly configure an engine or if an aftermarket 4 diagnostic tool manufacturer improperly designs its 5 product, could the vehicle manufacturer be held liable for 6 any resulting vehicle damage? Following the business 7 practices that are currently used in the light-duty 8 industry, ARB staff and Legal Office have determined that 9 legal liability can be controlled through the use of 10 indemnity or hold-harmless agreements as a condition for 11 sale of the tools and information. All indications to the 12 ARB staff are that these agreements have been used 13 reasonably and that likely the industry would not raise 14 any anti-competitive issues. 15 The staff believes that such agreements can also 16 be used by the heavy-duty industry to address liability 17 issues. 18 The staff also recognizes that prior to the first 19 requirements for light-duty manufacturers to make 20 available proprietary tools and reprogramming equipment, 21 lead time was provided for them to incorporate necessary 22 safeguards to minimize any opportunities for tampering or 23 accidental misuse of the tools. 24 Considering the fact that heavy-duty tools are at 25 least as complex and powerful as those used in the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 82 1 light-duty industry, the staff believes that it is 2 important to ensure that heavy-duty manufacturers also 3 have ample lead time to incorporate necessary safeguards 4 for their use. Therefore, the staff intends to draft 5 15-day changes to the regulation that would delay 6 requirements on the heavy-duty manufacturers for the 7 availability of reprogramming tools and related 8 reprogramming and bidirectional control information until 9 2010. 10 Data stream information would still have to be 11 made available starting with EMD implementation in 2007, 12 because this type of information cannot by definition 13 change an engine's calibration or its performance. 14 --o0o-- 15 AIR RESOURCES ENGINEER HERMANO: In conclusion, 16 through continued discussions with the stakeholders, the 17 staff believes it has the information necessary to bring 18 closure to the outstanding issues related to this 19 rulemaking. 20 The Staff plans to make additional adjustments to 21 the regulation discussed in this presentation through the 22 regulatory 15-day change process. Other minor 23 modifications to the regulatory language resulting from 24 discussions with affected stakeholders since the January 25 hearing will also be part of that process. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 83 1 Further, the staff will continue to work with 2 stakeholders to address new issues that arise out of 3 implementation of these requirements and will propose 4 amendments as necessary at a future Board update. 5 Thank you. 6 BOARD MEMBER HUGH FRIEDMAN: Thank you very much. 7 Chairman Lloyd had to absent himself for a time 8 and asked me to continue with the meeting. 9 I understand that is not a regulatory item, that 10 is, there's no resolution before us. We don't have any 11 need for any ex parte communication reportage. There's no 12 need for an ombudsperson report. 13 So are there any questions or comments? 14 BOARD MEMBER CALHOUN: I have one quick question 15 I'd like to ask the staff. 16 I think you stated that there was a stakeholders' 17 meeting in April? 18 AIR RESOURCES ENGINEER HERMANO: April 21st, yes. 19 BOARD MEMBER CALHOUN: And at that meeting the 20 remanufacturers presented -- 21 BOARD MEMBER HUGH FRIEDMAN: Joe, we can't hear 22 you. 23 BOARD MEMBER CALHOUN: Okay. I'll try to talk a 24 little louder. 25 BOARD MEMBER HUGH FRIEDMAN: That's better. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 84 1 Thanks. 2 BOARD MEMBER CALHOUN: I believe you said at that 3 meeting the remanufacturers made a proposal that would 4 require the OEMs to install a special software to test 5 this system, is that correct? 6 AIR RESOURCES ENGINEER HERMANO: Correct. 7 BOARD MEMBER CALHOUN: And did I understand you 8 to say that to impose that requirement would be 9 inconsistent with the statute or intent of the statute? 10 AIR RESOURCES ENGINEER HERMANO: Well, in regards 11 to the Health and Safety Code and the actual language of 12 the Senate bill that authorizes us, there is no provision 13 specifically for remanufacturers to access this 14 information. But back in 2001 when the original 15 regulation was adopted, the Board asked us to see if we 16 could find a way for remanufacturers to be able to get the 17 information without sacrificing vehicle security. So 18 we've done every effort we could since 2001 and since 19 January of this year to do that. And at this point I 20 think we've kind of exhausted most of the options that we 21 have at hand. 22 EXECUTIVE OFFICER WITHERSPOON: Mr. Calhoun, Let 23 me see if I can put that in a slightly different way. The 24 statute requires that OEMs must share the information that 25 they have, but that they are not required to create PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 85 1 information solely for the use of the aftermarket industry 2 that they weren't producing for their own behalf. And 3 that's the difference here in the issue about statutory 4 authorization to require it. 5 BOARD MEMBER CALHOUN: All right. Thank you. 6 BOARD MEMBER HUGH FRIEDMAN: Any other comments? 7 Ms. D'Adamo. 8 BOARD MEMBER D'ADAMO: Well, just as a follow-up 9 to that. 10 I understand that it does not require the OEMs to 11 create any additional information. But it's -- this Board 12 would not be precluded. And I would just like perhaps 13 Legal to respond to that. In other words, would we still 14 have the discretion to require the vehicle software 15 changes? And if so, what sort of legal liability would 16 that present? 17 GENERAL COUNSEL JOHNSTON: I'm not sure that the 18 Board would have that discretion, because the statute is 19 fairly specific in requiring that the Board has authority 20 to direct information be shared by the OEMs with the 21 aftermarket. But the statute is definitely not going to 22 the point where it directs that the ARB can require that 23 OEMs create information that is available to the 24 aftermarket sector. 25 BOARD MEMBER D'ADAMO: Okay. And then -- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 86 1 SENIOR STAFF COUNSEL TERRIS: If I may add to 2 that. The statute basically gives authority for the Board 3 to require the OEMs to provide specific information. And 4 that when the statute's read in the whole, it makes it 5 clearer that with regard to the computer systems, 6 and which the initialization system is a part of, is that 7 its information is to be limited to information to allow 8 for the installation of computers and -- the installation 9 and the initialization of the computer system. 10 And if you look at the legislative history, it's 11 made it clear that rebuilders were first included in the 12 early iterations of the bill and then they were taken out. 13 And so in reading the statute as a whole and looking at 14 the legislative history, we find that the OEMs are not 15 required to redesign their computer systems to allow for 16 the initialization to permit rebuilding. 17 BOARD MEMBER D'ADAMO: Okay. And then I have a 18 follow-up question on costs for staff. I know one of the 19 reasons that we asked staff to take a look at this in the 20 interim between the hearings was to see if there was a way 21 that the costs could be brought down by perhaps looking at 22 some other alternatives such as vehicle software changes. 23 Could staff go through -- I see here on this 24 chart on slide 5 the cost impact. This would be per 25 vehicle or per computer tested. But if staff could PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 87 1 provide information about what the overall costs would be 2 to the OEMs versus the aftermarket industry. 3 MOBILE SOURCE DIVISION OPERATIONS DIVISION CHIEF 4 LYONS: Sure, we can do that. 5 We received cost estimates from both the vehicle 6 manufacturers to implement a software change solution and 7 from the aftermarket on the cost to implement a 8 service-procedures-based solution. And just taking the 9 costs that were given to us, the vehicle manufacturers 10 estimated up-front costs ranging from a million to two 11 million initial costs. And then ongoing costs ranging 12 from about 500,000 to about 800,000. Those would be 13 yearly costs. 14 The remanufacturers on the other hand estimate 15 that it would cost essentially a million dollars to 16 retrofit, if you will, 40 on-board computer testers. So 17 that works out to about $25,000 per tester. 18 It's my understanding that there are two major 19 remanufacturers, who would incur about a million dollars 20 each, and then there are a number of smaller players. We 21 haven't gotten cost estimates on exactly how that would 22 come out. But we would estimate that they have less than 23 50 percent in the market share, so that total cost on the 24 remanufacturers would be less than $4 million. 25 BOARD MEMBER D'ADAMO: And how about ongoing PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 88 1 costs for the remanufacturers? 2 MOBILE SOURCE DIVISION OPERATIONS DIVISION CHIEF 3 LYONS: Well, those are costs to develop and implement 4 testers -- or initialization stations for all of their 5 existing testers. The ongoing costs would only come in to 6 the extent that they have to redo that process to account 7 for new vehicle immobilizer designs. And we don't have 8 any information on how quickly those immobilizer systems 9 change and, therefore, how quickly the manufacturers will 10 have to reinvest. 11 BOARD MEMBER HUGH FRIEDMAN: Anything further. 12 Matt -- Mr. McKinnon. 13 BOARD MEMBER McKINNON: I have a lot of pretty 14 good recollection of the last hearing and having some real 15 difficulty with some of the costs discussion coming from 16 the remanufacturers. 17 And I remember there being sort of a confusion in 18 arguments about the difference in an original 19 manufacturers and a remanufacturers and the big price 20 difference between the two, which is -- obviously if 21 you're not manufacturing something from scratch, it's 22 going to cost less. 23 But I guess the thing that sort of really -- to 24 me sort of tells me we're in the right place -- and maybe 25 I can be convinced otherwise today -- is that sort of my PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 89 1 understanding, and albeit empirical, is that replacement 2 of these computers is a very, very rare occurrence. I've 3 never had to do it. I called my dad today, 74 years old, 4 he's had to do it once. So I guess what I'm curious about 5 is if we have to weigh -- and I think what we're being 6 asked to weigh is giving up the security of vehicles for 7 an industry that remanufactures that is somewhat created 8 by the regulatory environment. 9 If we have to weigh safety and security of cars 10 versus this industry's ease in merchandising -- 11 remanufacturing, it's real important to me to know how 12 often it occurs. Okay? Because if it's as rare as I 13 think it is, I don't think we should be giving up security 14 of people's cars for that rare of an occurrence. So if 15 you have the answer how often it happens, if anybody 16 that's going to testify, I'd be real curious in knowing 17 that. 18 BOARD MEMBER HUGH FRIEDMAN: Thank you. 19 Any other questions or comments? 20 We have a list of 13 requests to speak. In view 21 of the fact that we're going to lose a quorum and we plan 22 to adjourn within a little bit more than an hour, I'm 23 going to ask that each of you hold your presentation to 24 five minutes maximum. If you want to aggregate and that 25 would allow somebody to continue or if you want to join PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 90 1 together. But I have 13, and that would work out to be 2 about five minutes apiece. 3 I hope that's not going to be a hardship. 4 Okay. Mr. Douglas -- Steve Douglas is first, 5 then Kerby Suhre, and then Aaron Lowe. 6 MR. DOUGLAS: Thank you, Professor Friedman, 7 members of the Board. 8 I know how much you enjoy PowerPoint 9 presentations and we certainly have that. 10 But I thought it might be important for you to 11 see some real hardware, some parts, some vehicle parts. 12 And I thought that might help you understand the issue a 13 little bit better. 14 (Thereupon an overhead presentation was 15 Presented as follows.) 16 MR. DOUGLAS: For the record, I'm Steven 17 Douglas. I'm with the Alliance of Automobile 18 Manufacturers. And I'm speaking on behalf of both the 19 Alliance and the Association of International Automobile 20 Manufacturers today. Together we represent the entire 21 new -- all of the automobile manufacturers. 22 So first I'd like to acknowledge the Board's 23 diligence on this issue, vehicle service information, and 24 specifically express our appreciation for the staff. 25 They've gone above and beyond the call of duty on this PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 91 1 issue, as they routinely do. And I think -- you know, we 2 appreciate that. And I'm certain the ECU remanufacturers 3 do as well. 4 So with that, I would like to give you just a 5 little bit of background on this. The reason that we're 6 here today. In many cases the vehicle anti-theft system 7 uses the engine computer to prevent starting a vehicle, 8 unless the anti-theft system determines that an authorized 9 key is being used. 10 For example, the anti-theft system will prevent 11 the engine computer from energizing the fuel injectors or 12 energizing the ignition. These features prevent or at 13 least deter vehicle theft. In fact, at the December 2001 14 hearing the California Highway Patrol noted that 15 automotive thefts had dropped from a high of 300,000 to 16 180,000 the prior year. 17 Our data from NHTSA indicates that thefts are 18 down by 55 percent since 1985. And they attribute both -- 19 attribute this in large part to the vehicle anti-theft 20 systems. 21 So it's really unquestionable that the vehicle 22 anti-theft system improved vehicle security. It reduces 23 the enforcement -- law enforcement burden. It reduces the 24 cost to consumers through lower insurance rates. 25 However, this system also makes testing ECUs at PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 92 1 the factories more difficult, where the vehicle's not 2 available. All they have is the engine control unit. But 3 this has nothing to do with your regulation on the vehicle 4 service information. And I want to make that clear. The 5 Vehicle Service Information Regulation is not the reason 6 they have concerns that their costs are increasing. It's 7 because of the anti-theft system. 8 And, again, we believe that, as we'll 9 demonstrate, we've provided an adequate solution in the 10 form of a low-cost test bench that the ECU remanufacturers 11 can use at a reasonable cost to test these systems. 12 And with that, I'd like to turn it over now to 13 Kerby Suhre. He's with EEPod. And we've asked him to put 14 together a bench test. And this is the solution that we 15 would propose. And he has the details of it. He has the 16 cost of putting this system together. And with that I 17 have some other slides, but I'll turn it over to him so he 18 can get started. 19 MR. SUHRE: Good morning, Chairman Lloyd, Board 20 members. I'm going to start a demo here very quickly so 21 that we can move through this. It requires some time to 22 do an initialization. And then I'll describe what is 23 going on here. 24 So let me start the demo, and then I'll describe 25 it. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 93 1 Okay. What we have here is the Ford module 2 reprogramming demonstration for doing PATS initialization. 3 PATS stands for passive anti-theft system. 4 And to start the demo, I'm going to show that I 5 have two sets of keys here. One set of keys, as I turn it 6 on you'll see the PATS enable and then the other enable 7 that allows the spark injectors and all of the engine 8 functions to work. 9 And you'll see as I turn that on, this comes on, 10 this will go off. And the green light indicates that this 11 engine module here would enable it to perform all of the 12 engine functions. 13 I'm going to pull that set of keys out, move to a 14 new set of keys. This would be the situation you have 15 with a remanufacturer. He's got a set of keys that won't 16 enable the engine to run with this software and an 17 interface box. My company as well as many others saw 18 these J2534 interface boxes. You can use the Ford module 19 reprogramming software, go into this PATS function. 20 And this portion takes awhile to run. This is 21 again part of the anti-theft measure. It takes ten 22 minutes for the reinitialization to occur. And while that 23 is going on, I'm going to switch over and talk about this 24 demo setup. 25 The setup we have here -- this portion here is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 94 1 nothing more than a switch and a place to put the key. 2 There is a PATS transceiver. There's a transponder built 3 into the key. This is an intelligent key system. And 4 there's a transceiver here that talks with the key and 5 then talks over a proprietary protocol to the engine 6 controller module. This example here is a 2004 Taurus 7 speaking hand protocol. 8 And then I'm talking to the engine control 9 module. This is just a breakout box through a standard 10 J1962 SE OBD connector over to this box, which is a J2534 11 interface -- standard J2534 over to the DC performing the 12 initialization. 13 I've got a breakdown -- I guess we switched to a 14 picture here. 15 If we can switch back to the slide. 16 I've got a breakdown of the cost of this 17 particular setup. We have the PATS transceiver -- this 18 black part here -- $30. Two PATS keys with transponders, 19 $96. This key cylinder module, 61. 20 I also listed an E-PATS module. Ford has two 21 implementations, one where the PATS is built into the 22 engine control module, as is the case here called I-PATS. 23 They also have a version where it's external called 24 E-PATS. So I included that cost because this would be a 25 bench setup that could do any Ford module. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 95 1 The PCM connector, $50. I put in the breakout 2 box, 95. The FMP software is the software that I started 3 with. Ford offers it again in three flavors. You can buy 4 it for as long as you need it, at relatively low prices, 5 if you need it for short term or for long term. 6 The J2534 interface box. This is the box that my 7 company sells, four seventy-five. And then the cable to 8 the J1962 connector at $55. 9 So a total cost of this set up, $957 not 10 including the PC or power supply, assuming that you would 11 have that in your normal ECU test bench setup. 12 You want me to go through the -- okay. 13 --o0o-- 14 MR. SUHRE: I've got a couple other slides that 15 we'll talk about some of the differences between this 16 setup and some of the other manufacturers. General Motors 17 has an auto-learn feature in their ECUs. So you can do -- 18 you can reinitialize their engine control modules without 19 any of this equipment other than the power supply, where 20 you -- it requires a 30-minute wait for it to learn the 21 new combination with the anti-theft module. Or they also 22 have a scan tool method, which would be -- could be 23 similar to this with a J2534 pass through, which they're 24 going to support in the future, or with their hand-held 25 scan tools so you can reinitialize their modules quicker. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 96 1 Similar ten-minute wait to the Ford system that you're 2 seeing here. 3 --o0o-- 4 MR. SUHRE: DaimlerChrysler offers a diagnostic 5 test mode. Their data is available through ETI for the 6 purpose of performing tests to make sure that these 7 signals work, the starter, the fuel pump, the injectors, 8 to make sure that they all function properly. You don't 9 have to have -- you don't have to have -- you don't have 10 to bypass the anti-theft mode to be able to do that. So 11 you can do that similar to this setup here where you would 12 use again a pass-through tool with the ETI information, or 13 you could use their scan tool to perform that function. 14 Mazda is an identical setup to this, just a 15 different piece of software. They're also off our 16 web-base software. 17 By the way, I didn't explain it earlier. But the 18 software that I'm running here is actually attached to the 19 web. It's for the purposes of reprogramming as well. 20 This is a side function of it. 21 --o0o-- 22 MR. SUHRE: Other OEM examples: Toyota, Lexus, 23 Subaru -- there's a long list -- are similar to this demo, 24 except again they use their scan tool in place of a J2534 25 module. I can't speak for them directly, but my guess is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 97 1 in the future you will see a lot more manufacturers 2 support this style of approach. It benefits everyone, 3 including them. 4 --o0o-- 5 MR. SUHRE: And, finally, we have a list of 6 manufacturers whose modules can't be rebuilt. They 7 have -- I don't know how to put it, but they have very 8 secure systems where the modules are married up via the 9 VIN and the anti-theft module directly to the powertrain 10 control module -- the engine control module. And they 11 can't be unmarried. It's a very secure system and, 12 therefore, cannot be rebuilt and reprogrammed. 13 --o0o-- 14 MR. SUHRE: That's it at this time. I'll turn it 15 back over to Steve while we wait for the initialization to 16 finish. Then we'll return back to this for a moment. 17 CHAIRPERSON LLOYD: You had the ten minutes, 18 Steve. You just finishing up? 19 MR. DOUGLAS: What's that? 20 CHAIRPERSON LLOYD: You had the ten minutes. Are 21 you just wrapping up? 22 MR. DOUGLAS: Yes, yes. Well, while they're 23 doing the reprogramming. And I would ask that you devote 24 any time that Ford, Chrysler, Honda, Toyota have to my 25 presentation. They'd limited us to five minutes each. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 98 1 CHAIRPERSON LLOYD: Okay. 2 --o0o-- 3 MR. DOUGLAS: Just wanted to give you a brief 4 background. 5 The auto makers have been working cooperatively 6 with the ARB, with the staff, with EPA, with independent 7 repair technicians, the mom and pop service stations, and 8 the tool companies over the last five years. And the 9 process and the results can only be described as complete 10 success. And I think most people would describe it as 11 that. It's been successful for the auto makers, for the 12 service stations, and for the tool companies, and for the 13 motoring public for that matter. 14 I can say with a hundred percent confidence that 15 no one would have predicted where we are today from where 16 we were five years ago. We've made enormous strides. 17 Today every automobile manufacturer provides their service 18 information for both the emission control as well as the 19 non-emission control, air bags, antilock brakes. They 20 provide that over the Internet. They provide factory 21 training information, and factory tools to independent 22 repair shops. 23 They provide tool information to aftermarket tool 24 companies so they can build universal tools that would 25 work on Ford, GM, Chrysler, Toyota, and Nissan. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 99 1 And, finally, auto makers are the ones who 2 spearheaded this reprogramming so that a repair shop or a 3 dealer shop can reprogram any vehicle with just this small 4 black box here, which retails for around I think $300 to 5 $400. And it's manufactured by a number of companies, 6 that and a personal computer. 7 So I think we've gone a long way. And I wanted 8 to stress too -- there was some discussion at the last 9 hearing or maybe -- I thought maybe some confusion that 10 perhaps this regulation had some adverse unintended 11 consequences. And that's just not the case. The 12 regulation as it stands today benefits everyone. It 13 benefits independent repair shops and it benefits tool 14 companies and it -- and I think you could ask, and the ECU 15 rebuilders would say they're better off because of this 16 regulation. 17 --o0o-- 18 MR. DOUGLAS: Just to highlight the OEM 19 resources. Ms. D'Adamo had asked about how -- the cost of 20 this. The initial -- we did some conservative estimates. 21 And I say they're conservative because we only assumed 22 there were 15 automobile manufacturers. In fact there's 23 probably closer to 25 manufacturers. We didn't include 24 any costs for travel of engineers and such. And there 25 would be a considerable amount of travel. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 100 1 But it does break up into two cost elements: The 2 initial development cost, because you have to develop the 3 software, you have to test it. You have to make sure that 4 you don't jeopardize vehicle security because then -- you 5 have to make sure you don't damage the vehicle. So that's 6 the up-front cost. And we estimate that to be a couple of 7 million dollars. 8 And then there's the ongoing costs. Any time you 9 change the fuel injectors you have to go back, make sure 10 the software still works the way it's intended to. And 11 then of course if you have a new product, you have to do 12 all this -- all of the initial development. 13 --o0o-- 14 MR. DOUGLAS: Comparing that in contrast to a 15 requirement for all of the automobile manufacturers to 16 redesign all the vehicle computers and NFS systems, the 17 ECU rebuilders solution allows their companies to choose 18 which computers they want to rebuild. In many cases, the 19 ECU rebuilders have already -- have much of this 20 equipment. And they're rebuilding ECUs now so they have a 21 lot of this equipment. And, therefore, their costs would 22 only be the marginal costs to expand that to the new 23 products. 24 I think it would be ECU rebuilders -- it's 25 appropriate that they bear the cost for the equipment that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 101 1 will be in their factories, that will be producing their 2 products at that time. 3 Finally, I think the cost of constructing these 4 test benches is going down as a result of ARB and EPA 5 regulations that now require the auto makers to provide an 6 inexpensive method of reprogramming and reinitializing the 7 computers. We've offered to work with the rebuilders, and 8 we have, and I think you see what we have here, which is a 9 low-cost solution. 10 --o0o-- 11 MR. DOUGLAS: Finally, just to again address the 12 issue of legislative requirements. Eleven forty-six now 13 is involved in every single meeting associated with this. 14 It doesn't require -- it didn't direct ARB to redesign the 15 vehicle to accommodate remanufacturers. In fact, the 16 provision for rebuilding was specifically deleted by the 17 author during this legislative development. Even -- 18 still, even as it was originally proposed, the bill never 19 discussed redesigning vehicles for the benefit of 20 remanufacturing. It was only for -- it was only 21 information, which I think we're providing. 22 --o0o-- 23 MR. DOUGLAS: Just to summarize and wrap it up. 24 The current regulations do benefit everyone. On the ECU, 25 rebuilders just want more benefit. There are low-cost PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 102 1 test benches available, which we're demonstrating here. 2 And, finally, this hasn't -- you haven't heard a 3 lot of discussion about air quality because it's not 4 related to air quality. This is about transferring cost 5 from the ECU rebuilders to the automobile manufacturers. 6 And that's all I have. 7 We do agree with the staff's conclusion that the 8 best solution is with the service procedures and a test 9 bench. 10 And I'd be happy to answer any questions you 11 have. And I think initialization is complete now. 12 CHAIRPERSON LLOYD: Thank you. 13 MR. SUHRE: Okay. With the initialization 14 complete we'll just show the last step here real quick. 15 We got security access. We come in. And what 16 you do is we erase current key codes in the module. 17 It's warning us that we will need two keys to 18 restart it. 19 And when this is complete it will give us some 20 instructions on how to reprogram two new keys. So it 21 wants us to turn the ignition off. Turn it on with key 1. 22 And you'll notice with key 1 we still just get the PATS 23 LED "not enabled." It requires two keys for the Ford 24 system to work. 25 We'll take the second key. And now you see we're PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 103 1 back to two keys reprogrammed. Everything's enabled. You 2 could test this module. 3 Thank you. 4 CHAIRPERSON LLOYD: Thank you. 5 Any questions? 6 BOARD MEMBER RIORDAN: Just, Mr. Chairman, I 7 appreciated the demonstration. I think that's very 8 helpful for us to see. 9 CHAIRPERSON LLOYD: Thank you very much. 10 Aaron Lowe, John Cabral, and David Darge. 11 MR. LOWE: Thank you, Mr. Chairman. 12 I was waiting for my PowerPoint. 13 (Thereupon an overhead presentation was 14 Presented as follows.) 15 MR. LOWE: But thank you very much for the 16 opportunity to testify. My name's Aaron Lowe and I'm with 17 the Automotive Aftermarket Industry Association. And we 18 have been -- we appreciate the patience of the Board in 19 trying to address this issue, which is of major importance 20 to our rebuilder members and also to our service 21 facilities that purchase those rebuilt computers. 22 The problem that we're dealing with was created 23 because the vehicle manufacturers designed their 24 immobilizer systems in such a way that they didn't take 25 into consideration the problems of the in-use repair shop PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 104 1 and the parts industry obviously, the aftermarket. 2 It's important to remember that SB 1146 corrected 3 the problem by ensuring that the service industry, and we 4 also think the rebuilders, to have the information 5 necessary to initialize these systems. So we had to 6 correct the problem because in the service industry they 7 wouldn't have been able to initialize or work with these 8 systems had there not been a solution put into SB 1146. 9 There are 1.2 million ECUs every year in this country. So 10 it's a pretty sizable replacement part. 11 It's also important to remember that these are a 12 very expensive purchase for the consumer. 13 After the January Board meeting during the 14 discussion we went back and looked at a proposal -- tried 15 to find a proposal that would resolve a lot of the issues 16 that were raised by the Board during that meeting. And we 17 retained the services of an engineer who had extensive 18 experience in working with vehicle software to come up 19 with a low-cost solution that would not have any impact on 20 the theft of that vehicle. And we think a one second 21 immobilizer test that we developed resolves that issue. 22 We also don't see how this solution has any 23 conflict with SB 1146. We believe that the rebuilders are 24 covered -- they are included in the scope of 1146 at the 25 beginning. And it does require that initialization be PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 105 1 included as far as a requirement to complete the repair of 2 a vehicle. So we don't see where this would be prohibited 3 from being required. They're not actually changing 4 anything about the ECU as part of this solution. 5 CHAIRPERSON LLOYD: You're half way through your 6 five minutes. 7 MR. LOWE: Okay. Well, then I'm just about done. 8 Actually I'm going to turn it over to John Cabral. 9 --o0o-- 10 MR. LOWE: This is an important -- oh, I'm sorry. 11 It's important to remember what the cost is of 12 this equipment. If you look at these ECUs, these are 13 those currently on the market. As you can see, the cost 14 for an ECU where there's competition, there's between 15 two -- there's some that are above like 700 to 400, but 16 most of them are $200 or less. And that's because there's 17 competition in the market. 18 You also see that the OE price and the 19 aftermarket price are getting closer and closer together. 20 And that serves to indicate that competition is much more 21 intense in the aftermarket and that the OE's are really 22 pushing on the price to try to keep -- to compete against 23 our industry. 24 --o0o-- 25 MR. LOWE: But then when you look at where -- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 106 1 I've bypassed a slide. I'm sorry. 2 Okay. If you looked at a Toyota Camry where 3 there's no competition for repairs, the price is well over 4 a thousand dollars. So if we begin to lose the 5 competitive industry for the rebuilders, the cost to 6 consumers by maintaining their car when their ECU fails, 7 which is a key part of the emission system, it is going to 8 be fairly expensive. 9 Now, I'd like to turn it over to John Cabral, 10 who's going to talk about how the rebuild -- the impact of 11 the bench test proposal on the rebuilders in the factory. 12 MR. CABRAL: Good morning, Chairman Lloyd and 13 honored Board members. 14 I'd like to thank the manufacturers for giving us 15 such a wonderful demonstration. I'm sure it simplified 16 everything for everyone. 17 The bench test idea proposes that we simulate 18 on-vehicle conditions in a factory environment. And this 19 slide show will show the typical components that are 20 required as he showed that are necessary to initialize the 21 immobilizer system on a bench. 22 Based on a number of -- this is one setup. This 23 is for one particular vehicle. But based on the number of 24 keys, modules, and transceivers required, just for Ford 25 alone we have upwards of 40 different combinations. And PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 107 1 seeing that we need three setups per tester to satisfy the 2 ten-minute delay, we're talking about a substantial number 3 just for one manufacturer alone. And not to mention the 4 fact that these two keys now have to travel in the factory 5 environment taped to this ECU in order for it to be tested 6 as it goes along. 7 So I'd just like the Board to see what kind of, 8 you know, complicated procedure this is just to be able to 9 test an ECU, where we never had this before. And the OE 10 supplied remanufacturers don't have this issue. 11 Furthermore, once the manufacturers change their 12 systems on an ongoing basis -- and sometimes they do it 13 yearly, sometimes they don't -- we're going to have to 14 develop these systems on an ongoing basis. We don't know 15 what these costs are just yet. I mean from manufacturer 16 to manufacturer these components vary widely in price. 17 --o0o-- 18 MR. CABRAL: This one -- this slide shows the 19 same system for a Toyota. This one is assuming that the 20 Toyota uses the J2534 reprogramming tool. We have a price 21 for this tool costed at $1,800. And this is the actual 22 posted price on the website for True Technology's J2534 23 programming tool. Though the cost that was given by the 24 manufacturer was only $400. If it's $400, we'd like to 25 know about it. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 108 1 Currently Toyota uses their factory tool. And if 2 they used their factory tool for initialization, the cost 3 jumps substantially. And you'll also notice that some of 4 these modules compared to the Ford modules, like the 5 transponder, key computer, and the transceivers and the 6 keys cost significantly more than it did with the Ford. 7 And, you know, if you get into Mercedes or other 8 higher-end vehicles, those costs can jump twofold or 9 threefold. 10 I'm now going to turn it over to Russ Schinizing, 11 and he's going to explain some of the costs that are 12 incurred with some of these setups. 13 Thank you. 14 MR. SCHINIZING: Good afternoon. 15 The summary of these costs are just what they 16 are, summaries. The details have been provided. 17 --o0o-- 18 MR. SCHINIZING: But there's initial manpower 19 costs and system development costs and then there's 20 hardware costs. All totaling -- remanufacturer to a 21 little over a million dollars. And they don't include 22 some of the costs you were talking about, because they're 23 very unknown. There's training, future upgrades, ongoing 24 maintenance with the 40 different systems or the hundreds 25 of different systems we'll have to have in the factory. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 109 1 These costs will significantly eliminate the 2 value proposition. You saw Aaron's slide that showed how 3 close the reman list price is to the OE new price. That 4 value proposition is shrinking day by day. And as that 5 value proposition continues to erode, you'll find that 6 there is -- once the value proposition is gone for reman'd 7 ECUs, there will be no more competition because all there 8 will be available is new and the only new available will 9 be at one source. There will be no more extra sources of 10 new for healthy competition. And the prices will go up, 11 as you saw. 12 These costs we don't think are practical and we 13 feel aren't even necessary with the proposal that we have. 14 We have a truly practical solution, that is low cost, 15 non-obtrusive to the vehicle operation or the anti-theft 16 operation. And mainly -- most of the manufacturers costs 17 are centered around the development of a Mode A. And we 18 are not asking for a Mode A, as proposed by the vehicle 19 manufacturers. 20 Our proposal does not interfere with the 21 vehicle's operation or security system. And to explain 22 this, Dave Darge is coming. He's a senior engineer from 23 Powertrain Electronics, a limited liability corporation. 24 MR. DARGE: Hello. My name is Dave Darge from 25 Powertrain Electronics. I'd like to go over a couple of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 110 1 things. 2 One of the things that we're working on is 3 that -- based on the supplied estimates we received from 4 the OEM, they're trying to implement a new special test 5 mode which we're not asking them to do. It's not our 6 intention to request or develop anything that has to do 7 with the J1979 or Mode A. Simply we're trying to 8 implement a one second test which is active only the first 9 second after the key is turned on. This test is only run 10 once. And then once the engine runs, it's never run ever 11 again. This does not affect any of the existing fuel, 12 spark, starter control, or security system. The PCM's 13 existing engine control software will stay the same as it 14 is today and the security will stay as it is today. 15 --o0o-- 16 MR. DARGE: This slide shows what is current. 17 Basically, the key on -- the key is installed, the engine 18 starts normally. That's current technology. 19 --o0o-- 20 MR. DARGE: With our one second test the same 21 thing. The key's going to get turned on, the engine's 22 going to start normally. 23 --o0o-- 24 MR. DARGE: We're proposing that the 25 communication between the PCM and the test bench is done PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 111 1 with current wires and inputs and outputs that already 2 exist in the bench and the PCM, so the communications will 3 not be any cost to the OEM. 4 If we go with their current test method, there's 5 a high cost and long delays. 6 --o0o-- 7 MR. DARGE: We're proposing this one second test: 8 The key is on, within one second the security is pleased, 9 and then we'll go to Mode D. That is our goal, is to make 10 the computer think it's okay to run on the bench test. 11 --o0o-- 12 MR. DARGE: Basically this is a simplified 13 diagram which shows what it takes to initiate this test. 14 I won't go into details because of time constraints. 15 --o0o-- 16 MR. DARGE: The next slide, G, shows what happens 17 when the security is satisfied. We go to Mode D, which 18 means PCM can run and can be tested on the test bench. 19 --o0o-- 20 MR. DARGE: And the final slide is actually the 21 whole complete system. To save time you can review this 22 on your own. And this does not change any of the security 23 which is currently in place today. And it's a cost 24 effective way. There's very little software to be 25 proposed. And it's doable for the OEMs. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 112 1 Thank you. 2 CHAIRPERSON LLOYD: Thank you. 3 MR. DARGE: Any questions? 4 CHAIRPERSON LLOYD: Questions? 5 No. No questions. Thank you. 6 MR. LOWE: Could I just make a couple of 7 concluding remarks? 8 CHAIRPERSON LLOYD: Yes. 9 MR. LOWE: We're trying to move as quick as we 10 could. And I know you have time constraints. 11 The solution we have is low cost. As they said, 12 Mode A is not require. It's non-obtrusive to the security 13 system or the ECU. It just -- it's a piece of software 14 that's added on to the computer to just check it in the 15 first second before the engine's on. It in no way makes 16 the car any easier to steal. And we think it will help 17 reduce the cost significantly for the engine rebuilders at 18 a very low cost for the manufacturers to put together. 19 And I appreciate your time on this. 20 CHAIRPERSON LLOYD: Thank you. 21 Just for clarification. Did Russ speak? 22 MR. SCHINIZING: Yes. 23 CHAIRPERSON LLOYD: Yeah, I thought -- out of 24 order. Okay, thank you. 25 And thank you for consideration. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 113 1 Mr. McKinnon. 2 BOARD MEMBER McKINNON: Yeah, we -- the thing I'm 3 interested in is the occurrences. We heard a number of 4 1.5 million per year. 5 How many automobiles operate in the United States 6 per year? Do we have any idea? 7 EXECUTIVE OFFICER WITHERSPOON: Well, the number 8 in California -- 9 BOARD MEMBER McKINNON: Or that's vehicles 10 actually. 11 EXECUTIVE OFFICER WITHERSPOON: -- is 28 million, 12 which is generally ten percent of the U.S. market. So 200 13 million. 14 BOARD MEMBER McKINNON: Two hundred eighty 15 million? 16 EXECUTIVE OFFICER WITHERSPOON: Something like 17 that, 200 to 300 million. 18 BOARD MEMBER McKINNON: And how many computers 19 tend to be on-board a car? 20 EXECUTIVE OFFICER WITHERSPOON: Of that fleet, 21 how many have computers? 22 BOARD MEMBER McKINNON: Yeah. 23 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Well, 24 the majority of them, since there's been computers since 25 1981. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 114 1 BOARD MEMBER McKINNON: One? 2 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: No, 3 since 1981 there have been computers on virtually all 4 cars. So I think the majority of those cars -- you know, 5 a high fraction of that 200 to 300 million have computers. 6 BOARD MEMBER McKINNON: Okay. And how many 7 computers per car? 8 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Oh, I 9 think the one they're talking about is one. It's the main 10 ECU or main control computer. 11 BOARD MEMBER McKINNON: Okay. 12 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: There 13 are lots of other computers on cars, but it's -- that's 14 one. 15 BOARD MEMBER McKINNON: So it's 1.5 million out 16 of something like 3 million. So it's a fraction of a 17 percent. 18 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: I think 19 that -- the data they presented which is the million 20 dollars type number is the same data we used to come up 21 with. But on a per-computer basis it's two and a half 22 dollars. And you saw the price of the computer is two 23 hundred and some dollars, on the low end at least. And so 24 it has an impact that looks like one percent. 25 BOARD MEMBER McKINNON: Okay. Thank you. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 115 1 CHAIRPERSON LLOYD: Thank you. 2 Now we have Frank Krich, John Trajnowski. One of 3 you, I guess, are going to give up the five minutes that 4 Steve took. 5 John, are you going to forfeit completely? 6 MR. TRAJNOWSKI: I think so. 7 CHAIRPERSON LLOYD: Thank you. We really 8 appreciate that. 9 MR. KRICH: Thank you, Chairman Lloyd and members 10 of the Board. My name is Frank Krich, Senior Planning 11 Specialist, DaimlerChrysler Corporation. And, again, in 12 lieu of saving time I'm going to pass my time to the 13 others. 14 But I do want to make one statement, and that we 15 agree with the staff's conclusion that the existing 16 service procedure solution is the best regulatory 17 approach. 18 And with that brief statement, I'll pass to the 19 others, unless there's any questions for me in particular. 20 CHAIRPERSON LLOYD: I don't think so. Thank you. 21 MR. KRICH: Thank you. 22 CHAIRPERSON LLOYD: So we'll move through. 23 Steve did such a superb job with his colleague, 24 Kerby, there. 25 Then we go to Pete Meier from Honda. And then PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 116 1 Lisa Stegink and Steve Hoke. 2 MR. MEIER: Good morning, Chairman Lloyd and 3 members of the Board. My name is Pete Meier from American 4 Honda. 5 We support the Alliance -- AAIM position. We 6 have nothing further to add, unless you have questions. 7 CHAIRPERSON LLOYD: Great. Thank you. 8 Lisa Stegink, Steve Hoke, David Ferris. 9 MS. STEGINK: Good morning, Chairman Lloyd and 10 members of the Board. 11 I'm actually here to testify on the heavy-duty 12 aspects of the Service Information Rule, as you recall 13 from the hearing in January. So I'm switching topics 14 here. 15 I will be brief. 16 I am pleased to address the second part or what 17 we consider the second part of the EMD service information 18 rulemaking agenda. 19 The heavy-duty engine industry has not previously 20 been subject to a service information requirement in 21 California. However, we acknowledge and support the 22 application of service information requirements to the 23 heavy-duty industry as a corollary to heavy-duty EMD, 24 which the Board has just adopted. 25 Like EMD, we think it is essential that the SIR PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 117 1 requirements for heavy-duty engines be implemented in a 2 way that assures that compliance with and acceptance of 3 the 2007-and-later model year tailpipe standards are not 4 jeopardized. 5 As you know, there is an existing ARB SIR 6 template in practice for the light- and medium-duty 7 vehicle industries. That template does not reflect the 8 realities of the heavy-duty engine industry and 9 marketplace and, as such, is not the best place to start 10 for implementing heavy-duty engine SIR requirements. A 11 lot of detailed and nuanced modifications are required in 12 order to make the existing SIR template and practice 13 applicable to heavy duty. 14 Noting the well known axiom that the Devil is in 15 the details, we urge the Board to direct the staff to work 16 with us and other interested stakeholders to assure that 17 all the appropriate and necessary heavy-duty engine 18 industry modifications are made to the Service Information 19 Rule. 20 Similarly, and as noted above, the Service 21 Information Rule is being adopted for heavy-duty engines 22 in conjunction with the EMD rule. As you are well aware, 23 the EMD requirements for 2007 are not the final word on 24 on-board diagnostic requirements. Further requirements 25 are coming, and we've committed to working with the staff PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 118 1 on those additional requirements. But in the meantime, 2 those additional requirements have been deferred. 3 Likewise, there are aspects of the SIR 4 requirements that have been proposed for adoption now but 5 which are not set to go into effect until after the 2009 6 model year. We believe that it's critical to a successful 7 roll-out of both the additional service information 8 requirements and the additional on-board diagnostic 9 requirements for the Board to consider them in context 10 with one another. 11 As such, we urge the Board to defer adoption now 12 of any heavy-duty service information requirements that 13 does not take effect until after 2009. Instead, we 14 suggest that the staff repropose any additional post-2009 15 heavy-duty service information requirements after we have 16 had a chance to work with the staff on the next round of 17 on-board diagnostic requirements. 18 If you have any questions, I would be pleased to 19 answer them. 20 CHAIRPERSON LLOYD: Thank you. 21 Does staff have any problems with her testimony? 22 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: I think 23 the only thing that doesn't happen in 2007 is the tooling 24 information, which we had proposed to delay to 2010. And 25 I don't think it -- I think it makes sense that we could PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 119 1 deal with that in 2005 as part of OBD because OBD will 2 have an effective date of probably 2010. So it makes 3 sense to link that one piece together. The rest of it 4 though would still -- the rest of the service information 5 requirements would still go into effect in 2007, at least 6 as staff would propose it. 7 So just the one part on tooling. 8 CHAIRPERSON LLOYD: So you would continue to work 9 with EMA? 10 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Yeah. 11 And we could just, you know, delete that part from the -- 12 during the 15-day changes if that's what your direction 13 is. And then we'll bring it back up to you next year in 14 the more comprehensive OBD proposal. 15 CHAIRPERSON LLOYD: Is that satisfactory? 16 MS. STEGINK: That would be -- yes, we would 17 agree with that. 18 CHAIRPERSON LLOYD: Thank you. 19 Questions from the Board? 20 Thank you very much. 21 MS. STEGINK: Thank you. 22 CHAIRPERSON LLOYD: Steve Hoke and David Ferris. 23 MR. HOKE: Good morning. My name's Steve Hoke. 24 I'm from NorthState Truck Equipment up in Redding, 25 California. And I'd like to make certain remarks on the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 120 1 heavy-duty -- for the heavy-duty diesel engines. 2 I speak for many diesel engine rebuilders, and I 3 can say that it's very important for us as rebuilders and 4 repair facilities to have -- and to heavy-duty truck 5 owners on-board diagnostic capability on all heavy-duty 6 diesel engines. 7 Since the information flow on OBD diagnostic is 8 almost nonexistent in the heavy-duty market, I'd like to 9 see that the OEMs have all their OBD and EMD diagnostic, 10 not reprogramming information, available on the Internet. 11 And we also agree with the ARB staff on 12 implementing their EMD for the vehicle emission systems. 13 CHAIRPERSON LLOYD: Thank you very much. 14 And David Ferris. 15 MR. FERRIS: I just have one brief comment. And 16 we support the Alliance comments of course. 17 But there was some confusion between the -- the 18 ECU rebuilders had proposed a software change. And we 19 looked at that closely. We did a cost estimate for what's 20 referred to as a Mode A test mode software change. And 21 Aaron Low was correct about that. And he indicated he 22 thought that was a more expensive change. That's not the 23 case. 24 The reason why we did the cost estimate for the 25 Mode A change is because we believe it would be easier to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 121 1 implement less expensive and more secure. So if we had to 2 make some kind of software change, we'd prefer to make 3 that one. 4 CHAIRPERSON LLOYD: Thank you. 5 I guess this is a discussion -- this is not a 6 regulatory item. It's an informational item? 7 EXECUTIVE OFFICER WITHERSPOON: That's correct. 8 You acted on the regulation in January. And it's before 9 the staff at this time to do the 15-day change process. 10 And so this item is informational for you. But you can of 11 course give direction to us as we're carrying on with 12 15-day changes. But you don't have the actual rule in 13 front of you. 14 CHAIRPERSON LLOYD: Well, no, I -- 15 GENERAL COUNSEL JOHNSTON: And, in addition, you 16 will have to close the record because the record was left 17 open for these additional comments today. 18 CHAIRPERSON LLOYD: Thank you. 19 MR. SAXONBERG: Chairman Lloyd, my name is Mark 20 Saxonberg. I'm from Toyota Motor Sales U.S.A. 21 CHAIRPERSON LLOYD: Did I miss you? 22 MR. SAXONBERG: I had signed up to testify today. 23 And if you wouldn't mind -- 24 CHAIRPERSON LLOYD: No, I guess I was -- 25 MR. SAXONBERG: Since Toyota was a target here PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 122 1 today, I'd like an opportunity to defend our honor. 2 CHAIRPERSON LLOYD: I was zealous in moving ahead 3 there. And I'm sorry. I lumped you in with Ford and 4 DaimlerChrysler. I apologize for that. 5 MR. SAXONBERG: Well, I am part of the party. 6 But since they were picking on me, if you'd bear with me 7 for just a moment, I do have a statement. 8 As I said, my name is Mark Saxonberg. I'm the 9 Service Technology Manager with Toyota Motor Sales U.S.A. 10 And I'd like to start out by saying that Toyota is a 11 strong supporter of the Air Resources Board Service 12 Information Rule and have been since the very beginning. 13 The issue today is whether to require auto makers 14 to add a function to their engine control computers so 15 it's going to make it easier for aftermarket rebuilders to 16 remanufacturer those computers. 17 And while the aftermarket rebuilders admittedly 18 have solutions that will allow them to rebuild these 19 computers already, they're contending here today that the 20 solutions are too costly. And, therefore, they want every 21 auto maker to implement a special diagnostic function in 22 every one of our engine-control computers literally across 23 the industry to save tooling costs to remanufacturer some 24 fraction of those computers. And I think it's a fairly 25 small fraction. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 123 1 While implementing a special test function is on 2 the surface a fairly benign thing, beneath the surface it 3 causes several significant problems. 4 All of the diagnostic functions on today's 5 computers compete for limited memory resources. Computer 6 architecture changes, they're not a simple matter both in 7 terms of cost and in terms of lead times. 8 Further, every new mandated function has the 9 potential to displace important diagnostic functions that 10 could make it easier and more efficient to diagnose and 11 repair emissions failures. 12 As an example, Toyota's implemented several new 13 automated diagnostic routines for evaporative emissions 14 and feedback fuel systems over the last several years. 15 These functions make it fast, simple and extremely 16 accurate to diagnose emissions failures. The memory 17 available to do this on the computer is in direct 18 competition with CARB-mandated functions. So if we add a 19 mandated function, we may have to omit another diagnostic 20 function. 21 It's also important to understand the true impact 22 that engine control computer replacement has on clean air 23 efforts. Statistically speaking, very few emissions 24 failures are caused by a failed engine control computer. 25 Computers, especially engine-control computers are the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 124 1 most misdiagnosed part on the automobile. A large 2 percentage of all the computers replaced in the U.S. 3 there's nothing wrong with them. 4 The typical failure mode of an emission system is 5 a sub-component of the system, one of the parts on the 6 car, or related wiring. 7 Engine-control computer replacement rarely is an 8 emissions failure repair. This is corroborated by 9 statistics from EPA and the data coming out of every smog 10 check program across the nation. 11 While the results of this Board's finding today 12 may reduce the testing costs for aftermarket rebuilders, 13 statistics from smog-check programs indicate that it will 14 have virtually no impact on making the California fleet 15 any cleaner. And in fact it won't even reduce owner costs 16 to repair emissions failures. 17 The rebuilders contend here that they need 18 regulatory assistance to ensure continued competition to 19 keep auto makers' parts prices in check. They've gone on 20 record citing OEM engine-control computer prices compared 21 to aftermarket prices as being very high. And, granted, 22 Toyota does have some high prices for engine-control 23 computers. But there's a very good reason for it. Our 24 engine-control computer pricing is a function of the cost 25 of quality. And it has nothing to do with our competition PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 125 1 for market share. 2 We sell very few engine-control computers because 3 it is a critical component on the car. If it doesn't 4 work, it leaves our customers stranded somewhere. We 5 manufacture those computers to zero-defect standards. 6 It costs more to maintain the quality control 7 that we put into our engine-control computers. That's why 8 they cost more. Because our quality standards are so 9 high, the failure rate is extremely low. And I pulled 10 some statistics yesterday just to make the point. We sold 11 430,000 Camrys in Year 2002. We only replaced 350 12 engine-control modules under warranty. And keep in mind 13 that virtually 100 percent of all of the parts are under 14 warranty. So those were all warranty parts. And that was 15 during the last 13 months. So this amounts to less than 16 one-tenth of one percent failure rate for vehicles that 17 are about three years old now. 18 The same holds true for older models. A 1993 19 Corolla, as an example, we sold 191,000 of those. Now, 20 there's only 120,000 that are left on the road today. But 21 the failure rate of those computers is so low that we only 22 sold 17 computers last year for 120,000 cars that are on 23 the road. Now, granted, rebuilders sold some, too. But 24 if we're only 10 percent of the market, that's still less 25 than two-hundredths of one percent of the total vehicles PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 126 1 out there that have replacement computers. 2 CHAIRPERSON LLOYD: You about to wrap up? 3 MR. SAXONBERG: Yes. 4 So I guess in conclusion we respectfully request 5 that the Board support the staff in their request not to 6 amend the Service Information Rule any further. 7 And I'd like to thank you very much. 8 CHAIRPERSON LLOYD: Thank you. 9 How would -- how does the service information for 10 the Prius -- does that change at all, the hybrid compared 11 to -- 12 MR. SAXONBERG: Are you talking about 13 availability of the information, or is the information 14 different than it is for other vehicles? 15 CHAIRPERSON LLOYD: The latter one. 16 MR. SAXONBERG: Certainly hybrid technology is 17 different, parts of it are different than cars that came 18 before it. Although a large subset of the information is 19 exactly the same. There's still an internal combustion 20 engine, engine control system and so on. The hybrid part 21 is a little different than technicians are used to. But 22 they'll learn it the same way they learned electronic 23 ignition systems and engine control systems. 24 CHAIRPERSON LLOYD: Any questions? 25 Thank you very much indeed. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 127 1 Well any comments from my colleagues? 2 BOARD MEMBER CALHOUN: Thank you, Mr. Chairman. 3 It might be worthwhile for the staff to sort of 4 summarize where they are relative to this particular 5 regulation so we'll know -- 6 MOBILE SOURCE DIVISION OPERATIONS DIVISION CHIEF 7 LYONS: Summarize where we are on the immobilizer issue? 8 BOARD MEMBER CALHOUN: Yes. 9 BOARD MEMBER HUGH FRIEDMAN: You have five 10 minutes. 11 MOBILE SOURCE DIVISION OPERATIONS DIVISION CHIEF 12 LYONS: I have to do it much quicker. 13 The bottom line is that we came into this hearing 14 saying that we've -- the Board adopted a regulatory 15 amendment in January which makes the cost of 16 initialization equipment cheaper for both the service 17 industry and for the rebuilders. And we think that the 18 availability of that equipment provides a cost effective 19 method for the remanufacturers to continue 20 remanufacturing. 21 Therefore, we're proposing to -- replying to go 22 along with that, saying process and not require the 23 vehicle manufacturers to implement any special software 24 changes to address this issue. 25 CHAIRPERSON LLOYD: Seeing no other comments, I PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 128 1 guess -- I guess we don't need a motion on this. We'd 2 approve the staff position here? 3 EXECUTIVE OFFICER WITHERSPOON: Well, we 4 understood you to say earlier that you would like us to 5 follow through on the heavy-duty tooling adjustment in our 6 15-day changes. And we will do that. 7 CHAIRPERSON LLOYD: And we have to officially 8 close the record on this agenda item. So we will do that. 9 And close the item there. 10 And, again, thank you, staff. Thank you for 11 working with the industry and reporting back to us just as 12 we had requested. So I appreciate that very much. 13 Seeing no other agenda items and no other 14 business, that will officially bring the May 20th meeting 15 of the Air Resources Board to a close. 16 Thank you very much. And thank my colleagues. 17 (Thereupon the California Air Resources 18 Board meeting adjourned at 12:05 p.m.) 19 20 21 22 23 24 25 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 129 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 31st day of May, 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